December 18, 2013
By Hans A. von Spakovsky
On Nov. 29, when Americans were with their families giving thanks for the founding of our great nation, the Obama administration quietly unveiled its latest attempt to silence the political opposition to a mostly-empty Washington.
As if the indefensible attack on Tea Party and other conservative organizations documented by the IRS Inspector General wasn’t enough, the IRS is now proposing new regulations that would further restrict the activity of these organizations and give IRS officials even more power to intimidate – sorry, regulate – them. This is, of course, the exact opposite of what should be done to reverse the politicized targeting that IRS bureaucrats have been engaged in.
The proposed regulation would redefine what the IRS considers “candidate-related political activity” for §501(c)(4) organizations. It is a thinly veiled attempt to overturn the U.S. Supreme Court’s decision in Citizens United by executive fiat, after the administration failed in a similar attempt when it couldn’t get the DISCLOSE Act passed by Congress. The regulation would seriously infringe the First Amendment rights of advocacy organizations.
The vast majority of advocacy organizations don’t apply for charitable status under §501(c)(3) of the tax code, under which donations are tax deductible, which is available for religious institutions, art museums, and the like. Instead, organizations such as the National Rifle Association and the Sierra Club apply for tax-exempt status under §501(c)(4), which simply exempts them from paying income taxes on the donations they receive from their members (donations the members have already paid taxes on and which are not tax deductible). The statute passed by Congress says that §501(c)(4) governs “civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare.”
When it comes to political activity, §501(c)(3) charitable organizations are by statute not allowed to “participate in, or intervene” in the political campaign of any candidate. However, despite the fact that there is no such equivalent ban in the statutory definition of §501(c)(4) “social welfare” organizations, starting in 1959, the IRS imposed such a restriction by regulation without the authority to do so.
Under that regulation, a §501(c)(4)such as the NRA can engage in political activity as long as that activity does not constitute the primary engagement or purpose of the organization. In other words, as long as its “candidate-related political activity” is less than 50 percent of what it does, an organization can keep its tax-exempt status.
The current IRS regulation is so broad and ill-defined that the IRS applies a “facts and circumstances” test to determine what constitutes “political activity” by an organization. This test can vary greatly depending on the subjective views of the particular IRS bureaucrat applying the test. IRS employees took advantage of this vague and subjective standard to unfairly delay granting tax-exempt status to Tea Party organizations and subject them to unreasonable scrutiny.
But the new proposed regulation would make things even worse. It suffers from a crucial defect: the assumption by the IRS that engaging in political speech and political activity do not “promote social welfare.” We live in a society in which an all-too-powerful federal government regulates almost every facet of Americans’ lives, businesses, and property. Membership organizations such as the NRA or NARAL have to participate in the political life of the nation if they want to advance the particular issues their members care about. As former FEC Chairman Brad Smith says, “What kind of democracy claims that political participation is not in the interest of ‘social welfare’?”
Another fundamental mistake with the proposed regulation is its sweeping view of “candidate-related political activity.” This would include nonpartisan voter registration and get-out-the vote drives as well as voter guides and hosting of candidate debates or meet-the-candidate events.
What is partisan about inviting the candidates in a particular election to a debate to discuss their views on the issues of interest to an organization’s members? How is an organization supposed to educate its members if it can’t provide them with a voter guide that lists an officeholder’s votes on bills affecting the particular issues the organization is organized around?
As long as the organization is not engaging in express advocacy — that is, telling its members who to vote for or against — it should be able to engage in all of these activities without penalty. Doing so promotes “social welfare” by educating the public on important issues and encouraging basic civic participation, an essential ingredient in maintaining a health democracy.
Finally, the proposed regulation very unsubtly tries to impose a new rule that the Supreme Court already found unconstitutional in Citizens United v. FEC. One issue in that case was a federal campaign finance rule that prohibited labor unions and corporations – both profit and nonprofit – from running any broadcast ad that “refers to a clearly identified” federal candidate within 30 days of a federal primary or 60 days of the general election. The problem with this provision was that it banned pure grassroots lobbying ads that had nothing to do with an election.
If, for example, Congress scheduled a vote on an abortion bill two weeks out from the November election, both NARAL and Americans United for Life Action would be prohibited from running an ad asking people to call specific senators to vote for or against the bill if those senators were up for reelection. Such an ad about a legislative issue has nothing to do with the senator’s reelection, yet the First Amendment rights of these organizations and their members to speak on an issue important to them were stilled.
The Supreme Court quite properly found this 30/60-day provision unconstitutional, since it suppressed speech “in the realm where its necessity is most evident: in the public dialogue preceding a real election” when Congress tends to schedule lots of votes.
The Supreme Court also found that the regulation the FEC had promulgated on whether political speech was “candidate-related” was unconstitutional. The FEC determined if a communication was the “functional equivalent of express advocacy” even if it did not directly call for a vote for or against a candidate if it was “susceptible of no reasonable interpretation other than as an appeal to vote for or against” a candidate.
In essence, the complex regulation the FEC implemented to apply this definition required a speaker to “ask a governmental agency for prior permission to speak” if it wanted to avoid “threats of criminal liability and the heavy costs of defending against FEC enforcement.” Therefore, it violated the First Amendment as an onerous “ongoing chill upon speech” that was the “equivalent of prior restraint…analogous to licensing laws implemented in 16th- and 17th- century England, laws and governmental practices of the sort that the First Amendment was drawn to prohibit.”
Yet the IRS is proposing to implement the exact same language the Supreme Court found unconstitutional. It defines as “candidate-related political activity” a communication “within 30 days of a primary election or 60 days of a general election that refers to one or more clearly identified candidates.”
It even repeats the confusing language from the FEC regulation that the Supreme Court threw out about candidate advocacy including any communication “susceptible of no reasonable interpretation other than a call” for a vote for against a candidate – and the definition of candidate is so broad that it would include nominees, not just political candidates. This would effectively bar discussion of the president’s nominations, such as his controversial judicial nominees to the D.C. Court of Appeals.
Not surprisingly, none of these new rules would apply to unions, which are the backbone of the voter registration and get-out-the vote activities of the president’s political party. But advocacy groups of all political persuasions should protest this proposed IRS regulation. It is aimed at chilling political speech and political activity.
Alexis de Tocqueville said that when Americans “want to proclaim a truth or propagate some feeling by the encouragement of a great example, they form an association.” Such associations are critical to the First Amendment ecosystem; citizens use them not only to assert their views and opinions under the protection of the First Amendment, but also to try to advance the social welfare of the country. To their shame, the IRS and the Obama administration are taking steps that would thwart that.
- Hans A. von Spakovsky is a Senior Legal Fellow at The Heritage Foundation and is a former commissioner on the Federal Election Commission.
Originally published by Human Events
Hans A. von Spakovsky
Manager, Election Law Reform Initiative and Senior Legal Fellow
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