In the News

ProPublica: Why the IRS’ Recent Dark Money Decision May Be Less Dire Than It Seems

By Ian MacDougall

[E]ven critics acknowledge that the IRS very rarely audits nonprofits. In other words, the IRS will no longer receive information that it was seemingly making little use of. And the information in question was already shielded from the public’s view…

What the IRS makes public about donors to nonprofits, including those involved in political activities, however, has always been fairly limited. The public sees only the number of major contributors and how much each gave in a year. The identities of the donors are redacted. Still, journalists and groups like the Center for Responsive Politics have used the specific quantities contributed by individual donors – even without knowing who the donor is – to guide research on money in politics.
Under the new IRS policy, the public will still have access to this information, according to the Treasury Department…

Supporters of the new policy counter that it’s not the IRS’ job to enforce campaign finance laws and that there are limits on sharing tax information with government agencies responsible for enforcing those laws, the Federal Election Commission and the Justice Department. Where there is suspicion of an improper donation, they say, the IRS still has the ability to investigate by requesting information from the nonprofit.

“Even if there was a possible improper donation, a more appropriate data request (that honors First Amendment associational rights) would be for the IRS to only ask for donation information from suspect sources, not everyone,” David Keating, the president of the Institute for Free Speech, wrote in an email.

Capital Research Center: Trump’s SCOTUS Pick to Continue Justice Kennedy’s Legacy on Free Speech

By Christine Ravold

Before Citizens United, Judge Kavanaugh wrote an important majority opinion for the U.S. Court of Appeals for the District of Columbia Circuit affirming the right of EMILY’s List, the pro-abortion political action committee, to spend unlimited funds on supporting candidates for office…

EMILY’s List v. FEC shows that regardless of the content of the speech, Kavanaugh can set aside his personal opinions to rule on issues pertaining to civil liberties, even if he may disagree with the content of the speech in question. It also should send a comforting message to political donors and nonprofit organizations that they can probably count on the consistency of the current campaign finance rules as they move forward.

Other  cases he ruled on show a strong pattern of upholding free speech. SpeechNow.org v. FEC, Pursuing America’s Greatness v. FEC, and Independence Institute v. FEC show that Kavanaugh is unafraid to rule against regulatory bodies when their rules threaten the free expression of private organizations.

The Courts

New York Times: Montana Governor Sues I.R.S., Warning of ‘Foreign Money’ in Elections

By Alexander Burns

The Treasury Department announced last week that the Internal Revenue Service would no longer require a range of nonprofit organizations to identify any contributors giving more than $5,000, in a move it described as bolstering privacy and easing administrative burdens for those groups. Previously, certain nonprofits had to name their large donors to the government even though they were not supposed to be disclosed to the public…

[I]n a lawsuit filed on Tuesday in Federal District Court in Montana, Mr. Bullock and his administration alleged that the Trump administration had flouted proper government process in eliminating the disclosure requirements. The suit asked the court to issue a judgment voiding the new I.R.S. policy…

“The goal of the litigation is to make sure that dark money and foreign money isn’t flowing into our elections unchecked,” Mr. Bullock said, accusing the Trump administration of “playing fast and loose with Treasury procedures.”

The Montana litigation claims that the federal government failed to follow the Administrative Procedure Act, a law that has been the basis for other suits charging the Trump administration with improper or capricious rule making. The suit accuses the I.R.S. of evading important regulatory requirements, like the mandate to seek public comment before rewriting government rules, and of rewriting policy under the guise of adjusting what the I.R.S. termed a “revenue procedure.” …

On Tuesday, Mr. Bullock said he could pursue even more intensive state regulations on nonprofit groups if his lawsuit against the I.R.S. is not successful.

IRS

Lexington Herald-Leader: McConnell: Stopping the speech police is goal of new IRS rule

By U.S. Senate Majority Leader Mitch McConnell

The Herald-Leader’s recent attack against me proved, once again, that its editorial board favors government regulation of speech and association over our basic individual freedoms.
I, on the other hand, have spent my career defending the First Amendment, and will do so again now.

Last month marked the 60th anniversary of NAACP v. Alabama, a momentous Supreme Court decision for our freedoms of speech and association. Writing for the unanimous court, Justice John Marshall Harlan agreed with the NAACP when he wrote that “Inviolability of privacy in group association may in many circumstances be indispensable to preservation of freedom of association, particularly where a group espouses dissident beliefs.”

Attacks on the First Amendment have continued, and defenders of free speech must remain on constant guard. Much to our delight, the Internal Revenue Service recently announced that it will no longer require personal information for non-deductible donations to certain nonprofit groups…

We must also understand what this announcement has not changed. The IRS continues to uphold the same level of transparency to the public. Super PACs, political-action committees and candidates will still be required to list their donors to the Federal Election Commission.
And – in response to the Herald-Leader’s accusations about foreign governments – prohibitions still apply on money from other countries entering the political process. The laws against that are clear, and I wholeheartedly support them.

This announcement protects free speech and association.

FEC

Roll Call: Groups Call for Fed Crackdown on Lawmaker Slush Funds

By Stephanie Akin

Leadership political action committees are meant to help Congress members raise money for their colleagues – thus helping them climb leadership ranks. Because those accounts aren’t subject to the same spending restrictions as the ones candidates use for their own campaigns, they are prone to eyebrow-raising spending activity, or “used as slush funds to subsidize officeholders’ lifestyles,” the Campaign Legal Center and Issue One wrote in a petition to the FEC.

Some of the most egregious spending could be curbed if the FEC would clarify that the prohibition on the use of campaign donations for personal expenses also applies to Leadership PACs, the groups said in a letter to the FEC.The letter was signed by a bipartisan group of retired House members, Rod Chandler, R-Wash., Larry LaRocco, D-Idaho, Peter Smith, R-Vt., Claudine Schneider, R-R.I., and John Tanner, D-Tenn…

The FEC could change its rules regarding leadership PACs after a public comment period.

Candidates and Campaigns

NBC News: Trump’s payments to stop stories about women sound like the John Edwards case

By Ken Dilanian

Michael Cohen’s taped conversation with Donald Trump about a proposed payment to silence an alleged affair with a Playboy model was designed to help Trump’s campaign for the presidency, his lawyer told NBC News – an assertion that could mean that campaign finance laws were broken.

Cohen’s lawyer, Lanny Davis, drew a parallel to a former North Carolina senator who ran for president in 2008 – and was later charged with federal campaign finance violations over payments to a mistress during that run.

“It certainly sounds like the John Edwards case,” Cohen’s attorney, Lanny Davis, told NBC’s Katy Tur. “This tape, you could say, is a discussion about hush money. It is a discussion about paying money to control adverse information that might come out before an election.”

Edwards, a former Democratic senator from North Carolina, was indicted on felony charges related to payments his wealthy benefactors made to a mistress that prosecutors said amounted to illegal, undisclosed campaign contributions. After a jury acquitted him of one charge and failed to agree on the rest in 2012, the Justice Department declined to retry him.

If Michael Cohen is prepared to testify that the proposed payment was election-related, the case for campaign fraud would be much stronger than the case against Edwards, said Brett Kappel, a campaign finance expert with Akerman LLP.

The same would be true if Cohen were to say that a $130,000 payment he made to porn star Stormy Daniels was designed to silence her to help Trump’s election chances, he said.

Washington Post: Four important points that arise from the Trump-Cohen recording

By Philip Bump

One of the central issues determining whether or not money being spent is reportable as a campaign expense is whether or not the money was being spent to aid the campaign. Here it’s clear that Cohen and Trump are speaking primarily about the campaign, covering Burns’ ability to continue to aid the campaign and polling.

Perhaps more importantly, Cohen also raises a lawsuit by the New York Times aimed at unsealing documents related to Trump’s divorce from his first wife Ivana.

“All you have to do is delay it for…” Trump says.

“Even after that, it’s not going to be opened,” Cohen interjects.

After what? After Election Day, clearly…

Cohen appears to be an agent of the campaign. When Cohen spent that $130,000 on keeping adult film actress Stormy Daniels quiet about her alleged relationship with Trump, he paid with his own money.

The ramifications of spending money are different if someone is or isn’t acting on behalf of the campaign. Were he a random guy, that payment falls into one category under federal election law. But in February, former general counsel for the Federal Election Commission Lawrence Noble told The Washington Post that such a payment from an agent of the campaign is illegal…

How and when Cohen and AMI spoke about the McDougal payment becomes even more interesting…

The company can buy stories and then not run them. But if it coordinated with the campaign, Noble said last week, things get much trickier.

Center for Responsive Politics: Alexandria Ocasio-Cortez boosted by out-of-state donors after primary win

By Jordan Muller

Alexandria Ocasio-Cortez, the 28-year-old Democratic House candidate who upset Rep. Joe Crowley in New York’s 14th District race, saw an explosion of out-of-state campaign contributions in the days after she won the primary in June…

In the four days between her primary win and the end of June, Ocasio-Cortez raked in more than $70,000 from out-of-state donors who contributed more than $200, according to an OpenSecrets analysis of her FEC filings. That’s more than a quarter of all itemized donations she received in June and about 71 percent of the roughly $99,400 in itemized donations she collected in the days after her victory over Crowley.  

Corbin Trent, Ocasio-Cortez’s communications director, said the primary win helped put Ocasio-Cortez on a national stage and that her victory speech on June 26 inspired people nationwide.

“And that was reflected in the donors,” Trent said.

Of Ocasio-Cortez’s itemized donations that OpenSecrets could analyze by geographic location, about 55 percent have come from contributors outside New York state this election cycle. Donors in California contributed almost $52,000 to her campaign in June, making the Golden State the largest source of out-of-state funds last month…

About 6 percent of Ocasio-Cortez’s itemized contributions have come from the 14th Congressional District, which includes parts of Queens and the Bronx in New York City. The city was Ocasio-Cortez’s largest source of funds by metro area. She brought in at least $138,000 from New Yorkers, with Manhattan’s Upper West Side and Chelsea neighborhoods being her most lucrative zip codes.

Ocasio-Cortez shunned corporate PACs, but her campaign accepted $10,000 from two progressive PACs: MoveOn.org and Justice Democrats.

The States

Albany Times Union: Sugarman cracks down on former-IDC campaign accounts

By David Lombardo

The fate of more than $2.5 million raised from a partnership between the Independence Party and the state Senate’s now-defunct [Independent Democratic Conference] was the subject of a letter sent on Friday by the state’s Division of Election Law Enforcement, which identified more than $1.4 million that needs to be refunded to contributors. The letter also demanded candidates return excessive contributions, which could add up to hundreds of thousands of dollars.

The letter from the office of Chief Enforcement Counsel Risa Sugarman comes almost seven weeks after a state supreme court ruled that the Senate Independence Campaign Committee and an associated housekeeping account were illegal because the breakaway group of Democratic senators was not a political party…

Lawrence A. Mandelker, the attorney for the former IDC members and the Independence Party, said last month that steps had been taken to fully comply with the court ruling from June. At the time, Mandelker also indicated there were no plans to refund any contributions from the SICC and its housekeeping account.

In a written response to Sugarman’s office on Tuesday, he argued that the demands from the state went beyond the judgment of the court. “Your office must know that the relief you obtained from the court was extraordinarily narrow,” Mandelker wrote.

But Sugarman’s office, in last week’s letter, argues that the steps taken don’t go far enough and demands action within 20 days. It’s likely the dispute will end up back in court – potentially before the same state supreme court judge who invalidated the fundraising arrangement in June.

Portland Press Herald: Legislative candidates ask judge to force LePage to release Clean Election funds

By Scott Thistle

An attorney for Maine Citizens for Clean Elections argued Tuesday in Superior Court that Republican Gov. Paul LePage was abridging the free speech rights of legislative candidates by refusing to release $1.4 million in public funds to help bankroll their campaigns.

David Kallin also pointed out to Superior Court Justice William Stokes that only about $100,000 of the funds in question would go to candidates running as members of LePage’s Republican Party, while close to 10 times that amount is owed Democratic and unenrolled candidates.

About 120 candidates are affected by the dispute. Kallin filed suit on behalf of candidates, as well as Maine residents who made $5 donations to the candidates that qualified their campaigns for Clean Election funding…

LePage is withholding his signature from financial orders that would instruct the Commission on Governmental Ethics and Election Practices to disburse funds that were left unused or returned by Clean Election candidates after the 2016 elections…

Under state law, if the Clean Election fund runs dry, candidates would be allowed to raise private funds up to the amount of Clean Election funding they would be eligible for, but that’s not the situation, said Kallin, the attorney for Maine Citizens for Clean Elections.

Phyllis Gardiner, an attorney for the ethics commission, told Stokes that the commission couldn’t give candidates permission to collect private contributions without violating the law…

[Stokes] hopes to issue a ruling next week, but said Tuesday that he expects his decision will likely be appealed to the Maine Supreme Judicial Court, the state’s highest court.

Arizona Republic: Conservative groups sue to knock ‘dirty money’ measure off Arizona ballot

By Dustin Gardiner

The lawsuit, filed Thursday, aims to disqualify thousands of signatures collected in support of the “Outlaw Dirty Money” constitutional amendment…

The campaign’s supporters need 225,963 valid signatures for their amendment to remain on the Nov. 6 ballot. They submitted  285,768 signatures.

The lawsuit doesn’t specify how many signatures opponents believe are invalid. But it states numerous petition sheets must be disqualified because they were collected by paid gatherers who aren’t registered with the state, as the law requires, or who are convicted felons.

In Arizona, citizen groups that bring initiatives to change state law must comply with a strict set of rules, including a requirement that any paid petition gatherers be eligible to register to vote…

The proposed amendment, if passed by voters, could have a drastic impact on millions of dollars spent to influence elections in Arizona. 

It would require anyone spending more than $10,000 to oppose or support candidates or ballot measures to disclose everyone who contributed $2,500 or more to the effort. Violators would be subject to fines.

The initiative’s main proponent is Terry Goddard, a Democrat who formerly served as Arizona’s attorney general…

State election officials are vetting signatures the proponents submitted to place the amendment on the ballot. That review is expected to be completed by late August.

Colorado Independent: Colorado campaign finance loophole allows dark money flyers

By Sandra Fish

Voters in two key state Senate districts recently received flyers praising GOP Sens. Beth Martinez Humenik and Tim Neville for their work in the state legislature on issues such as health care and education.

Nothing on the four-page leaflets, which dropped on doorsteps in June and July, indicates who paid for them. But, because the flyers don’t directly urge people to vote for the two Republicans running in competitive Senate districts, they are legal.

Colorado’s campaign finance law has a loophole that allows printed literature, mailers or other materials about candidates to be distributed without disclosing who paid for them if they don’t include what an elections division manager with the Secretary of State calls “magic words” such as “vote for” or “vote against.”