Six months after the Internal Revenue Service’s inspector general revealed that the tax-collection agency had been targeting conservative organizations for added scrutiny and delaying their applications for tax-exempt status, the agency proposed new rules for handling political activity by nonprofits. Unfortunately, the proposed rules would plunge the agency deeper into the business of regulating political speech.
The agency’s proposed rules to govern the political activity of social welfare groups suffer from significant flaws. The Institute for Free Speech (IFS) questions the need for the IRS to define or regulate political speech because the Federal Election Commission already reviews groups to determine if their political activity is so extensive as to trigger FEC filings as political committees.
The Institute submitted comments to the IRS suggesting that if an entity with a social welfare purpose is a PAC under Federal Election Commission rules, it ought to be regulated as a Section 527 organization. If it is not, it should be regulated as a Section 501(c)(4) social welfare group. The IRS should focus on its tax-collecting mission and leave campaign finance rules to the FEC.
The comments submitted by IFS Chairman and former Federal Election Commission Chairman Bradley Smith and IFS Legal Director Allen Dickerson note that “This straightforward approach would harmonize the IRS’s rules with those of the Federal Election Commission, the body entrusted by Congress with ‘exclusive jurisdiction’ for civil enforcement of the nation’s campaign finance laws…. [This] approach offers real clarity without dragging the IRS further into the thicket of political regulation, a tangle from which it—and the Service’s reputation for the neutral, nonpartisan collection of revenue—may never recover.”
However, if the IRS decides to proceed with new regulations, the Institute’s comments offers an alternative based on the landmark Buckley v. Valeo ruling, a unanimous Supreme Court decision that provides an elegant solution to the complex problem of regulating political speech and association. Our proposal suggests adopting the Buckley case’s definition of political activity, which includes only direct support for candidates and political parties and express advocacy for candidates — e.g., “Vote for Jones” — as “political activity” subject to limits. We also believe groups should be permitted to spend up to half of their budget on political activities and maintain their tax exempt status as a Section 501(c)(4) social welfare group.
The Institute released a report on the overwhelming opposition to the proposed rulemaking, available here.
Notable Comments Filed with the IRS on the Future Revised Rule
- Comments by the Institute for Free Speech:
- Comments by the Institute for Free Speech:
- Notable Comments with Extensive Legal Analysis:
- Alliance for Justice
- American Bar Association Section of Taxation
- American Center for Law and Justice
- American Civil Liberties Union (ACLU)
- American Conservative Union
- American Future Fund (Jason Torchinsky and Michael Bayes of Holtzman Vogel Josefiak PLLC)
- Barnaby Zall, Weinberg, Jacobs & Tolani, LLP
- Bell, McAndrews & Hiltachk LLP
- Center for Equal Opportunity
- Center for Individual Freedom, American Commitment, and American Encore, Inc. (Bobby R. Burchfield, McDermott, Will, & Emery)
- Citizens United
- Concerned Women for America (Webster, Chamberlain & Bean, LLP)
- First Amendment Advocates (Floyd Abrams, Arthur Eisenberg, Joel Gora, Michael Meyers, Harvey Silverglate, Nadine Strossen, and Bill Van Alstyne)
- Former Federal Election Commission Commissioners (Lee Ann Elliott, Thomas J. Josefiak, David M. Mason, Don McGahn, Bradley A. Smith, Michael E. Toner, Hans A. von Spakovsky, Darryl R. Wold)
- Free Speech Coalition
- The Heritage Foundation
- Institute for Justice
- Judicial Watch (Webster, Chamberlain & Bean, LLP)
- Labor Organization Comments (AFLCIO, AFSCME, AFT, IAM, NEA, SEIU, UFCW)
- Missouri Alliance for Freedom, Citizens for Self-Governance, and Empower Texans (Graves Garrett LLC)
- National Association of Manufacturers
- National Rifle Association of America
- National Right to Work Committee
- South Carolinians for Responsible Government
- Strickland Brockington Lewis LLP
- TheTeaParty.net (Dan Backer)
- Tradition, Family, Property, Inc. (Webster, Chamberlain & Bean, LLP)
- U.S. Chamber of Commerce
- Wyoming Liberty Group and Republic Free Choice (Benjamin T. Barr)
- Comments Filed by National Organizations
- Comments Filed by Labor and Agricultural Organizations
- Comments Filed by Members of Congress and Appointed Officials
- Comments Filed by State and Local Organizations
- Comments Filed by Experts and Law Firms
Comments on Compliance with the Paperwork Reduction Act
- Center for Competitive Politics
- Cleta Mitchell (On behalf of Tea Party Patriots and FreedomWorks)
- Constantine Financial Services, Inc.
- Graves Garrett LLC, (On behalf of the Missouri Alliance for Freedom and Empower Texans)
- McDermot, Will & Emery (On behalf of the Center for Individual Freedom)
- Webster, Chamberlain & Bean, LLP (On behalf of the Concerned Women for America (CWA) and the CWA Legislative Action Committee)
- Webster, Chamberlain & Bean, LLP (On behalf of Judicial Watch)
- Weinberg, Jacobs & Tolani, LLP
- Video – Wall Street Journal Opinion Journal: Making IRS Abuse Official
- Wall Street Journal: All the President’s IRS Agents, By Kimberley Strassel
- Wall Street Journal: IRS Unpopularity Contest, Editorial
- Wall Street Journal: Connecting the Dots in the IRS Scandal, By Bradley A. Smith
- Wall Street Journal: Liberals vs. the IRS, Editorial
- The Nation: The IRS Swings on Dark Money but Misses the Target, By Nan Aron
- Human Events: Silencing Conservatives – The Administration’s Latest Attempt to Censor Political Speech by Hans von Spakovsky
- Wall Street Journal: IRS Targeting: Round Two, By Kimberley Strassel
- Wall Street Journal: The Latest IRS Power Grab, By Bradley A. Smith
- Daily Caller: The IRS’s Thanksgiving turkey: More non-profit restrictions, By Eric Wang
- National Review Online: Silenced by the Taxman, By Bradley A. Smith
- Wall Street Journal: The Latest IRS Political Crackdown, Editorial
- 55+ Conservative and Free Market Groups Urge Congress to Stop IRS 501(c)4 Rule in Omnibus (60 Plus Association, Able Americans, American Commitment, American Conservative Union, American Energy Alliance, American Family Association, American Target Advertising, Inc., American Values, Americans for Prosperity, Americans for Tax Reform, Campaign for Liberty, Carleson Center Welfare Reform Action Fund, Center to Protect Patient Rights, Center for Individual Freedom, Center for Worker Freedom, Center for Military Readiness, Center for Security Policy, CitizenLink, Club for Growth, CNP Action, Inc., Concerned Women for America Legislative Action Committee, The Conservative Caucus, Cost of Government Center, Council for Citizens Against Government Waste, Center for Health Policy and Inequalities Research at Duke University, Digital Liberty, Ending Spending, Faith and Freedom Coalition, Faithful Catholic Citizens, Family Business Defense Council, Family-Pac Federal, Foundation for Democracy in Iran, Free Congress Action, Freedom Action, FreedomWorks, Frontiers of Freedom, The Heartland Institute, Heritage Action, Hispanic Leadership Fund, Home School Legal Defense Association, Independent Women’s Voice, Institute for Liberty, Less Government, Let Freedom Ring, Move-On-Up.org, National Tax Limitation Committee, National Taxpayers Union, Restore America’s Mission, Restore America’s Voice, Social Security Institute, Taxpayers Protection Alliance, Tea Party Nation, Tea Party Express, Tea Party Patriots, TheTeaParty.net, Tradition, Family, Property, Inc., United for Missouri, The Weyrich Lunch, Young America’s Foundation, and YR Alumni Network, Inc.)
- ACLU: ACLU Defends Nonprofit Free Speech
- Alliance for Justice: Treasury, IRS proposal endangers citizen participation in democracy
- Alliance for Justice: Treasury, IRS Proposal: The End of Nonpartisan Election Work By 501(c)(4)s?
- The IRS, “Political Activity,” and “Disclosure:” A Brief Rejoinder to Mr. Ryan, By Allen Dickerson
- Campaign Legal Center agrees with CCP: IRS regulations are not about tax policy, but regulating political speech, By Bradley A. Smith
- Trister, Ross, Schadler & Gold: Memo to Clients on the IRS Notice of Proposed Rulemaking
- More Soft Money Hard Law: The IRS and (c)(4) Political Activity: Choices and Explanations, By Bob Bauer
- 21st Century Taxation: IRC §501(c)(4) Information, Compiled by Professor Annette Nellen
- Presentation: IRS Proposed (c)4 Regulations, By Cleta Mitchell (Foley & Lardner, LLP)
- Facts About the Proposed IRS Rules for 501(c)4’s, By Cleta Mitchell (Foley & Lardner, LLP)
Congressional Statements, Letters, and Legislation
- Letter – Top Congressional Republicans Urge IRS Commissioner to Withdraw a Proposed Agency Rule Designed to Muzzle Administration Critics
- Letter – 60 Organizations and Groups in Support of the Stop Targeting of Political Beliefs by the IRS Act of 2014
- Speech – McConnell Calls on IRS Commissioner to Resist Obama Administration Efforts to Muzzle Free Speech
- Statement – McConnell to the IRS: Leave the First Amendment Alone
- Statement – Senator Cruz: Democrats defeat amendments to protect Americans from IRS abuses
- H. R. 3865: “Stop Targeting of Political Beliefs by the IRS Act of 2014”
- Letter – National Right to Life Committee Urges Congress to Vote for “Stop Targeting of Political Beliefs by the IRS Act of 2014”
- Letter – “YES” on H.R. 3865, the “Stop Targeting of Political Beliefs by the IRS Act of 2014” (National Taxpayers Union)
- Ways and Means Committee: Camp Introduces Legislation to Block Proposed IRS Regulations that Stifle Rights of Tea Party Groups
- Statement – Camp Opening Statement: H.R. 3865, “Stop Targeting of Political Beliefs by the IRS Act of 2014”
- S. 2011: “Stop Targeting of Political Beliefs by the IRS Act of 2014”
- Letter – Darrell Issa and Jim Jordan: Committee on Oversight and Government Reform to John Koskinen
- Myth: 501(c)(4)s are “charities,” and doing political work abuses their charitable status.
- Myth: 501(c)(4)s must be operated “exclusively for the promotion of social welfare,” not politics.
- Myth: Political activities shouldn’t get tax breaks.
- Submit a comment to the IRS on this rulemaking.
- Notice of proposed rulemaking.
- What is the definition of candidate-related political activity?
- Tips on submitting comments to the IRS opposing the proposed regulations, By Cleta Mitchell
- CCP: “Bright Lines Project” Fails to Live Up to Its Name, By Eric Wang
- CCP: Response to Recent Comments of the “Bright Lines Project”, By Eric Wang
- Controversial Speech and the Education of Voters, By Bob Bauer
- The Bright Lines Project: Its Defense and a Brief Reply, By Bob Bauer
- The IRS and the Question of Intent, By Bob Bauer