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Governor Bullock: IRS broke the law by shielding dark money groups

Friday, April 19, 2019/Categories: Governor's Office/Tags:

Governor Steve Bullock is arguing the IRS broke federal law when it moved to protect dark money political groups from disclosure. The Governor’s argument came in a Motion for Summary Judgement filed in the United States District Court in Great Falls. The motion is attached.

“It’s simple. The IRS broke the law when stopped enforcing its own transparency rules for dark money groups,” Governor Bullock said. “The IRS made its decision behind closed doors with no notice or public input. But the law holds the federal government to a higher standard.”

Governor Bullock sued the IRS last year over a decision to stop collecting information from dark money groups about their donors. The reporting rules have existed since the Nixon administration, and are designed to prevent fraud and abuse by groups claiming nonprofit status. Last summer, the IRS purported to repeal the requirements wholesale without going through the process mandated by federal law. The State of New Jersey recently joined the Governor’s suit, arguing that the IRS’s decision make it harder to protect taxpayers and fight fraud, scams, and abuse.

“The federal government should work for the people, not big money donors who hide behind a veil of secrecy,” Bullock said.

The suit would require the IRS to collect information about the donors to these groups, which often structure themselves as nonprofit “social welfare organizations” to avoid the reporting requirements that go along with traditional political committees.

In his brief, Bullock cited a fifty-fold increase in spending by dark money groups in recent years, totaling as much as one billion dollars in secret election spending.

“The opacity of these groups’ operations can make it difficult for states to enforce their laws protecting the public from fraud and misrepresentation,” Bullock argues in the brief. He asked the Court to “set aside the IRS’s unlawful action.” 

The Court will hear arguments in the case in a hearing set for June 5.

Governor Bullock’s record on fighting money in politics:

Governor Bullock has been called “the biggest threat to Citizens United,” and remains committed to ensuring Montana’s elections are the most transparent in the nation. As Attorney General, Bullock led the effort to preserve Montana’s 100-year-old Corrupt Practices Act, taking the case for the state’s citizen democracy all the way to the U.S. Supreme Court.

In an exceedingly rare bipartisan effort, Governor Bullock worked with Republicans and Democrats to pass the DISCLOSE Act to require the disclosure of donors to independent group spending money on state-level elections. The Act requires any group, regardless of their tax status, that spends money or resources to influence an election within 60 days of when voting begins, must disclose how they are spending money and the source of the money.

Governor Bullock signed a first-of-its kind executive order requiring the recipients of major government contracts to disclose dark money spending in elections. The order represents a significant new step for transparency in government. Under the executive order, government contractors who have spent over $2,500 in the past two years in elections will be required to disclose their donations. The order covers contributions to so-called “dark money” groups that are otherwise not required to disclose their donors.

In January, the U.S. Supreme Court left in place Montana’s contribution limits, rejecting a challenge that would increase the amount of money in politics. The case dates back to Bullock’s time as Attorney General, when he defended the state’s limits. The United States Supreme Court also left in place Montana’s DISCLOSE Act, rejecting a challenge brought by the same law firm that brought the original Citizens United case.

Most recently Governor Bullock proposed a bill in the Montana legislature to ban spending and contributions in Montana elections by foreign governments, foreign corporations and foreign nationals. The proposed law closes a loophole created by the Citizens United case that allows foreign governments and foreign companies to spend in United States elections through domestic subsidiaries. The bill passed the Montana legislature and is on its way to Governor Bullock for signature.

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