In February, U.S. House Oversight Committee chairman James Comer opened an investigation into the Internal Revenue Service (IRS)’s enforcement (or lack thereof) of non-profit tax laws against progressive activist groups, including anti-tip credit group One Fair Wage (OFW).
Once the investigation went public, National Review reports One Fair Wage amended its filings for 2022 to lower its lobbying expenditures to stay in compliance as a 501(c)(3) tax-exempt nonprofit. To remain a tax-exempt organization, the IRS limits how much a group can spend on grassroots activities to affect public opinion on issues and how much they can spend on direct lobbying of candidates or officials.
National Review reports that prior to the Oversight Committee investigation, OFW reported a tax liability of $100,000 and exceeded the 150% cap on total permissible lobbying expenditures. This status should have been flagged by the IRS to investigate the group’s nonprofit status.
Following the launch of the investigation, the group amended its tax filings to report roughly $1,000 in tax liability, and “reclassified grassroots lobbying expenditures as direct lobbying” while also raising its total expenditures, so the new lobbying spending amount “did not threaten the group’s tax exemption.”
Following this incident, on October 1, One Fair Wage sent out a fundraising email that directly violates IRS rules and regulations regarding campaign intervention by 501(c)(3) organizations.
In a fundraising appeal, the email claimed “we have an opportunity to reach 14 million restaurant workers showing that [Kamala] Harris supports One Fair Wage.” The group wrote it is “leading voter engagement with service workers” through its 510(c)(4) arm called One Fair Wage Action, and it excerpted a New Yorker article on its work titled: “Can Harris Stop Blue Collar Workers from Defecting to Trump?” It then directed donors to a link to contribute to a 501(c)(3) – which is not permitted to engage in electioneering activities.
This year is not the first time One Fair Wage has gotten flagged for potential issues with their political activity:
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Employees from its Ohio campaign (which failed earlier this year after not receiving the required amount of signatures to get on the November Ballot) have also recently complained that they have not received pay for their work.
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In 2022, the Michigan Secretary of State’s Bureau of Elections levied a campaign finance complaint against One Fair Wage Action and its push for a 2022 ballot measure to raise the state’s minimum wage and eliminate its tip credit.
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In 2012, the U.S. House of Representatives opened an oversight investigation into predecessor organization Restaurant Opportunities Center (ROC), since it received federal funds amid its controversial tactics to coerce restaurants into conceding to its demands. The subpoena cites harassment of restaurant owners and their employees, leading to restraining orders against the organization, “serious health and sanitation violations” within its own restaurant, and “a history of disputes over wages” within ROC and its Colors restaurant.
Read the full piece at National Review here.