Last week, Scott and I attended the Heritage Foundation’s program on the Obama administration IRS’s assault on the First Amendment. Scott’s daughter, rising superstar Eliana Johnson, was one of the speakers. The others were Cleta Mitchell (whom Scott interviewed following the program), Bradley Smith, and Kim Strassel. Hans von Spakovsky was the moderator.
The program looked both backwards, to the IRS targeting scandal, and forwards, to the IRS’s proposed regulation regarding 501(c)(4) organizations. The two events are best understood in tandem as a concerted effort by the Obama administration to limit severely the free speech rights of those who oppose their policies.
How would the proposed IRS regulation accomplish this? To answer this question, we need to provide some background.
501(c)(4) status applies to “civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare.” Donations to these groups aren’t tax deductible — unlike with 501(c)(3) charitable organizations — but the groups are exempt from paying income taxes on donations they receive from members.
Political advocacy groups are natural candidates for 501(c)(4) status. They aren’t charitable organizations, but they exist to promote social welfare as they see it. This is true whether the group is said to be on the “right” — e.g. The National Rifle Organization — or on the “left” — e.g. the Sierra Club. As Bradley Smith reminds us, in a democracy, it is offensive to contend that political participation does not promote social welfare.
Indeed, few would be advancing this obnoxious contention were it not for the fact that most 501(c)(4) organizations advance conservative causes. Labor Unions, a major source of the left’s funding of political causes, are not encompassed by 501(c)(4).
For half a century or so, IRS regulations have held that a political advocacy group maintains its 501(c)(4) status as long as “candidate-related political activity” is less than 50 percent of what it does. These groups have been able to meet this test because they are far more focused on citizen education and grassroots lobbying than on the election of particular candidates.
This is where the new proposed regulation comes into play. In order to strike at these groups — most of which are conservative — the Obama IRS proposes to redefine “candidate-related political activity” to encompass most of what 501(c)(4) organizations normally do. Thus, the IRS would include as “candidate-related political activity”:
* Grassroots lobbying
* Issue advocacy
* Voter registration
* Candidate forums and debates
* Voter guides
For example, if a citizens group sets up a table where volunteers register voters during a county fair, this activity must be counted as candidate-related political activity even if there is no candidate literature and no campaign activity. But this is not the case if the group is a labor union or a local chamber of commerce.
Similarly, a candidate forum or debate sponsored by a citizens group is candidate-related political activity even if all candidates are invited. All of the costs of the event and the value of the volunteer time is counted as candidate-related political activity for purposes of determining whether such activity is 50 percent or more of what it does (in which case, the group loses its tax exempt status). But again, if the group is a labor union or a local chamber of commerce, there is no such problem.
In addition, a statement by a leader, officer, or volunteer speaking on behalf of a 501(c)(4) organization that references or depicts any public official within 30 days of a primary or 60 days of a general election is candidate-related political activity if published in the news media. Say, for example, that 30 days before the 2016 New Hampshire primary President Obama makes a Supreme Court nomination. The director of a group dedicated to nominating and confirming strict constructionist jurists criticizes Obama for making that nomination. That criticism, if reported in a newspaper, must be reported to the IRS and be treated as candidate-related political activity even though Obama himself is not a candidate.
Here’s a final example, though I could cite many more. If a conservative organization that opposes the Law of the Sea Treaty identifies Senators who are on the fence regarding their vote on the treaty and urges people to call these Senators and tell them to vote “no,” this too would be deemed candidate-related political activity under the proposed IRS regulation.
The purpose of the proposed regulation is clear — to “get in the face” of President Obama’s political opponents, as candidate Obama exhorted his supporters to do in 2008. The regulation gets in the face of conservative advocacy groups (and, by way of collateral damage, some liberal ones too) by pressuring them to curtail the activities that are most instrumental in carrying their purpose — political (but not candidate-related) advocacy.
It also gets in the face of these groups by imposing an enormous paperwork burden. Advocacy groups would have to track and record the costs of their so-called candidate-related political activity and develop a methodology for calculating and reporting the value of voluntary activities spent on such activity.
The paperwork burden would be massive. I understand, however, that the IRS takes the position that the Paperwork Reduction Act doesn’t apply to it. In this instance, of course, imposing the paperwork burden is part of the point of the proposed regulation.
The period for public comment on the IRS’s proposed regulation will close this week. Not to worry, though. The number of comments already filed is approximately 70,000. I’m told that only a proposed regulation of the internet has ever received more public comment.
We urge readers to call and write to Congress — both House and Senate — and demand action to stop the IRS regulation. The number for the U.S. Capitol switchboard is 202-224-3121. The good folks who work the switchboard will put you right through.