December 10, 2019

Senators Warn IRS against Weakening Dark Money Reporting

Whitehouse, Udall, Blumenthal, and Warren in official comment: The IRS cannot stand down as a wealthy special-interest class ‘unload[s] nearly a billion dollars of anonymous money into our elections’

Washington, DC – Senators Sheldon Whitehouse (D-R), Tom Udall (D-NM), Richard Blumenthal (D-CT), and Elizabeth Warren (D-MA) are pushing back against a Trump administration regulatory proposal to weaken the IRS’s ability to collect information on the special interest donors spending hundreds of millions of dollars to influence elections and the operation of government.  The proposed rule would limit one of the remaining avenues for federal and state officials to collect the true identities of major corporate and partisan special interests seeking to control the government.  If the rulemaking is finalized and the IRS’s enforcement capabilities weakened – as they have been repeatedly in recent years – corporate and ultra-wealthy special interests would further cement their political power at the expense of the transparency on which our democracy depends, the senators point out in an official comment to the IRS.

Citizens United provided the wealthy special-interest class with significant new political artillery, which they swiftly ran through 501(c)(4) organizations to unload nearly a billion dollars of anonymous money into our elections — the ‘tsunami of slime,’” the senators write.  “To protect their unprecedented powers of political influence, these elites engaged in a public campaign to bludgeon the IRS into a state of regulatory stasis.  They are now back, asking the IRS to further hamstring its own ability to perform even the most basic oversight.  The IRS should reject this invitation.

After Citizens United, political spending by 501(c)(4) “social welfare” groups exploded.  Since 2010, such organizations have spent over $800 million on political expenditures, compared to $103 million in the previous decade.  Political expenditures from undisclosed sources in the 2012 general election alone topped $312 million.  In one case, the American Action Network, a 501(c)(4), raised $41.9 million in one year, $24.6 million of which came from a single anonymous donor. 

But this spending is only a part of special interest influencers’ campaign to mold government to their own benefit.  In addition to spending directly to influence elections, 501(c)(4) and similar groups spend on lobbying lawmakers and administrative agencies; special conventions and retreats in exotic locations designed to “educate” policy makers; and “issue ads”—typically thinly veiled political attack ads that aren’t reported as political campaign spending. 

This spending is designed to influence political campaigns, legislation pending in Congress, and even the makeup and operation of courts.  During the confirmation battles over Supreme Court Justices Neil M. Gorsuch and Brett M. Kavanaugh, one unnamed donor gave $17 million to the 501(c)(4) group Judicial Crisis Network to block the nomination of Judge Merrick Garland and to support Gorsuch, and later another anonymous $17 million donation went to the Judicial Crisis Network to support the confirmation of Kavanaugh.  

Among the parties engaged in this type of spending is the network of 501(c)(4) and similar groups built by the billionaire industrialist Koch family.  The Koch network has “create[d] an illusion of multiplicity and a screen of anonymity, from behind which they pursue an aggressive anti-regulatory and climate denial political agenda, spending hundreds of millions in elections since 2010 and threatening to spend hundreds more,” the senators note. 

The combination of Citizens United and lax regulations promulgated by the Treasury Department has allowed this unreported influencer spending to flourish.  “[T]he IRS has been cowed from regulating or even investigating a small, powerful cadre of savvy political operatives who have formed and funded a flotilla of non-profit front groups, through which they can funnel money into elections, in contravention of a clear statute and the IRS’s own rules,” the senators continue.  “They have gotten away with it even in the face of open and notorious abuses.

A full PDF copy of the senators’ comment is available here.




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