Raising the Standard.

Proposed IRS Rules Raise New Questions

(Photo courtesy Scismgenie)

When Bill O’Reilly asked about the IRS targeting of Tea Party groups in an interview before the Super Bowl, President Barack Obama stated that “There were some bone-headed decisions out of a local office … [But] not even a smidgeon of corruption, I would say.” President Obama suggests incompetence is the answer to the scandal that both houses of Congress and the Justice Department are still investigating. However, it is a little early for the president to guarantee that the IRS does not act out of corrupt political motivations.

In late November of last year, six months after the targeting scandal was made public, the IRS proposed new amendments to a regulation that applies to tax-exempt 501(c)(4) groups. Before the proposed amendment, this classification applied to “social welfare organizations.” In order to become tax-exempt under this classification, groups had to prove they were civic leagues or organizations operating for the promotion of social welfare, broadly understood. They were allowed to partake in political activities as long as politics was not their primary venture. The regulations for this classification of non-profits sat untouched for a half century, since 1959 — only in 2013, in the midst of 2014 election fundraising, did the administration decide the rules needed to be amended.

Obviously, this debate would not be happening if the 501(c)(4) groups were not participating in political activities. For decades, groups on both sides of the ideological spectrum were allowed to register as social welfare non-profits as long as they spent 51 percent of their funds on projects other than politics. The new proposal by the IRS would narrowly define what activities are considered political, thereby forcing groups to be much more careful about how they spend their time and funds. While this change may seem like a neutral attempt to reign in the amount of anonymous money flowing into politics, it does not impact both sides evenly.

On the surface, 501(c)(4) groups seem equally represented by both conservatives and liberals. A closer look reveals the classification is much more important to conservatives. While the regulation does not explicitly favor liberals, the problem has more to do with what conservatives do not have. Of the largest political contributors over the past 25 years, 10 of the top 16 are unions, a loyal Democratic constituency. Unions are also non-profit organizations, falling into the 501(c)(5) classification. As Republicans go without the big-spending support from 501(c)(5) unions, conservative 501(c)(4) groups are essential to keep up with Democrats.

Additionally, one of the privileges that 501(c) organizations enjoy over other tax-exempt or political organizations is the ability to withhold the identity of their donors. This privilege is incredibly important to conservative donors, who worry about harassment resulting from disclosure of their identities — especially after the results of the leak of the National Organization of Marriage’s donor list. Restricting 501(c) access could chill speech and fundraising efforts, disproportionately on the conservative side.

The Obama administration has proven beyond a doubt that it cannot be trusted to implement potentially manipulative regulations. The IRS in particular has lost credibility with conservatives after the targeting scandal was revealed. The same agency and administration should not be trusted when they claim new rules are needed to replace those that have survived intact since 1959. Before the case, the average wait time for a response from the IRS after requesting 501(c) 4 classification was 90 days. Yet some Tea Party groups are still waiting for a response from the IRS — three years later. And that is not to mention the many unnecessary and intrusive questions the groups were forced to answer during the registration process. One pro-life group was forced to disclose the content and frequency of its prayers.

These abuses of power give conservatives ample justification to distrust the administration. The investigations currently under way have a lot of questions to answer before President Obama’s claim about corruption can be proven. Until that point, though, the IRS should not be allowed to implement new rules governing 501(c)(4) groups.

—Connor Kitchings is a freshman studying political science and economics

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