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.”