Secret Money Will Continue to Influence Elections Without Clearer IRS Rules | Commentary
By Lisa Gilbert Everyone and their mother can tell the difference between a nonprofit spending millions of dollars on campaign ads to elect political candidates and a bona fide nonpartisan charity promoting voter engagement. Unfortunately, the Internal Revenue Service’s vague system for identifying political activity prevents it from being like everyone (and their mothers).
And worse, the IRS will continue to be the odd man out, if Sen. Ted Cruz, R-Texas, and his Senate colleagues on the judiciary committee get their way. At a committee hearing chaired by Cruz recently, the Republican committee members continued to beat a dead horse about supposed political targeting by the IRS. Rather than drawing hyperbolic analogies to Nixon and Watergate, they should promote solutions to ensure the IRS has clear guidelines for judging whether a nonprofit is abusing the tax code.
Failing to issue clearer guidelines would be a lose-lose. Nonprofits would continue to serve as vehicles for corporations and wealthy individuals to secretly influence elections, and real charities and social welfare organizations would continue to find themselves in the uncomfortable position of not knowing what they can and can’t do when it comes to politics.
Vague rules governing what constitutes “political activity” and how much such activity different kinds of tax-exempt organizations can legally engage in have long been a problem.
However, the problem worsened significantly after the Supreme Court’s decision in Citizens United v. FEC. In that decision the Supreme Court gave corporations the green light to raise and spend unlimited amounts of money to influence election outcomes. Even though 501(c)(4) nonprofits are not supposed to “directly or indirectly intervene in political campaigns,” they have since become the vehicle of choice for big donors to anonymously spend substantial sums influencing elections.
Nonprofits that are not required to disclose their donors have spent more than $600 million to influence federal elections since the Court’s decision in 2010. In 2016, many presidential candidates already have allied nonprofits poised to boost their candidacies with million-dollar ad buys.
The IRS can alleviate this problem with clear, enforceable rules governing the political activity of nonprofits. After more than 18 months of reworking a proposal for new rules, it’s time for the IRS to release its newest draft and ensure new rules are on the books and enforceable before the end of the Obama administration.
During its hearing on the IRS at the end of July, the Senate Judiciary committee had an opportunity to encourage the IRS to finish this critical rulemaking. Unfortunately, Cruz continued to demonize the agency, focusing on his delusion that the IRS is “a partisan arm of the Democratic National Committee.”
Nonprofits and the American people would be better served if he used his chairmanship to stress the importance of new rules that balance the protection of nonpartisan civic engagement with the need to prevent abuses of the tax system by political organizations seeking to hide their donors from voters. The extra scrutiny the IRS applied to the tax-exempt applications of some conservative and progressive organizations was the result of unclear IRS rules that do not adequately strike this balance, not some conspiracy to target political enemies.
Contrary to Cruz’s rhetoric, clearer rules would reduce unnecessary scrutiny by the IRS. The IRS should not be making up criteria on the fly for flagging nonprofit applications, such as using key words like “Tea Party” and “progressive.” The new rules are a solution to Cruz’s concerns. They would help prevent ambiguous and unpredictable enforcement of the law by giving IRS staff a clear set of criteria for judging whether a group is breaking the law or not.
Some 50 organizations, including Public Citizen, have endorsed the Bright Lines Project’s shared principles detailing what the new rules should accomplish and encouraging the IRS to enact them for fiscal year 2017.
As we sit on the brink of yet another election sure to be the target of millions in anonymous big money, it is well past time for the IRS to finally put an end to abuses of our tax laws. The IRS should push forward with its rulemaking to ensure that nonprofits understand what they can and cannot do, and so the public has a clearer picture of who is trying to influence our elections.
Lisa Gilbert is the director of the Bright Lines Project and Public Citizen’s Congress Watch Division.
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