News for Campaign Finance Reform!
Since the U.S. Supreme Court decided Citizens United in 2010, clean election and campaign finance advocates have been playing defense; however, last month the IRS announced a potential victory for those fighting against the Court’s decision.
Citizens United opened the floodgate for corporate money to flow into 501 (c)(4) non-profit organizations (often called social welfare or advocacy organizations, including well-known organizations like the NAACP, NOW and the NRA). Contributions to 501(c)(4)s are not tax-deductible, but do not have to be disclosed. Thus, this tax-classification has been the choice for political organizations like Crossroads GPS and the League of Conservation Voters, who accept money from corporations, people or organizations that may not want their political activity to be public knowledge.
But, the IRS might put a stop to the use of this classification by overtly political organizations by clarifying that “candidate-related activity” does not promote social welfare as many 501(c)(4)s claim. The IRS has formally announced it will make a rule on this issue and is asking for public comment—a big step in the right direction. Potentially, a 501(c)(4) engaging in any “communications that expressly advocate for a clearly identified political candidate or candidates of a political party” or donating to a PAC or Super-PAC could lose its tax-exempt status. Hopefully, this will curtail some of the “dark money” in our elections, as donors will need to use organizations that are required to disclose their donors, unlike a 501(c)(4).
However, the IRS also announced that non-partisan get-out-the-vote (GOTV) activities and voter guides could also fall under candidate-related activity classification, which could hurt many GOTV campaigns.
While we hope the final rule will end the largest avenue for dark money in elections, we also hope it excludes non-partisan GOTV campaigns.