[EL] account of how the c4 situation became what it is?

[Ellen Aprill]

The IRS promised some activity in this area in last year's work plan, after
a request from Baucus.  The IRS probably meant audits.  If they have taken
place, we will learn about them in detail only if the organization audited
chooses to go public. It is possible the IRS would give some kind of
aggregated information to show that it responded to Baucus's request.

The IRS has been urged for many years to set up guidelines as to what
"primary activity" means for c-4's. (The primary activity of c-4's cannot
be electioneering, defined far more broadly than for FEC purposes.)  The
IRS has nnot responded to these requests.

The Code states that only donors to private foundations and 527
organization can be disclosed publicly on the annual information return for
exempt organizations.  Congress would have to make a change for
contributors to c-4's to be disclosed publiclty (donors above $5000 are
listed on a schedule that must be filed with the IRS.)

While section 527 recognizes that noncharitable exempt organizations can
engage in electioneering by imposing tax on them equal to the lower of
their electioneering expenses or their investment income, no disclosure
obligation accompanies this imposition of tax.
  Ellen
On Mon, Jan 30, 2012 at 9:53 AM, Rick Hasen <rhasen at law.uci.edu> wrote:

> Donald,
> To what extent is there the likelihood that, absent further congressional
> action, the IRS will eventually come after some of these electoral c(4)s
> for having electioneering as their primary activity?  Or at least to set
> guidelines going forward?  I recall that the IRS said it would do such a
> thing but it first required additional study.
> Rick
>
> On 1/30/2012 9:49 AM, Tobin, Donald wrote:
>
>  Part of the story is that very few entities that avoided express
> advocacy had any disclosure requirement.  The only Federal disclosure
> requirements were in FECA or those required by the FCC when placing an ad
> on TV.****
>
> ** **
>
> Congress then added disclosure provisions to 527 of the IRC.  This
> required political organizations organized under 527 to disclose.   It did
> not impose a similar requirement on 501(c)(4)s.****
>
> ** **
>
> Congress then passed the broader electioneering communication rules in
> McCain-Feingold.****
>
> ** **
>
> Because of the disclosure requirements, 527 political organizations were
> no longer a preferred vehicle.  Organizations that wished to avoid
> disclosure organized as 501(c)(4) organizations instead of 527
> organizations.****
>
> ** **
>
> So while (c)(4)s were not required to disclose, they usually were social
> welfare organizations that also engaged in some advocacy.****
>
> ** **
>
> In my view, the big change is the use of (c)(4)s as political campaign
> type vehicles absent any real social welfare purpose.****
>
> ** **
>
> There is a big difference between the NAACP or the NRA, having a social
> welfare purpose and also engaging in some political advocacy than an
> organization that is allegedly social welfare but really has its primary
> purpose being election activity.****
>
> ** **
>
> So I agree with Brad that (c)(4)s have not had the burden to disclose
> (except if they engaged in express advocacy, and now electioneering
> communication), but the type of organization now claiming to be a (c)(4)
> has changed.****
>
> ** **
>
> Donald****
>
> ** **
>
> *From:* law-election-bounces at department-lists.uci.edu [
> mailto:law-election-bounces at department-lists.uci.edu<law-election-bounces at department-lists.uci.edu>]
> *On Behalf Of *Justin Elliott
> *Sent:* Monday, January 30, 2012 12:30 PM
> *To:* law-election at department-lists.uci.edu
> *Subject:* [EL] account of how the c4 situation became what it is?****
>
> ** **
>
> Hi --
>
> To briefly introduce myself since I'm new to the list: I'm a reporter at
> Salon who covers campaign finance from time to time. People may have read
> my recent inteview with Floyd Abrams and Rick's response
> http://bit.ly/AnZlbK  http://bit.ly/yRXw55
>
> Quick question for the group. I'm looking for a narrative account or just
> good explanation of how we got to the current point of c4s running ads etc
> and not disclosing donors. My sense is this is a relatively new phenomenon,
> but I'd like to be more clear on the legal/regulatory background....
>
> Thanks!
> Justin Elliott****
>  ------------------------------
>
>
> Spam <https://antispam.osu.edu/b.php?i=1329163449&m=8499252149d7&c=s>
> Not spam <https://antispam.osu.edu/b.php?i=1329163449&m=8499252149d7&c=n>
> Forget previous vote<https://antispam.osu.edu/b.php?i=1329163449&m=8499252149d7&c=f>
> ****
>
>
> --
> Rick Hasen
> Chancellor's Professor of Law and Political Science
> UC Irvine School of Law
> 401 E. Peltason Dr., Suite 1000
> Irvine, CA 92697-8000
> 949.824.3072 - office
> 949.824.0495 - fax
> rhasen at law.uci.edu
> http://law.uci.edu/faculty/page1_r_hasen.html
> http://electionlawblog.org
>
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-- 
Ellen P. Aprill
John E. Anderson Professor of Tax Law
Loyola Law School
919 Albany Street
Los Angeles, CA 90015
213-736-1157
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