IRS Chief Filibusters Political Regulations For Nonprofits

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February 3, 2015; Bloomberg Politics

After testifying to the Senate Finance Committee Tuesday, IRS Commissioner John Koskinen told reporters that revised regulations governing nonprofit political activity might not be issued in time for the next election cycle. “It’s not clear when we’re going to be able to get to it. My only focus on 2016 is to make sure that whatever we do, it doesn’t look like we’re trying to influence the 2016 election.”

The IRS had issued draft regulations in November 2013 to revise the definitions and parameters for political activity by 501(c)(4) social welfare organizations. The regulations were drafted “off plan” by the IRS and received an unprecedented number of public comments, almost all negative, from across the political spectrum. In April 2014, the IRS announced it would delay the rulemaking process. The IRS’s official 2014-2015 Priority Guidance Plan included the political activity regulation project among its 317 projects to focus on, but Koskinen’s comments appear to put the project lower on the IRS’s priority list.

Koskinen still believes the regulations need to be addressed, but outlined the steps needed to implement new regulations, from the re-drafting and reissuing process to a public comment period and public hearings before a new set of regulations could be made final. The previous effort stalled before the IRS scheduled public hearings. “If we change it, it’s a change for a long time,” Koskinen said. “And so it ought not to be influenced by whether it’s going to have an effect on one election or another.”

The further delay in addressing nonprofit political activity is not surprising, for several reasons. As noted, the 2013 draft regulations were met with criticism for being complex, for outlawing some long-standing voter registration and voter education activities, and for being narrowly focused on 501(c)(4) organizations rather than addressing other types of nonprofits like charities, labor unions, and professional and trade associations.

Congress and the judiciary also play a role in making a delay advisable. Republicans, now in the majority in both houses of Congress, are skeptical of the IRS effort, seeing it as a continuation of the targeting of conservative organizations for special scrutiny that is at the heart of the IRS scandal. In addition, nonprofit political activity is currently viewed as being more favorable to Republican candidates than to Democratic ones, owing to well-known and well-financed 501(c)(4)s like the Koch brothers’ Americans for Prosperity and Karl Rove’s Crossroads GPS. Both supporters and opponents of regulatory efforts agree that any new regulations will be challenged in court and ultimately appealed to the U.S. Supreme Court. The Supreme Court’s majority has indicated through recent decisions like Citizens United and McCutcheon that government-imposed restrictions on political activity will have to meet a strict standard to be deemed constitutional.

Based on the IRS Commissioner’s remarks, unless something changes, the 2016 election cycle will be conducted under the same unclear rules governing nonprofit political activity that have existed since 1959, with a permissive lens being applied by the courts to campaign activities in general. The recent exploitation of those long-standing rules by “dark money” 501(c)(4) groups (so called because their donors do not have to be disclosed) and other nonprofit organizations will not only continue, but will be free to grow more intense, based on current signals from all three branches of the federal government.—Michael Wyland

  • Larry Ottinger

    This is an important story to follow. I am concerned about the continuing misleading line about “the targeting of conservative organizations for special scrutiny that is at the heart of the IRS scandal.” That sounds more like partisan conservative talking points than news or the facts that have been come out after all of this time and money. The facts show that both conservative and progressive keywords were used by IRS officials on the ground in an honest attempt to figure out which groups involved in political activities should be granted exempt status. There has been absolutely no evidence of intentional targeting of political opponents. Indeed, the IRS has an ongoing rulemaking to clarify the relevant rules, which everyone on the ideological spectrum agree are completely vague, perhaps unconstitutionally so. These rules are what are at the heart of what was a management and enforcement issue at the IRS. This necessary rulemaking is now being delay in large part because of those who continue to argue that the IRS perpetrated a “targeting scandal” of conservatives and thus should be stopped from fixing the underlying problem. This is a personal message not on behalf of any organization.

  • Michael Wyland

    Larry: I appreciate your comments. The Treasury Department Inspector General (TIGTA) substantiated the partisan nature of the IRS’s activities. Only seven “liberal” or “progressive” groups were singled out as a result of the targeting, according to the TIGTA, and all seven of those applications were subsequently approved. Further, none of the seven organizations received the IRS questionnaires with “inappropriate questions” (TIGTA’s phrase) prior to their being approved.

    From the beginning of the IRS scandal in 2010, the cases singled out were referred to within the IRS as “Tea Party cases.” When Lois Lerner issued her apology on behalf of the IRS on May 10, 2013, she acknowledged targeting of conservative-sounding organizations.

    NPQ’s has produced more than 30 articles on the IRS scandal that are available for review on the NPQ web site. All articles use other news reports and public documents as sources, with many of the sources hyperlinked in the NPQ coverage. Six concurrent investigations into the IRS activities continue, and much more evidence is yet to be analyzed and released – perhaps most notably, 30,000 e-mails to and from Lois Lerner recently recovered by TIGTA. So, more to come….