By Eric Wang
On the question of whether to submit to secular taxation, Jesus famously advised the Jews to “render to Caesar the things that are Caesar’s, and unto God the things that are God’s.” In response to the ongoing Internal Revenue Service scandal, Congress should take a page out of Mark 12:17 and render to the IRS only the issues that are within the agency’s expertise. Concomitantly, regulation of politics should be vested solely in the agency that is best structured for the role: the Federal Election Commission.
In its report of the IRS’s targeting of conservative groups seeking tax-exempt status, the Treasury Inspector General for Tax Administration notes that IRS examiners “lacked knowledge of what [political] activities are allowed by … 501(c)(3) and … 501(c)(4) tax-exempt organizations.” They are not alone. Political and tax law experts grapple with this problem every day.
The IRS uses a free-ranging “facts and circumstances” test for determining impermissible “political intervention” by nonprofits. The standard is so vague that the IRS has all but given up on providing clarification. In its current “Election Year Issues” publication, the agency lists four factors it considers, and then cites to a 1991 conference presentation by a private-sector attorney for other unspecified factors that may be relevant.
Political “reform” advocates have proposed to fix the problem by simply prohibiting nonprofits, and 501(c)(4)s in particular, from engaging in any political activities, or to permit only a miniscule amount. These suggestions still beg the question of what constitutes political intervention, and they still leave the IRS as the adjudicator.