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Governor Bullock Wins Dark Money Lawsuit Against the IRS

Federal judge invalidates IRS rule that allowed dark money groups to hide their donors

Wednesday, July 31, 2019/Categories: Governor's Office/Tags:

Governor Steve Bullock announced that a federal district court has ruled against the IRS in the Governor’s suit challenging a move by the agency that made it easier for dark money groups to hide their donors from disclosure.

“This decision is a big victory for Montanans, for Americans and for our representative democracy,” Governor Bullock said. “We’re holding the federal government accountable to following its own rules and making sure that people, not dark money groups, decide our elections.”

“I will continue fighting against the corrupting influence of dark money to ensure that Montana remains one of the most transparent states in the nation,” Bullock continued.   

Judge Brian Morris of the United States District Court in Great Falls issued a decision late Tuesday in Bullock v. IRS in which he set aside the tax agency’s decision to remove the disclosure rule for nonprofit organizations that commonly serve as the vehicle for so-called “dark money” spending in elections.  Judge Morris held that the IRS violated the Administrative Procedure Act by failing to give the public notice of the change or an opportunity to comment, as required by law.

Yesterday’s decision invalidates the IRS rule change and requires the government to follow the law with future rules.

In addition to being a party in the suit, Governor Bullock also appeared as an attorney and was personally involved in authoring the original complaint and shepherding the case.

A copy of the ruling is included with this release.

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 and passed a bill in the Montana legislature to ban spending and contributions in Montana elections by foreign governments, foreign corporations and foreign nationals. The 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.

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