Wednesday, May 15, 2024

The Republican Pincer Movement on Civil Society

I told you a few days ago that the Republicans were engaged in a coordinated offensive against civil society.  There is plenty of evidence.  And even if the offensive is only against "left leaning" nonprofits, conservative groups should also be concerned.  Because as noted earlier, Congressional Republicans are engaged in illegitimate "ideological policing" of civil society.  And if successful, the pincer strategy -- legislation from one side and hearings and demands on the executive from the other -- will create a roadmap for future illegitimate assaults on civil society. And not only that, at least on the House side, the Chairperson is unabashedly using the tax writing committee to execute the plan.  I have not seen emails and press releases of the sort Smith sends out from Senate Finance.  

The latest exhibits are four new bills about exempt organizations introduced in Congress recently, three of which I was previously unaware (I reported on Smucker's bill here).  From Ways and Means Chairman Smith's press release:  

WASHINGTON, D.C. – Throughout the 118th Congress, the Committee on Ways and Means has been investigating whether U.S.-based tax-exempt organizations are operating in a manner consistent with the laws that govern them, whether the U.S. tax code is being abused by foreign nationals to influence our electoral system and policy debates, and whether legislative changes are necessary given the growth of the tax-exempt sector. As a result of this scrutiny, the Committee has uncovered loopholes in the tax code allowing tax-exempt organizations to be conduits to influxes of money from foreign nationals used in a way that threatens the integrity of genuine policy discourse here in the U.S. as well as our electoral process. 

These four pieces of legislation include reforms to the Internal Revenue Code to promote transparency in the tax-exempt sector as it pertains to foreign donations and grants, requiring tax-exempt organizations to disclose to the public whether they accept foreign donations while also prohibiting tax-exempt organizations that accept contributions from foreign nationals from donating to political committees including Super Political Action Committees (Super PACs). Additional provisions include closing a loophole by requiring tax-exempt entities to disclose information on foreign grant recipients, as they must already do for domestic grant recipients, and ensuring that charitable tax-exempt organizations cannot provide direct funding to official election organizations. The package also protects American donors by preventing federal agencies from implementing new disclosure requirements for the U.S. citizen donors of tax-exempt organizations. 

“These bills represent a critical step forward in safeguarding the integrity of our elections and policy debates from foreign influence. By bringing transparency and accountability to the flow of foreign money into elections through tax-exempt organizations, we are preserving the sanctity of our system and shielding it from external manipulation. Foreign nationals are already prohibited from donating to candidates for office directly, why should we allow a work around that allows them to flow money into our political system through tax-exempt organizations? Americans deserve the assurance that there is no undue outside influence on our federal, state, and local elections,” said Ways and Means Committee Chairman Jason Smith (MO-08).

The legislation introduced includes: 

    • H.R. 8293 – American Donor Privacy and Foreign Funding Transparency Act (Rep. David Schweikert)
    • H.R. 8290 – Foreign Grant Reporting Act (Rep. Lloyd Smucker)
    • H.R. 8314 – No Foreign Election Interference Act (Rep. Nicole Malliotakis)
    • H.R. 8291 – The End Zuckerbucks Act (Rep. Claudia Tenney)

The bills follow a hearing on foreign money in American elections that exposed the ways in which foreign donors could violate the law and abuse the tax code to donate money with the intent of influencing our elections. In August 2023, the Committee issued a request for information to solicit public input on existing rules and regulations governing tax-exempt organizations and foreign sources of funding for these organizations and what, if any, policy changes Congress should consider.

These are some boneheaded bills.  Ways and Means undertakes a mark-up session for the bills this morning at 10:00 am eastern.

darryll k. jones

https://lawprofessors.typepad.com/nonprofit/2024/05/republicans-are-executing-a-pincer-movement-on-civil-society.html

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