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On July 30, a U.S. district court judge struck down a federal revenue procedure that had exempted select 501(c) nonprofit entities from disclosing the names and addresses of their donors to the Internal Revenue Service. Judge Brian Morris, appointed to the bench by President Barack Obama (D), found that the IRS failed to follow proper procedures when it made the rule change.
What was at issue?
On July 16, 2018, the IRS issued Revenue Procedure 2018-38, which exempted 501(c) nonprofit entities from reporting the names and addresses of their contributors to the agency. The rule change did not apply to 501(c)(3) organizations.
Who were the parties to the suit?
The plaintiffs were Montana Gov. Stephen Bullock (D), a 2020 presidential candidate, and the Montana Department of Revenue. The state of New Jersey later joined the suit. The defendants were the Internal Revenue Service, Acting IRS Commissioner David Kautter, and the Treasury Department.
How did the court rule?
In striking down Revenue Procedure 2018-38, Judge Morris said he was not ruling on the procedure’s merits. Instead, he was assessing the validity of the process used to enact it: “Plaintiffs ask simply for the opportunity to submit written data and opposing views or arguments, as required by the APA’s public notice-and-comment process, before it changes the long-established reporting requirements. A proper notice-and-comment procedure will provide the IRS with the opportunity to review and consider information submitted by the public and interested parties. Then, and only then, may the IRS act on a fully-informed basis when making potentially significant changes to federal tax law.”
What were the arguments?
What comes next?
The federal government has not indicated whether it intends to appeal the decision. The case name and number are Bullock v. Internal Revenue Service, 4:18-cv-00103-BMM.
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.
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.
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On Aug. 7, Pennsylvania state employee Catherine Kioussis filed a class-action lawsuit against the Service Employees International Union Local 668 seeking restitution for agency fees paid to the union in 2017 and 2018.
Who are the parties to the suit?
Kioussis, the plaintiff, works for the Pennsylvania Department of Human Services. She is represented by the Liberty Justice Center, a nonprofit public-interest law firm that represented Mark Janus in Janus v. AFSCME (2018). The defendant is the Service Employees International Union Local 668, which represents public- and private-sector social service workers at both the state and municipal levels of government. According to a federal disclosure report, SEIU Local 668 comprised 16,507 dues-paying members and 361 agency fee payers as of Dec. 31, 2018.
What’s at issue?
Kioussiss alleges “SEIU should have known that its seizure of [agency fees] from non-consenting employees likely violated the First Amendment.” Kioussiss seeks a refund of all agency fees she and other non-member employees paid to the union from Aug. 7, 2017, to June 27, 2018, the period permitted under Pennsylvania’s statute of limitations. According to the Liberty Justice Center, should the case be decided in Kioussiss’ favor, approximately 2,000 workers could receive as much as $1 million in restitution.
What are the reactions?
What comes next?
The case is pending before Judge John E. Jones III of the U.S. District Court for the Middle District of Pennsylvania. President George W. Bush (R) appointed Jones in 2002. The case name and number are Kioussis v. Service Employees International Union Local 668, 1:19-cv-01367.
We are currently tracking 102 pieces of legislation dealing with public-sector employee union policy. 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.
No legislative actions have occurred since our last issue.