IRS: Watchdogs Urge IRS Not to Bow to Pressure from GOP Senators to Ignore Scofflaws
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Today, the Campaign Legal Center joined Democracy 21 in urging the Internal Revenue Service (IRS) to stand fast in the face of partisan political pressure from a number of Republican Senators who are warning the agency not to enforce tax laws against 501(c)(4) organizations that are secretly pouring tens of millions of dollars into candidate attack ads nationwide.
In a letter to IRS Commissioner Douglas H. Shulman and Director of Exempt Organizations Lois Lerner, the Legal Center and Democracy 21emphasized that the agency should “investigate and take appropriate enforcement action against” the groups currently abusing the tax code for partisan politicking and to set down clear guidelines for eligibility for the privileged tax status as a “social welfare” organization.
The Republican Senators’ letter appears to have been sent in response to last month’s IRS correspondence to the Legal Center and Democracy 21 announcing that the IRS “will consider proposed changes” in eligibility regulations for section 501(c)(4) tax-exempt groups. The tax status has been widely misused by organizations that have spent tens of millions of dollars on political advertising in battleground states largely attacking candidates for federal office.
“This is a blatant effort to intimidate and bully the IRS into not doing its job of enforcing our tax laws in the face of rampant abuse by shadow political committees, dodging taxes and hiding their deep-pocket funders behind 501(c)(4) tax status,” said J. Gerald Hebert, Executive Director of the Campaign Legal Center. “We encourage the IRS to ignore this partisan political pressure and press on with enforcing the laws on the books and issuing clear guidelines regarding eligibility for 501(c)(4) tax status to stop the abuse of a privileged tax-exempt status.”
In July 2011, the Campaign Legal Center and Democracy 21 initially filed a rulemaking petition and have subsequently written to the IRS on multiple occasions to challenge the eligibility for 501(c)(4) tax status of a number of Republican and Democratic affiliated groups, including Crossroads GPS, Priorities USA, American Action Network and Americans Elect.
To read the full letter sent today to the IRS, click here.
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Another Attempt to Evade Campaign Finance Law Challenged by Watchdogs
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Today, the Campaign Legal Center, joined by Democracy 21, filed comments urging the Federal Election Commission (FEC) to reject an attempt by National Defense Committee (NDC) to avoid registering as a political committee and revealing its donors if it runs a series of advertisements expressly advocating the election or defeat of federal candidates. The 501(c)(4) organization submitted an advisory opinion request (AOR 2012-27) proposing a series of advertisement scripts that clearly meet the definition of “express advocacy” and then asked the Commission whether it intends to enforce the regulation defining “express advocacy” (11 C.F.R. § 100.22(b)), implying that it is no longer valid but offering no credible legal argument to back up the claim.
“The legal argument offered by NDC is based on outdated court decisions. NDC ignores recent decisions related to the law and neglects altogether to mention the Supreme Court’s decision in Wisconsin Right to Life, in which the court defined the ‘functional equivalent of express advocacy’ using a definition nearly identical to the regulation NDC argues the FEC should not enforce,” said Paul S. Ryan, Campaign Legal Center Senior Counsel. “This is just the latest in a recent rash of filings with the FEC and in the courts attempting to undermine the modest disclosure provisions still in effect. Clearly this effort reveals that there are some people and organizations out there looking to spend a lot of money to pick winners and losers in our elections without revealing their identities to American voters.”
The regulation (11 C.F.R. § 100.22(b)) being questioned by NDC deals with sham issue ads that do not say “vote for” or “vote against” a candidate, but “could only be interpreted by a reasonable person as containing advocacy of the election or defeat of one or more clearly identified candidate(s).”
NDC also proposed a series of donation communications in its AOR, asking whether they would constitute solicitations of contributions under federal campaign finance law. Finally, NDC asked the FEC whether it would be required to register as a political committee, but provided the Commission with insufficient information to make a determination as to the group’s political committee status.
The filing today by the Campaign Legal Center and Democracy 21 urged the Commission to advise NDC that it will continue to enforce section 100.22(b), that a number of the proposed ads do in fact constitute express advocacy, that several of its proposed donation requests constitute solicitations of contributions, and that NDC has failed to provide the Commission with sufficient information to determine whether NDC will need to register as a political committee.
To read the comments filed today by the Campaign Legal Center and Democracy 21, click here.
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American Future Fund’s Attempt to Evade Candidate “Soft Money” Ban Challenged by Watchdogs
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The latest attempt by American Future Fund (AFF) to evade existing campaign finance laws was challenged today by watchdog groups in a filing with the Federal Election Commission (FEC). The Campaign Legal Center, joined by Democracy 21, filed comments urging the FEC to reject an attempt by AFF to utilize candidates and their committees to solicit “soft money” contributions through joint fundraising efforts with the 501(c)(4), super PACs and related entities.
In Advisory Opinion Request 2012-19, AFF asks the agency whether it may engage in joint fundraising efforts in various combinations with a list of political entities including the authorized campaign committees of federal candidates in direct violation of the federal law.
“An opinion permitting candidate-authorized joint fundraising committees to solicit and receive unlimited contributions would effectively gut candidate contribution limits,” said Legal Center Senior Counsel Paul S. Ryan. “Candidate-authorized joint fundraising committees such as the Obama Victory Fund 2012 and Romney Victory Inc. would be able to add super PACs like Priorities USA Action and 501(c)(4) groups like Crossroads GPS to their rosters and solicit $1 million, $10 million or larger contributions from corporations, unions and other special interests—every penny of which could be spent advocating the election or defeat of President Obama and Mitt Romney.”
The comments filed today emphasize that such contributions to candidate-authorized joint fundraising committees, “would pose precisely the threat of real and apparent corruption that FECA’s contribution limits and BCRA’s soft money prohibitions were enacted to prevent.”
This current advisory opinion request by AFF is yet another effort by the group to evade federal campaign finance laws. In June, in response to another AOR filed by AFF, the FEC deadlocked on 5 of 8 advertisements the group proposed to run without filing electioneering communications reports and disclosing donors. The Legal Center, joined by Democracy 21, had filed comments arguing the ads using recordings of President Obama’s voice and the phrases “the White House” and “the Administration,” referred to a “clearly identified candidate” and therefore constituted “electioneering communication” subject to disclosure laws requiring the group to reveal its funders.
To read the comments filed today, click here.
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Legal Center Files Again in Defense of Texas Campaign Finance Laws
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Today, the Campaign Legal Center filed an amicus brief in a Texas Appeals Court to defend the constitutionality of Texas’s campaign finance laws in Texas Democratic Party, et al. v. King Street Patriots, et al. The case is an appeal of a Texas district court decision upholding these laws, as the Legal Center had urged in an earlier amicus brief.
The District Court saw right through the King Street Patriots’ unsubstantiated claims and we are confident that the Court of Appeals will come to the same conclusion and uphold the laws,” said Tara Malloy, Campaign Legal Center Senior Counsel. “This case is part of a wave of litigation across the country attempting to overturn a host of state campaign finance laws in the aftermath of the Supreme Court’s Citizens United decision. But like in many of the other challenges, the plaintiffs here overreach and attempt to argue that Citizens United implicitly invalidated corporate contribution restrictions – an argument completely unsupported by the law.”
The Texas Democratic Party filed an action against the King Street Patriots, alleging that the non-profit 501(c)(4) corporation made in-kind contributions to the state Republican Party in violation of Texas’s restriction on corporate political contributions, and failed to register as a “political committee” and comply with state disclosure law. The King Street Patriots, in response, filed a broad counterclaim challenging numerous provisions of Texas campaign finance law.
The District Court granted summary judgment to the Texas Democratic Party and dismissed the counterclaim, allowing the original Texas Democratic Party action to move forward on a separate track seeking damages and declaratory and injunctive relief in connection to the alleged violations of state campaign finance law.
The Campaign Legal Center also filed an amicus brief in the lower court on September 21, 2011.
To read the brief filed today, click here.
To read the summary judgment opinion of the district court, click here.
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Congressional Forum on Voting Rights Requests Statement of Legal Center Executive Director
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Today, Legal Center Executive Director J. Gerald Hebert provided a statement to a Congressional Voting Rights Forum convened in Houston Texas at Texas Southern University’s Thurgood Marshall School of Law. Mr. Hebert’s statement was adapted from his closing argument earlier this month in State of Texas v. Holder (D.D.C.) — a case in which the State of Texas seeks Voting Rights Act approval of its controversial photo ID law. The forum, “The Right to Vote: Foundation of America” was convened by the Rep. Charles A. Gonzalez (D-TX), Ranking Member of the Subcommittee on Elections.
Mr. Hebert’s full statement follows below:
Statement of J. Gerald Hebert
Executive Director and Director of Litigation of the Campaign Legal Center
Regarding the Texas Voter ID Case[1]
In May, 2011, Texas Governor Rick Perry signed S.B. 14, the most onerous, restrictive photo voter identification bill in the country. Not just any photo ID will do, or even any government-issued ID; voters must show a Texas driver’s license or state ID card, a passport, U.S. citizenship papers with a photograph, or a license to carry a concealed weapon. Yet hundreds of thousands of Texas registered voters lack one of these forms of identification, and they are disproportionately Black and Latino. Evidence shows that Hispanic and Black voters are nearly twice as likely as Anglo voters to lack the proper identification needed to cast a ballot in person under S.B. 14. Moreover, the anti-voter fraud justification Texas offered for the law was transparent pretext, hiding a racially discriminatory purpose behind the photo ID requirement. S.B. 14 was a solution in search of a problem.
The disparate impact S.B. 14 will have on minority voters, along with the clear evidence showing the law’s discriminatory purpose, run afoul of the Voting Rights Act of 1965 (VRA). Texas, like much of the South, is a “covered jurisdiction,” subject to special provisions of the VRA because of a long history of racial discrimination in voting laws. Section 5 of the VRA requires that Texas seek approval of any change to its voting practices or procedures from either the U.S. Attorney General or a federal court. This process, known as pre-clearance, requires that Texas prove the change is not for the purpose and will not have the effect of discriminating against minority voters. Most changes are approved speedily. However, in the case of S.B. 14, the Attorney General objected to the law. Texas filed a suit seeking preclearance and the case went to trial last month in the District Court for the District of Columbia before a three-judge panel.
The issues of voter fraud and voter ID in Texas have been tinged with race since day one. Major Forest Mitchell, an employee with the Special Investigations Unit of the Texas Attorney General’s Office, testified at the recent trial that the Attorney General of Texas traveled around the state and spent hundreds of thousands of dollars educating local district attorneys on how best to combat voter fraud. Excerpts of the Texas Attorney General’s training materials are included in the attached PowerPoint presentation slides. Not a single slide in the presentation addressed the need for a photo ID, but it certainly addressed mail-in fraud. Attorney General Abbott told local DAs to look for “unique” postage stamps as a sign of possible fraud. His example? A stamp commemorating sickle cell anemia patients that reads “Test early for sickle cell” and pictures an African-American woman holding an African-American child. One need not be a rocket scientist to figure out whether that queues race. Then when he warned about in-person voter fraud, Texas Attorney General Greg Abbott showed another slide that contained a photograph of Black people lined up at the polls.
Throughout the legislative debate on S.B. 14 and the recent trial, Texas legislators claimed that requiring a photo ID to vote does not impose a legally significant burden because proving one’s identity with a photo ID is a routine feature of modern life. This conclusory statement, however, is inaccurate, incomplete, and misleading. As the Carter-Baker Commission Report noted, photo voter ID requirements “may present a barrier to voting, particularly by traditionally marginalized groups.” The Commission also worried that states might not have enough locations issuing IDs. Testimony at trial showed this will be a major problem in Texas if the photo ID receives Voting Rights Act approval by the DC court. Despite claims to contrary, social science research estimates that a strict requirement depresses turnout by up to 10%, with a modal estimate among studies of 2-3%. Applying national data to Texas suggests that implementation of S.B. 14 could result in up to a 5% reduction in voter turnout.
Texas also frequently cited to Crawford v. Marion County Election Board, in which the Supreme Court upheld Indiana’s voter ID law, as support for their position that preventing voter fraud could justify S.B. 14. However, that case addressed a specific, facial challenge under the Equal Protection Clause of the Fourteenth Amendment and did not look at the intent of the Indiana legislature in the way the recent case has looked at the intent of the Texas legislature. Even though combating voter fraud is a legitimate state goal, it was uncontested at the trial that to the extent voter fraud exists in Texas, it almost never happens in person and usually happens by mail or by election officials.
S.B. 14, however, addresses only the virtually non-existent threat of in-person voter impersonation and does nothing to strengthen mail-in ballot laws. Texas’ claim that the goal of S.B. 14 was to prevent voter fraud was merely a pretext for discrimination and a cloak for voter suppression.
Texas employed a litany of unusual legislative procedures to enact S.B. 14, which is one of the factors the Supreme Court has found shows evidence of purposeful discrimination. In prior sessions, the Democrats in the Senate, who comprised just a little over a third of the body, had the benefit of the two-thirds rule to prevent the majority from ramming through legislation. Every Democrat in the Senate, it should be noted, represents a district that’s majority minority. So we’re talking about the folks who are really trying to protect minority voting rights. But because they could stop legislation in this way, Senate Republicans did away with the two-thirds rule through unusual procedures just to jam the law through in 2011. And they did away with the two-thirds rule only for the photo ID, which speaks volumes about their intent.
Texas also failed to prove that the law will not have a discriminatory effect on racial and ethnic minorities. In the recent trial, expert witnesses Dr. Stephen Ansolabehere of Harvard University and Dr. Thomas Sager of the University of Texas at Austin presented analyses that established that Blacks and Hispanics are substantially overrepresented among registered voters who cannot be matched to a valid state photo ID required under S.B. 14. The only way this racially discriminatory effect could be rectified is if most of the group of minority registered voters who lack a state photo ID in fact possess a valid federal photo ID, such as a passport. No evidence, however, was presented by any expert in the trial regarding that particular group of registered voters. Additionally, trial testimony by Texas State Senator Wendy Davis demonstrated that obtaining a federal ID requires first having a state ID.
Regardless of the rate at which Latinos and other minority groups possess valid photo IDs, it is undisputed by Texas that Latinos will still disproportionately face the problem of a mismatch between their names as they are in the voter database and the names as they appear on their photo IDs. Given the discretion that is afforded local election officials under S.B. 14, both Blacks and Latinos are sure to face an insuperable additional barrier of discriminatory application of photo ID laws at the polls. This problem was highlighted by expert witness and national voting rights expert Dr. Allan Lichtman at the recent trial, and Texas never rebutted his testimony. Texas lawmakers showed a gross lack of sensitivity to this special problem that minority voters will face. In fact, Betty Brown, a Republican who was in the Texas legislature in 2009 when a voter ID bill was being pushed, was informed of the data base name mismatch problem faced by Asian Americans. Rep. Brown said that voters of Asian descent with easily mismatched names should adopt names that are “easier for Americans to deal with.”
The fact of the matter is that minority voters are disproportionately poor, and so the costs associated with obtaining a photo ID will have a disparate impact on their effective exercise of the electoral franchise. Latinos in Texas are often among the working poor and are relatively younger than the general population. For working class voters, it is difficult to obtain ID at a Department of Public Safety (DPS) office because DPS offices are open during regular business hours and work hours often are not flexible. Currently, 81 Texas counties have no DPS office, and 34 additional counties have offices open two days per week or less. Some Texas voters must travel more than 60 miles one way to reach an office. Lower-income voters struggling to afford groceries, rent, and child care may not be able to afford the gas money to travel to a DPS office or to obtain the underlying documents needed to get the so-called “free” election ID card the state will make available.
There are many people who are not going to be affected by this law. But those who are going to be affected are overwhelmingly Black and Latino, whom the Census data show are disproportionately poor, according to every socioeconomic indicator. S.B. 14 will harm the poor and it will harm the downtrodden, those who are already suffering the debilitating effects of their poverty. Texas rejected amendment after amendment that would have given the poor some relief from this unjust law. Texas could have kept its photo ID law but still given the indigent, poor, and the homeless some relief. But the State of Texas did no such thing.
One of the Intervenors in the Texas voter ID case was Eric Kennie, who testified that he doesn’t have a birth certificate. Mr. Kennie was born in a car, is indigent, and has been homeless. Yet he still votes. He doesn’t have an ID and he cannot afford to spend the required $22.00 to buy a birth certificate needed for the so-called “free” ID. Even if he could scrape together $22.00, he would not be able to obtain an ID and vote, because no such birth certificate was ever issued. Even if a birth certificate did exist, he would either have to pay more money to have the certificate mailed to him somewhere, or travel to Austin to obtain a birth certificate in person. Acquiring other forms of photo identification, such as a driver’s license or passport, can be costly as well. The fee for an original Texas Driver’s License is $25.00 for ages 18 and up and $9 for ages 85 and up. It is undeniably discriminatory to deny Mr. Kennie the most sacred right we have as Americans: the right to vote.
There has been a recent effort to have Section 5 of the Voting Rights Act declared unconstitutional. The Texas redistricting case and the Texas voter ID case give us Exhibits A and B for why Section 5 is still needed. Texas’ redistricting plans and their recently adopted photo ID law were infected with discriminatory intent and effect, and they would have gone into effect and harmed minority voters, but for Section 5.
A U.S. House of Representatives Report on the extension of the VRA to the southwest in 1975 noted that “Texas has a long history of discriminating” against minorities using “myriad forms of discrimination.” Since the early 1900s, various devices have been used to restrict and suppress minority voting, including poll taxes, gerrymandering, conditioning work on votes, English-only ballots, and limiting interpreters at the polls. As the recent trial showed, the onerous and discriminatory photo voter ID requirement enacted through S.B. 14 is no different. Texas’ ongoing war waged against minority voters continues, and the VRA remains the most important weapon minority voters have available to fight back.
To view the excerpts of the Texas Attorney General’s training materials in PowerPoint presentation slides, click here.
[1] This statement is adapted from J. Gerald Hebert’s closing argument in State of Texas v. Holder (D.D.C.)—a case in which the State of Texas seeks Voting Rights Act approval of its photo ID law.
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Legal Center Joins Voting Rights Litigation in South Carolina & Florida
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This week, the Campaign Legal Center joined the efforts underway in two cases fighting to protect the right to vote. Legal Center attorneys are now participating in a challenge to Florida’s voter purge efforts and in an effort to keep a voter ID law in South Carolina, which the Justice Department found did not meet Voting Rights Act requirements, from going into effect.
“The right to vote is a fundamental right. Both of these cases are about protecting the right of every American to cast a ballot and choose the individuals who will represent them in government,” said J. Gerald Hebert, Legal Center Executive Director. “In both cases we are seeing state government actions that would disenfranchise minority voters at vastly disproportionate rates.”
Executive Director J. Gerald Hebert will serve as co-counsel to several groups challenging Florida’s attempts to purge voters off its rolls. Florida announced that it had prepared a purge list of 182,000 people allegedly ineligible to vote. The State urged local supervisors of elections to remove voters whose names appeared on the list, despite federal law prohibiting systematic voter registration purges within 90 days of an election. When it was discovered that the list was hopelessly flawed, Florida backpedaled and admitted that the list is riddled with errors and should not be used. The Legal Center and its clients have filed a federal lawsuit in the Southern District of Florida, styled Arcia v. Detzner, to restore the rights of eligible voters wrongfully purged by Florida’s flawed list and to prevent a second purge attempt by the State in advance of the fall Election.
The Legal Center’s attorneys will also participate in South Carolina v. United States. South Carolina is seeking approval of its voter ID law, which the Department of Justice has concluded fails to meet the requirements of the Voting Rights Act. The Legal Center will serve as co-counsel with the ACLU for a group of Intervenors whose voting rights will be denied if the voter ID law is allowed to take effect. The South Carolina case goes to trial before a three judge court in Washington, DC, on August 27.
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IRS: Agency to Consider Changes to 501(c)(4) Eligibility Rules as Requested by Campaign Legal Center and Democracy 21
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Today, the Campaign Legal Center joined Democracy 21 in responding to an Internal Revenue Service (IRS) letter stating that the agency will consider changes to regulations governing 501(c)(4) tax status eligibility. The organizations previously filed a rulemaking petition on the matter with the IRS, calling on the agency to adopt new regulations making clear that 501(c)(4) organizations may engage in no more than an insubstantial amount of candidate election activity—far less than the amount currently conducted by many high-profile organizations claiming 501(c)(4) tax-exempt status.
Last week, Lois Lerner, IRS Director of the Exempt Organizations Division, replied in a letter that the IRS “will consider proposed changes” in eligibility regulations for section 501(c)(4) tax-exempt groups. The tax status has been widely misused by organizations that have spent tens of millions of dollars on political advertising in battleground states largely attacking candidates for federal office.
“We are encouraged that the IRS has recognized the threat posed by these shadow party committees that are using a privileged tax status to keep secret the names of donors who are pumping tens of millions of dollars into our federal elections in an attempt to pick the winners and losers on Election Day,” said J. Gerald Hebert, Executive Director of the Campaign Legal Center. “We hope that the IRS will proceed quickly and effectively in curbing this wholesale abuse of the tax code for partisan political ends. Left unchecked, this problem will only grow worse and is an urgent matter that must be dealt with by the IRS now. We are counting on the IRS to stop this charade being put on by political operatives from both parties which poses a very serious threat to our democracy.”
In the letter today, the Campaign Legal Center and Democracy 21 again strongly urged the IRS to promptly institute a rulemaking proceeding to address the widespread abuse of the 501(c)(4) tax status and to take measures “in the interim to stop the blatant abuses of the tax laws that are resulting in massive amounts of secret money being laundered into our national elections by groups claiming to be ‘social welfare’ organizations.”
Since initially filing a rulemaking petition in July 2011, the Campaign Legal Center and Democracy 21 have on multiple occasions written to the IRS to challenge the eligibility for 501(c)(4) tax status of a number of Republican and Democratic affiliated groups, including Crossroads GPS, Priorities USA, American Action Network and Americans Elect.
To read the letter sent today by the Campaign Legal Center and Democracy 21, click here.
To read the IRS letter responding to both organizations, click here.
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Rep. Van Hollen Files Brief in Appeal to his Successful Challenge to Political Ad Donor Disclosure Regs
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Today, Representative Chris Van Hollen (D-MD) filed a brief in the U.S. Court of Appeals for the District of Columbia urging the court to uphold a lower court ruling in Van Hollen v. FEC that requires comprehensive disclosure of donors to groups making “electioneering communications.”
Rep. Van Hollen successfully challenged a Federal Election Commission (FEC) regulation that improperly narrowed the scope of McCain-Feingold law donor disclosure requirements allowing nonprofit 501(c)(4) advocacy groups, 501(c)(6) business associations, and others to spend tens of millions of dollars on “electioneering communication” without disclosing the donors to the groups paying for the ads.
“The law passed by Congress clearly requires disclosure of the funders for groups making ‘electioneering communications,’ yet the FEC ignored both the letter and intent of the law and in effect made the disclosure provision optional,” stated Paul S. Ryan, Campaign Legal Center Senior Counsel. “The lower court rightly condemned this gutting of the law as it is not the job of a regulatory agency to rewrite the laws passed by Congress but instead to promulgate rules that implement the statutes as they were written. Congress passed a law requiring groups making electioneering communications to disclose the names of ‘all contributors who contributed’ $1,000 or more to the group paying for the ads. Yet in 2010 election cycle, thanks to the FEC’s now-invalid rule, the sources of less the 10% of the tens of millions of dollars spent were ever disclosed. Americans have a right to know who is trying to buy election results and political influence.”
On March 30, 2012, the U.S. District Court for the District of Columbia ruled for Rep. Van Hollen and stuck down the FEC regulation that allowed spenders to hide their donors, holding that it was arbitrary, capricious and contrary to the federal campaign finance statute it purports to implement. The FEC did not to appeal the decision, but an appeal was filed by two corporate funded non-profit groups that have intervened in the case.
“Electioneering communications” are broadcast advertisements that name a candidate and air within 30 days of a primary election or 60 days of a general election. Groups making electioneering communications in excess of $10,000 are now required to disclose all their donors of $1,000 or more, or establish and use a segregated bank account for electioneering communications and disclose the donors of $1,000 or more to that account.
Lawyers for the Campaign Legal Center, Democracy 21 and Public Citizen are part of Rep. Van Hollen’s pro bono legal team, led by Roger Witten of the law firm WilmerHale.
To read the brief, click here.
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