IRS on Wrong Track About Reforms to Prevent Repeat of Targeting Scandal

Alexandria, Va. – The Center for Competitive Politics (CCP) sent a letter this morning to IRS Acting Commissioner Daniel Werfel warning that the IRS is on the wrong track in addressing fundamental problems that helped cause the targeting of conservative groups criticized by the Treasury Department’s Inspector General in May.

CCP President David Keating wrote “The outrageous treatment of groups on the basis of their ideology came about because the IRS’s rules are so vague. These rules created the flexibility allowing the IRS to delay tax-exempt applications that clearly should have been granted.”

The letter was sent in reaction to an interim report by the IRS Acting Commissioner Werfel that was the subject of a House tax-writing committee hearing today.

Keating said, “We believe the rules are unconstitutional under the landmark Supreme Court decision in the Buckley v. Valeo case… In that ruling, the Supreme Court warned about laws that put a speaker ‘at the mercy of the varied understanding of his hearers,’” which in this case are “IRS agents.”

The letter recommends that the IRS adopt the Supreme Court’s solution to the deficiencies in the Federal Election Campaign Act, where the Court ruled that “in order to preserve the provision against invalidation on vagueness grounds, [the law] must be construed to apply only to expenditures for communications that in express terms advocate the election or defeat of a clearly identified candidate for federal office.”

The letter says “This is the rule that ought to have been adopted by the IRS following Buckley 37 years ago. Yet even after the exposure of recent abuses caused by the lack of bright line rules, instead of scrapping the vague, unconstitutional rules immediately, the IRS and Treasury have merely ‘agreed to include these items in the next Priority Guidance Plan.’

“This problem won’t be solved until the IRS and Treasury write rules that follow the Buckley decision. These rules are not difficult to write. The IRS and Treasury should do so immediately.”

Werfel’s report offers a “Path 2” for approving currently backlogged cases, which the IRS characterizes as a streamlined process that purports to identify political activities that would be considered by the IRS to constitute political campaign intervention. However, this path includes the nebulous and, most likely unconstitutional, “facts and circumstances” test, as well as a warning that “other activities may constitute direct or indirect participation or intervention in a political campaign.

“These groups have already had to certify under penalty of perjury in their application for 501(c)(4) status that their activities are primarily not for political campaign intervention,” wrote Keating. “It is unfair that they should be subjected to a new, and in some respects even more burdensome, set of requirements,” even if they are optional.

Additionally, the proposed “Path 2” outlined in the report defines as political campaign intervention “Any public communication within 60 days prior to a general election or 30 days prior to a primary election that identifies a candidate in the election.” This is particularly troubling, as such communications have long advanced activities that are clearly grassroots lobbying or educational activities, which qualify as advancing social welfare.

Another issue with “Path 2” is a proposed test on time spent by volunteers. This is impractical and burdensome, particularly for grassroots organizations, to track and know in advance how many volunteers will do which activities. Additionally, knowledge that organizations will likely have to report volunteer activities to the IRS would chill efforts to recruit volunteers.

A copy of the letter can be found here.

The Center for Competitive Politics promotes and defends the First Amendment’s protection of the political rights of speech, assembly, and petition. It is the nation’s largest organization dedicated solely to protecting First Amendment political rights.

 

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