As the public comment period closes today on new IRS rules, thirteen Democratic senators have signed a letter asking the agency to implement strict new limits on political spending by 501(c)(4) organizations.
“New IRS regulations must put an end to the use of 501(c)(4) status as a means of evading campaign finance disclosure requirements,” the senators write. “In particular, the new rules must make clear that it is impermissible for political operatives to create what are for all practical purposes PACs, obtain 501(c)(4) status for those PACs, and then spend essentially unlimited money to influence elections without disclosing their donors, as is now common practice.”
The problem with current IRS rules governing 501(c)(4) nonprofits, according to the letter, is that they diverge from the language of the statute. The law passed by Congress states that 501(c)(4) nonprofits must be operated “exclusively” to promote their social welfare function and not to engage in express political activity. The current IRS rules, however, state that these nonprofits need only be “primarily” focused on their social welfare function. Lawyers and nonprofit groups have interpreted the word “primarily” to mean they need spend just 51 percent of their time and resources on social welfare efforts.
The senators propose a new “bright line” rule allowing only an “insubstantial” level of political activity by nonprofit groups — between 5 percent and 15 percent of an organization’s total time and expenses.
The letter further urges the IRS to count financial transfers from one 501(c)(4) group to another that ultimately spends money on political activity as political activity by the first group as well.
Of course, the same House Republicans who pursued that fake IRS scandal are trying to delay the new rules that their hearings and noise have spurred. Tea party organizations are screaming mad that their secret political spending habits might have to be curtailed despite their years-long effort to avoid accountability. Michigan Democrat Sander Levin took to the floor this week to call Republicans out for this self-interested campaign to protect the dark money political spending that they hope will keep them in power.
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