Were New Proposed IRS Nonprofit Regulations Prepared in Secret?



February 5, 2014; Accounting Today

U.S. House Ways and Means Chair Dave Camp (R-MI) sent an official letter to IRS Commissioner John Koskinen requesting copies of all documents pertaining to the proposed changes in regulations affecting 501(c)(4) social welfare organizations. In the letter, the IRS Commissioner has until February 13 to reply to the request and provide the documents.

Statements from Treasury officials indicated that the proposed 501(c)(4) regulations were drafted in 2013 in response to the “confusion” surrounding the issues of nonprofit political activity and applications for tax exemption by some conservative groups. However, Rep. Camp cited an email from a Treasury employee, Ruth Madrigal, to former IRS Exempt Organizations (EO) Director Lois Lerner and others as evidence that the proposed regulations were planned much earlier and possibly in secret.

In the June 2012 email, Madrigal says, “Don’t know who in your organizations is keeping tabs on c4s, but since we mentioned potentially addressing them (off-plan) in 2013, I’ve got my radar up and this seemed interesting….” The term “off-plan” appears to refer to work performed by Treasury but not included in the agency’s official, publicly available list of priorities. Camp cites the email as evidence that there were plans to change 501(c)(4) regulations for the first time since 1959 as part of an attempt by the government to limit legitimate activities by groups with which the Obama administration disagreed. Democrats on the House Ways and Means Committee say that the Madrigal email is nothing new and is being used by Republicans to renew interest in a nonexistent scandal.

The proposed regulations were issued by the IRS late in November of 2013 and included a 90-day comment period. According to Koskinen, the IRS has received “an unprecedented number of public comments” thus far (almost 21,000, according to the Federal Register website). Due in part to the large number of public comments to be reviewed, Koskinen believes the regulations “will not be finalized anytime soon,” according to the article in Accounting Today.—Michael Wyland


Michael Wyland

Michael L. Wyland, CSL, has more than thirty years of experience in corporate and government public policy, management, and administration. An expert on nonprofit governance and public policy issues, he has been featured and quoted extensively in media including The Wall Street Journal, The New York Times, CNN, Fox News, Washington Post, The Chronicle of Philanthropy, and The Nonprofit Quarterly. He currently serves as an editorial advisory board member and contributor to The Nonprofit Quarterly, with more than 100 articles published since 2012. Michael is a partner in the consulting firm of Sumption & Wyland. Founded in 1990, the firm provides board governance consulting, public speaking and training, and executive coaching to nonprofit organizations. Sumption & Wyland has assisted more than 200 nonprofits with strategic planning services from pre-retreat research to staff-level implementation assistance and effectiveness monitoring. Speaking topics include board-CEO partnerships, nonprofit executive transition issues, and overviews of the nonprofit sector of the US economy. Michael was born in Washington, DC and raised in the Northern Virginia suburbs. Prior to co-founding Sumption & Wyland, Michael managed the computer operations for an independent oil & gas investor in Dallas, Texas and served as a staff assistant to a U.S. Representative. During his college years, he spent one summer working at the US Department of Labor and one summer working at the US Department of Justice. His past volunteer service includes various leadership positions at the local, state, and national level with the Young Republicans. He has been the secretary and president of a condominium homeowners association and the treasurer of a professional association serving computing professionals. He served as a Trustee and Vice President of Sertoma Foundation, and has been elected president of his local Sertoma club twice. In 2014, Michael was elected Chair of the South Dakota Commission for National and Community Service (Serve SD), on which he has served since its founding in 2011. He is currently working as a senior advisor to establish a national charity dedicated to the elimination of prejudice, expanding the scope and reach of the 120-year old Pi Lamba Phi fraternal organization. Michael's writing for NPQ often addresses healthcare policy and governance, scandals involving nonprofits, and the governance and policy implications of nonprofit stories in the news. He was widely quoted and cited for his work analyzing the governance issues related to the Jerry Sandusky/Penn State/Second Mile scandal in 2011. More recently, he has written more than 30 pieces for NPQ relating to the IRS scandal. In addition, he presented a paper at the national 2014 ARNOVA Conference about the IRS scandal and its implications for regulation of political activity by nonprofit organizations. Michael lives in Sioux Falls, SD with his wife, Margaret Sumption, and their dog. They have one adult son. In his leisure time, he likes to read histories and biographies, play golf, cook, and be a companion to his wife.