Notable Comments and Opinion Articles

Notable Comments Filed with the IRS on the Proposed Rule

If an entity with a social welfare purpose is a political committee (“PAC”) under federal or state law, it ought to be regulated as a 26 U.S.C. (“IRC”)§527 organization. If it is not, it should be regulated under 26 U.S.C.§501(c)(4). This straightforward approach would harmonize the IRS’s rules with those of the Federal Election Commission, the body entrusted by Congress with “exclusive jurisdiction” for civil enforcement of the nation’s campaign finance laws. 2 U.S.C. §437c(b)(1). This approach would recognize that in a democracy, political education not only should but must fall within the definition of “social welfare” and “educational” activities that constitute exempt activities under §501(c)(4). Nothing in the statute requires exclusion of these functions from the definition of social welfare.

It’s crucial to note that the ACLU’s website includes literally hundreds of thousands of individual webpages, and the proposed blackout rules would cover vast amounts of content that has absolutely nothing to do even with issue advocacy, let alone partisan politicking. For instance, it could cover copies of publicly filed lawsuits with government defendants, requests under the Freedom of Information Act, any communication addressed to a candidate currently holding elective or appointed office or even 50-state legal surveys mentioning covered officials…

…To put a finer and final point on it, we note that these comments, when posted to the ACLU’s website and otherwise distributed, would likely qualify as CRPA under the proposed rule during the 60/30-day blackout period, including the rolling blackout period before the 2014 election.40 The ACLU would have to either remove this document from its website or otherwise determine a way to account for the expense in creating it as CRPA expenditures….

…Despite our serious concerns with the approach in the proposed rule, the Service can and should take resolute steps to address the issues that resulted in the inappropriate targeting of conservative and progressive § 501(c)(4) (and § (c)(3)) groups, and to apply a true bright-line test for political intervention by social welfare groups. Most social welfare organizations—on both the left and right—serve exactly that function as they see it, the promotion of social welfare and community good. Based on their respective visions, they advocate for the powerless and the voiceless. They promote fiscal responsibility and good government. They serve as a check on government overreach, or as a cheerleader for sound public policy.

In many of these functions, social welfare organizations praise or criticize candidates for public office on the issues and they should be able to do so freely, without fear of losing or being denied tax-exempt status, even if doing so could influence a citizen’s vote. Such advocacy is at the heart of our representative democracy. To the extent it influences voting, it does so by promoting an informed citizenry. The current IRS exempt organization review system serves to chill that activity and, despite our concerns with the proposed rule, we appreciate the Service’s demonstrated commitment to reforming the current rule to provide a clearer standard.

When, as here, Congress has intentionally excluded political restrictions on501(c)(4) organizations, the Secretary of the Treasury cannot impose them by himself by defining the statutory term “social welfare” to incorporate the political restrictions that Congress excluded. The statutory authority of the Secretary of the Treasury to prescribe rules allows him to enforce the law — not flout the law. 

The Secretary of the Treasury prescribed the existing 50l(c)(4) implementing regulation, which states that “[a]n organization is operated exclusively for the promotion of social welfare if it is primarily engaged in promoting in some way the common good and general welfare of the people of the community” and that “[a]n organization embraced within this section is one which is operated primarily for the purpose of bringing about civic betterments and social improvements. ” The plain meaning of that definition of” social welfare” includes promoting the common good and general welfare of the people for the purpose of bringing about civic betterments and social improvements through advocating, in the electoral process, principles and those who espouse them.

While some communication may indeed be candidate-related, the IRS cannot assume that allcommunications that contain the name of a candidate – any elected official running for office -are automatically candidate-related. Legislative and regulatory business is conducted in the 60days prior to an election. A prime example is that the U.S. House of Representatives is scheduledto be in session for 12 days during the proposed rule’s blackout period.As written, this creates a 60 day disconnect where the American government is potentiallyunaccountable to the people it represents.

Ever since the 501 (c)( 4) category was created in 1959, and dating back to the exemption for these types of organizations in the 1913 enactment of the federal income tax, it has been understood that it is government policy to encourage organizations made up of millions of citizens to advocate public policy and hold politicians and government itself accountable for the policies they consider and enact. This is part of social welfare. It is not something that should be prohibited as deleterious for our nation, as the Proposed Rule seeks to do.

This Proposed Rule is not only bad policy, but it is likely unconstitutional. It is indirect contradiction to the guidance of recent Supreme Court decisions such as Citizens United v. Federal Election Commission, 558 U.S. 310 (2010), which have strengthened rather than restricted the First Amendment rights of 501 (c)( 4)organizations…

…As part of our mission to enable homeschool families to know where their elected officials stand on issues, HSLDA circulates voter guides, lets homeschool families knowhow their elected officials vote, and occasionally scores and publishes key votes on issues that relate to homeschool freedom. If this Proposed Rule were adopted, HSLDA would be prohibited from doing this, and homeschool families would be in the dark about how their elected officials act in regards to homeschool freedom.

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