Paul L. Caron

Monday, December 9, 2013

Smith: The Latest IRS Power Grab

FEC IRSWall Street Journal op-ed:  The Latest IRS Power Grab: The Left Wants the Disclosure of Private Information About Conservative Donors, by Bradley A. Smith (Former Chair, Federal Election Commission):

Six months after the IRS's inspector general revealed that the tax-collection agency had been targeting conservative organizations for added scrutiny and delaying their applications for tax-exempt status, the IRS has proposed new rules for handling political activity by nonprofits. The proposed rules would plunge the agency deeper into political regulation.

The rules would upset more than 50 years of settled law and practice by limiting the ability of certain tax-exempt nonprofits, organized under Section 501(c)(4) of the Internal Revenue Code, to conduct nonpartisan voter registration and voter education. Such organizations would be forbidden to leave records of officeholder votes and public statements on their websites in the two months before an election.

It is tempting to pick the proposed rules apart—and there is much to pick, such as restrictions on a nonprofit discussing any aspect of a president's judicial nominees in a public communication any time between Feb. 2 and a national election day nine months later. But it is more important to ask how we got here. Why is the IRS regulating political activity at all?

The answer is that many Democratic politicians and progressive activists think new rules limiting political speech by nonprofits will benefit Democrats politically. Stymied by judicial decisions restricting direct government regulation of political speech, and by a Federal Election Commission whose bipartisan makeup prevents Democratic commissioners from forcing through partisan rules on a party-line vote, these politicians and activists have decided to dragoon the IRS into doing their work.

Nobody will admit that the goal is to hamper the political opposition. To make the case for IRS regulation of politics, these progressives, such as Sen. Sheldon Whitehouse (D., R.I.) and the Campaign Legal Center, have promulgated three myths.

Myth No. 1: 501(c)(4)s are "charities," and doing political work abuses their charitable status. ...

Myth No. 2: 501(c)(4)s must be operated "exclusively for the promotion of social welfare," not politics. ...

Myth No. 3: Political activities shouldn't get tax breaks. ...

This is not about taxes, so what is it really about? What the left wants is the disclosure of private information about conservative donors. ...

To anyone concerned about 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. In a June report to Congress, IRS taxpayer advocate Nina Olson wrote: "It may be advisable to separate political determinations from the function of revenue collection." She suggested legislation requiring the IRS to follow Federal Election Commission rules that define what groups are "political committees" under campaign-finance law, effectively ending the agency's political activity. But legislation is not required. The IRS could with its own rules follow the bipartisan FEC on the question of a group's political status.

IRS News, IRS Scandal, Tax | Permalink


> Eliminate the notion of "tax-exempt."

Corporate taxes are on profit, the difference between the amount of revenue and the expenses.

What is the "profit" of a corporation that does not sell anything but merely exists as a vehicle for folks to pool their money to do something, such as teaching folks to read, etc.

We got here because the tax code seems to think that donations are revenue or even profit.

Posted by: Andy Freeman | Dec 10, 2013 12:56:28 PM

Eliminate the notion of "tax-exempt." Give everyone, and every organization, skin in the game regarding the tax rates they support.

Posted by: Banzel | Dec 9, 2013 4:05:31 PM

I don't want government regulation to be anonamous. I want available on line, the names, addresses of all government regulators, the schools which their children attend, the types of car they drive and their usual routes, and the license numbers on their cars and the common places where they park.

Oh, no, I am not violent. I just think that all this regulation stuff should be transparent and open, for greater fairness.

Posted by: DonM | Dec 9, 2013 12:58:14 PM

So, on February 3 Obama will announce his judicial picks for the D.C. Circuit.
No need for progressives to worry about voter registration the two months before the next election, all their registration is being done under the radar through Obamacare---millions who sign up under expanded Medicaid rules will be automatically registered and the operatives have their names and addresses so you can be sure a van will be at their door on election day. If they don't vote, they'll be warned, your medicaid card will be taken away.
and on and on and on and on and on. They don't even care how blatant they are.

Posted by: Syl | Dec 9, 2013 12:17:26 PM

The left does not want political speech to be anonymous. Their position is that someone should be willing to accept the consequences for expressing an opinion. Those consequences include having those who disagree taking action against the person who expressed the opinion -- picketing the person's house, protesting against the person's employer, making the person a subject of public scorn, etc. Obviously, this would have a chilling affect on political speech (which is the intent; prevent the expression of "bad" ideas and opinions). The left correctly believes it would be more willing to engage in such tactics, so their proposals would chill conservative speech more than their own.

Of course, the left's rules would have prevented much of the political speech that took place at the time of our country's founding. Many of the political tracts published before the revolution and before the Constitution was adopted were published anonymously. The authors often could not have published those opinions had they been required to do so openly -- the King hanged men who advocated revolution. Other times, the author chose to remain anonymous so that the idea could receive a fair hearing. If the reader knew Hamilton had written the tract, he or she may have been more inclined to accept (or reject) what was written. By remaining anonymous, the author prevented his reputation from clouding the issue.

Posted by: David Walser | Dec 9, 2013 6:59:20 AM