IRS rule shielding political donors blocked by federal judge
A Trump administration rule permitting many politically active nonprofits to keep their donors a secret has been upended by a federal judge, who says the regulation was written with illegal secrecy.
The IRS decided one year ago to allow so-called 501(c)4 organizations, known as social-welfare groups, to generally keep their contributor lists from the IRS – further accelerating the flow of anonymously donated "dark money" into campaigns. Prominent examples of these organizations are the National Rifle Association, the AARP, Democratic Socialists of America and the Koch brothers' Americans for Prosperity. They are permitted to retain their tax-exempt status so long as they spend less than half their money trying to influence elections.
But a federal trial judge in Montana, Brian Morris, ruled this week that the IRS moved too quickly in its rulemaking and did not give the public a formalize means to weigh in.
The judge was acting on a lawsuit brought by Democratic Gov. Steve Bullock, a long-shot presidential candidate, and the state of New Jersey. Its attorney general, Gurbir Grewal, called the decision a "big win for democracy" because "not only did the IRS try to make it easier for dark money groups to hide their funding sources, it did so behind closed doors."
Treasury Secretary Steven Mnuchin had defended the regulation, which applied to donors of more than $5,000, as protecting individual benefactors' privacy. Advocates for tougher campaign finance regulation said it continued the trend of porousness that permitted potential abuse, including foreign interference in elections.
The Federal Election Commission has once again punted on establishing rules for identifying who is sponsoring online political advertisements. Thursday marked the fourth consecutive meeting in which the topic fell to the wayside without a clear path forward.
FEC Chairwoman Ellen Weintraub revived debate on the topic in June when she introduced a proposal on how to regulate online political ads. In her proposal, she said the growing threat of misinformation meant that requiring transparency for political ads was "a small but necessary step."
Vice Chairman Matthew Petersen and Commissioner Caroline Hunter put forth their own proposal soon after Weintraub, but the commissioners have failed to find any middle ground. At Thursday's meeting, a decision on the agenda item was pushed off to a later date.
Weintraub's proposal says the funding source should be clearly visible on the face of the ad, with some allowance for abbreviations. But Petersen and Hunter want to allow more flexibility for tiny ads that cannot accommodate these disclaimers due to space.
The California Supreme Court is fast-tracking its review of a challenge to a new law that would require President Trump to make public his tax returns in order to get on the state's ballot for the 2020 election.
A lawsuit seeking to block implementation of the law was filed August 6 by the California Republican Party against Secretary of State Alex Padilla. It claims the law violates California's constitution.
Two other challenges, one filed by Trump's personal lawyers, are pending in federal court.