TPA Submits Public Comment on the IRS Rule Targeting 501 (c)(4) Groups

IRS HQ in Washington, D.C.

A publc comment was submitted yesterday by the Taxpayers Protection Alliance regarding the new proposed rule which aims to codify political targeting that the IRS engaged in over a period of the previous two elections. The deadline for comment submission regarding this rule is Thursday, February 27, 2014 at 11:59 PM EST. TPA encourages everyone to go to this link and submit a comment. This was also the topic of discussion in the second half of TPA’s podcast ‘Taxpayer Watch’ yesterday, you can listen here.

Read the comment below:

February 24, 2014

The Honorable John A. Koskinen
Commissioner of Internal Revenue
CC:PA:LPD:PR (REG-134417-13), Room 5205
Internal Revenue Service
1111 Constitution Avenue NW
Washington, DC 20224

RE: Guidance for Tax-Exempt Social Welfare Organizations on Candidate-Related Political Activities

Dear Commissioner Koskinen:

The Taxpayers Protection Alliance (TPA) is deeply troubled by the impending move by the Internal Revenue Service (IRS) to enact a rule that would codify what amounts to selective targeting of independently run organizations that are involved in the political process. TPA is a 501 (c)(4) organization that represents the interests of millions of American taxpayers across the country and as such we feel compelled to submit a detailed comment that expressly states our opposition to the rule for Guidance for Tax-Exempt Social Welfare Organizations on Candidate-Related Political Activities. There is no doubt that any actions taken by the IRS to limit participation from groups or individuals who seek to have a voice in today’s debate is something that should concern everyone, regardless of what their ideologies may be or which party,candidate, or issue they may support. 

Last November, the Obama Administration (through the Treasury Department) announced a proposed rule that would impact the way 501 (c)(4) organizations could participate in the political arena. The rationale the administration is using for the rule is that there is confusion in the tax laws and that this new rule would clarify that confusion. The truth is that this new rule would codify political targeting that the IRS was responsible for and is currently being investigated for by the Justice Department. As we understand it, the way the rule will work is that it is essentially a re-branding of specific categories that are being used now to obtain or retain tax-exempt status. In order for a 501 (c)(4) to obtain or retain tax-exempt status, a majority of the work they do must be devoted to a “primary” social-welfare purpose. The new rules would take issues that groups focus on, and put them in the category of “political activity” related to candidates and by doing so would make it more than likely that many groups would not be able to qualify for tax-exempt status as a 501 (c)(4). The new rule is clearly an attempt to take the same type of tack that was used in targeting of many right-of-center groups in recent elections and make it legal, and thus unstoppable.

The Chairman of the House Ways & Means Committee, Rep. Dave Camp (R-Mich.), has been a fierce critic of the new rule and the impact it would have on the political process. Mr. Camp has said that, “The committee has reviewed thousands of tax exempt applications. The new regulation so closely mirrors the abused tea-party group applications, it leads me to question if this new proposed regulation is simply another form of targeting.” This should be a warning for any organization that wants to exercise their right to participate in the political system and regardless of which side a group may be on, they should be worried that they may all become potential targets should this rule go into effect. That point was made very clear when the American Civil Liberties Union voiced their opposition to this new proposal with their own comment submission last week. Gabe Rottman, legislative counsel for the ACLU stated that, “The proposed rules could pose a significant chilling effect on issue advocacy engaged in by many nonprofits… They would also disproportionately affect small, poor nonprofits that cannot afford the legal counsel to guarantee compliance with the new rules.”

This is a blatant attack on the political process and the freedoms of groups and individuals to organize, and participate. How anyone could support such a change in policy, and codify giving the IRS and any administration the power to use the agency to go after specific groups simply because of the issues they are focusing on is a frightening thing to think about. Cleta Mitchell, a well-respected attorney in Washington, D.C. who has represented some of the groups who were targeted by the IRS in recent years, has detailed exactly why the proposed action taken by the IRS would result in codifying the rules that the were used to selectively target conservative groups and make them permanent, saying this rule will “silence grassroots organizations.” This type of blanket targeting and systematic shutting down of groups is unsettling, and to know that simply by acting in opposition to an issue that the Administration may be involved with could be grounds for being targeted is troublesome.

These rules would strike at the heart of civic participation in several ways because many 501 (c)(4) groups engage in activities that aren’t necessarily candidate-oriented but are more about encouraging and increasing awareness by individuals of many issues and their rights as citizens to be a part of the political process. These include voter registration, issue education, giving grants, etc. The ability of 501 (c)(4) groups to engage in these types of activities would be impacted negatively under the new rule.

In closing, that Taxpayers Protection Alliance would like to once again state our opposition to this new rule, citing once again the crippling impact it would have on groups and individuals who have the desire to participate in the political process. Instead of looking for ways to legalize the very illegal selective targeting that has taken place in recent years at the agency, the IRS should be focusing on ways to find out who is responsible for the illegal targeting and hold them accountable while ensuring it never happens to any organization ever again. TPA hopes that the rule will not be adopted, and that groups on all sides of every issue will continue to be able to play a role in the public arena.

Sincerely,
David Williams
President
Taxpayers Protection Alliance