Government to revise proposed regulations on controversial tax-exempt groups
May 22nd, 2014
06:08 PM ET
4 months ago

Government to revise proposed regulations on controversial tax-exempt groups

Washington (CNN) – The IRS and Treasury Department are going to revamp proposed regulations regarding the controversial advocacy groups and how much politics they should be allowed to do and still keep their tax-exempt status.

After the government last November proposed new regulations for these groups, known by their tax status as 501c4s, the IRS received over 150,000 comments – the most ever received on a possible tax regulation change officials said.

“It is likely that we will make some changes to the proposed regulation in light of the comments we have received. Given the diversity of views expressed and the volume of substantive input, we have concluded that it would be more efficient and useful to hold a public hearing after we publish the revised proposed regulation. Treasury and the IRS remain committed to providing updated standards for tax-exemption that are fair, clear, and easier to administer,” the IRS and Treasury Department said Thursday in a joint statement.

Currently the law states for these groups to receive tax-exempt status they must “exclusively” push social welfare and that politics can’t be their primary purpose – which has been interpreted to mean these organizations can still do a lot of campaign work and not lose their status.

Originally a hearing on the proposed changes was going to be held this summer. IRS officials said it made more sense to come up with a new proposal before moving ahead with any hearing. The officials insist they are still committed to changing the tax rules governing these groups. They are controversial because are currently allowed to do political advocacy work so long as a majority of their work is not campaign-related.

The proposal to change how the regulations came after IRS officials disclosed last year they targeted some groups, including some tea party ones, and gave them more scrutiny after they applied for the special tax-exempt status. More activities would be considered political under the proposed guidelines, and groups would risk losing their tax status if they engaged in too many of them.

The groups are controversial not only because of how much political activity many engage in but also because the law doesn’t require them to disclose their donors.

Conservatives said the move Thursday to re-draft new rules wasn’t enough.

"Obama’s IRS should drop this effort permanently and stop trying to prohibit Americans from making their voices heard in the political debate over the direction of the country,” ForAmerica Chairman Brent Bozell said in a statement.

“The decision by the IRS to revise proposed rules governing the actions of non-profit organizations reflects the reality that the initial proposed rules were so deeply flawed and unconstitutional that the IRS had no choice but to back off,” Jay Sekulow, chief counsel to the American Center for Law and Justice, who represents many tea party groups in a lawsuit against the IRS for the targeting, said in a statement to CNN.

Sen. Charles Schumer, D-New York, who has been pressing for more scrutiny for these type of organizations, said he was not pleased with the decision.

“One of the greatest dangers our democracy faces is the unregulated ‘Wild West’ nature of 501(c)(4)s that allows a multimillionaire to spend undisclosed millions on TV ads and call it social welfare. This delay is deeply disappointing and a real setback for democracy and faith in government. The only hope we have is when the IRS goes back, they don’t succumb to any form of political pressure and enact a very tough rule that will equally curtail liberal and conservative groups.”


Filed under: IRS
soundoff (16 Responses)
  1. A Kickin' Donkey

    I would love all those Republicans who call for less "regulation" to speak up. Lets return to the original, simple language on tax exempt status. Only those organizations exclusively promoting SOCIAL WELFARE of the country should be entitled to this status.

    All of you partisan, political special interest advocacy groups, you violate the law as it was written. You can exist but you DO NOT get tax exempt status. Simple. So what say you Republicans? Follow the law. . . . . is that crickets I hear?

    May 22, 2014 06:43 pm at 6:43 pm |
  2. J Anthony

    Most of them targeted post-2010 are not "social welfare" groups in any sense, and deserve no tax-exempt status.

    May 22, 2014 06:57 pm at 6:57 pm |
  3. Liz the First

    If you are an organization engaged in politics in any way, you should pay taxes, period! and that includes churches!

    May 22, 2014 07:22 pm at 7:22 pm |
  4. ThinkAgain

    Every application should be reviewed to verify whether these groups meet the criteria for tax-exempt status. I'm tired of subsidizing these "social welfare" groups that are obviously engaging in political activity.

    His is all thanks to the John Roberts Court and Citizens United. He and the other 4 Justices who upheld this decision should be ashamed for sellin our county off to the highest bidder.

    May 22, 2014 08:19 pm at 8:19 pm |
  5. ghost

    What new rules? The law is very clear, EXCLUSIVE! non political activities. What is so hard to understand about that???

    May 22, 2014 08:45 pm at 8:45 pm |
  6. They ought to change from the elephant to the hippo...

    "Currently the law states for these groups to receive tax-exempt status they must “exclusively” push social welfare and that politics can’t be their primary purpose – which has been interpreted to mean these organizations can still do a lot of campaign work and not lose their status."

    Which "Tea Party" group complies with the law? Answer NONE! Plenty of left leaning groups should not be included either. Boot them ALL out.

    Tax payers footing the bill for such free-loading fake "social welfare" groups should be an outrage to all citizens.

    May 22, 2014 09:36 pm at 9:36 pm |
  7. jinx9to88

    Stop these Super pacs and outside money for both parties and we wouldn't have to worry about this problem.

    May 22, 2014 10:38 pm at 10:38 pm |
  8. S. B. Stein

    I think that all new social welfare groups should have no more that 1% of their activities (in terms of time spend doing something and money spent) related to political activities like talking about legislation unless directly related to their function such as ocean research for a group supporting Woods Hole Oceanographic. These groups are just another way for rich people to get more voice than a poor man.

    May 22, 2014 10:56 pm at 10:56 pm |
  9. Roz

    I am firmly against Citizens United and that ANY of these groups are for social welfare is a crock of kitty litter. Brainwashing is what they sell – stay out of my bedroom, my womb, my life!! You are sickos and so is your "message".

    May 22, 2014 11:21 pm at 11:21 pm |
  10. John Q

    In summary, the GOP wants 501c4 groups to actively campaign with unlimited anonymous donors and get a tax exemption for doing so.....
    Just more selling of the government to the highest bidder

    May 22, 2014 11:25 pm at 11:25 pm |
  11. J.V.Hodgson

    I think most Americans of either political persuasion would be in favor of an IRS law on this that keeps uses the KISS technique, I.E keep it simple stupid.
    If your objective is charity including social welfare projects ( for or against abortion LGBT matters as just a couple of items you can be non profit and no need to disclose donors but provide adequate proof to donors and the charity commission of how you spent that money churches need to account for how their money is used for the furtherance of religion or which charities they supported or ran them selves. Essentially charities only.
    Then we have PAC's ( political action committees ) the law technically says even now as originally written social spending charity work is not allowed under the law . but IRS guidelines have been issued for non profits especially so called 501c4's to engage in political spending and social or charitable together if the latter are up 51% of spend or more and then donors need not be identified.
    Existing law treatment means foreign individuals or corporates could give money to 501c4,s which is banned under election law rules.
    So for me its simple If you wanna place ads at any time especially within 9months prior to an election AND ITS NOT A 100 % CHARITABLE DONATION ITS A POLITICAL CONTRIBUTION AND YOU ARE AND MUST STATE YOUR POLITICAL AFFILIATION and ARE TAXABLE ON REVENUES LESS EXPENSES WITH NO CARRY OVER OF LOSSES and all donors must be named and state the desired purpose or use of that donation for donation.
    At the donor side charitable donations are tax deductible but not those to PACS who by definition cannot be non profit.
    Regards,
    Hodgson

    May 23, 2014 12:34 am at 12:34 am |
  12. Thomas

    This is a scam , and both parties do it .

    “One of the greatest dangers our democracy faces is the unregulated ‘Wild West’ nature of 501(c)(4)s that allows a multimillionaire to spend undisclosed millions on TV ads and call it social welfare.

    May 23, 2014 12:47 am at 12:47 am |
  13. ChrisM

    Go back to the Original language Congress passed :
    This massive loophole was never authorized by Congress!

    The current version of the Revenue Act of 1913 provides a tax exemption for:
    Civil leagues or organizations not organized for profit but operated Exclusively for the promotion of social welfare or local associations of employees, the membership of which is limited to the employees of a designated person or persons in a particular municipality, and the net earnings of which are devoted Exclusively to charitable, educational, or recreational purposes.

    May 23, 2014 01:32 am at 1:32 am |
  14. king

    why is the IRS changing the rules for a bunch of hate filled tea party groups, who went buck wild when the first African american became president. they pour hoard of money to groups to undermined this government, by sending obstructionist to congress by the ton load. china seized the opportunity to modernized and move past our country in modernization, overall economy, and moving quickly up the rear in their modernized armed forces. the repubs have spitefully held this country back, just because they were pissed as hell because the american people elected the first black president. they began forming all these so called patriot groups to oust this president before he even had the chance to start doing his work getting us out of the devastating financial crash the repubs administration put the country in.

    May 23, 2014 06:40 am at 6:40 am |
  15. Bryan

    Never before has a political party sought to use government power to attack thier political enemys. It sets a very dangerous tone that ussally ends up with violence,

    May 23, 2014 06:56 am at 6:56 am |
  16. Free Man in the Republic of Texas

    WE are FEDERAL GOVERNMENT
    Resistance is futile.
    You will be assimilated
    into "The Collective"

    It's
    The NEW Freedom
    of
    Fundamental Transformation

    You MUST remember that the
    Lib / Progressive / Democrat
    UTOPIA-NIRVANA end
    is justified by
    ANY and ALL means.

    FORWARD
    PUBLIC UNIONS FOREVER

    May 23, 2014 07:27 am at 7:27 am |