IRS Targets 501(c)(4) Groups

The IRS sent questionnaires to a number of 501(c)(4) groups this week that suggests they are targets in an investigation into whether they are exclusively promoting social welfare.

Dan Froomkin from the Huffington Post reports (IRS May Make Political Groups Pay Dearly for Keeping Donors Secret — And Out Them, 3/8/2012):

But in a sign that the agency may be waking from its slumber, the IRS has sent detailed questionnaires to several Tea Party organizations — and possibly other political groups — to determine if they truly qualify for the 501(c)(4) designation intended for groups whose exclusive purpose is to promote social welfare.

Should any group currently calling itself a 501(c)(4) have its designation denied or revoked, tax experts said the consequences could be severe, including fines of 35 percent or more of the money they raised in secret.

And the groups might have to make donors’ names public.           

The article continues:

“If I thought it was important to remain anonymous for my business reasons or for my personal reasons, I wouldn’t take any comfort in any assurances the organization has given me until now,” said Karl Sandstrom, a former Federal Election Commission member who now works at the Washington office of law firm of Perkins Cole.

This is another attempt to disrupt the legitimate operations of organizations unpopular with the current administration and to force a stifling disclosure regimes that impact their funding.  As counsel for the American Center for Law and Justice put it:

“The problem here is the IRS has gone beyond legitimate inquiries and is demanding that these organizations answer questions that actually violate the First Amendment rights of our clients,” Jay Sekulow, chief counsel of the evangelical interest group American Center for Law and Justice, said in a statement.

Between these actions and the SEC’s recent interest in political spending, it would appear that the administration is forcing the unpopular, failed DISCLOSE Act through non-legislative channels.  Unfortunately, free speech is once again in the crossfire.

The Center for Competitive Politics is now the Institute for Free Speech.