Center for Competitive Politics: Proposed IRS Nonprofit Rules Violate Paperwork Reduction Act

January 23, 2014   •  By Joe Trotter   •    •  

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 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.

Joe Trotter

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