Gaming the Tax Code

In this update 1. WDC asks IRS to investigate electioneering by “charitable” groups 2. Judge declares voter ID law unconstitutional 3. Walker establishes legal defense fund 4. Let the sun shine in Gaming the Tax Code

Email date: 3/13/12

In this update
1. WDC asks IRS to investigate electioneering by “charitable” groups
2. Judge declares voter ID law unconstitutional
3. Walker establishes legal defense fund
4. Let the sun shine in

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WDC asks IRS to investigate electioneering by “charitable” groups
The Democracy Campaign today filed formal complaints with the U.S. Internal Revenue Service asking for an immediate investigation into election-related activity by three tax-exempt groups whose work by law is supposed to be confined to charitable and educational purposes. A podcast just posted on wisdc.org provides more information and reflections on today’s action.

One of the effects of the IRS’s failure to rigorously enforce the law requiring charitable groups organized under section 501(c)(3) of the Internal Revenue Code to steer clear of electoral politics is that the public’s right to know who is behind election campaigning is thwarted. Because 501(c)(3) groups do not have to publicly disclose their donors, groups that play politics while masquerading as charitable organizations can keep their fundraising hidden. Political groups should be operating as so-called “527s,” named for the section of the IRS code under which they are organized. Such groups are required to disclose their donors.

Another effect of the way the tax code is being gamed for political purposes is that taxpayers end up subsidizing the political agendas of millionaires and billionaires who fund the political groups operating as charitable organizations. Charitable donations to 501(c)(3) groups are tax deductible. Political donations to groups such as 527s are not.

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Judge declares voter ID law unconstitutional
A trial judge hearing the state League of Women Voters’ legal challenge to Wisconsin’s voter ID law yesterday declared the law unconstitutional and permanently barred its enforcement. The ruling will be appealed. The Democracy Campaign intervened in this case in support of the legal challenge.

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Walker establishes legal defense fund
Governor Scott Walker announced last Friday that he has set up a legal defense fund to pay for expenses related to the ongoing investigation that already has resulted in criminal charges against some top former aides and close associates. The move signals that the governor himself is under investigation. More on this development from the Milwaukee Journal Sentinel and Wisconsin State Journal.

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Let the sun shine in
This week is Sunshine Week. As Mark Pitsch of the Wisconsin State Journal reminds us in a recent commentary, the principles of open and transparent government have taken a beating in recent times and we all have our work cut out for us in getting Wisconsin back on track.