In a letter sent today to the Senate, reform groups urged Senators to support S.375, the “Senate Campaign Disclosure Parity Act,” which would require electronic filing of campaign finance disclosure reports by Senate candidates under federal campaign finance laws.  

Candidates for the U.S. House of Representatives and for the office of President, and nearly all federal political committees, currently file their campaign finance disclosure reports electronically with the FEC.  This data is typically uploaded onto the FEC website for public access within 24 hours.  By contrast Senate filings generally take weeks to become publicly available and the cost of converting them for FEC purposes costs taxpayers hundreds of thousands of dollars annually. 

The reform groups sending the letter include Americans for Campaign Reform, Campaign Finance Institute, the Campaign Legal Center, Citizens for Responsibility and Ethics in Washington, Common Cause, Democracy 21, Demos, the League of Women Voters, Public Citizen, Sunlight Foundation and U.S. PIRG.

S. 375 is bipartisan legislation introduced by Senator Jon Tester (D-MT) and Sen. Thad Cochran’s (R-MS) and cosponsored by 33 Senators.

To read the full letter, click here.

In a letter sent today to members of the House Administration Committee, reform groups called on the Committee to oppose legislation to repeal the presidential public financing system and the financing system for conventions. The letter also urged the Committee to oppose proposed legislation to repeal the Election Assistance Commission. 

The reform groups sending the letter include Americans for Campaign Reform, the Campaign Legal Center, Citizens for Responsibility and Ethics in Washington, Common Cause, Democracy 21, Demos, Public Citizen and U.S. PIRG.

The letter sent to Chairman Rep. Candice Miller (R-MI) and Ranking Subcommittee Member Rep. Robert Brady (D-PA), and copied to the full Committee, is in response to the House Administration Committee’s consideration of several bills on Tuesday, June 4, that seek to dismantle important anti-corruption and voting laws.

The letter from reform groups stated:

[I]t is essential to repair the presidential public financing system -- not repeal it. We strongly support the legislation to revise the current presidential system by matching small contributions with multiple public funds for the primary and general elections, by closing the loophole that has allowed corporations, labor unions and wealthy individuals to provide soft money to pay for the conventions and by replacing the public funding for conventions with a new system of hard money contributions.

According to the letter:

Together H.R. 94 and H.R. 95 would terminate the presidential public financing system and eliminate public financing for the conventions while placing no restrictions on funding party conventions with corporate and labor union money and large contributions from individuals. As a result, the parties would rely even more on unlimited soft money contributions that have the power to corrupt officeholders and government decisions, as happened in the Watergate scandals.  In Buckley v. Valeo (1976), the Supreme Court held that the contribution limits enacted in the 1974 reform legislation were necessary to deal with the “reality or appearance of corruption inherent in a system permitting unlimited financial contributions.”

The “reality or appearance of corruption” that is “inherent in a system permitting unlimited financial contributions,” is precisely the danger that would be increased by these bills.

The letter stated:

The Supreme Court’s Citizens United decision has created chaos in the nation’s campaign finance system and substantially increased opportunities for big-money corruption. It has also shown just how important it is to have an effective alternative means to finance campaigns that are based on a central role for small donors.

We urge you to oppose H.R. 94 and 95 and instead to support efforts to repair the presidential public financing system with an approach focused on matching small contributions and to reform convention financing by establishing a new system that prevents the use of soft money to pay for the conventions.

The letter further stated:

We also urge you to oppose H.R. 1994, the Election Assistance Commission Termination Act.  We believe the Commission, if fully staffed, could provide vital assistance in addressing the problems in our voting system, including modernized voter registration and ongoing issues with polling station lines so in some communities that voter turnout is actually driven down by them. Congress should strengthen, not terminate, the EAC and ensure that the agency can perform its critical functions in data collection, research, and information sharing among elected officials at every level, the public and concerned organizations. Congress should ensure that the EAC has sufficient authority to carry out these responsibilities.

The letter concluded:

The presidential public financing system should be repaired, not repealed. The Election Administration Commission should be strengthened, not terminated.  We strongly urge you to oppose these measures which would undermine the integrity and the public’s faith in our democracy.

To read the full letter, click here.

In a letter sent today to the House Ways and Means Committee, the Campaign Legal Center joined Democracy 21 in urging the Committee to examine the failure of the IRS to properly enforce the tax laws against groups improperly claiming to be “social welfare” organizations under section 501(c)(4) of the tax code. The nonprofit tax status has been widely abused by groups that have spent hundreds of millions of dollars in the last two election cycles in an attempt to elect or defeat candidates for federal office.

The Ways and Means Committee is scheduled to hold hearings on Tuesday, June 4, 2013 continuing the Committee’s investigation into whether the IRS improperly targeted certain groups for heightened scrutiny as part of their application process for tax exempt status.

The letter sent by the watchdog groups to Chairman Dave Camp (R-MI) and Ranking Member Sander Levin (D-MI), and copied to members of the full committee, called on the committee also to investigate the IRS’s lack of enforcement for groups claiming 501(c)(4) status under the tax code, but that “primarily engage in campaign activities and use their improper claim of “social welfare” status in order to keep secret the donors funding their campaign expenditures.”

“In addition to investigating improper targeting of Mom & Pop conservative groups for additional scrutiny, the Committee must make it clear to the IRS that its ‘see no evil, hear no evil, speak no evil' approach to the big money 501(c)(4) scofflaws is completely unacceptable,” said J. Gerald Hebert, Campaign Legal Center Executive Director. “The Committee needs to make it abundantly clear that the IRS must enforce the laws on the books when it comes to 501(c)(4)s and not retreat back into a shell after chastised publicly before numerous congressional committees. If the IRS continues to do nothing about the groups that spent hundreds of millions of dollars on candidate attack ads last election cycle, those numbers will grow exponentially and in no time we will have hundreds of groups posing as ‘social welfare’ organizations spending billions of dollars trying to determine the winners and losers in our federal elections.”

The Legal Center and Democracy 21 included as attachments their petition for rulemaking to replace flawed IRS rules dealing with 501(c)(4) eligibility and the extensive correspondence with the IRS urging the agency to enforce existing regulations against organizations abusing the privileged tax status in order to hide the donors while running multi-million dollars political advertising campaigns seeking to sway voters in the 2010 and 2012 election cycles.

To read the full letter to the Committee, click here.

To read the earlier correspondence with the IRS, click here.

To read the petition for IRS rulemaking on 501(c)(4) eligibility, click here.

This week additional jurisdictions continued to move forward with bailouts from the preclearance provisions of the Voting Rights Act at a time when the U.S. Supreme Court is considering a challenge to the constitutionality of those provisions.  Yesterday, a three-judge court in Washington, DC approved a final consent decree exempting the City of Falls Church, Virginia (along with the Falls Church City Public School District) from the Act’s preclearance provisions.  Today, the Justice Department also announced that it had reached agreement on a bailout with Yuba County Water Agency in California and submitted a proposed consent decree for approval to a three-judge court in the U.S. District Court for the District of Columbia. 

The preclearance provisions, known as Section 5 of the Voting Rights Act, are being challenged in a case currently being weighed by the U.S. Supreme Court,Shelby County, AL v. United States,.  The covered jurisdictions, including all or parts of fifteen states predominantly in the Deep South with long histories of discrimination against minority voters, must seek preclearance before changing any election practice or procedure, such as moving polling locations or altering voting districts.  However, if jurisdictions, like Falls Church, the Yuba County Water Agency and others can demonstrate that they have maintained a clean record of voting practices for a decade and undertaken additional steps to ensure non-discriminatory voting procedures, they may “bail out” of this preclearance requirement.

In the Shelby County case, which was argued before the Supreme Court in February, critics of Section 5 argued in a number of briefs that the process to achieve a bailout is far too arduous and cost-prohibitive.  That claim is just flat wrong.  In addition to Falls Church and the Yuba County Water Agency, the City of Wheatland, California bailed out last month, the State of New Hampshire bailed out in March and California’s Browns Valley Water District bailed out in January.  On top of dozens of previous bailouts, a number of other jurisdictions are currently awaiting court approval of their bailouts, including Hanover County (Virginia) and Linda County Water District in California.  Since 2009 (the year of the Supreme Court’s decision in the NAMUDNO case), more than twice as many political subdivisions have bailed out (140) than in the entire period from 1982 to 2009 (69).

“As more and more of these bailouts are cleared by the court, the argument that the process is too arduous and too expensive rings more and more hollow,” said Campaign Legal Center Executive Director J. Gerald Hebert, who serves as legal counsel to both Falls Church and the Yuba County Water Agency in his capacity as a solo practitioner.  “There could be no more convincing argument than this ever-growing list of successful bailouts to prove that the coverage formula self-tailors, and therefore Section 5 coverage adjusts to current needs required to protect the franchise.  The Voting Rights Act is not just a page torn from the history books; it remains today a vital safeguard of every citizen’s right to vote.  The City of Falls Church and the Yuba County Water Agency, like other bailed out state and local governments before them, have shown to the courts that these additional safeguards are no longer necessary to protect the franchise in their jurisdictions, which sadly cannot be said of some covered jurisdictions as has been proven time and again in the courts in recent years.”

To read the consent judgment and decree for Falls Church, Virginia, click here.

To read the Joint Motion to Enter a Consent Judgment and Decree in the Yuba County Water Agency case, click here. 

To read a proposed Consent Judgment and Decree in the Yuba County Water Agency case, click here.

The Campaign Legal Center filed a friend of the Court brief in Shelby County v. United States.  To read the brief, click here.

The Campaign Legal Center joined Democracy 21 today in urging the Chairman and Ranking Member of the House Committee on Appropriations Subcommittee on Financial Services and General Government, not to undermine the IRS’s ability to enforce existing tax laws as they seek to address the agency’s targeting of certain groups filing for 501(c)(4) tax status.

The letter to Chairman Ander Crenshaw (R-FL), and Ranking Subcommittee Member Rep. Jose Serrano (D-NY), and copied to the full Subcommittee, urged them “not to adopt any measures that would prevent or undermine the ability of the IRS to enforce the tax laws against groups that claim to be “social welfare” organizations under section 501(c)(4) of the tax code, but primarily engage in campaign activities and use their improper claim of “social welfare” status in order to keep secret the donors funding their campaign expenditures.”

“It is vitally important that Congress strengthen the IRS’s ability to rein in the widespread abuses of this privileged tax status and not hamstring the agency’s enforcement capabilities when it comes to those groups that abused the 501(c)(4) status as a means to hide the identities of their funders while spending tens of millions of dollars attempting to pick winners and losers in federal elections,” said J. Gerald Hebert, Legal Center Executive Director. “IRS targeting of organizations because of their names or political leanings is absolutely unacceptable but any attempt to curb the practice must not turn into a witch hunt that leaves the agency unable or afraid to enforce the restrictions on political activity by 501(c)(4)s. The other part of this scandal that must not be forgotten is that while the IRS was improperly picking on Mom & Pop Tea Party groups they turned a blind eye to those organizations abusing their privileged tax status on a colossal scale.”

The letter was written in response to published reports that stated the subcommittee’s hearing next on June 3 is intended to examine “how the upcoming appropriations bills can help prevent the targeting” of conservative groups by the Internal Revenue Service. (B. Becker, “New IRS chief’s first hearing is Monday,” The Hill, May 28, 2013).

To read the full letter, click here.

In a letter sent today to the Treasury Inspector General for Tax Administration (TIGTA), Democracy 21, joined by the Campaign Legal Center, forwarded fifteen letters that the watchdog groups had sent to the IRS beginning in October 2010 urging IRS action against groups improperly claiming 501(c)(4) tax status and calling for a rulemaking proceeding.

The letters to the IRS that had been sent by the watchdog groups called on the IRS to investigate and take appropriate action regarding groups that were improperly claiming tax status as section 501(c)(4) “social welfare” organizations in order to keep secret from the American people the donors financing their expenditures in federal elections.

The letters also petitioned the IRS for a rulemaking to replace flawed IRS regulations adopted more than a half century ago that conflict with the statute and that have been wrongly interpreted to allow section 501(c)(4) groups to conduct far more campaign activities than are permitted by the law.

According to the letter to the TIGTA:

The IRS rules, their lax interpretation and the absence of IRS enforcement, all combined to play a central role in the blatant abuses of the tax laws by groups improperly claiming section 501(c)(4) tax status to hide the sources of the funds being spent by the groups to influence federal elections.

The letter from the watchdog groups to the TIGTA followed his testimony on May 21, 2013 in which the Inspector General said that his office is undertaking an audit to determine how the Internal Revenue Service “monitors I.R.C. §§ 501(c)(4)–(6) organizations to ensure that political campaign intervention does not constitute their primary activity.”

According to the letter from the watchdog groups to the TIGTA, which called the audit essential, improper claims to tax status under section 501(c)(4) “have deprived citizens of basic information on the source of funds that were spent to influence their votes.” The letter stated:

More than $250 million of this “dark money” was spent in the 2012 presidential and congressional elections by groups claiming tax status as section 501(c)(4) “social welfare” organizations, making this evasion of disclosure requirements a major scandal in its own right.

The letter to the TIGTA stated:

Our letters have presented documented cases to the IRS regarding the abuse of section 501(c)(4) by pro-Republican, pro-Democratic and independent candidate groups – including Crossroads GPS, Priorities USA, Americans Elect and American Action Network. These groups claimed section 501(c)(4) tax status to shield their donors from disclosure, even though the groups appear to be engaged primarily in campaign activities, in contravention of the eligibility requirements for section 501(c)(4) tax status. 

Our IRS letters presented specific evidence regarding the extent of the campaign activities by these groups and called for an IRS investigation into their campaign activities. To date, however, no public action has been taken by the IRS against these groups and they have been improperly allowed to continue to function as section 501(c)(4) “social welfare” groups.

According to the letter to the TIGTA:

During this same period, Democracy 21,  joined by the Campaign Legal Center, also filed a petition with the IRS in July 2011, calling on the IRS to institute a rulemaking to replace its deeply flawed regulations implementing section 501(c)(4) of the tax laws. Attached are copies of the petition and the subsequent letters we sent in regard to it.

As the petition sets forth, the existing IRS rules, which are more than a half century old,  provide that in order to be eligible for section 501(c)(4) tax status an organization must be “primarily engaged” in social welfare activities. The petition explains that the rules are contrary to the statutory language of section 501(c)(4), which provides that such groups must be “exclusively” engaged in social welfare. The petition further explains that the rules are also contrary to court cases construing the statute, which conclude that such groups may engage in no more than an “insubstantial” amount of non-social welfare activity. 

The letter concluded:

We strongly urge you to fully investigate the failure of the IRS to properly enforce the requirements of section 501(c)(4), which we believe resulted in the improper spending of hundreds of millions of dollars of secret money in the 2010 and 2012 federal elections.

To read today’s letter to Inspector General in its entirety, click here.

To read the letters to the IRS from 2010 to 2013, click here.

To read the petition for rulemaking, click here.

Today, reform groups called on Congress to investigate and address both of the scandals at the IRS in order to prevent the same abuses from occurring in the future. The letter, sent to the full House and Senate, stressed the need to investigate the improper targeting of conservative groups and also emphasized that Members have a responsibility to investigate the abuses of the tax laws by some organizations in order to keep secret the donors financing their campaign activities.

At the heart of both current scandals, the letter stresses, are flaws in the existing IRS rules defining eligibility for section 501(c)(4) tax-exempt status. Those rules have been interpreted to permit 501(c)(4) groups to engage in substantial campaign activities, while the statute governing such groups explicitly states that they are required to engage “exclusively” in social welfare activities.

The organizations sending the letter included Americans for Campaign Reform, the Campaign Legal Center, Citizens for Responsibility and Ethics in Washington, Common Cause, Democracy 21, Demos, Public Citizen and Sunlight Foundation.

The read the letter sent to Senators, click here.

To read the letter sent to Representatives, click here.