October 6, 2010; Source: The Washington Indepenent |
On September 28, Senate Finance Committee Chairman Max Baucus (D-Mont.) wrote a letter to the IRS Commissioner Doug Shulman asking for a thorough investigation into the use of tax-exempt groups for political activity. The letter can be read here.

Campaign finance watchdog groups applauded the move at the time, but now at least one group, Citizens for Responsibility and Ethics in Washington, suggests that there is “no need to punt to the IRS.” In a letter to Baucus [PDF] the group says the Senate Finance Committee has the jurisdiction to hold hearings or launch its own independent investigation into nonprofits that may be flouting the rules.

Since the Supreme Court’s ruling in Citizens United v. Federal Election Commission, which found that corporations are able spend as much as they want for or against political candidates a frenzy of spending by groups outside the party system was unleashed this year, most of it by donors who do not have to be publicly identified.

While 501(c)(3) public charities are absolutely prohibited from political campaign activities [PDF], 501(c)(4) “social welfare organizations” (as well as 501(c)(5) labor organizations and 501(c)(6) business leagues) can engage in campaign activities “so long as it does not constitute the organization’s primary activity,” according to the IRS.

In recent years, the Senate Finance Committee has conducted investigations into groups affiliated with ACORN, the tax-exempt ministries of six televangelists, the Institute for Healthcare Improvement, and others. As The Washington Independent notes however, because Congress is on recess there is little chance of anything happening before the midterm elections in November.—Aaron Lester