Friday, December 13, 2013

Is the IRS using nonprofits to regulate political activity?

A few days ago in an article from the Wall Street Journal, former chairman of the Federal Election Committee Bradley A. Smith claimed the IRS’ recently proposed rules for dealing with the political activity of nonprofits “would plunge the agency deeper into political regulation.”

Clearly frustrated with the new rules, Smith argues the rules disturb over 50 years of settled law and practice because they limit the ability of certain tax-exempt 501(c)(4) nonprofits to conduct nonpartisan voter registration and voter education. Additionally, Smith notes the rules place restrictions on nonprofit public communication over any aspect of a president’s judicial nominees between February 2 and the national Election Day.

Smith asks why the IRS is regulating political activity at all and suggests it is because “many Democratic politicians and progressive activist think the new rules limiting political speech by nonprofits will benefit Democrats politically.”

Smith goes on to claim “these progressives” have propagated “three myths” about 501(c)(4) organizations to further that end:

  1. 501(c)(4)s are ‘charities,’ and doing political work abuses their charitable status;
  2. 501(c)(4)s must be operated ‘exclusively for the promotion of social welfare,’ not politics; and
  3. Political activities shouldn't get tax breaks.

Smith’s ultimate conclusion is that “to anyone concerned with public confidence in nonpartisan tax collection and preventing future IRS scandals, the solution is not more tax rules. It is for the IRS to get out of the business of regulating politics.”


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