501(c)(4) Mess Update: Hearings, Reports, and Bright Lines

The IRS 501(c)(4) application mess continues to percolate, although most media attention has moved elsewhere.  For those who want all the details, Paul Caron continues his comprehensive coverage at TaxProf Blog (The IRS Scandal, Day 69).  Here are some highlights:

Congressional Hearings Relating to the IRS (including non-501(c)(4) issues)

• House Committee on Oversight & Government Reform
  • The IRS' Systematic Delay and Scrutiny of Tea Party Applications (July 18th)
  • The IRS Contracts with Strong Castle, Inc. (June 26th)
  • Collected and Wasted: The IRS Spending Culture and Conference Abuses (June 6th)
  • The IRS: Targeting Americans for Their Political Beliefs (May 22nd)

• House Committee on Ways and Means
  • Status of IRS' Review of Taxpayer Targeting Practices (June 27th)
  • Organizations Targeted by IRS for Their Personal Beliefs (June 4th)
  • IRS Targeting Conservative Groups (May 17th)

• House Subcommittee on Financial Services and General Government
  • Oversight Hearing - Internal Revenue Service (June 3rd)

• Senate Committee on Finance
  • A Review of Criteria Used by the IRS to Identify 501(c)(4) Applications for Greater Scrutiny (May 21st)

Reports

• Treasury Inspector General for Tax Administration, Inappropriate Criteria Were Used to Identify Tax-Exempt Applications for Review (May 14th)

• Congressional Research Service, 501(c)(4)s and Campaign Activity: Analysis Under Tax and Campaign Finance Laws (May 17th)

• Internal Revenue Service, Charting a Path Forward at the IRS: Initial Assessment and Plan of Action (June 24th)

• National Taxpayer Advocate, Special Report to Congress: Political Activity and the Rights of Applicants for Tax-Exempt Status (June 30th)

No word at this point on whether the Department of Justice will eventually generate a report (or indictments) based on its investigation, announced by U.S. Attorney General Eric Holder (from about the 22:45 mark to the 25:30 mark) on May 14th, after President Barack Obama personally addressed the IRS situation on May 13th.

Bright Lines

If there is any silver lining to this situation, it is the possibility that needed reform in this area may gain traction.  As fellow blogger John Colombo has already noted (and critiqued), The Bright Lines Project has been quietly working for more than four years to revise the definition of political campaign intervention in the federal tax laws.  In response to the IRS mess, it has now accelerated its public push for legislation and regulations to implement its proposals.  This push has already drawn public opposition from a senior fellow at the Center for Competitive Politics, indicating that The Bright Lines Project may in fact have some hope of changing the legal landscape for politically active tax-exempt organizations.  Stay tuned.

LHM