Federal judge rules IRS dark money anti-disclosure rule unlawful

Federal judge rules IRS donor guidance is unlawful

A federal judge in Montana ruled on Tuesday that IRS guidance reducing donor disclosure requirements for certain nonprofits is unlawful and will be set aside.

The ruling is a win for two states with Democratic governors that challenged the guidance — Montana and New Jersey — and is likely to be cheered by Democrats in Congress who have criticized the guidance.

Montana Gov. Steve Bullock is seeking the Democratic nomination for president, and the ruling was issued on the same day he appeared in the party’s presidential debate.

The IRS and Treasury Department released guidance last year that ended a requirement for certain tax-exempt groups to report the names and addresses of major donors on annual forms.

Groups affected by the guidance included social welfare organizations such as the National Rifle Association and the American Civil Liberties Union, labor unions, and business leagues.

Republicans argue that the guidance was important to protect taxpayers’ privacy and First Amendment rights. But Democrats have strongly opposed the guidance, arguing that it could make it easier for foreign governments to influence U.S. elections through donations to “dark money” groups.

Bullock, the Montana Department of Revenue and the state of New Jersey filed a lawsuit challenging the IRS guidance, asking the court to set it aside because the IRS didn’t provide a notice and comment period before issuing the guidance. Both states said that they had utilized the donor information.

Treasury and the IRS said the lawsuit should be dismissed, arguing that the states lack standing to sue. They also argued that the guidance was an interpretive rule that didn’t need a notice and comment period.

In his ruling, Judge Brian Morris, who was appointed by former President Obama, ruled that the states have standing to pursue their claim and that the guidance was a legislative rule that did need a notice and comment period.

Morris noted that the states argued they may need the donor information to determine whether an organization violates requirements for tax-exempt groups and to enforce limits on tax-exempt groups’ political activity.

“The Court agrees that these purposes support the need for the IRS to comply with the [Administrative Procedure Act]’s notice-and-comment provision when it amends a long-standing regulation that implicates the collection and sharing of this information,” Morris wrote.

Morris said that if the IRS wants to adopt a similar rule in the future, it needs to follow notice and comment procedures under the Administrative Procedure Act.

Reformers push Dems to adopt sweeping anti-corruption platform in 2020

POLITICO

By MAGGIE SEVERNS

07/09/2019 05:04 AM EDT

As Democratic presidential candidates swear off super PACs and corporate PAC money, a campaign finance reform group is pushing them to take things a step further by using anti-corruption messages to campaign against President Donald Trump and pledging to make ethics reform an early priority in the White House.

End Citizens United, armed with polling and a track record of success in helping elect Democrats during the 2018 midterm elections, says Democrats shouldn’t hesitate to put an anti-corruption message at the forefront of the eventual general election, according to polling and presentation materials reviewed by POLITICO. The group’s leaders have briefed nine presidential campaigns, including the campaigns of polling front-runners Joe Biden, Kamala Harris, Bernie Sanders and Elizabeth Warren, and they are making plans to sit down with more.

Trump — who often boasted about his independence from big money in 2016 and branded his rival “crooked Hillary” — wielded Washington corruption as a tool on the campaign trail in his last race. But this time, ECU argues there’s space for Democrats to shape the debate, with many independents now seeing the president as similarly corrupt as other politicians in Washington.

“It’s key to winning back independents, and the kind of independents that Democrats have lost over the last couple cycles,” said Adam Bozzi, vice president for communications at ECU. “And it’s a jump ball: Voters don’t know who to trust, whether it’s Trump or a Democrat, on this issue.”

ECU operates with the goal of getting money out of politics and supporting politicians who pledge to work on campaign finance reform. The group backed more than 50 successful Democratic congressional candidates during the midterms, and it helped raise $9 million for candidates, including for 27 successful challengers who flipped seats while pledging to not take corporate PAC money.

As Democrats worked to flip the House, ECU and the “no corporate PAC” Democrats prodded incoming House leadership to make a sweeping ethics reform package its first order of business in the House. The bill, H.R.1, passed the House in March, though it has received little attention in the Republican-led Senate.

ECU is adopting a similar approach to the Democratic 2020 field. The group has not announced how it will support Democratic candidates for president. But it is now asking Democratic campaigns to commit to making ethics reform as his or her act as president, a sign it is outlining criteria and may start raising money for some candidates later in the campaign.

One candidate, Pete Buttigieg, cited reform as the first issue he’d push as president during last month’s presidential debates.

“Fix our democracy before it’s too late. Get that and every other issue gets better,” Buttigieg said. Other candidates including Kirsten Gillibrand, Michael Bennet and Warren have outlined detailed campaign finance reform plans.

ECU is also urging candidates to make an anti-corruption message central to their campaigns and their anti-Trump messages.

“Corruption and money in politics are top issues for independent voters in 2020, and the debate between the two parties on these issues is largely unsettled,” reads the presentation that ECU has been giving to Democratic campaigns.

According to polling conducted by ECU, voters in swing states see corruption as a top concern: 83 percent of swing state voters said that “cracking down on political corruption” is a top priority, the same share of voters who said “making health care affordable” was a top priority. National security was the next highest priority on the list, followed by other issues.

The findings are based on an online poll of 1,212 likely voters in 12 battleground states conducted by Global Strategy Group. GSG purposefully oversampled voters in counties that voted for Donald Trump in 2016 after twice favoring Barack Obama in 2008 and 2012. The poll was conducted between April 26 and May 8, 2019.

Asked how effective they think Trump has been at fulfilling his promise to “drain the swamp,” 74 percent of independent voters said they think Trump was “not effective” in his first term, while 22 percent said he was “effective” and 4 percent said they didn’t know. Sixty percent of Republican voters said Trump has been effective at draining the swamp, while 9 percent of Democratic voters agreed.

Some voters still see Trump in the same light as his initial independent, self-funding political persona. Only 25 percent of independent voters and 10 percent of Republican voters said they see Trump as “more corrupt” than other Washington politicians. About half of independent voters said they thought Trump was “about the same” as Washington politicians, the poll found.

ECU is telling Democratic campaigns to combat these perceptions of Trump by tying his positions on issues like health care and guns to powerful special interests in Washington.

“Voters don’t start with a clearly formed opinion on Trump’s independence,” reads ECU’s presentation. “What could be a strength for him of ‘not being bought’ can be undermined effectively with messaging about the money he has accepted from corporate special interests and pushing policies that hurt everyday Americans.”

On health care, for example, ECU suggests noting that Trump “has taken hundreds of thousands in donations from big health insurance companies” before talking about Trump’s positions.

But it will be difficult for Democrats to dislodge Trump on this issue, said Chris Wilson, CEO of the Republican research and polling firm WPAi — and as politicians lambaste money in politics, they are increasingly risking alienating their own supporters.

“It’s impossible for them to take the ‘drain the swamp’ mantle away from Trump,” Wilson said. “Where Democrats are pushing themselves is not an anti-corruption standpoint, it’s an anti-corporation, anti-business, anti-Wall Street— and in some cases, taking on their own baR