CAP Calls for Administration to Take Action through IRS, SEC, Federal Contractors

Center for American Progress: “”Specifically, CAP is calling on the executive branch to act in the following three areas:

  • IRS rulemaking on political activity by nonprofit organizations: Current regulations enable so-called dark-money groups to masquerade as 501(c)(4) “social welfare” organizations, thereby avoiding campaign finance disclosure laws. The IRS should clarify the rules for 501(c) organizations and should also tackle the problem of undisclosed political spending more directly by amending the regulations for Section 527 of the tax code. Rather than simply regulating dark money groups out of Section 501(c), the IRS should regulate those groups into Section 527 and thereby mandate public disclosure of donors.
  • Political activity by federal contractors: The executive branch should mandate further disclosure of political spending by federal contractors and should furthermore require those contractors take steps to ensure that they are not making impermissible federal political contributions.
  • SEC rulemaking: Currently, there is no rule requiring corporations to disclose political activity expenditures to their shareholders. The SEC should prioritize the development and implementation of a political activity disclosure rule. This corporate transparency would not only help to ensure that corporate spending is in line with shareholder interest, but it would also combat the problem of dark money.”

More information here.

Groups Push to Tighten, Loosen SEC Limits on State Contributions

Wall Street Journal (12/28): “The rule effectively prohibits certain employees of financial-services companies that do—or might do—business with state agencies from contributing to the officials who oversee those agencies. The rule, adopted in 2010, was intended to prevent political contributions from influencing state contracting decisions.

“Critics say the SEC rule’s effectiveness could be blunted in 2016 by the rise of super PACs, which can raise money without contribution caps but can’t coordinate with or give to candidates’ campaigns, as well as politically active nonprofit groups. In particular, they point to the increasing number of super PACs that form to support only a single candidate. Critics argue that a contribution to a group that spends money on behalf of a single candidate is akin to giving to the candidate.

“Others say the SEC rule should be eliminated, not expanded, with some noting that it creates an advantage for members of Congress, who aren’t subject to the rule, over governors in campaign fundraising. Some states have rules that are even more restrictive than the SEC’s.”

The IRS or SEC Could Help Reduce Dark Money

This piece ties the two trends of relaxing campaign finance limits and disclosure laws and tightening voter id laws and explores potential solutions from the IRS and SEC

Salon: “What if Washington, D.C., adopted a comprehensive disclosure law? In 2010, Congress came within one vote of overcoming a party-line filibuster to pass the DISCLOSE Act. Since then, the need for improved transparency has only grown more urgent and it’d be nice if the Republican Congress would adopt a donor ID law. (Don’t hold your breath, said Demos’Liz Kennedy.)

“Better to lay your bet on the Securities and Exchange Commission, which is supposed to protect shareholders and the “integrity of the markets.” It could issue a rule requiring publicly traded corporations to disclose political spending to shareholders.”

“Or maybe the taxman could help. The Internal Revenue Code does not require nonprofits organized under section 501(c)4 or 501(c)(6) to disclose their donors to the public. Yet, the Bipartisan Campaign Reform Act calls for exactly those groups to disclose their donors when they run “issue ads” that mention a candidate. Confusing? You bet! The law and the code don’t match up and things get even muddier when you factor in other federal agencies. As this chart demonstrates, the tangled web of campaign finance is enough to give even an offshore banker a migraine.