Tuesday, August 7, 2012

GOP Senators Pressure IRS on 501(c)(4) Rules

ImagesLed by Senator Orrin Hatch (R-Utah), ten GOP senators sent a letter to the IRS yesterday urging it not to revisit its regulations governing section 501(c)(4) organizations in response to outside political pressure without careful (and time-consuming) deliberation.  More specifically, they stated "public confidence in the non-partisan integrity of the agency demands that you issue no sub-regulatory guidance nor engage in any similar efforts that would effectuate immediate changes without a lengthy period of review, separated in time from the current heated political environment."  The Senators were writing in response to a letter the IRS sent last month to two groups supporting campaign finance reform stating:

I am responding to your letter dated March 22, 2012, which supplemented you [sic] letter dated July 27, 2011, urging the IRS to institute a rulemaking proceeding to address the rules related to political activity by organizations exempt under section 501(c)(4) of the Internal Revenue Code.

The IRS is aware of the current public interest in this issue.  These regulations have been in place since 1959.  We will consider proposed changes in this area as we work with the IRS Office of Chief Counsel and the Treasury Department's Office of Tax Policy to identify tax issues that should be addressed through regulations and other published guidance.

This letter underlines the political tightrope that the IRS is walking in this area, especially with countervailing pressure coming from the Democratic side of the congressional aisle.  Whether the Service can successfully walk this tightrope - and where it leads - remains to be seen.

Media Coverage:  Chicago Tribune (Reuters); The Hill blog; Wall Street Journal blog.

LHM

http://lawprofessors.typepad.com/nonprofit/2012/08/gop-senators-pressure-irs-on-501c4-rules.html

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