Proposed IRS Nonprofit Rules Violate Paperwork Reduction Act

Estimated burden is “wildly off the mark”

For Release: January 24, 2013  Contact: Joe Trotter  Phone: 210-352-0055 (Cell)

Alexandria, Va. – Proposed IRS rules on social welfare groups violate the Paperwork Reduction Act (PRA) because the estimated recordkeeping burden “is excessively low and wildly off the mark,” according to comments filed by the Center for Competitive Politics (CCP) with the Office of Management and Budget (OMB) and IRS.

The comments warn that “The IRS may not proceed to a final rulemaking under the PRA without addressing this fatal flaw in the [proposed rule’s] gross understatement of the recordkeeping burden.”

“The absurd time estimates contained in the proposed rules provide more evidence that the rules are fatally flawed,” said CCP President David Keating.

The IRS estimates that the proposed rules would impose an annual recordkeeping burden of only two hours for the typical nonprofit group, but CCP said this “estimate ignores the fact that the IRS already has provided a far greater estimate of the recordkeeping burden for the existing rules.”  Since the new rules would “sweep many more activities within the realm of what is restricted” political activity, the proposed rules “will consequently also increase the recordkeeping burden beyond the IRS’s already far greater estimates for the existing rules.”

The comments, written by Senior Fellow Eric Wang, note that the rules propose to define as political activity currently unrestricted activities such as nonpartisan voter guides, voter registration, grassroots lobbying and educational website content.  Tracking spending on these activities and a new requirement to categorize volunteer hours impose huge new recordkeeping burdens.

Wang also notes that the IRS currently appears to require that such groups spend no more than 50% of their budget on political activities.  He warns that “if a final rule proposes a proportion that is significantly lower than what is currently used by the IRS, this would require much greater precision in recordkeeping, forcing many organizations to abandon the use of time-saving estimates, which would produce a large increase in the recordkeeping burden.”

Wang concludes that “Congress enacted the Paperwork Reduction Act ‘to have Federal agencies become more responsible and publicly accountable for reducing the burden of Federal paperwork on the public.’ [Pub. L. No. 104-13.] The Service’s severe underestimation of the recordkeeping burden … contravenes the law, and the rulemaking may not proceed unless this fundamental error is corrected.”

You can find a copy of Eric Wang’s comments on the Paperwork Reduction Act impact here and CCP’s December comments to the IRS that propose an alternative rule here.  For more information on the proposed IRS rules, check out CCP’s resource page on the IRS rulemaking.

The Center for Competitive Politics promotes and defends the First Amendment’s protection of the political rights of speech, assembly, and petition. It is the nation’s largest organization dedicated solely to protecting First Amendment political rights.


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