Right now, the IRS is trying to change the rules for tax-exempted 501 (c)(4) groups. Yes, we're talking about the same IRS that targeted conservative groups trying to obtain that tax exempt status. This latest round of controversy was best described by the Wall Street Journal's Kimberley Strassel on January 16:
The fight was sparked by a new rule that the Treasury Department and the IRS introduced during the hush of Thanksgiving recess, ostensibly to "improve" the law governing nonprofits. What the rule in fact does is recategorize as "political" all manner of educational activities that 501(c)(4) social-welfare organizations currently engage in.
It's IRS targeting all over again, only this time by administration design and with the raw political goal-as House Ways and Means Chairman Dave Camp (R., Mich.) notes-of putting "tea party groups out of business."
As a result, Chairman Camp has requested that all documents on the proposed changes to 501(c)(4) groups from Treasury Secretary Jack Lew and IRS Commissioner John Koskinen last month.
Upon sending the letter, the Chairman said "Before having all the facts in hand, Treasury rushed forward with new rules that seriously limit groups' ability to engage in public debate. It is clear that the Obama Administration is still targeting conservative groups and wrote these rules to put them out of business. This is pure politics and the new IRS commissioner should do the right thing and put a stop to it."
- Under proposed Treasury regulations, 501(c)(4) organizations cannot engage in non-partisan activities, like voter registration and get-out-the-vote efforts, or convene candidate forums without jeopardizing their exempt status.
- Chairman Camp introduced H.R. 3865, "Stop Targeting of Political Beliefs by the IRS Act of 2014," which would prohibit Treasury and the IRS from finalizing the proposed rules for one-year in order to allow for the completion of the IRS targeting investigation and a thorough public discussion, including a review of public comments related to the proposed regulations.
Responses are due to the Committee by February 13, 2014.
Well, now this regulatory nightmare facing conservative groups has also roped liberals into the fray.
Why? Social welfare groups' activity would be considered political, thus subject to the new regulations. Additionally, liberals are worried these new rules could serve as a launching ground to bring unions and trade associations under the IRS' jurisdiction.
Eliana Johnson at National review wrote on February 17:
The proposed regulations have a host of left-leaning groups worried that the 501(c)(4) rules could serve as a template for regulations governing 501(c)(5) nonprofits (unions) and 501(c)(6) groups (trade associations), and they are speaking out. Service Employees International Union associate general counsel John Sullivan told the Washington Post that the proposed rules "would be totally inappropriate for unions" because they are "broadly phrased and categorical," and that they would "seriously affect [unions'] ability to function."
The American Civil Liberties Union, meanwhile, submitted a 26-page comment to IRS commissioner John Koskinen slamming the proposed regulations. "Social welfare organizations praise or criticize candidates for public office on the issues and they should be able to do so freely, without fear of losing or being denied tax-exempt status, even if doing so could influence a citizen's vote," the group wrote, calling such advocacy "the heart of our representative democracy." The ACLU argued that, if the advocacy of social-welfare groups influences voting, it does so only by "promoting an informed citizenry."
Then, late last week, the liberal magazine The Nation piled on with an op-ed arguing that the rules would "do almost nothing to fix the things you think are broken and may, in fact, do some real damage to the ability of everyday Americans to have an impact on the political process" - that is, that groups funneling big money into the electoral process would find a way around the rules, perhaps by recategorizing themselves, while the little guy would effectively be silenced.
When conservatives, the ACLU, and the left-wing Nation magazine are saying how bad these new IRS regulations are going to be, you know you have a bad government policy.