This lawsuit, initiated by Montana Governor Steve Bullock, challenges a 2018 administrative decision by the Internal Revenue Service (“IRS”). Under this decision, adopted as Revenue Procedure 2018-38, the IRS no longer requires some 501(c) organizations to submit the names and addresses of donors as part of their return information. Although the IRS did not make this information publicly available, they could use it to determine a group’s tax-exempt status. Prior to the promulgation of Revenue Procedure 2018-38, 501(c)(4) groups listed the names and addresses of donors making aggregate contributions over $5,000 on Schedule B of their Form 990.
Revenue Procedure 2018-38 raises campaign finance concerns, as some 501(c)(4) social welfare organizations become heavily involved in electioneering and campaign activities, and are more colloquially known as “dark money” groups. Revenue Procedure 2018-38 is viewed by many as a relaxation of regulation on money in politics, as it limits the oversight of these “dark money” groups. As an outspoken critic of the current federal campaign finance regulatory system, Governor Bullock continues to pursue policies that ensure transparency in campaign finance. This lawsuit is one such action. Campaign finance reform is also an essential component of his Presidential platform.
As an initial matter, the Court must decide whether the Plaintiffs have standing to bring suit. Should it find there is standing, the question becomes whether Revenue Procedure 2018-38 was promulgated in violation of the Administrative Procedures Act (“APA”). If the Court grants the Plaintiff’s motion for summary judgment, the Revenue Procedure will be set aside and the IRS would need to comply with the APA in adopting similar rules that alter the information the IRS collects. Regardless of the district court’s decision, this case will likely reach the United States Court of Appeals for the Ninth Circuit.
Rebekah Gryder, Oral Argument Preview, Bullock v. Internal Revenue Service: Can Montana Force IRS Oversight of Dark Money Groups?, 79 Mont. L. Rev. Online 105 (2019), https://scholarship.law.umt.edu/mlr_online/vol79/iss1/15.