Liberal Groups Join Conservatives in Opposing IRS Proposals to Rewrite Nonprofit Political Speech Regulations

A woman walks out of the Internal Revenue Service building in New York in this May 13, 2013 photo. (Photo: REUTERS/Shannon Stapleton)

A growing chorus of liberal groups are joining those of conservatives, warning that the Internal Revenue Service's proposals to rewrite rules governing the political speech of certain nonprofits could be a detriment for freedom of speech.

The IRS last November proposed changing its rules governing the political speech of 501(c)4 organizations. Under current rules, which have been in place since the 1950s, these organizations may not spend more than half of their budgets to explicitly advocate for the election or defeat of a candidate.

501(c)4 is a section of the tax code reserved for "social welfare" organizations. After passage of the Bipartisan Campaign Reform Act (2002) and a U.S. Supreme Court decision, Citizens United vs. FEC (2008), that struck down part of that law, 501(c)4 has become the part of the tax code through which much funding for political activity has flowed.

Under the proposed new rules, the IRS is attempting to draw a distinction between what is considered activities done to benefit society, "social welfare," and activities that are "political." Activities that are considered non-social-good election activities, what the IRS calls "candidate-related political activity," would be greatly expanded, thus limiting the ability of 501(c)4s to engage in them.

Informing voters about the voting record or issue positions of candidates, for instance, would not be considered an activity done to benefit society but candidate-related political activity. Efforts to get people registered to vote and to encourage them to vote would also not be considered a social good. Many 501(c)4 groups have complained, though, that informing voters, registering voters and getting voters to the polls is a social good.

The IRS proposal has also become part of the scandal involving the IRS' targeting of conservative, pro-life and evangelical groups.

The Obama administration argues that the scandal happened because of confusion about how to apply the rules governing 501(c)4s. There is "not even a smidgen of corruption" at the IRS, President Barack Obama claimed in a Super Bowl Sunday interview. The House Ways and Means Committee this month discovered, though, that plans to rewrite the 501(c)4 rules date back at least to 2011, long before the IRS scandal became news in May 2013.

To many conservative groups, who already feel that the IRS (possibly at the direction of the White House) is abusing its power by trying to silence them, the proposed rule changes were merely an extension of the current scandal.

The IRS is "trying to change [how 501(c)4s operate] through these proposed regulations ... that would categorize voter guides, candidate forums, congressional scorecards and voter registration activity as political activity subject to regulation by the IRS," Ralph Reed, founder and chairman of the Faith & Freedom Coalition, told The Christian Post in a Jan. 20 interview. "That's really a dagger aimed at the heart of evangelical voter education activities ... more than even Tea Party groups. ... They're trying to basically codify in regulation the harassment of conservative, Christian and Tea Party organizations that was conducted by the IRS from 2009 through 2012."

If they do go into effect, though, the rules will affect all 501(c)4s, liberal and conservative alike. This is why some liberal groups have expressed concerns about the proposal.

Labor groups, which typically support Democrats, worry that the new rules would be expanded to apply to them (501(c)5s) or trade organizations (501(c)6s). If applied to labor unions, the rules "would seriously affect their ability to function as membership organizations," John Sullivan, associate general counsel at the Service Employees International Union, told The Washington Post.

The IRS also received comments from the American Civil Liberties Union opposing the new rules. The ACLU sometimes sides with conservatives on legal issues but is more often aligned with the Left.

"The proposed rules could pose a significant chilling effect on issue advocacy engaged in by many nonprofits," Gabe Rottman, legislative counsel for the ACLU, wrote last week. "They would also disproportionately affect small, poor nonprofits that cannot afford the legal counsel to guarantee compliance with the new rules.

"We fear that faced with such uncertainty, and needing to maintain their (c)(4) status, they would opt to just keep their mouths closed, so to speak. The rules also would fail to stop the groups they were meant to crack down on, as they would still be able to engage in a certain amount of actual partisan electioneering without disclosing their members.

"The proposed rules thus create the worst of all worlds."

The IRS proposal was also condemned by Nan Aron, president of Alliance for Justice, a liberal advocacy group, in a Feb. 7 op-ed for The Nation.

The rule changes are "frankly befuddling," he wrote, because "they don't have much, if anything, to do with the controversial actions of the host of well-funded new (c)(4)s that have popped up post–Citizens United, but they do take a big bite out of the work of the long-established smaller ones."

In an article for National Review, Eliana Johnson points out these liberal groups are at odds with Democrats in Washington. Some of those Democrats are facing tough re-election battles in November and would like to see the rules in place before the conservative 501(c)4's can influence their election. Additionally, Johnson says, the proposed rule changes may have come at the behest of congressional Democrats in the first place.

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