Immediately upon the Treasury and IRS's publication of proposed rules on 501(c)(4) activity, the political jockeying began. Reformers said high time; critics replied that the suppression of free speech was at hand. The IRS Notice is not all that dramatic because what the Service may eventually do is up in the air: the IRS invites comments on all aspects of the definition of (c)(4) political activity. There is no way of knowing how this will all end up many months from now. But the IRS appears to be doing what both sides had demanded that it do for different reasons—improve on current rules—and its notice of proposed rulemaking simply calls for comment on a baseline proposal, which is fairly normal for this type of agency rulemaking setting. This is a reasonable place to begin.

After critically examining Lawrence Lessig’s “dependence corruption” theory, Bruce Cain concludes with a few of his own suggestions. Bruce Cain, Is Dependence Corruption the Solution to America's Campaign Finance Problems? (May 19, 2013). Available at SSRN: http://ssrn.com/abstract=2267187. One of these is meant to address the disclosure issues he sees presented by 501(c)(4) advertising to influence elections. As he has done before, Cain explores the grounds for compromise between those committed to disclosure and those who are afraid, and spirited in expressing their fear, that it invites political harassment and reprisal. His proposal is for full reporting but “semi-disclosure”: regulators would collect the information, reserving its use for enforcement purposes, and would provide the public only with data in the aggregate that is useful in identifying in broad terms the sources of candidate support and, perhaps, future officeholder indebtedness. Bruce Cain, Shade from the Glare: The Case for Semi-Disclosure, Cato Unbound (Nov. 8, 2010), http://www.cato-unbound.org/2010/11/08/bruce-cain/shade-glare-case-semi-disclosure.

Here is another reply by Greg Colvin, answering the second post here on the topic. Colvin picks up on the last word of the June 5 posting—“intent”—and argues that it is well settled that the IRS does not look into intent when judging political activity. He also defends the liberalizing effect that the proposed rules would have on certain voter education activity.

Greg, it seems, may be overstating his assurances that “intent” is not, as a matter of law, a permissible factor in the test of whether a 501(c)(4) organization is engaged in “political intervention.” This is an important issue for those disinclined to have the federal tax law enforcement agency ferreting out the possible political intent of issue advocacy communications.

DOJ is taking an exceptional action in suing for large fines against an "habitual" violator of the federal lobbying disclosure laws. United States of America v. Biassi Business Services, Inc., No. 13-0853 (D.D.C., filed June 7, 2013). The delinquencies alleged in the Complaint, for late or unfiled reports, are sobering: 28 quarterly reports and 98 semi-annual reports since 2009. Even the remedial actions taken, the Complaint alleges, lagged behind the statutory requirement, indifferent to the 60 day deadlines for correcting problems once the filer is officially notified of them. The U.S. Attorney’s arrival on the scene to issue additional warnings apparently had little effect: the defendant “ignored or failed to respond to numerous letters sent by the U.S. Attorney’s Office…” Id at 11. Assuming the facts as alleged, this first enforcement action hardly qualifies as an overreaction or a trial run of an innovative enforcement theory. And yet it is a “first.” So it is an occasion for considering the relative weights assigned as a matter of federal law and policy to the two disclosure regimes of campaign finance and lobbying.

Greg Colvin, the Chair of the Bright Lines Project Drafting Committee, has replied to this posting that raised questions about the Project’s proposed revision of the standards for determining tax-exempt political intervention. Colvin concentrates his defense on the retention of a role, which he describes as limited, of the indefinite, poorly understood and variously applied “facts and circumstances” test. Under the Project’s re-definition, he writes, the test is reserved for use on a “limited basis” in a “small number of cases” and is necessary to address “unforeseen situations,” outside the bright lines, that trigger First Amendment concerns. He provides a crisp summary of the Project proposal and argues that, all in all and with a place for “facts and circumstances,” it “would correct the serious absence of neutral, objective criteria…that led to instances of ideological bias in the IRS review of tax-exempt applications.”