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Christine O’Donnell, the wacky Tea Party candidate for Senate in Delaware last fall, has done something wacky again. Perhaps that’s no longer news—but her latest chapter of head-slapping hypocrisy is a window into an increasingly fascinating fight over campaign finance and the shadowy groups that will play an enormous role in the upcoming elections. Ad Policy

First, the brazen and hilarious Christine O’Donnell episode that unfolded on Thursday.

Last fall, the watchdog group Citizens for Responsibility and Ethics in Washington (CREW) asked for a criminal investigation into O’Donnell’s misuse of campaign funds, alleging she was using them to pay personal expenses and then lying on her Federal Election Commission reports.

CREW was on pretty solid ground in asking for the investigation, as their main piece of evidence was the sworn affidavit of a former campaign worker who said O’Donnell was using campaign money to pay for rent, food, gas and even bowling outings, and then lying on her FEC reports.

The allegations, less than two months before the election, caused a media stir and led to an investigation by the US Attorney in Delaware, who ultimately didn’t pursue criminal charges but referred the case to the FEC.

This summer—only after the door had been closed on criminal charges, and incidentally at the same time O’Donnell had a book coming out—she started making noise about going after CREW.

Yesterday, her political action committee ChristinePAC launched a shiny new website asking followers to “Join the wrecking CREW” and help her battle the watchdog group. Specifically, she wants people to get behind an effort to strip CREW of its nonprofit status, since it so cruelly goes after good-hearted Republicans such as herself:

George Soros funded CREW, has dedicated their mission to WRECKING the campaigns and careers of many Republicans and Conservatives. It’s time the WRECKING BALL swung the other way…. Acting as a “charitable organization,” CREW is barred from intervening in political campaigns (“electioneering”) as well as participating in discriminatory activities. Assuming they are above the law, over a period of several election cycles, CREW has abused its tax-exempt status by blatantly acting on behalf of the Democratic Party as well as establishing a pattern of racially discriminatory activities. Ms. Sloan’s leftist roots run deep as she’s worked for some of the most strident liberals in Congress, including Vice President Joe Biden and Sen. Chuck Schumer (D-NY)….When someone so blatantly breaks the law, as Melanie Sloan has, and wastes scarce government resources and tax payer dollars to carry out a political vendetta, she should face the consequences.

It’s worth noting that while CREW has criticized many Republicans, it has also tangled with the Obama administration over transparency, and that its annual list of the most corrupt members of Congress includes many Democrats.

But here’s the funny part: on its original FEC filings, ChristinePAC—which has $33,000 on hand, according to the FEC—listed its address as O’Donnell’s home, though it now appears to have been switched to a post office box. This raises the obvious question of whether she’s still personally profiting from her political fundraising. As the Sunlight Foundation noted earlier this year, “The big problem with [ChristinePAC] is that it looks very similar to the campaign that brought O’Donnell under federal investigation.”

So, yes: O’Donnell is launching an offensive against CREW for pointing out a campaign finance violation, using a new political group that is potentially still guilty of the same violation.

That insanity aside, O’Donnell is correct that 501(c)(4) charitable organizations get tax breaks that forbid them from intervening in political campaigns—and non-ridiculous challenges to abuse of that privilege are mounting.

Karl Rove’s Crossroads GPS, as well as the White House–allied Priorities USA, are 501(c)(4) organizations that are technically forbidden for electioneering. In order to preserve their tax status—and most importantly, to preserve the very light donor disclosure rules that apply to 501(c)(4) groups—they must have a primary purpose of promoting social welfare, not political influence.

This is what they claim—but if you honestly think Karl Rove, of all people, is going to spend $240 million next year and it won’t be political, there are plenty of bridge-related real estate brokers who would like your number. The same goes for PrioritiesUSA, which was formed by Obama administration officials soon after they left the White House.

Last year, Senator Dick Durbin asked the IRS to investigate Crossroads GPS’s tax status. And earlier this week, several campaign finance watchdog groups issued strong calls for the IRS to investigate not only Rove’s group but a whole slew of 501(c)(4)s that seem to be defying the letter of the law:

In a letter to the IRS, Democracy 21 and the Campaign Legal Center called for an investigation into four groups that have 501(c)(4) tax status and are engaged in political activity: Crossroads GPS, Priorities USA, American Action Network and Americans Elect. “The IRS should conduct an investigation of whether each such organization has engaged in more than an insubstantial amount of non-exempt activity by participating or intervening in political campaigns, and accordingly is not primarily engaged in the promotion of social welfare,” the groups wrote in their letter. “The IRS should also conduct an investigation of whether each organization’s primary activity is campaign activity, and is accordingly not primarily engaged in the promotion of social welfare.” The letter was signed by Fred Wertheimer, president of Democracy 21, and J. Gerald Herbert, executive director of the Campaign Legal Center.

This is a crucial line of attack in the war against unlimited, shadowy money. Again, it’s not the tax breaks that matter—Rove can afford that—but 501(c)(4)s don’t have to disclose much at all about their donors. If those groups lose that status, they would have to open up the books going forward.

It’s also much more effective to pursue a remedy through the IRS instead of the FEC, which even its own members call “feckless” and “toothless.” If the IRS takes a hard look at Crossroads GPS and similar groups, there could be a less secret money in next year’s elections. There’ s at least a chance the IRS might do so—I’d suggest looking at this ad—it just has to deal with Christine O’Donnell’s “wrecking crew” first.