New IRS rules would scuttle tea parties

WASHINGTON — Constitutional law experts tell WND the IRS hasn't stopped targeting conservative groups, including tea parties. It's just trying a different approach, one that may be impossible to stop.

Many have heard of the president's repeated promises last week to bypass Congress to accomplish his goals, saying "I’m going to act on my own if Congress is deadlocked. I’ve got a pen, to take executive actions where Congress won’t, and I’ve got a telephone to rally folks around he country on this mission.”

But another effort to fundamentally transform the American political system has gone little noticed and barely reported by the mainstream media, and it has many conservatives alarmed about its possible effect on elections and free speech, because they are virtually powerless to prevent it.

On Nov. 29, 2013, the day after Thanksgiving, 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.

The proposal would change the rules for a type of tax-exempt political organization called a 501(c)(4), which typically engage in citizen education and grassroots lobbying.

Attorney Cleta Mitchell

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."

According to Washington attorney Cleta Mitchell, who represents a number of the tea-party groups targeted by the IRS, these 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 predicts 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.

Tea Party Patriots President Jenny Beth Martin

Jenny Beth Martin, president and co-founder of Tea Party Patriots, an umbrella organization supporting thousands of local organizations and millions of members, 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."

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."

And, sure enough, just a few months later, 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.

Lois Lerner

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 is 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.

Concerned citizens can register their comments with the IRS at the Federal eRulemaking Portal.

They must include this citation: IRS REG-134417-13.

Mitchell recommends 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.

Follow Garth Kant on Twitter @DCgarth.