The Treasury Inspector General for Tax Administration (TIGTA) has released an audit report addressing improvements in educating and enforcing the prohibition against political activities for tax-exempt organizations. The purpose of the audit was to determine the effectiveness of the Internal Revenue Service's (IRS) Political Activities Compliance Initiative (the Initiative). The audit addressed how effective the IRS is in addressing alleged incidences of political campaign intervention and "whether actions had detected repeated campaign intervention by previously identified organizations."

The audit found that the Initiative could be improved "to ensure that tax-exempt organizations receive timely notification that they might be involved in prohibited political activity. Also, the EO function needs to clarify why certain referrals are not included in the Initiative."

Recommendations laid out in the audit include :

• ensure that all referrals of potentially prohibited political intervention are reviewed in a timely manner.
• Improve the consistent understanding of prohibited political intervention criteria.

The IRS expects an active 2008 election cycle, and will start the Initiative even earlier this year. To read the full report, click here.

CQ ($$) reports that the Senate will take up a rewrite of the Foreign Intelligence Surveillance Act (FISA) after returning from the July 4th recess on July 8th. On June 25 the Senate voted 80-15, to limit debate on a motion to proceed to the bill (HR 6304).

Those who oppose the bill argue that the privacy of U.S. citizens would be jeopardized and the administration's warrantless surveillance program would be protected from any determination of illegality. During debate, Senator Chris Dodd (D-CT) said; "we are about to make another great error because of fear, because we fail to understand that balancing legitimate interests of our security and our rights ought not to be compromised. That is what the FISA courts were created to do - to balance rights and fears over legitimate concerns about our security being jeopardized. So I rise once again to voice my strong opposition to the misguided FISA legislation before us, as it will come in the next day or so."

When the bill is considered in July, three amendments will be considered :

• An amendment offered by Senators Dodd, Russ Feingold (D-WI) and Patrick Leahy (D-VT) would strip the bill of its immunity provision.
• An amendment offered by Senator Arlen Specter, (R-PA) would require the lawsuits' dismissal unless a federal district court determines the assistance "was provided in connection with an intelligence activity that violated the Constitution of the United States."
• Senator Jeff Bingaman (D-NM) plans to offer an amendment that would stay all the pending lawsuits until 90 days after Congress receives the inspectors general report on the president's surveillance program required by the legislation.

For a few blogs worth reading on the issue, check out Secrecy News and Wired.com's Threat Level Blog.

Contact your Senators' office and tell them to vote "no" on the FISA bill.

In June of last year, Americans United for Separation of Church and State (AU) requested that the Internal Revenue Service (IRS) investigate Bill Keller for possibly violating the political campaign intervention prohibition for tax exempt organizations. Keller has a call-in show on a Tampa television station and a Web site called Liveprayer.com. On May 11, 2007 Keller warned listeners; "if you vote for Mitt Romney, you are voting for Satan!" Now, the public is aware that the IRS is in fact investigating the case. According to the St. Petersburg Times, "the IRS gave him a week to assemble documents and videos of his television programs. . . Keller said he is prepared to fight if his ministry loses its tax-exempt status."

It has been two months since the controversial Supreme Court decision upholding Indiana's voter identification law requiring photo ID for anyone casting a ballot. Since the Supreme Court left open as applied challenges in federal court and state constitution challenges, two lawsuits in Indiana have already been filed.

The League of Women Voters of Indiana filed a lawsuit in Marion County against Indiana Secretary of State Todd Rokita. The lawsuit argues that it has the standing to sue on behalf of its members because the statute burdens potential voters and would cause the league to have to spend a great of deal resources assisting voters without the required ID. According to the Indiana Lawyer, "the suit says the 2005-passed Indiana voter ID law violates the Indiana Constitution's Article 2, Section 2, which states citizens only need to meet the age, citizenship, and residency requirements in order to cast a vote in-person. Any change the legislature might make must come through a constitutional amendment, not a statute, which didn't happen here, the suit says."

Co-counsel William Groth said, "It's a strict question of constitutional interpretation. Our argument will turn on whether the voter ID law imposes a new substantive requirement, or whether it's merely regulating the mechanics of the voting process. It's a subtle and nuanced distinction, but our Indiana caselaw supports that this must be a constitutional amendment."

The suit mentions two specific election examples where individuals were restricted from voting because of the ID law, including the famous May 2008 Indiana primary incident when 12 elderly nuns were not even allowed to cast provisional ballots because they didn't have the required ID.

In a separate lawsuit filed in Indiana, Robbin Stewart challenges the law for philosophical reasons. "It's different when going to an airport or driving a car, because those aren't constitutional rights, he said."

The Chronicle of Philanthropy ($$) has an interesting article on how nonprofits are utilizing the excitement of this election season.

As the November 4 presidential election draws nearer, Maria Rodriguez, executive director of the Florida Immigrant Coalition, has her eye on the calendar. Her organization is conducting its first voter-mobilization project and hopes to sign up 4,300 new Haitian, Latino, and community-college student voters and get 9,000 members of those groups to the polls. The coalition is one of many charities and foundations that are seeking to tap into unusually strong voter enthusiasm this year to recruit new foot soldiers in the fight for social causes both locally and nationally.

If you want your organization to get involved in the election, check out this free webinar from NonprofitVote.org. The webinar training on how to develop an effective plan for your organization's nonpartisan voter outreach activities, "Making a 2008 Voter Engagement Plan for Your Nonprofit," will be held on Thursday June 26 2:00-3:00pm EST. Topics will include how to integrate voter engagement work into daily activities, and the dos and don'ts of nonpartisan voter engagement. Sign up here.

By unanimous consent, the Senate finally approved five members of the Federal Election Commission (FEC). After the new members are sworn in, the agency will be back to full working order, and should be very busy. CQ Politics reports; "After months of squabbling over new members for the Federal Election Commission, the Senate confirmed five new officials Tuesday with little fanfare, putting the long-defunct commission back in working order. . . . Priorities for the group include new disclosure rules for lobbyists who bundle campaign contributions, requests for matching funds, and certifying public funds for the general election, said FEC spokesman Bob Biersack."

The current issue of the Chronicle of Philanthropy ($$) has an opinion piece titled " How to Guarantee Respect for Public-Interest Lobbyists." It addresses some of the negative consequences of the growing disdain towards lobbyists that has led to the presidential candidates' public purge of any such connections. In response, "to restore public faith in democracy, nonprofit groups need to do even more lobbying and advocacy. While it is critical to clamp down on unethical lobbying, nothing should be done to dampen interest in advocacy by the nation's more than one million charities." A proposed set of ethical principles to guide public interest lobbying is laid out in the article.

• Public-interest lobbying must add civic value.
• Public-interest lobbying must be inclusive, engaging the community, particularly those most affected by the public policy being advocated.
• Smart and ethical lobbying must be credible, and must follow all laws and regulations.

Although we do not fit into stereotypes, public-interest lobbyists are making a tremendous difference across this country every day against all odds. However, only if policy makers hear far more of America's voices can they govern in accord with what the people need. Lobbying is not only a constitutional right, but also a moral responsibility of nonprofit groups to improve the quality of life. So lobbying always needs to be a key part of nonprofit activities and one that we do with impeccable attention to ethics and the law.

The opinion piece was written by David Cohen, a senior fellow at Civic Ventures and Council for a Livable World, and Larry Ottinger, president of the Center for Lobbying in the Public Interest.

The American Civil Liberties Union (ACLU) and the ACLU of Texas filed a legal challenge in Dallas federal court to clear the names of two organizations, the Islamic Society of North America (ISNA) and the North American Islamic Trust (NAIT), named by the government as "unindicted co-conspirators" in its criminal case against the Holy Land Foundation (HLF). Government attorneys publicly identified them as co-conspirators before the HLF trial, even though neither organization was the subject of a criminal investigation or charged with any crimes.

The HLF case ended in a mistrial last fall and is scheduled for a retrial in September. The ACLU press release states that "the government conceded, however, that it had absolutely no evidence proving that either ISNA or NAIT had engaged in a criminal conspiracy. The lead prosecutor in the case told lawyers for the two organizations 'that ISNA and NAIT were not subjects or targets in the HLF prosecution or in any other pending investigation.' The prosecutor also acknowledged that the public labeling was simply a 'legal tactic' intended to allow the government to introduce hearsay evidence against HLF later at trial."

The court papers argue that the groups are mainstream charitable organizations, and the government violated their Fifth Amendment rights when it publicly branded them as criminals.

The National Association of Manufacturers' (NAM) challenge to a new member disclosure law was dismissed on April 11, followed by both the U.S. Court of Appeals and the U.S. Supreme Court refusing to grant a stay pending appeal. Now, the U.S. Court of Appeals for the District of Columbia Circuit has scheduled an oral argument for Sept. 12 with a decision expected weeks or months after the argument date.

NAM is appealing the lower court's decision that upheld disclosure provisions in the Honest Leadership and Open Government Act (HLOGA) that require coalitions and associations to reveal organizations that contribute at least $5,000 per quarter and actively participates in the lobbying campaigns. NAM charges that the member and affiliate provision is too vague, violating First Amendment rights of free association. The judge in April found that the provision was in fact narrowly defined.

CQ ($$) reports that a bill to revise the Foreign Intelligence Surveillance Act (FISA) will likely be announced today, with a possible House vote tomorrow (June 20). Under the new measure, "a federal district court to decide whether to provide retroactive legal immunity to telecommunications companies being sued for their role in the Bush administration's warrantless surveillance program. Under the prospective deal, the secret court created by the original law would get to review, in advance, the process by which the administration chooses foreign surveillance targets who may be communicating with people in the United States. One source said the federal district court deciding on retroactive immunity would review whether there was 'substantial evidence' the companies had received assurances from the government that the administration's program was legal."

And Reuters; considers this as clearly shielding the phone companies from potentially billions of dollars in lawsuits. "The House would likely approve the measure overwhelmingly. Despite opposition from its top two Democrats, the Senate would then likely give it final approval, clearing the way for President George W. Bush to sign it into law."

Meanwhile, read this New York Times editorial titled "Mr. Bush v. the Bill of Rights."

In the waning months of his tenure, President Bush and his allies are once again trying to scare Congress into expanding the president's powers to spy on Americans without a court order. . . . What is unacceptable, though, is that the district court would be instructed to decide based solely on whether the Bush administration certifies that the companies were told the spying was legal. If the aim is to allow a court hearing on the president's spying, the lawsuits should be allowed to proceed — and the courts should be able to resolve them the way they resolve every other case.

The Pew Internet and American Life Project has recently released a new report titled "Internet and the 2008 Election". The survey found that 46 percent of all Americans have used the internet, e-mail or cell-phone text messaging to participate in the political process. In addition, 35 percent of Americans have watched online videos related to the campaign, and 10 percent have used social networking sites to engage in political activity. Voters are increasingly making campaign contributions online, and more are using the Internet to get unfiltered information.

These findings show that people not only want to use the Internet to become informed, but also as a means to participate in our democracy. This speaks to the need to have an effective process of communicating with our elected representatives, and the importance of online advocacy campaigns.

The Senate is likely to quickly confirm five Federal Election Commission (FEC) nominees. CQ Politics discusses the list of issues that await a FEC with a complete quorum. These include writing regulations to implement new bundling rules in the Honest Leadership and Open Government Act of 2007, rewriting rules regarding "advertisements run in tandem by presidential candidates and the national parties. . . The commission also faces five months' worth of investigations, cases and complaints that are waiting for action, as well as several pending requests for advisory opinions from various groups and at least one now defunct 2008 presidential campaign."

And as a column by Eliza Carney from the National Journal" ($$) describes the situation, "with a backlog of pending regulatory issues that have piled up since January, the new commission will be playing a game of catch-up for the rest of this election season."

According to an Alternet article, an attorney for the Department of Veterans Affairs (VA), "told a federal appeals court Thursday that the VA could not conceive of any circumstance where voter registration drives could occur at its facilities." For the most part the atrocious decision to ban registration drives at VA facilities has largely been absent from major newspapers, but the New York Times has now covered the recent federal appeals court hearing.

An appeals court this week (June 12) considered whether restrictions on voter registration drives at the VA's campus in Menlo Park, CA are unconstitutional. The court is revisiting the question of whether Steve Preminger, chair of the Santa Clara County Democratic Central Committee has standing to question the constitutionality of the VA's policy.

According to the Alternet article, Owen Martikan, assistant U.S. attorney representing the VA said "voter registration drives would interfere with patient medical care and also violate the federal Hatch Act, which limits federal employees from participating in political campaign activities." However, veterans are not federal employees.

In May, the department took the broader step of issuing a ban on all outside groups from registration drives on its properties. Scott Rafferty, a lawyer representing Preminger, said "Just because veterans live on these campuses does not mean they should be deprived of the rights of free association and free speech."

The White House formally nominated Matthew S. Petersen for the Federal Election Commission (FEC), completing a panel of members for Senate consideration. President Bush announced his plans to nominate Petersen last month to replace controversial FEC nominee Hans von Spakovsky. Howard Gantman, an aide to Senate Rules Committee Chairman Dianne Feinstein (D-CA) told BNA Money and Politics ($$) that the Petersen's nomination could be advanced to the Senate floor for a vote within days. The Senate committee still must receive a routine report on possible conflicts of interest prepared by the Office of Government Ethics in cooperation with the FEC.

Meanwhile, a controversy has broken out over another Republican nominee, Donald McGahn and his previous role as an attorney for former House Majority Leader Tom DeLay (R-TX). Citizens for Responsibility and Ethics in Washington (CREW), has requested the Senate Rules Committee hold a new hearing on McGahn's work for DeLay's political action committee.

The American Bar Association Section of Taxation recommended guidance to be included in the 2008-2009 Treasury Department Internal Revenue Service (IRS) guidance priority list. The section asked for guidance in a range of practice areas including exempt organizations. Among many other recommendations, the request included guidance on "acceptable methods for determining whether an organization is conducting political activities (including both candidate campaign intervention and improper private benefit to partisan interests) as its primary activity (consistent with section 527 exemption), or as a less-than-primary activity (consistent with non-charitable section 501(c) exemption)."

OMB Watch filed comments on IRS guidance priorities urging the creation of a bright line definition of partisan intervention in elections.

Americans United for Separation of Church and State (AU) have asked the Internal Revenue Service (IRS) to investigate a Minnesota church whose pastor declared that Christians cannot vote for either Senator Hillary Clinton (D-NY) or Sen. Barack Obama (D-IL) in the presidential election. Pastor Gus Booth said in a May 18 sermon at Warroad Community Church in Warroad, MN, that Christians "cannot support Hillary Clinton or Barack Obama. Both Hillary and Barack favor the shedding of innocent blood [abortion] and the legalization of the abomination of homosexual marriage."

The Warroad Pioneer, a local weekly newspaper covered the sermon under the headline "Local pastor uses scripture to oppose presidential candidates Clinton and Obama." Booth sent the paper's article to both AU and the IRS. Americans United's mission is to preserve the separation of church and state as guaranteed by the constitution to ensure religious freedom for Americans, according to its Web site. According to AU's press release, the group also received an e-mail from the pastor noting that he had used his pulpit for partisan purposes. The email stated; "I am writing you to let you know that I preached a sermon in my church on Sunday, May 18, 2008, that specifically addressed the current candidates for President in the light of the Bible,' Booth wrote. 'As you can see from the attached newspaper article, I specifically made recommendations as to who a Christian should vote for."

In the press release, Rev. Barry W. Lynn, AU executive director, "called Booth's actions a flagrant violation of federal tax law. Churches and other tax-exempt organizations are free to address moral issues but are not allowed to engage in campaign intervention."

In March the Voter Education Committee (VEC), a 527 organization, sought a constitutional challenge to Washington state law which requires any organization found to support or oppose a candidate or ballot issue to register as a political committee and have their finances regulated. VEC considers the definition of "political committee" to be constitutionally vague. And recently last week on June 2, the U.S. Supreme Court denied the hearing of the case. The Supreme Court decision lets stand the Washington State Supreme Court ruling that VEC should have registered as a political committee.

The Congressional Management Foundation (CMF) has released a very interesting new study titled, "Communicating with Congress How the Internet Has Changed Citizen Engagement." It reports on the results of survey research with over 10,000 citizens about their correspondence with Congress. A CMF press release highlights that nearly 100 million adult Americans contacted Congress in the last five years. With consequences for citizens, Congress, and advocacy organizations, the study provides a lot of valuable information. For example, the study found that "organizers of grassroots advocacy campaigns, and the groups and causes for whom they work, play the role of trusted educators and facilitators of communications between citizens and Members of Congress. They are part of something bigger than a one-time advocacy campaign, and they should understand and respect their role in the democratic dialogue."

The Internal Revenue Service (IRS) held a phone forum on the role tax exempt organizations can play in the electoral process, addressing issues of political activity, lobbying and issue advocacy. 501(c)(3) organizations can educate voters, register voters, and encourage higher voter turnout, as long as the activity is carried out in an unbiased way. According to BNA Money and Politics ($$), the IRS is concentrating on issue advocacy because it is increasingly finding situations that are not covered under the precedential guidance in Revenue Ruling 2007-41.

Overall, the types of alleged prohibited political activity IRS has seen since it began its political activity program to follow up on referrals of misconduct in 2004 include: organizations distributing diverse materials encouraging people to vote for candidates, religious leaders using the pulpit to endorse or oppose particular candidates, candidates speaking in their roles as candidates at officials functions of exempt organizations, organizations placing signs on their properties showing support for particular candidates, organizations disseminating improper voter guides or candidate ratings, organizations criticizing or supporting candidates on the their Web sites or through links to another Webs site, organizations officially verbally endorsing candidates, and organizations making cash contributions to a candidate's political campaign.

Due to the Honest Leadership and Open Government Act of 2007, which amends the Lobbying Disclosure Act of 1995 (LDA), new guidance information has been issued. Section 5 of the LDA was amended by mandating an additional filing requirement, Form LD-203, to be filed semiannually by July 30th and January 30th. Information to be reported on new Form LD-203 includes certain contributions to political campaigns, honorary contributions, presidential library contributions, and payments for event costs. In addition, the filer must certify that they read and understand the Rules of the House and Senate relating to gifts and travel and has not provided, requested, or directed a gift with knowledge that it would violate either House or Senate Rules.

Senate guidance is available here and House guidance here.

The ranking member of the Senate Select Committee on Intelligence, Senator Christopher Bond (R-MO) has put out what he considers a compromise on surveillance legislation to revise the Foreign Intelligence Surveillance Act (FISA). OMB Watch signed on to a coalition letter strongly opposing this "compromise."

"The Bond proposal does incorporate a few improvements, including an audit of illegal warrantless surveillance and a provision reaffirming that FISA is the exclusive means by which foreign intelligence surveillance can lawfully be conducted in the United States. But these modest concessions do not offset the vast new unchecked surveillance powers the bill confers on the government."

In addition, Senators Russ Feingold (D-WI) and Chris Dodd (D-CT) are urging those working to finalize the FISA Amendments Act to include provisions that protect the privacy of Americans and not to grant retroactive immunity to companies that allegedly cooperated in the illegal warrantless wiretapping program. Bond's proposal would give the FISA court the authority to decide whether to grant retroactive legal immunity for telecommunications companies. Feingold and Dodd sent a letter to Democratic leaders stating, "under the Bond proposal, the result of the FISA Court's evaluation would be predetermined. Regardless of how much information it is permitted to review, what standard of review is employed, how open the proceedings are, and what role the plaintiffs' lawyers are permitted to play, the FISA Court would be required to grant immunity. To agree to such a proposal would not represent a reasonable compromise."

Americans United for Separation of Church and State (AU) has reportedly requested that the Internal Revenue Service (IRS) investigate a California ministry whose leader issued a press release endorsing Republican presidential candidate Mitt Romney.

"In a Feb. 4 press release, the Rev. Jesse Lee Peterson of the Brotherhood Organization of A New Destiny (BOND) endorsed Romney. The opening paragraph reads, in part, "Rev. Jesse Lee Peterson...Founder and President of BOND, the Brotherhood Organization of A New Destiny, announced this morning his personal endorsement of Governor Mitt Romney for President of the United States." The press release was printed on BOND letterhead and posted on the group's Web site, where it was clearly identified as a "BOND Press Release."

A federal judge has thrown out convictions of two formers leaders of a Boston-based Muslim charity that is now defunct. According to the Boston Globe Judge Dennis Saylor of the United States District Court in Boston ruled that they should not have been convicted for tax-related charges last January. The conviction against a third defendant was allowed to stand.

The case was based on charges that the defendants published a newsletter with articles supporting jihad without reporting it to the IRS. There was evidence the group, Massachusetts Care Interantional, Inc., also sent aid to widows and orphans and disaster victims around the world. A former Harvard law professor who helped challenge the convictions, Kathleen Sullivan, told the Globe, "Never before has there been a tax criminal prosecution for a charity failing to tell you that it's sending out newsletters that somebody might not like." Prosecutors are considering an appeal.




Nonprofits Comment on Proposed New Instructions for IRS Form 990

OMB Watch and the Center for Lobbying in the Public Interest filed joint comments on draft instructions for the new IRS Form 990 on May 30 that asked the agency to clarify instructions for reporting lobbying and partisan election activities.

Other groups filing comments include Independent Sector (IS)which commented on a number of issues, including a request for a more specific definition of key employees. The Council on Foundations also provided comprehensive comments that included a request to clarify reporting expenses paid for travel by government officials. The Council noted that such expenses are not illegal, and if fact can "appropriately and significantly" support a charity's mission.

Posted by Kay Guinane, 05:00:15 PM

Monday, June 02, 2008