Federal judge hears arguments in case over IRS donor disclosure rules

On June 5, 2019, U.S. District Court Judge Brian Morris heard arguments in Bullock v. Internal Revenue Service, a case concerning an Internal Revenue Service (IRS) rule exempting select classes of nonprofit organizations from donor disclosure requirements. The subject of the June 5 hearing was whether states have standing to challenge the IRS rule.

  • What is at issue? On July 16, 2018, the IRS issued Revenue Procedure 2018-38, which exempts 501(c) nonprofit entities from reporting the names and addresses of their contributors to the IRS. The rule modification does not apply to 501(c)(3) organizations.
  • Who are the parties to the suit, and what are they saying?
    • The plaintiffs are Montana Gov. Stephen Bullock, also a 2020 presidential candidate, (D) and the Montana Department of Revenue. The state of New Jersey later joined the suit. Montana operates under divided government (Republicans control both chambers of the state legislature). New Jersey is a Democratic trifecta.
      • In a court filing, attorneys for the plaintiffs said, “Reduced transparency for 501(c) organizations at the federal level has significant downstream effects. In the context of elections and election spending, reduced transparency at the IRS upends settled expectations that federal tax-exempt organizations are what they purport to be: domestically-funded social welfare groups validly participating in elections, for example.” The attorneys for the state of New Jersey are Attorney General Gurbir Grewal (D), Assistant Attorney General Glenn Moramarco, and Deputy Attorney General Katherine Gregory. The attorneys for Bullock and the Montana Department of Revenue are Raphael Graybill, Bullock’s chief legal counsel, and Deepak Gupta of Gupta Wessler PLLC.
    • The defendants are the Internal Revenue Service, Acting IRS Commissioner David Kautter, and the Treasury Department.
      • Justice Department attorneys for the defendants said, “Neither state has ever before sought or received from the IRS the information they are now trying to force the IRS to continue collecting, and both states lack the ability to obtain this information from the IRS even if it was collected. In issuing Revenue Procedure 2018-38, the IRS exercised its longstanding statutory discretion to determine what information it collects from exempt organizations to meet its tax administration needs.”
  • Case information: Judge Brian Morris, of the U.S. District Court for the District of Montana, is presiding. Morris was appointed by President Barack Obama (D) in 2013. The case name and number are Bullock v. Internal Revenue Service, 4:18-cv-00103.

What we’re reading

The big picture

Number of relevant bills by state: We’re currently tracking 72 pieces of legislation dealing with donor disclosure. On the map below, a darker shade of green indicates a greater number of relevant bills. Click here for a complete list of all the bills we’re tracking.

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Number of relevant bills by current legislative status

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Number of relevant bills by partisan status of sponsor(s)

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Recent legislative actions

Below is a complete list of legislative actions taken on relevant bills in the past week. Bills are listed in alphabetical order, first by state then by bill number. Know of any legislation we’re missing? Please email us so we can include it on our tracking list.

  • California AB864: This bill would expand disclosure requirements for certain kinds of political advertisements made by independent expenditure groups and other entities.
    • Senate Elections and Constitutional Amendments Committee hearing June 4.