IRS Hits Organization of All political Stripes on Nonprofit Rules

The language of Section 501(c) of the Internal Revenue Code is very clear: organizations that enjoy tax-exempt status as charitable organizations cannot engage in any significant political activities either by supporting candidates or by supporting particular legislation.  Despite this very clear restriction on non-profits, we have seen all kinds of political activities on the part of the Catholic Church, supposed "family values" organizations, and "educational" groups such as those run by the Koch brothers whose sole activities are in reality political.  Now, thankfully, the IRS is beginning to crack down on these bogus charities.  If we are lucky, the IRS will start to address the rampant abuses by religious affiliated groups as well.  Note the dishonest claims of Republicans that the rules would stifle free speech.  No one is stifling free speech - it is merely ending a situation where taxpayers are forced to indirectly subsidize groups working to harm them.  Here are highlights from a piece in Politico:

Three months after the administration unveiled a controversial new rule for 501(c)(4) nonprofits, both liberal and conservatives groups are hoping a record amount of comments and a deluge of attention from Capitol Hill will persuade the Internal Revenue Service to at least pare back the proposals before finalizing the new rule.

“No one thinks the proposals are perfect. There is near unanimity among liberals and conservatives that the effort was a bit too broad,” said Stephen Spaulding, a staff counsel with the liberal advocacy group Common Cause, which is generally supportive of revamping campaign finance laws.

At issue is the vague tax law that currently governs these nonprofits, which count among their number Crossroads GPS, founded by former George W. Bush adviser Karl Rove, and the liberal-leaning Patriot Majority. As it stands now, the law on 501(c)(4)s says such groups need to “exclusively” focus on social welfare, while the IRS regulations say social welfare must be their “primary” focus.

The IRS and Treasury proposed a new standard, applying to groups regardless of political affiliation, classifying any communications within 60 days of a general election that clearly identifies a candidate or party or some get-out-the-vote efforts as political. It would replace a vague “facts and circumstances” test that currently applies.

Some on the left dismiss worries that the rules violate First Amendment rights. A letter from 15 Democrats to the IRS last week called on the agency to put a strict test of political activities — from 5 percent to 15 percent — as a standard.  But some are calling for an even more aggressive approach.

Republicans see the regulations as an extension of the extra scrutiny faced by conservatives.

“It is disturbing that the IRS is proposing new rules that would attempt to further limit the free speech rights of Americans, while the IRS and the Department of Justice still refuse to provide the American people with all the facts surrounding the IRS’s targeting of certain organizations based on their political activity,” Texas Republican Sen. Ted Cruz wrote in his comments. “The IRS should not be used as a tool for partisan warfare. And the federal government must respect the First Amendment rights of our citizens. The proposed new rules do neither.”

And because of the fiery connection, the regulations have prompted comparisons by nearly 1,000 commenters to Nazi Germany and the Soviet Union.

The political drama caused the Treasury to write Camp last week to clarify what it called misstatements to the press from Republicans.

“There have been numerous misleading reports and public statements regarding the [proposed regulations]. … The [rule change] does not restrict any form of political speech,” said a letter authored by Assistant Secretary for Legislative Affairs Alastair Fitzpayne. “The [regulation] does not favor any individual or political party or group. It applies to all organizations regardless of political affiliation.”

The letter to Camp also attempts to push back a Republican narrative that the Obama administration was secretly working on the regulations before the May 2013 inspector general report that broke the IRS extra scrutiny of tea party groups.

Tax-exempt status is a privilege, not a right and the abuses need to end.