The Latest IRS Political Crackdown

WSJ, Editorial

An ambiguous new rule to stop Americans from influencing elections

The Obama Administration doesn’t lack for nerve or, more to the point, disdain for the law. Even as investigations continue into the IRS targeting of conservative nonprofit groups, Treasury and the IRS are introducing a new regulation to further restrict the ability of nonprofit groups to participate in elections.

Treasury’s draft of the proposed rule would redefine as political activity a wide range of actions currently undertaken by hundreds of 501(c)(4)s, which are allowed to engage in politics as long as it is not their “primary purpose.” The rule amounts to a crackdown on the Administration’s opponents, limiting their ability to talk about their core issues during an election cycle.

Under the new rule, the IRS would change the standard on issue advertising so that any broadcast ad that mentions a candidate within 30 days of a primary or 60 days of a general election would count as “political activity.” That’s the standard currently used by the Federal Election Commission to define an “electioneering communication,” but using it as a standard for tax-exempt status imposes artificial limits on groups’ ability to work on their core missions during election cycles.

The rule would also expand the definition of political activity to include any communication that mentions the name of a candidate and reaches more than 500 people in the run-up to an election. That definition would include newsletters, candidate appearances at a group function, common materials like voter guides, and articles or blog posts on a group’s website.

The latter would even include material that remains on the website during the 30- and 60-day election periods. To avoid getting tagged for engaging in too much politics, a group would have to scrub its website of anything written about a candidate, presumably even if the article was written before the candidate had announced.

Imagine if the Sierra Club criticized a manufacturing CEO for supposed sins against the Club’s core mission of protecting the environment. If the CEO later ran for Congress, would the Sierra Club have to delete those posts or have that material counted against its allotted share of political activity? Outside the IRS, that’s called censorship.

The rule would also use state and local definitions of what counts as a contribution to a candidate, a policy that would reach into other aspects of 501(c)(4) operations, such as counting pro-bono legal work for a candidate as an “in-kind” contribution. A “candidate” is defined to include executive and judicial nominees, whose confirmation battles happen outside of traditional election cycles. The American Bar Association rates judicial candidates when they are nominated, so would this put the ABA’s tax status in jeopardy?

The Administration claims the rule’s purpose is to clarify tax-exempt standards to prevent future mistakes like the one that sidelined the applications of hundreds of conservative and tea party groups in 2011-2012. Yet the new rule offers zero clarity on what percentage of a 501(c)(4)’s activities may be political without falling afoul of the nebulous “primary purpose” test. Enforcement could be as arbitrary as it is now.

The new proposal is designed to cover only 501(c)(4)s, the social welfare groups that liberals despise, while leaving the door open to cover other tax-exempt groups in the future. 501(c)(4)s are the immediate target because the real goal here is donor disclosure, which has become a liberal hobbyhorse. If 501(c)(4)s can’t run issue ads in the weeks before an election, that activity would likely shift to 527 groups that are required to report donors under IRS rules.

All of which continues this Administration’s unprecedented campaign to rewrite the law on its own if Congress won’t do its bidding. Democrats failed to pass the Disclose Act, so the Administration is pressuring the Securities and Exchange Commission and is now using the IRS to compel donor disclosure. President Obama seems to think Congress can simply be ignored if it doesn’t do what he wants.

The IRS is soliciting comments on its draft, so here’s ours: The same agency that showed it is willing to use the tax code to punish critics of the President can’t be trusted to limit anyone’s political speech.

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