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A Not-So-Bright 'Fix' for the IRS | Commentary

As Congress and the Department of Justice continue investigating the IRS scandal, there is growing recognition in Congress of the need to fix the laws or regulations that facilitated the agency’s targeting of ideological nonprofit groups. Recently, a panel of experts calling itself the Bright Lines Project presented a 32-page recipe for reform (“Finding Congressional Solutions to the IRS Scandal,” June 14). Despite its apparent good intentions, in practice, the proposal would insulate elected officials from public opinion and pressure. Members of Congress committed to the First Amendment should reject this guidance, which would make a bad situation worse.

As the name suggests, the Bright Lines Project purports to provide clear rules for the IRS to delineate the types of political activities that are restricted or off-limits for nonprofits. Currently, the agency relies on a nebulous “facts and circumstances” test for determining when a charity engages in prohibited “political intervention,” or when a social welfare group, union or trade association exceeds its limit on the same. When asked what constitutes “political intervention,” the IRS basically answers, “it depends on the facts and circumstances.” It’s easy to see how this could be a source of rampant abuse.

But the Bright Lines proposal not only perpetuates “facts and circumstances,” it makes it worse in many respects. For starters, the proposal calls for a “general speech rule” under which “any communication to any part of the electorate that (a) refers to a clearly identified candidate and (b) reflects a view on that candidate” is considered political intervention. “The view could be positive, negative, or nuanced.”

Despite its use of election-related vocabulary, the rule itself covers much more than election-related activity. To illustrate the proposal’s far-reaching effects, let’s use an example familiar to members of Congress: a newspaper ad urging them to enact gun legislation. If the ad names specific members, it could easily run afoul of the rule.

The proposal offers several “safe harbors” that purport to help groups preserve their tax-exempt status. However, like the project’s name, these “safe harbors” are a misnomer. They are more like throwing nonprofits into shark-infested regulatory waters with nothing more than a life vest, as none of the protections applies to “paid mass media advertising.” Thus, if the sponsor of the gun control ad discussed above is looking to grasp on to a “safe harbor,” it will find none under the Bright Lines proposal.

Even if a group were to forgo paid advertising, most of the proposed protections are still excessively narrow to the point of being nonexistent. For example, if our gun control group were to circulate a petition targeting specific members of Congress, the proposal appears to protect such activity under an exemption for influencing official action. But the exemption is limited to “specific actions the official may yet perform within his or her current term of office.” Advocacy targeted at legislative officials must be done while a “legislative vote or other major legislative activity” is pending.

Consider this: The U.S. Senate rejected gun control legislation in April. Congress and the White House appear to have moved on to other major priorities like immigration. Yet, prominent senators, such as Democrat Joe Manchin III of West Virginia, one of the primary sponsors of the gun control bill, have vowed to push on, as has President Barack Obama. Under the Bright Lines proposal, how are the gun control groups that continue to call out members of Congress supposed to operate? After all, there is no “legislative vote or other major legislative activity” pending. Moreover, it’s unclear if gun control will even come up for another vote during those members’ current terms. Are the gun control ads currently running political intervention? And if so, why should they be?

If a group falls off one of the narrow planks masquerading as safe harbors, the proposal simply would revert back to a form of the IRS test that the project was supposed to fix. As Bob Bauer, former White House counsel to Obama, has written, “The Project ... leaves the reader with the hope that a new rule has sailed and left the facts and circumstances test to wave good-bye on the dock — only to discover that [it has] snuck into steerage and [is] ready to be summoned back on deck as needed.”

Even worse, the proposal would consider whether a group is focusing on “wedge issues” or using “political code words,” as well as the group’s own “factual credibility,” as part of the “facts and circumstances” test. As bad as its existing rule is, even the IRS doesn’t presently go so far as to weigh these inherently subjective factors.

Is the phrase “gun safety” “code” for the “wedge issue” of gun control? The Bright Lines Project would have the IRS determining these questions, and penalizing groups that get it wrong. Far from being a very bright solution, this is downright dangerous.

Eric Wang is a political law attorney and a senior fellow with the Center for Competitive Politics.

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