Roll Call: Latest News on Capitol Hill, Congress, Politics and Elections
April 17, 2014

IRS Uproar Intensifies

As thousands of negative comments flood the Internal Revenue Service on the eve of a Feb. 27 deadline, GOP leaders are moving on several fronts to block the proposed IRS regulations that would curb political activity by tax-exempt groups.

The House has passed legislation that would bar the IRS from issuing new regulations for one year. Also, the House Oversight and Government Reform Committee has released a letter demanding further testimony from Lois Lerner, the ex-senior IRS official at the heart of an ongoing scandal over the agency’s self-admitted targeting of the Tea Party and other groups seeking tax exemption.

The National Republican Congressional Committee has publicly challenged more than three dozen House Democrats on whether they will “stop IRS targeting,” pushing the IRS controversy onto the campaign trail as midterm elections heat up. The NRCC has dubbed this week, “Stop Government Abuse Week,” and sent press releases asking how Rep. Ann McLane Kuster, D-N.H., and 41 of her fellow Democrats will vote on the IRS bill.

The Office of Management and Budget announced that the Obama administration “strongly opposes” the legislation and would veto it. The “Stop Targeting of Political Beliefs by the IRS Act”  was introduced in the House by Ways and Means Chairman Dave Camp, R-Mich., and matches a Senate companion bill introduced by Minority Leader Mitch McConnell, R-Ky.

Senate Democrats have long called on the IRS to more forcefully rein in political activity by tax-exempt social welfare and trade groups that spent hundreds of millions on the 2012 elections without disclosing their donors. At a January public forum, Sen. Charles E. Schumer, D-N.Y, said the IRS and other agencies should “immediately” redouble efforts to stop what he called election law abuses by tax-exempt groups that engage in politics outside the disclosure rules.

But when it comes to the draft IRS regulations, congressional Democrats are directly at odds with their progressive allies, from labor unions to civil rights and environmental groups. Organizers on the left have joined Tea Party and conservative activists in assailing the regulations, which would define political activity so broadly that it would include voter registration and mobilization, as an assault on the First Amendment.

In public comments that echo those submitted by conservatives, the American Civil Liberties Union warned that defining legitimate advocacy and voter engagement as campaigning would chill activities that are “at the heart of our representative democracy.” The IRS proposal’s deep flaws have managed to unite a broad array of Washington players at odds on other fronts, from the Chamber of Commerce to watchdog groups and tea party activists.

The agency has faced criticism for decades on both sides of the aisle for its failure to clearly define how aggressively social welfare and other tax-exempt groups may engage in politics without losing their tax-exempt status. According to the tax law, 501(c)(4) social welfare groups must operate “exclusively” for the public welfare. But IRS regulations say such groups must be “primarily” for the social welfare, a standard that’s widely interpreted to mean 50 percent.

Lerner triggered an uproar last year when she admitted that the agency had singled out the tea party and other groups for special scrutiny, delaying their applications for tax exemption for up to two years. A federal inspector general faulted the agency for mishandling the applications and recommended that it write new rules to clear up longstanding confusion over what’s permitted.

But the proposed regulations, released by the Treasury Department in November, have only redoubled attacks on the IRS. Congressional Republicans have vowed to continue investigating what they say is part of a pattern of administration overreach, and have faulted federal investigators for taking no action.

“This week should be an interesting week for us,” said Rep. Mike Kelly, R-Pa., who has called the proposed regulations “a naked attack on the First Amendment.” Kelly sits on the House Ways and Means Committee, one of the House panels investigating the IRS. He said the agency has failed to fully respond to inquiries, sending in documents with extensive redactions.

The administration has denied knowledge of the IRS targeting, which Obama has attributed to incompetence, not malicious intent. The recent OBM statement urges the agency to move forward with its attempt to rewrite regulations that “are broadly recognized as unclear.” Democracy 21 has joined with several other watchdog groups to lobby against the Camp legislation, arguing that delaying the rule-making would simply “prolong the opportunity for the abuses of the tax laws” and undisclosed political spending.

But many of the very groups that oppose a delay, including Citizens for Responsibility and Ethics in Washington and Public Citizen, also oppose the IRS regulations as written. Said CREW Executive Director Melanie Sloan: “They are both over- and under-inclusive in ways that are particularly troubling.”

Like many IRS-watchers following the rule-making process, Sloan predicts that there is “actually zero chance” that they will ultimately be enacted. That the agency has produced such predictably controversial draft regulations has prompted much head-scratching among campaign finance and tax experts.

“One might assign nefarious motives to the IRS, or one might say that they don’t know what they’re doing,” said former FEC chairman Bradley Smith, chairman of the Center for Competitive Politics, at Heritage Foundation panel discussion last week on the IRS regulations. “Neither of those reflects well for putting forward this kind of rule.”

  • gwhh

    what does all this double speak mean?
    Are they going to pass this NEW rule this year or ANY new rule in this area by the IRS this year or not?

    • Harry_Voyager

      It means the administration is going to make it up as they go along, and use whatever fig-leaf they can find to punish their enemies.

      The president says he has no idea where the IRS got the idea that they should be targeting Tea Party groups, after he has spent the past four years shouting from the rooftops that the Tea Parties are evil enemies of the state, and that the IRS should drop the hammer on them.

      At least Henry II had the basic decency to admit that he screwed up.

      • http://whenfallsthecoliseum.com/author/kwatson/ megapotamus

        How did Obama screw up? Only by getting caught and he ain’t caught yet. Forward.

        • Harry_Voyager

          Ok, ok, I concede. Henry II admitted that what he did was morally wrong. Slight difference.

          This administration, by contrast, has shown no indication that it believes such personal targeting and government corruption to be a bad thing.

  • Softie

    Once dependent upon central authority for organization and control, the tendency is toward more organization and control, requiring more central authority, and so on – a downward spiral known as “The Road to Serfdom”.

  • johnholliday

    No surprise that Obama wants to be able to utilize the IRS for the 2014 elections

    • Dave Hunter

      Why not? It worked for him in the 2012 election.

      • gwhh

        The old ideas work best! Beside liberal know nothing other than brute force or cruelness in there hearts and mind

  • http://whenfallsthecoliseum.com/author/kwatson/ megapotamus

    Really, there should be no such thing as ‘tax exempt’. Who says that PETA or Heritage are doing more for society than, say, Target? If the income tax, personal and biz were 10% everybody would pay up, charity or not. But if there are going to be these rules all that matters is that they apply evenly to everyone. That is why the Lefty groups are squealing. They know they have been in violation of these laws the day they were passed. From the jump, rules are always made for the opposition and that is the Right, broadly. Now they fear that the enforcement will have to fall on themselves as well for PR reasons (and PR reasons are all they ever have). I say, bring it on! Can the NAACP survive one minute of auditing? Or the frickin’ unions? Bottom line though, all this is restricting Free Speach, whatever that is. Forward.

  • SClanding

    Dishonest people do dishonest things.

    Barack Obama and his supporters are fundamentally dishonest people.

    • gwhh

      said very well

  • Chance Boudreaux

    Abolish the IRS, go to a Flat National Sales Tax… No more hiding, no more rules to benefit one group over another.

  • Dave Hunter

    Let’s see, multiple public statements by Democrat Senators, multiple letters to the IRS signed only by Senate Democrats, all demanding that the IRS crack down on 501(c)4 organizations. Surprise! The IRS proposes changes to regulations for these organizations that have been in existence for over 50 years.

    Nah, not even a “smidgen” of corruption at the IRS. Really, none.

  • bittman

    The new America is beginning to look a lot like the old Russia–a Pravda media, the IRS abuse of the Administration’s perceived enemies, the FCC’s wanting to study the media, the DHA’s wanting to track licenses on cars traveling on roads in our country, the President unilaterally changing laws passed by Congress, the government’s takeover of our healthcare via only votes from Democrats, the violation of our religious freedoms, etc.

  • teapartydoc

    People seem to forget that the French Revolution, as well as ours, were both tax revolts.

  • us1patriot

    The IRS has 80,000 pages of regulations and they are confused!

    How about the taxpayer?

    Abolish the IRS!!

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