Action – Comment on the IRS’ dereliction of duty – Due tonight (12/9) by 11:59 EST.
This is from 2016 before Trump was elected, but still very relevant regarding dark money.
The IRS is proposing regulations allowing tax-exempt groups to keep donor identities secret. Political groups using tax-exempt entities for fundraising will be able to do so without disclosing the identities of their donors, effectively using so-called “dark money” to finance their causes and preferred candidates. Although the proposed rules would apply equally to groups such as Planned Parenthood, Indivisible, National Rifle Association, labor unions and trade associations, “dark money” is disproportionately used by far-right proponents.
Deeper Dive
Propublica has published an article called “How the IRS Gave Up Fighting Political Dark Money Groups” as the IRS proposes new regulations allowing tax-exempt groups, including people, companies and unions to dispense more than $1 billion in dark money while keeping their identities secret. Such spending is legal because Section 501(c)(4) of the U.S. tax code allows organizations to make independent expenditures on politics while concealing their donors’ names — as long as politics isn’t the organization’s “primary activity.” The IRS is was supposed to check that organizations comply.
But after being smacked by conservative politicians for doing exactly that to filings from right-wing non-profits, the IRS wants to officially bow out of the oversight business, effectively blinding the public to who’s contributing and how much. Under the proposed regulations, 501(c)(4) tax-exempt organizations must continue to file Schedule B with an annual return but would no longer be required to include the names and addresses of contributors unless specifically requested by the IRS. The department also issued Notice 2019-47, which exempts any tax-exempt organizations that failed to report donor names and addresses with their 2018 Form 990, based on Revenue Ruling 2018-38, from incurring penalties for following the IRS guidance
This proposal bolsters conservative causes: This is not a “neutral” change. This will bolster wealthy donors who deal in untraceable political spending in their quest to covertly buy their preferred policies and, in the case of Brett Kavanaugh, judicial appointees. According to Rewire, “The vast majority of dark money comes from organizations tied to the wealthiest of donor networks, who overwhelmingly spend to oppose worker protections, defund reproductive health services, gut environmental preservation, and block commonsense gun control measures.” The nonpartisan Center for Responsive Politics confirmed this after looking through thousands of 990 tax forms. Top donors include:
- Freedom Partners Chamber of Commerce (the Koch brothers’ “secret bank”),
- the Center to Protect Patient Rights (the founder of which was previously hired by the Kochs), and Crossroads GPS (Karl Rove’sspending nonprofit).
- In the 2016 cycle, the NRA’s political arm outspent every other political nonprofit.
By comparison, Sea Change Foundation, the environmental action group next on the list, contributed less than one-fifth of what Freedom Partners gave to political groups over the years.
Foreign countries now can play politics as well. The Center for Responsive Politics, testified to the Senate last year that “foreign corporations, individuals and governments had the wherewithal and the willingness to try to shape U.S. elections.” In light of known Russian influence efforts in the 2016—potentially including part of $35 million in NRA dark money—voluntarily rejecting expenditure reports is nothing less than an abdication of the IRS’s responsibility to its government and people. Eight public interest groups filed a joint letter saying the rule was “the only real protection we currently have against the use of 501(c)(4) groups to launder foreign money into federal elections.”
What are all those confusing designations for tax-exempt organizations?
- Section 501(c)(3): 501(c)(3) entities are tax exempt and allowed to lobby on a limited basis — but they’re barred from spending any money on political candidates. If you donate to one, you get to write it off as a charitable donation.
- Section 527 political organizations: These are the big dogs of politics including political parties, political action committees and Super PACs. 527s can spend all they want on elections — but they have to reveal their donors.
- 501(c)(4) organizations: These are organizations that are also tax-exempt. They “must not be organized for profit and must be operated exclusively to promote social welfare. The regulations state that such an organization “may engage in some political activities, so long as that is not its primary activity.” The Citizens United decision was followed by a surge in the formation of politically focused organizations seeking IRS approval as C4s. In 2012, at least $250 million passed through such groups and into efforts to elect candidates, an 80-fold increase from eight years prior. Up until 2018, these organizations were required to report the names and addresses of their contributors on the the Schedule B of the Form 990 or 990-EZ tax form.
Reading
- IRS lets dark money groups hide their donors from the public (rewire)
- How the IRS gave up fighting policical dark money groups (propublica)
- IRS proposed regulation allowing tax-exempt groups to keep donor identities secret. (accountingtoday)
- IRS issues notice of proposed tule-making on donor disclosure rules in response to court ruling (Covington)
- How the Koch brothers built the most powerful rightwing group you’ve never heard of (guardian)
- An amazing map of the Koch brothers massive political network (wapo) Graphic by the Center for Responsive Politics
INDIVISIBLE VENTURA 