“Where the First Amendment is implicated, the tie goes to the speaker, not the censor.” — Fed. Election Comm’n v. Wisconsin Right to Life, 551 U.S. 449, 474 (2007).

The First Amendment “‘has its fullest and most urgent application’ to speech uttered during a campaign for political office.” Eu v. San Francisco County Democratic Central Comm., 489 U.S. 214, 223 (1989) (quoting, Monitor Patriot Co. v. Roy, 401 U.S. 265, 272 (1971)). This primacy makes the Federal Election Campaign Act, which governs political campaign speech and related activities, the most sensitive federal law in First Amendment terms. Which, in turn, makes the Federal Election Commission, which enforces most provisions of FECA, potentially the most dangerous federal agency; it is “[u]nique among federal administrative agencies, having as its sole purpose the regulation of core constitutionally protected activity — the behavior of individuals and groups only insofar as they act, speak and associate for political purposes.” Van Hollen v. FEC, 811 F.3d 486, 499 (D.C. Cir. 2016).

Congress was fully aware of this explosive potential when it established the FEC, balancing the agency between political parties and establishing due process norms to protect First Amendment rights. For example, the 1976 House Committee Report on FECA said: “It is therefore essential in this sensitive area [of campaign regulation] that the system of administrative and enforcement enacted into law does not provide room for partisan misuse . . . .” H.R.Rep. No. 917, 94th Cong., 2d Sess. 3 (1976). Some observers rightly claim that the enormous procedural roadblocks in the path of FEC enforcement actions are a feature, not a bug, in the agency’s design. No person or party is considered sufficiently independent, alone, to decide who can speak and how, except as delegated by Congress and interpreted by the courts.

Which makes the latest thunderstorm stirred up by FEC Commissioner Ellen Weintraub more consequential than her usual rants. And the comprehensive rebuttal by FEC Chair Caroline Hunter, pictured above, consequently more important. The fight is over what is enough to trigger an FEC investigation; in particular, is it enough that the underlying allegation, even if unproven, ambiguous or untrue, is “a blockbuster” about some heavily-covered news story, or does there have to be at least some reasonably-credible evidence that the allegation is true?

Weintraub says foreign interference is so important that even an anonymous claim with no evidence is enough to spark an FEC investigation; “we should have looked into it merely because it was so important and we need to put it to rest one way or the other.” Hunter says “nope,” the Constitution and the FECA require at least some credible evidence on any allegation, even one over which the media are in a frenzy: “the Act does not permit this Commission to investigate the political activities of Americans (or American advocacy groups) ‘merely because’ an allegation is important, serious, blockbuster, sensational, going viral, or trending on Twitter.” Otherwise, Hunter points out, all political enemies would have to do to force an unwarranted investigation is exaggerate their false claims into “blockbusters.”

The fracas began, as so many recent ones have, with news media reports on allegations of Russian interference in the 2016 Presidential election. In this case, however, the anonymous allegations also involved the National Rifle Association, an American advocacy organization which does not shy from controversy and so attracts much as a result.

A January 2018 story by McClatchy News Service, whose best known outlet is the Sacramento Bee (and which filed for bankruptcy six weeks ago), led with the assertion that: “The FBI is investigating whether a top Russian banker with ties to the Kremlin illegally funneled money to the National Rifle Association to help Donald Trump win the presidency, two sources familiar with the matter have told McClatchy.” The story tied the supposed FBI investigation to the since-completed Mueller investigation and other supposed congressional and international investigations. The story did not cite any FBI sources, though it admitted that: “The extent to which the FBI has evidence … could not be learned.”

Just as a few credulous Americans believed 2016 stories like Hillary Clinton helped a pedophile ring based in a pizza parlor, the McClatchy “blockbuster” story triggered thousands of copycat news stories, again with no factual basis, all echoing the original allegation. Even worse, Brad Woodhouse, head of the American Democracy Legal Fund, filed a complaint with the FEC based on the McClatchy article.

Complaints like that are common in an election year, and this was 2018, when control over the House and Senate was at issue. The complaint asked the FEC to “investigate these claims and any additional coordination between Respondents [the NRA] and foreign nationals in connection with the 2016 presidential election.” The complaint was based solely on news sources, which, again, is common practice in complaints made to the FEC.  So common, in fact, that political parties and campaigns expect to respond to complaints based entirely on news stories, few of which actually turn into significant FEC investigations. Most just waste time and money in victims’ responses and preliminary reviews by FEC staff.

But there tends to be a bottom-line requirement that there be at least some substance – some clear evidence grounded in reality – in such stories and in such complaints. This de minimis substance requirement is derived from the due process requirements that such investigations must respect, including the requirement that at least four Commissioners find “reason to believe” in the allegations in a complaint before opening an official investigation of wrongdoing.

The FEC regulations require several preliminary reviews even before the Commission can vote to find “reason to believe” a complaint’s allegations of legal violations, as several FEC Commissioners explained in detail in dismissing a complaint against the Hillary Rodham Clinton for U.S. Senate Exploratory Committee in 2000:

Any person who believes a violation of the FECA has occurred may file a complaint with the Commission. 2 USC § 437g(a)(l). The FECA anticipates that the Commission may summarily dismiss the complaint before the expiration of the 15 days afforded to alleged violators to set forth their reasons why no action should be taken against them. Id. After the response period closes, the Commission has the power to investigate alleged FECA violations only where there is “reason to believe” that a violation has been, or is about to be, committed. 2 USC § 437g(a)(2).
The Commission may find “reason to believe” only if a complaint sets forth sufficient
specific facts, which, if proven true, would constitute a violation of the FECA. Complaints not based upon personal knowledge must identify a source of information that reasonably gives rise to a belief in the truth of the allegations presented. See 11 CFR 11 1.4(d)(2); MUR [Matter Under Review] 4545 (ClintonGore ’96 Primary Comm./Amtrak) (“While the available evidence is inadequate to determine whether the costs of the Train Trip were properly paid, the complainant’s allegations are not sufficient to support a finding of reason to believe . . . .”); MUR 3534 (Bibleway Church of Atlas Road) (“[Tlhere was a lack of evidence indicating the literature was distributed on behalf of the [Respondent] or at its expense.”).

Unwarranted legal conclusions from asserted facts, see SOR [Commissioners’ Statement of Reasons] in MUR 4869 (American Postal Workers Union), or mere speculation, see SOR of Chairman Wold and Commissioners Mason and Thomas in MUR 4850 (Fossella), will not be accepted as true. In addition, while credibility will not be weighed in favor of the complainant or the respondent, a complaint may be dismissed if it consists of factual allegations that are rebutted with sufficiently compelling evidence provided in the response to the complaint, see MUR 4852 (Wiebe), or available from public sources such as the Commission’s reports database.

In order to help Commissioners in this lengthy and complicated review of Woodhouse’s complaint, the FEC’s Office of General Counsel conducted one of its typical investigations, not only reviewing the evidence (or lack thereof) in the complaint, but also checking on other sources, such as filings in criminal cases involving the Russians cited in the original news story. The OGC reported, however,

the available information does not support a finding of reason to believe with respect to the alleged violations of federal campaign finance law. The allegations in the Complaint are premised on a vague news article reporting that the Federal Bureau of Investigation (“FBI”) is investigating …, but without providing any specifics. The Complaint assembles an assortment of circumstantial information …

On the other hand, the NRA filed numerous specific and detailed rebuttals to the complaint’s allegations. The OGC concluded:

In light of the circumstances presented and the affidavits submitted by the NRA
regarding its financial activities during the relevant period, there is not an adequate basis to conclude that Respondents violated the foreign national prohibition, as alleged.

The NRA’s rebuttals must have seemed “sufficiently compelling evidence provided in the response to the complaint,” to cause at least some of the FEC Commissioners to want to dismiss the complaint. On July 9, 2019, the FEC Commissioners split 2-2 over whether there was “reason to believe” that federal campaign finance law had been broken. The tie vote automatically rejected the complaint.

Commissioner Ellen Weintraub, then the Chair of the FEC, was quite upset about the vote and rejection, and said so in an August 16, 2019 Statement of Reasons. Her view was that the allegations were so substantial that the FEC should investigate them even without evidence in the record; that just the unsupported claim was so important that the due process protections should be ignored:

Some allegations are too serious to ignore. Too serious to simply take Respondents’
denials at face value. Too serious to play games with. Yet in this matter, my colleagues ran their usual evidence-blocking play and the Commission’s attorneys placed too much faith in the few facts Respondents put before us.

As a result, this agency barely lifted a finger to find out the truth behind one of the most blockbuster campaign finance allegations in recent memory.  …

The article contains few details on the alleged funneling, but its report that the FBI is
investigating the matter is direct and specific. And there can hardly be a matter more significant for this Commission than large-scale foreign influence exerted by a preeminent global adversary aimed at interfering with a U.S. presidential campaign. The complaint’s use of this article alone justified my vote to find reason to believe a violation of the Act may have occurred.

Current FEC Chair Caroline Hunter responded on March 20, 2020, with an equally-blistering rejection of Weintraub’s screed. To Hunter, it was the FEC’s constitutional due process responsibilities that were “too serious to play games with:”

Boiled down to its essence, the complaint in this matter claimed that Russian sleeper
agents used the National Rifle Association (“NRA”) to help Donald Trump win the 2016 presidential election. Such an explosive claim should only have been made — let alone filed with the federal government — if there were credible evidence to back it up. That is not what happened here. Instead, the complaint capitalized on fears of foreign influence in U.S. elections to conjure inferences of illegal conduct, and relied on statements from anonymous sources in a single article written by reporters whose dependability in this area is in doubt.

I agreed with the recommendation of the Commission’s Office of General Counsel
(“OGC”) to dismiss the complaint. But my colleague, Commissioner Weintraub, strongly disagreed; she has argued that the only acceptable Commission response would have been to launch an immediate investigation. Given the law’s protections against partisan prosecutions, her approach is not just wrong, it is dangerous. This statement explains why. …

I do not believe that Commissioners’ concerns about foreign influence should shut down our ability to think critically, or that mere claims of foreign interference, by themselves, should trigger knee-jerk Commission investigations of Americans’ political activities.

The complaint in this matter did not offer a shred of credible evidence in support of its claim … In contrast to the unsubstantiated allegation, the NRA’s denials were specific, detailed, and based on facts. …

The reasons that my colleague has given for her vote have little, if anything, to do with the evidence or the law. First, she focuses on the nature of the allegation, by itself, as justifying a Commission investigation. She argues that the allegation is “too serious to ignore,” “too serious to take the Respondents’ denials at face value,” “one of the most blockbuster campaign finance allegations in recent memory,” concerns “a matter of . . . national importance,” and potentially implicates “an extraordinarily significant violation of the Act.” Separately, she has reiterated the “blockbuster” nature of the allegation and said that “we should have looked into it merely because it was so important and we need to put it to rest one way or the other.”

But the Act does not permit this Commission to investigate the political activities of
Americans (or American advocacy groups) “merely because” an allegation is important, serious, blockbuster, sensational, going viral, or trending on Twitter. To the contrary, the Commission may open investigations only when there is reason to believe a violation occurred — that is, when credible evidence supports the allegation. …

Further, launching an investigation “merely because” a particular allegation is a
“blockbuster” would encourage increasingly spectacular but unfounded allegations: The more spectacular the claim, the smaller the factual basis would need to be. At the same time, it would negate the Act’s requirement that respondents be given an opportunity to respond to allegations before the Commission finds reason to believe. Under my colleague’s rationale, if a complaint alleges something sufficiently sensational, there’s nothing a respondent could say to avoid a reason-to-believe finding and investigation. …

Investigating the political activities of American advocacy groups threatens to chill the free exercise of their First Amendment rights of political speech and association. Thus, the Commission should take such action only when there is a demonstrable factual basis for it. Even my colleague has acknowledged that “facts matter,” and serious allegations of wrongdoing demand evidence. Here, OGC determined the facts did not indicate or even suggest activity that is illegal under the Act. I agree.

There is nothing wrong with concerned citizens filing complaints with the appropriate government agencies alleging wrong-doing. That is the essence of the First Amendment-protected right of “petitioning the government for redress of grievances.”

But there is a world of difference between a citizen filing a complaint and saying that the simple filing of an unsupported “blockbuster” complaint, especially in the face of documented responses demonstrating that the claims are not true, should trigger the immense burdens of governmental investigations. The recent Mueller investigation cost taxpayers about $32 million and undoubtedly millions of dollars in defense costs.

As FEC Chair Caroline Hunter pointed out, especially in an election year, one can expect rough and tumble hardball politics, and the FEC should think twice about injecting an official investigation into any campaign. The article underlying this tumult itself is a classic example: allegations by themselves sparked thousands of news reports breathlessly repeating … nothing at all.

The most dangerous federal agency shouldn’t light that kind of fuse, no matter how “blockbuster” the allegation, without a genuine basis for believing the truth of an allegation. The system is not set up for that kind of agency malpractice, nor should it be.

 

 

Internal Revenue Service rules have long protected the privacy of donors to tax-exempt  organizations, but in 2000, the IRS created a new form, Schedule B to a tax-exempt organization’s annual Form 990, which required many organizations to disclose names and addresses of donors to the IRS. Ironically, the IRS issued Schedule B to protect donor privacy, because its employees did not always recognize when donor information was being filed, and then inappropriately disclosed the protected donor information.

Gradually, governments and private organizations discovered the donor information being filed on Schedule B, and what began as a donor protection mechanism became a method to target donors. Courts, including in New York and California, have upheld state efforts to require tax-exempt organizations to file copies of their Schedule B forms, even though the protected information was leaking out of their offices.

On Sept. 10, 2019, the Internal Revenue Service issued a notice to the public that it was proposing to end the requirement of disclosing donor information on Schedule B forms filed by many tax-exempt organizations, and asked for comment. Donor information would still be required on Schedule B forms filed by 501(c)(3) charities and Section 527 political organizations.

More than 8,000 comments were filed, virtually all of which supported the proposed donor protection regulation; many of the comments, however, were short and non-technical public responses. The Public Policy Legal Institute filed a lengthy and detailed comment, supporting the proposed regulation and looking at the tax-related aspects of the proposed regulation; other organizations cited the PPLI tax comments.

Read the PPLI Comment here: Sched B donor disclosure comments final.

Many state governments also commented on the proposed regulations, but split between those who supported and opposed the regulations. Some states, led by New York and New Jersey, argued that they needed data from the IRS to enforce their own state laws. Other states said they did not need IRS data; for example, Arizona Attorney General Mark Brnovich said:

Forty-seven states and the District of Columbia regulate non-profit organizations without requiring them to report the names of their donors, a practice that satisfies these jurisdictions’ commitment both to detecting unscrupulous non-profit activity and to protecting citizens’ First Amendment right of association. The experience
of these jurisdictions—every state in the Union except California, Hawaii, and New York—demonstrates that effective enforcement can be carried out without such a broad disclosure regime.”

On Feb. 7, 2020, the IRS held a public hearing on the proposed regulation. Sixteen organizations presented testimony at the hearing; again, the vast majority of comments supported the proposed regulation. The IRS is now considering the public comments, and it’s not clear when it will make a final decision on whether or not to issue the proposed Schedule B regulations.

Meanwhile, the Supreme Court of the United States is scheduled in the next few months to consider whether to review one or more of the lawsuits brought by organizations challenging state governments’ requirements to file Schedule B. If the Supreme Court decides to review those cases, briefing and oral arguments would be held in the next Supreme Court Term, beginning in October 2020.

 

We live in an era where online disinformation sometimes — fortunately very rarely — sparks Americans to do bad things. A few people believe things planted by unknown persons with no regard for veracity on the Internet or social media. In an era where insane readers strap up and crash into pizza parlors to free children supposedly held by Hillary Clinton, the same stories are echoed by White House officials. The Russians set up the “Internet Research Agency” solely to exacerbate social strife through fake news.

Recent research shows that, while the Internet Research Agency’s effectiveness was very limited, those affected by it were those who were already primed for action — “locked and loaded” if you will.

We find no evidence that interacting with these [Russian Internet Research Agency] accounts substantially impacted political attitudes and behaviors. Descriptively, interactions with trolls were most common among individuals who use Twitter frequently, have strong social-media “echo chambers,” and high interest in politics. These results suggest Americans may not be easily susceptible to online influence campaigns, but leave unanswered important questions

As Freud said, sometimes a cigar is just a cigar, but there is an interesting First Amendment issue here. Please forgive the “deep dive” into First Amendment vulnerabilities, but consider this:

Would you be at risk for a federal investigation if you were deemed to be a “foreign agent” affected by these foreign trolls? Even if you weren’t a “locked and loaded” fringy, but just someone really dedicated to a cause and then stimulated by a targeted online campaign to do something to influence American policy?

It sounds outlandish, but one pretty decent analysis says: maybe. And if you look at modern advertising targeting, that danger is probably a lot greater than it was in the past.

A very interesting article in Lawfare raises that possibility, citing recent successful prosecutions and indictments related to the 2016 Russian social media disinformation campaign run by the Internet Research Agency. Author Joshua Fattal, a former government official and current law clerk to a federal judge on the nationwide litigation over the 9/11 terrorist attacks, points out that the U.S. Department of Justice is starting to use the Foreign Agent Registration Act, normally used to require disclosures of agents of foreign governments who lobby the U.S. government, against targets such as the Russian Internet Research Agency, a former White House Counsel to President Obama, and former officials of the 2016 Trump presidential campaign.

FARA in its original sense was an anti-foreign propaganda law, requiring disclosure and reporting of foreign attempts to influence American public opinion. Sounds pretty contemporaneous, doesn’t it? But FARA was enacted in 1938, in the wake of German Nazi-era propaganda. It’s now being applied to Facebook, as Fattal discussed in a recent law review article.

Fattal’s latest Lawfare article shows a new side to the recent DoJ FARA enforcement efforts, which, if pushed further than current understanding (and it’s possible in today’s environment that the DoJ or the FBI might keep pushing; just ask Greg Craig, see below), could conceivably ensnare U.S. citizens just responding eagerly to foreign disinformation:

But the Justice Department has also begun to employ FARA in an entirely new context, a move that has so far failed to attract significant attention or analysis. In February 2018, Mueller indicted 13 Russian individuals and three organizations allegedly involved in the 2016 Russian coordinated disinformation campaign. Mueller’s team claimed that these actors violated a number of laws—including failing to register as foreign agents under FARA. …

As the case against these actors has proceeded in the U.S. District Court for the District of Columbia, the government indicated in October that it intends to argue at trial that the defendants conspired to cause a number of individuals or organizations to act as agents of a foreign principal, for which the individuals and organizations or the conspirators (or both) would have had a legal duty to register under FARA with the Justice Department. In other words, the government is arguing that foreign online disinformation actors such as the Russia-based Internet Research Agency, and perhaps those Americans acting at the behest of foreign disinformation organizations, have a legal duty to register their activities with the department.

Id., emphasis added. As the DoJ trial letter quoted by Fattal shows, the government’s argument was that the American individuals and organizations “caused” to “act” by agents of a foreign government — even without knowing it — would have had to register under FARA.

And prosecuted if they don’t register, like Greg Craig, former White House Counsel to President Barack Obama, who was recently acquitted of charges of failing to register under FARA for writing a legal report for pro-Russian leaders in Ukraine in 2012. Craig was the first prominent Democrat to be indicted in a spin-off from former Special Counsel Robert Mueller’s investigation into Russian interference in the 2016 presidential campaign.

Greg Craig was an accomplished lawyer, and apparently quite careful in his consideration of what FARA required. In 2014, he wrote in an email: “I don’t really care who you ask [about the FARA requirements] but we need an answer from someone who we can rely on with a straight face.”  According to news reports, Craig “testified that because his position was contrary to that of the Ukrainian government, he did not view himself as a foreign agent and did not think it necessary to register as one with the Justice Department.”

They charged him anyway. Although prosecutors did not charge Craig with failing to register under FARA, they did charge him with not giving them all the facts behind his relationship to his foreign clients and his interactions with American media to promote his views about an action of the Ukrainian government at the time.

But Craig had the money and connections to fight the charges and win. That doesn’t mean that other Americans who guess wrong about DoJ’s expanding interpretation of FARA will also win. Fattal notes:

It is unprecedented for the Justice Department to use FARA in the context of social media disinformation campaigns that originate abroad.  …

FARA’s disclosure and record-keeping requirements are imposed on “persons” who act as “agents of a foreign principal.” A “person” is an “agent of a foreign principal” when the person “acts as an agent, representative, employee, or servant, or any person who acts in any other capacity at the order, request, or under the direction or control, of a foreign principal.” Justice Department regulations have not further clarified the necessary elements of an agent’s relationship with a foreign principal, but they have defined “control” to include “the possession or the exercise of power, directly or indirectly, to determine the policies or the activities of a person, whether through… contract, or otherwise.” This definition does not provide much guidance as to what kinds of activities, in practice, suffice to establish a principal-agent relationship.

The case law interpreting FARA suggests that the principal-agent relationship does not require that the parties expressly enter into a contract establishing the relationship. While financial support from a foreign principal alone is insufficient to establish agency, the U.S. Court of Appeals for the D.C. Circuit has held that financial support is not required to establish agency. FARA also does not include any threshold requirements for a certain degree of activity on the agent’s part (i.e., there is no set minimum amount of political activity that the actor has to engage in to properly qualify as an agent).

So is it likely that a concerned American, responding to a post that invites her to protest American policy, has unwittingly become a “foreign agent,” whose failure to register under FARA could put her in jeopardy? Case law, including a 1981 case, Attorney General of the U.S. v. Irish Northern Aid, suggests an important caveat, as Fattal explains:

The [U.S. Court of Appeals for the Fourth Circuit] suggested that it is important to ascertain whether “those requested to act were identified with specificity by the principal”—specifically, whether “a particular individual, or a sufficiently limited group of identifiable individuals, is asked to act.” The court also suggested that the specificity of the action requested is relevant: “Once a foreign principal establishes a particular course of conduct to be followed, those who respond to its ‘request’ for complying action may properly be found to be agents under the Act.”

But how strong is that caveat almost forty years after Irish Northern Aid? In days of yore, such specificity was hard to come by, meaning that Americans were undoubtedly safe from prosecution as “foreign agents.”

Not today, where the hallmark of social media (and mainstream Internet advertising) is precise targeting on the basis of individual, “identifiable” characteristics. Ads are no longer bought in enormous blocks of anonymous recipients; they are personally tailored to a select group of individuals defined by specific characteristics. Social media giants are struggling to adjust.

So would the Irish Northern Aid test for “identified with specificity by the principal” actually protect anyone in today’s microtargeting environment? Google, for example, seems to be proactively getting ahead of this question:

While we’ve never offered granular microtargeting of election ads, we believe there’s more we can do to further promote increased visibility of election ads. That’s why we’re limiting election ads audience targeting to the following general categories: age, gender, and general location (postal code level). Political advertisers can, of course, continue to do contextual targeting, such as serving ads to people reading or watching a story about, say, the economy.

But it’s an ever-changing environment right now, and we may not know exactly where we stand until additional DoJ or FBI actions, and, of course, until more judicial interpretations.

 

 

 

Since 2000, the Internal Revenue Service has required tax-exempt organizations to file lists of substantial donors on Schedule B to their Annual Information Returns, Form 990. In originally preparing Schedule B, the IRS was attempting to protect donors’ private information from disclosure. Prior to 2000, tax-exempt organizations’ donor lists were sometimes disclosed because IRS officials did not recognize the submitted donor lists as non-disclosable, protected information. The Schedule B was intended as a standard form easily recognized by IRS employees as not disclosable.

Unfortunately, Schedule B did not protect donors’ information. In fact, it became a way for state governments and outside organizations to demand information they weren’t allowed to have. As a result, state governments put thousands of donor records on the Internet, and outside organizations began to use the disclosed information for purposes other than tax administration, such as “outing” donors for supporting disfavored organizations.

In September 2019, the IRS published a Notice of Proposed Rulemaking, asking for public comments on a new plan for Schedule B. Instead of requiring all organizations to submit the names and addresses of donors, the IRS proposed not to include the names and addresses. The IRS noted in its NPRM that it did not need or use the donors’ names and addresses for tax administration, so its proposal wouldn’t cause it any difficulties. Thousands of comments were submitted to the IRS, the vast majority in favor of the update to the IRS’s rules.

Today, the Public Policy Legal Institute submitted an 18-page set of comments, strongly supporting the proposed update, but offering five major recommendations for improvements in how the rule was explained.

From the PPLI Comments:

            Since 1976, congressional policy has been that taxpayer information is to be kept confidential except in “limited situations.” The Supreme Court ratified that interpretation in 1987 against a request to release even redacted information. In 2000, facing repeated instances of Service personnel releasing this confidential information, the Service adopted Schedule B, as an attempt to clearly identify for its own employees the information that could not be released.

But Schedule B failed, in large part because Service employees reversed the congressional and Supreme Court interpretation in a 2001 staff memorandum. In 2002, the Service decided just to ignore its own mistake and require people to request the information twice. That non-compliant policy has continued since, with the requests for non-compliant, non-tax administration-based use of Schedule B increasing. Those increasing requests have caused untold, but very real damage to tax-exempt organizations and individuals, with unrebutted court records of harassment and donor loss of privacy caused directly by the requests of state governments and Service leaks.

            This has been the confused and confusing situation for almost twenty years, until this proposed update. In this proposed update, the Service would cut the Gordian knot by simply not requiring the name and address to be filed. The stated rationale is that the information is not needed, but the real answer is that the proposed update finally returns the Service position to what it was after [the Supreme Court’s decision in] Scientology and its progeny explained the correct interpretation of the legislative language and intent.

Learn more about the PPLI Comments here.