House Ways and Means Committee chairman Dave Camp, R-Mich., has written to Treasury Secretary Jacob Lew and Internal Revenue Service commissioner John Koskinen asking for all documents pertaining to the proposed changes in rules for organizations applying for tax-exempt status under Section 501(c)(4) of the Tax Code.
The IRS and the Treasury issued proposed regulations last November in an effort to settle the controversy that erupted over the discovery that it was using terms such as “Tea Party,” “Patriot,” “Progressive” and “Occupy” to screen applications from political groups for 501(c)(4) tax-exempt status (see Treasury and IRS Issue Guidance or 501(c)4 Tax-Exempt Social Welfare Organizations).
The outcry over the so-called “targeting” of Tear Party groups and other organizations led to the dismissal of several officials at the IRS and its Exempt Organizations unit. The relevant section of the Tax Code is supposed to be pertain to social welfare organizations, but the IRS has had difficulty determining how much political activity a social welfare group is allowed to carry out while still qualifying for tax-exempt status. It sent questionnaires to the groups it had identified through its so-called BOLO, short for Be on the Lookout, lists, about their activities and contributors, which led to complaints about harassment, particularly from conservative groups.
On the other hand, Democratic lawmakers pressed for clear regulations from the IRS about such groups, noting that the 501(c)4 groups were being used in the wake of the Supreme Court's Citizens United decision to collect unlimited amounts of donations for campaign-style ads in the run-up to the 2012 elections, without a requirement for the donors' names to be disclosed.
The proposed regulations are intended to provide clear guidelines for the IRS in making such determinations, but they have also provoked controversy, particularly among conservatives, who charge that the IRS is trying to codify discrimination against various forms of political activity in its regulations.
Upon sending the letter, Camp said Friday, “Before having all the facts in hand, Treasury rushed forward with new rules that seriously limit groups’ ability to engage in public debate. It is clear that the Obama Administration is still targeting conservative groups and wrote these rules to put them out of business. This is pure politics and the new IRS commissioner should do the right thing and put a stop to it.”
Under the proposed Treasury regulations, 501(c)(4) organizations cannot engage in non-partisan activities, such as voter registration and get-out-the-vote efforts, or convene candidate forums without jeopardizing their exempt status, Camp's office noted.
Camp has introduced H.R. 3865, “Stop Targeting of Political Beliefs by the IRS Act of 2014,” which would prohibit the Treasury Department and the IRS from finalizing the proposed rules for one year to allow for completion of the investigation of the IRS “targeting” and a thorough public discussion, including a review of public comments related to the proposed regulations.
Responses are due to the House Ways and Means Committee by Feb. 13, 2014.