- Campaign Legal Center Calls for Hearings on IRS Conduct in 501(c)(4) Controversy
- Reform Groups Call on Congress to Deal with Two IRS Scandals: Wrongful Targeting of Groups & Failure to Prevent Abuse of 501(c)(4) Status
- Watchdog Groups Send Treasury IG Previous Requests Urging IRS Action Against Groups Improperly Claiming 501(c)(4) Tax Status
- Reform Groups Urge House Committee to Investigate Failure of IRS to Enforce the Tax Laws
- Watchdog Groups Warn House Committee Not to Prevent or Undermine Proper Enforcement of Tax Laws Against 501(c)(4) Abusers
- Stephen Colbert & Trevor Potter Consider What’s to be Done In the Wake of the IRS Scandal
- Legal Center & CREW Call On FEC to Investigate Excessive Campaign Contributions
- Voting Rights Institute to Train New Generation of Voting Rights Lawyers
- Bailouts of Covered Jurisdictions Continue As Supreme Court Considers Voting Rights Act Challenge
- Court of Appeals Remands Contractor Contribution Case
- New York AG Leads the Way on 501(c)(4) Political Disclosure
- Legal Center Registers Support for Senate Electronic Filing Legislation
- Reform Groups Call on House Administration Committee to Reject Efforts to Repeal Presidential Public Financing, Election Assistance Commission
- Senior Counsel Participates in Nat. Institute on Money in State Politics Conference
- Special Counsel Addresses AARP National Policy Council’s Consumer & Livable Communities Committee
- Legal Center’s Paul S. Ryan Speaks at Yale ISPS Conference
Campaign Legal Center Calls for Hearings on IRS Conduct in 501(c)(4) Controversy
On May, 13, as details began to emerge about the improper IRS targeting of certain groups seeking 501(c)(4) status, J. Gerald Hebert, the Executive Director of the Campaign Legal Center, issued a statement calling for congressional hearings. In the statement, Hebert stressed the need to investigate the targeting but emphasized that the IRS must not shrink from its responsibility to enforce the laws currently in place.
“The IRS needs to enforce the laws on the books in a completely nonpartisan manner, but it must enforce the law rather than turning a blind eye to widespread abuses,” Hebert stated. “This scandal must not be used as an excuse by the IRS to back away from enforcing existing restrictions on political activity by tax exempt 501(c)(4) groups.”
To read the full statement, click here.
Reform Groups Call on Congress to Deal with Two IRS Scandals: Wrongful Targeting of Groups & Failure to Prevent Abuse of 501(c)(4) Status
On May, 22, the Legal Center and other reform groups called on Congress to investigate and address two scandals at the IRS – the targeting of certain applicants for 501(c)(4) status and the abuse of the nonprofit tax status by groups seeking to hide the identities of their donors while spending millions of dollars on political advertising. At the heart of both current scandals, the letter to the full House and Senate stressed, 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 signing 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.
Watchdog Groups Send Treasury IG Previous Requests Urging IRS Action Against Groups Improperly Claiming 501(c)(4) Tax Status
In a letter sent May, 23, to the Treasury Inspector General for Tax Administration (TIGTA), the Campaign Legal Center and Democracy 21 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 agency 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 law.
To read the letter sent to the TIGTA, click here.
To read the letters to the IRS, click here.
To read the petition to the IRS, click here.
Reform Groups Warn House Committee Not to Prevent or Undermine Proper Enforcement of Tax Laws Against 501(c)(4) Abusers
On May 30, the Campaign Legal Center joined Democracy 21 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) tax status,” 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 letter was written in response to published reports that stated the subcommittee’s hearing on June 3 was intended to examine “how the upcoming appropriations bills can help prevent the targeting” of conservative groups by the Internal Revenue Service.
To read the full letter, click here.
Watchdog Groups Urge House Committee to Investigate Failure of IRS to Enforce the Tax Laws
In a letter sent to the House Ways and Means Committee on June 3, the Campaign Legal Center and Democracy 21 urged 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 letter to Chairman Dave Camp (R-MI) and Ranking Member Sander Levin (D-MI), and copied to members of the full committee, was sent on the eve the Committee’s hearing on IRS targeting of certain groups for heightened scrutiny as part of their application process for tax exempt status. The letter called on the committee also to investigate the agency’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, Legal Center Executive Director
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.
Stephen Colbert & Trevor Potter Consider What’s to be Done in the Wake of the IRS Scandal
On May 20, Legal Center President Trevor Potter was once again called upon to provide legal counsel to the host of Comedy Central’s Colbert Report . The topic of discussion was why host Stephen Colbert’s 501(c)(4), Colbert Super PAC SHH!, never applied for the privileged tax status with the IRS. The short answer was: because it didn’t have to. Informed of that fact, Mr. Colbert decided to use the current IRS scandal to his advantage.
Speculating that the IRS might be a little gun shy about rejecting applications from groups with names that include “Tea Party” or other flagged terms that arose in the recent controversy, Mr. Colbert’s decided it was the perfect time to submit his own application with a mouthful of a modification to the group’s name.
To watch Mr. Potter’s latest appearance on The Colbert Report, click here.
To watch Mr. Potter’s numerous other appearances on the show, click here.
Legal Center & CREW Call On FEC to Investigate Excessive Campaign Contributions
On May 8, the Campaign Legal Center (CLC) joined Citizens for Responsibility and Ethics in Washington (CREW) in filing a complaint with the Federal Election Commission (FEC), asking it to investigate 32 political donors for excessive contributions to federal candidates during the 2012 election cycle. The complaint followed a Huffington Post report revealing that each of the individuals contributed more than the biennial limit of $46,200 to federal candidates during 2011 and 2012, in violation of the Federal Election Campaign Act and FEC regulations.
Some of the overages are so high they seem unlikely to be accidental. For example, Jeffrey Hurt, the president of Diversified Resources, Inc., contributed $144,300 to federal candidates, more than three times the legal limit of $46,200 per election cycle. Following closely behind him is David Wallace, president and CEO of Wallace Electrical Systems, with $127,700, and John Canning, chairman of Madison Dearborn Partners, with $119,400.
Those who deliberately violate the contribution limits may also find themselves in the crosshairs of the Department of Justice as knowing and willful violations of campaign finance law are subject to criminal prosecution. Sloan and Ryan agreed, “If the FEC expects anyone to adhere to contribution limits in the future, commissioners have no choice but to hold these donors accountable.”
To read the complaint, click here.
Voting Rights Institute to Train New Generation of Voting Rights Lawyers
On May 29, the Campaign Legal Center and American University’s Washington College of Law announced that they will jointly launch a new Voting Rights Law Institute this summer to help train the next generation voting rights litigators. The four-night Institute will be held June 24 - 27, to train and update law students and practitioners on enforcement of voting rights law, particularly cases brought to enforce Section 2 of the Voting Rights Act, and the Fourteenth and Fifteenth Amendments to the Constitution. The Voting Rights Institute is believed to be the first of its kind.
“There has never been so great a need for new voting rights litigators and this program is designed to help teach the next generation how to bring and successfully litigate voting rights cases,” said J. Gerald Hebert. “The Shelby County decision could have a profound impact on the voting rights field, but even if it leaves the Voting Rights Act’s preclearance provisions undisturbed, recent elections have witnessed an unprecedented spike by states to restrict the franchise, especially in ways that disproportionately impact the racial and language minorities."
Experts in the field will provide background on the Voting Rights Act and relevant Supreme Court cases and will then focus on teaching participants the litigation mechanics of voting rights cases. J. Gerald Hebert, the Legal Center’s Executive Director will serve as the Institute’s lead instructor and each night he will be joined by seasoned voting rights litigators, appellate advocates, and scholars in the field.
For more information on the Voting Rights Institute, including detailed biographies of faculty members, schedule, or to register, click here.
Bailouts of Covered Jurisdictions Continue As Supreme Court Considers Voting Rights Act Challenge
Additional jurisdictions continued to move forward in late May 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. On May 30, 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. The Justice Department also announced on May 31, 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, require certain state and local governments to obtain approval of all voting changes. These provisions are being challenged in a case currently being weighed by the U.S. Supreme Court, Shelby County, AL v. Holder. Jurisdictions subject to the preclearance requirements include all or parts of fifteen states predominantly in the Deep South with long histories of discrimination against minority voters. 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 the preclearance requirements.
“As more and more of these bailouts are cleared by the court, the argument that the bailout process is too arduous and too expensive rings more and more hollow,” said 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.
To read the Consent Judgment and Decree for Falls Church, Virginia, click here.
To read the 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. Holder. To read the brief, click here.
Court of Appeals Remands Contractor Contribution Case
On May 31, 2013, a three-judge panel of the D.C. Circuit Court of Appeals vacated the district court decision in Wagner v. FEC and remanded the case to the district court to make appropriate findings of fact and certify constitutional questions to the en banc (i.e., full) Court of Appeals pursuant to 2 U.S.C. § 437h.
Wagner v. FEC is a challenge to the federal ban on campaign contributions from governmental contractors, 2 U.S.C. § 441c. The district court upheld this “pay-to-play” restriction in November 2012.
At oral argument on May 16, 2013, the three-judge panel of the D.C. Circuit did not focus on the merits of the case, but rather asked the parties to address the procedural history of the case and the court’s jurisdiction over the matter. The May 31 decision concluded that the three-judge panel did not have jurisdiction, and held that the plaintiffs-appellants should have instead proceeded under § 437h to the en banc Court of Appeals.
New York AG Leads the Way on 501(c)(4) Political Disclosure
On June 5, New York State Attorney General Eric Schneiderman announced new regulations that will require certain non-profit organizations that engage in political spending in New York State elections, including 501(c)(4) “social welfare” groups, to disclose their donors to the public.
The Legal Center strongly urged adoption of the regulations proposed by the New York Attorney General, submitting testimony on January 15 and February 27, 2013 in support of the effort. The testimony by Senior Counsel Tara Malloy highlighted the Legal Center’s belief that the regulations are constitutional and are crucial to ensuring that voters can make informed decisions in elections and to preventing corruption in the political system. The transparency also protects the integrity of the tax laws and deters abuse of federal and state laws granting tax-exempt status. The testimony also noted that “[f]or almost a century, the Supreme Court has consistently upheld laws requiring political transparency, and emphasized that ‘public disclosure of political contributions . . . tend[s] to prevent the corrupt use of money to affect elections.’”
The regulations would require groups that spend at least $10,000 to influence state and local elections in New York to file itemized reports of their expenses and contributions, including their donors of over $1,000 or more. Spending that would trigger potential disclosure includes advertisements that expressly advocate for the election or defeat of a candidate, political party or ballot referendum, as well as communications made within 45 days of a primary election and 90 days of a general election that identify a particular candidate, political party or ballot referendum.
To read the Attorney General's press release, click here.
To read the testimony submitted to the New York Attorney General by the Campaign Legal Center, click here.
Legal Center Registers Support for Senate Electronic Filing Legislation
On May 9, the Campaign Legal Center expressed strong support for Sen. Jon Tester’s (D-MT) and Sen. Thad Cochran’s (R-MS) Senate Campaign Disclosure Parity Act (S. 375), to require electronic filing of campaign finance disclosure reports by Senate candidates, as House and Presidential candidates have done for more than a decade.
Campaign disclosure reports for House and Presidential candidates are typically uploaded onto the FEC website for public access within 24 hours. By contrast, Senate filings are paper-based and generally take weeks to become publicly available and the cost of converting them to electronic format costs taxpayers hundreds of thousands of dollars annually.
“Through its insistence on clinging to this time-consuming and expensive process of paper-based filing, the U.S. Senate succeeds only in denying voters vital information about who is bankrolling campaigns until after the votes have been counted, but that is precisely the goal of opponents,” said Meredith McGehee, Campaign Legal Center Policy Director.
To view a PDF of the letter of support, click here.
Reform Groups Call on House Administration Committee to Reject Efforts to Repeal Presidential Public Financing, Election Assistance Commission
In a letter sent to members of the House Administration Committee on June 3, the Legal Center and other reform groups called on the Committee to oppose legislation to repeal the presidential public financing system and the financing system for conventions. The groups also urged the Committee to reject proposed legislation to eliminate the Election Assistance Commission (EAC).
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, was written in response to the House Administration Committee hearing the next day to consider several bills that seek to dismantle important anti-corruption and voting laws. On June 4, however, the Committee voted to repeal the presidential public financing system and to eliminate the EAC.
The reform groups 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 U.S. PIRG.
To read the full letter, click here.
Senior Counsel Participates in Nat. Institute on Money in State Politics Conference
From May 30 through June 1, Campaign Legal Center Senior Counsel Paul S. Ryan participated in a conference near Bigfork, MT held by the National Institute on Money in State Politics (www.followthemoney.org) entitled Transparency 2013: Bright Minds, Dark Money. Ryan spoke on a panel entitled Fighting for Disclosure: C4 and C6, together with Ann Ravel, Chair of the California Political Practices Commission and Diane Fishburn, Partner at Olson, Hagel & Fishburn, moderated by Jean Ross of The Ford Foundation.
Special Counsel Addresses AARP National Policy Council’s Consumer & Livable Communities Committee
On May 29, CLC Special Counsel Beverly Hudnut addressed the AARP National Policy Council’s Consumer & Livable Communities Committee in Las Vegas, Nevada on the issue of voter registration modernization. The Committee invited Ms. Hudnut to give an overview of a bipartisan approach to voter registration reform that would assure the integrity of the voting process while increasing voter participation.
Legal Center's Paul S. Ryan Speaks at Yale ISPS Conference
On May 6, CLC Senior Counsel Paul S. Ryan spoke at the Yale Institution for Social and Policy Studies (ISPS) conference Purchasing Power: Money, Politics, and Inequality. Ryan spoke on a panel entitled “The 2012 Election—How Much Did Money Matter?,” together with Sheila Krumholz of the Center for Responsive Politics, Erika Fowler of Wesleyan University, Michael Malbin of the Campaign Finance Institute and moderator Ezra Klein of the Washington Post. Ryan explained how federal campaign finance and tax laws, as well as court decisions, enabled so-called “independent” political groups to spend hundreds of millions of dollars to influence the 2012 federal elections.