WASHINGTON — The IRS is responding to record criticism of a proposed rule further targeting conservatives, not by listening to the will of the people, but by going behind closed doors.
The Treasury department acknowledged it has received a record 150,000 written comments on a proposed rule that many conservatives say is designed to put into law the practice that led the IRS to target tea-party groups applying for tax-exempt status.
But instead of addressing those complaints and conducting its proceedings in public, the IRS made the bombshell announcement that it will do just the opposite.
The agency announced Thursday that it will go ahead with its plan to tighten the rules governing certain tax-exempt groups organizations (including many tea-party groups) without holding a public hearing.
“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,” said an IRS statement.
The proposal would change the rules for a type of tax-exempt political organization called a 501(c)(4), which typically engages in citizen education and grassroots lobbying.
Jenny Beth Martin, president and co-founder of Tea Party Patriots, or TPP, an umbrella organization supporting thousands of local organizations and millions of members, told WND, “This is nothing more than double-speak from Internal Revenue Service Commissioner John Koskinen. Instead of walking-back proposed restrictions on free speech by 501(c)(4) groups, he and the Obama administration want to write them in secret.”
Martin accused the IRS of writing rules to circumvent the Constitution and restrict the free exercise of the First Amendment, and said the IRS should draft and enforce regulations prohibiting targeted intimidation campaigns against groups like Tea Party Patriots and other nonprofits with which the Obama administration disagrees.
She added, “Between drafting secret IRS rules and Senator Harry Reid trying to re-write the First Amendment, Democrats are laying the groundwork to stifle free speech ahead of the 2016 elections.”
The IRS announced its intention to make the controversial changes on the day after Thanksgiving last year, eventually causing an uproar when the public got word of it.
On Nov. 29, 2013, the IRS quietly proposed regulations that critics say would drastically change the nature of elections and severely limit the power of conservative grassroots organizations, such as tea parties, by redefining what is considered tax-exempt political activity.
Numerous grassroots organizations (including many tea parties) are 501(c)(4)s, and many prominent conservatives see the proposed rules as an attempt to shut down such groups as the Tea Party Patriots, the Family Research Council and the American Family Association.
The new rules would remove tax-exempt status for certain political activities by redefining them as “candidate-related political activity.”
The IRS claimed it will consider some of the criticisms in the 150,000 comments it received, but it will still keep many of the same elements as the original proposal that caused such outrage on the right.
The IRS scandal began last year when an inspector general report discovered IRS agents had been using words like “tea party” and “patriot” to political nonprofits for extra scrutiny.
The agency claims the new rule is designed to assure the public that politics does not determine the groups it scrutinizes.
But IRS victims say it is just an attempt to make legal what the IRS had to admit last year were “inappropriate” practices, causing it to make a public apology to the conservative groups it had targeted during, and before, the 2012 election.
In January, IRS victims told WND the new rules would scuttle tea parties and that all the IRS did was shift tactics.
At the time, TPP’s Martin told WND, “It’s going to affect our ability to have free speech and hold members of Congress accountable.”
“Speaking as one who’s been targeted by the IRS,” she said the regulations will severely hamper her groups members’ ability as citizens to coordinate with one another and understand what Congress is doing, and then to be able to decide when they need to hold Congress accountable.
That’s because, Martin emphasized, “It costs money to get a big group of people together to research bills and find out what Congress is doing and then get the information out to people.”
Constitutional law expert and Washington attorney Cleta Mitchell, who represents TPP and a number of other tea-party groups targeted by the IRS, told WND the IRS proposals would treat as candidate-related activities virtually everything that a 501(c)(4) normally does:
- Grassroots lobbying
- Candidate forums
- Candidate debates
- Voter registration
- Voting guides
- Issue advocacy
- Any public statements by officers of 501(c)(4)s that reference incumbents and candidates
Additionally, any event at which any candidate for office appears within 30 days of a primary, or 60 days of a general election, would be automatically deemed a “candidate-related political activity.”
The rules would also treat meetings with public officials as taxable events, even if the appearance was in an official capacity and not as a candidate.
Mitchell said 501(c)(4) groups would be left with very little to do because almost everything would be a candidate-related political activity.
Even worse, she predicted it would force citizens to get their information about candidates from 30-second television ads and the media rather than from candidate debates, candidate forums and by seeing public officials face-to-face in town-hall and other meetings.
In the video below, Mitchell details how she believes the proposed IRS regulations would silence tea parties.
Confusion may arise over the 501(c)(4) designation because the IRS calls such groups “social welfare organizations,” which may conjure images of neighborhood watches or volunteer fire departments.
In fact, on March 12, 2012, Sens. Chuck Schumer, D-N.Y., Al Franken, D-Minn., and five other Democrats signed a letter demanding the IRS target conservative groups and impose tighter restrictions on 501(c)(4) groups affiliated with the tea parties because, they claimed, the groups were “masquerading as social welfare organizations.”
It also came to light last week that Sen. Carl Levin, D-Mich., was in direct contact with the number two Internal Revenue Service official about scrutinizing tea-party and conservative groups throughout the 2012 election.
Levin, the chairman of the Senate Subcommittee on Investigations, wrote a series of letters in 2012 demanding the IRS scrutinize several nonprofit groups and to determine if their political activity should disqualify them from tax-exempt status.
And, sure enough, in September 2012, IRS Director of the Exempt Organizations Division Lois Lerner announced the agency “will consider proposed changes” in the regulations governing eligibility for 501(c)(4) tax-exempt status because of complaints that some “social welfare” groups were being used too politically.
That’s the same Lois Lerner who ended up, on May 10, 2013, apologizing for the IRS having inappropriately targeted conservative groups (such as 501(c)(4) tea parties) for years.
After sparking the entire IRS scandal, Lerner then invoked her Fifth Amendment right on May 22, 2013, rather than explain her actions to Congress.
However, despite Democrat’s objections, when it comes to the stated purpose of these groups, the IRS regulation on “501(c)(4) – Civic Leagues and Social Welfare Organizations” states “if you submit proof that your organization is organized primarily to promote social welfare, it can obtain exemption even if it participates legally in some political activity on behalf of or in opposition to candidates for public office.”
The website Legalzoom further clarifies: “501(c)(4) organizations are allowed to engage in political activities in ways that other tax-exempt organizations are not. For example, a 501(c)(4) may spend as much money as it wants on lobbying activities. It may also endorse or oppose any political candidates of its choosing, and participate in campaigns by offering money, time or the use of its facilities.”
Democrats objected to the political use of 501(c)(4)s for politics only after tea parties became a strong political force in the 2010 midterm elections, helping put the House of Representatives back under Republican control.
Bloomberg even noted in its article back on Sept. 24, 2012, that 501(c)(4)s “have long been politically active, but several such organizations have become especially visible in the 2012 Presidential election, causing some to question the appropriateness of significant political involvement under this provision of the tax code.”
Indeed, leftists have been using 501(c)(4)s for advocacy organizations during campaigns for years.
MoveOn.org and the NAACP are both 501(c)(4)s.
“Conservatives have been playing catch-up,” said David French, senior counsel at the American Center for Law and Justice, which is suing the government on behalf of tea-party groups targeted by the IRS.
“501(c)(4)s are only a threat to the republic since conservatives have begun their own movement of utilizing every legal means available to influence issues the same way the left has for years,” he told WND.
When WND asked American Family Association, or AFA, general counsel Patrick Vaughn what made him think the proposed IRS regulations target conservatives, he said that’s because leftist groups more often use a type of tax-exempt organization named after section 527 of the IRS tax code.
He said the “huge money going to liberal causes” coming from big-money donors like George Soros goes into 527 organizations. If it comes from the grassroots, it flows through the unions.
Aside from a few large donors like the Koch brothers, most conservative money comes from smaller sources such as business owner and families, according to Vaughn, who noted that money traditionally flows into 501(4)(c) community-betterment organizations.
“The government and the IRS know that, so they’re targeting the structure the conservatives use.”
In fact, Vaughn believes it’s more than just an attempt to change tax rules.
It’s part of a “coup” and an attempt to shift power from the people to the president, according to the constitutional law expert.
“I think we are in the middle of a quiet coup” and the president is telling Americans that it is a “good thing” to go around their elected representatives to serve his constituency, according Vaughn.
He told WND, “The current administration does not respect the system. They want to fundamentally change it. They believe in power. They believe in whatever means are necessary to justify their ends. And that’s what they’re executing. I am serious about this.”
Vaughn explained how the executive branch of government is attempting to implement a bill Congress rejected in 2012, The Disclose Act. He believes administration is subverting the separation of powers by attempting to dictate, through an executive agency, the IRS, a law that Congress rejected.
Is that unconstitutional?
“You have to be careful here,” Vaughn warned, explaining that “administrative agencies have to fill in gaps that are left by the law” and they have latitude to figure out how to implement regulations.
French told WND the threat to the separation of powers and constitutional liberties is “very grave.”
He called it extreme overreach by a federal bureaucracy that is largely unaccountable to voters, and we now have “an entrenched hyper-partisan bureaucracy at the IRS” that only compounds the problem.
The attorney said the particular danger these regulations pose is the IRS is attempting, “in the critical phase when most Americans start paying attention to issues, in the 30, 60 or 90 days before an election, to muzzle dissenting voices.”
And French doesn’t just blame Democratic lawmakers for the IRS targeting of conservative groups.
He noted how President Obama began to publicly criticize conservative organizations following the Citizens United decision by the Supreme Court on Jan. 21, 2010, which allowed corporations and labor unions to promote or oppose political candidates.
“The president himself began to publicly condemn 501(c)(4) citizens groups, casting aspersions on their funding sources, demanding transparency” and not long after that, “the IRS began to ask about funding sources and began to make demands far beyond its legal limits.”
French said when the IRS was caught abusing conservative groups, “they apologized, but all they did was shift tactics, trying to suppress speech by regulations rather than through lawless administrative actions, from 2009 to the present.”
The public and lawmakers are virtually powerless to stop the IRS from implementing the proposed regulations that would so fundamentally change 501(c)(4)s and the election system, unless there is a massive outcry from the public.
Feb. 27 was the last day for public comment on the changes, and after that, there is nothing stopping the IRS from adopting them.
Only the courts could stop the changes by declaring them an unconstitutional violation of separation of powers.
Mitchell urged concerned citizens tell the IRS these rules are unacceptable because they would:
- Keep citizens from holding their public officials accountable
- Silence citizens and chill the very purpose of grassroots groups
- Create different rules and standards for different types of 501c groups, such that a charitable organization could do more than a grassroots group
- Force citizens to get their information about candidates from 30-second TV ads and the candidates and the media – rather than from candidate debates, candidate forums and seeing public officials face-to-face in town hall and other meetings
- Treat as candidate-related activities essentially everything that a grassroots organization does
- Force organizations to remove legislative voting records from their websites in even-numbered years
- Treat legislative voting records as a taxable, non-primary purpose activity of a c4 organization
- Treat meetings with public officials as taxable events, even when the official appears as an “official” and not as a candidate
- Treat internal membership communications as taxable, if there is a mention of a candidate or public official, if a group has more than 500 members who receive the communication
- Declare certain activities to be “candidate-related” political activities, even if no candidate is mentioned
- Allow labor unions, churches, universities, veterans groups, social clubs, business groups and others to have greater First Amendment rights than grassroots citizens organizations.
To read Patrick Vaughn’s description of the proposed IRS changes and his analysis of what the would do, go here.