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Chilling speech through the tax code

by Michael W. Macleod-Ball and Gabe Rottman - 02/17/14 12:00 PM ET

Earlier this month, new IRS Commissioner John Koskinen sat in the hot seat before a House subcommittee over rules released late last year that could significantly chill non-partisan issue advocacy by tax-exempt groups.

The proposed rules would broadly expand what qualifies as political intervention by 501(c)(4) social welfare groups like the ACLU, too much of which will result in the revocation or denial of (c)(4) status. They’re so broad, in fact, that were we to just mention the name of someone who decides to run for president in 2016, post this column to our website, and leave it up during the 2016 presidential primaries, this very opinion piece would qualify as political intervention despite being clearly non-partisan issue advocacy.

{mosads}Loss of the (c)(4) tax shield for non-profits is an awfully sharp sword of Damocles. It’s not something any group—especially a smaller, poorer group without sophisticated legal advisors like those at the ACLU—is willing to risk. Non-profit groups that lose or are denied (c)(4) status enjoy less favorable tax treatment.

Consequently, non-profit (c)(4) entities will seriously restrict what they do and say to stay far clear of the line between political activity and non-partisan issue advocacy.

To understand why the new IRS rules are so broad, one needs to look beyond the tax code to campaign finance regulation, which is related to what’s going on here. The proposed IRS rules are, in part, an attempt to force 501(c)(4)s that are really focused on supporting or opposing candidates to disclose their donors, which might be appropriate, but can be done without the steroid-strong medicine of the proposed rules.

With respect to campaign finance, there have historically been two camps in the debate over “big money” in politics.

One holds that any political speech regulation must err on the side of caution. It would vigorously protect all speech, perhaps even noxious speech, to safeguard controversial speech by unpopular minorities like, yes, some Tea Party groups.

The other overcorrects and tries to paint with as wide a brush as possible to catch anything that could, however remote the possibility, corrupt the electoral process.

The most obvious examples of this overcorrection with respect to political speech are efforts to regulate “sham” issue advocacy: political communications ostensibly on issues like the economy or healthcare that some say are covert attempts to influence voters to support or oppose a specific candidate or party. An example would be “Call Congressman Doe and tell him to stop his war on women,” which, for the record, the ACLU believes is genuine issue advocacy and immune from regulation.

In the 2002 McCain-Feingold campaign finance bill, Congress tried to restrict sham issue advertisements by regulating all genuine issue ads before an election. The law included a (now defunct) prohibition on “electioneering communications” by labor groups and corporations, non- and for-profit, which included any broadcast, cable, or satellite communication that just mentioned a candidate for office within 30 days before a primary or 60 days before a general election.

The new IRS rules do something similar, but sweep even more broadly. They would define as campaign intervention any communication that merely mentions a candidate in the 30/60-day blackout period, or, remarkably, any political party in the 60-day window. A group that engages in too much such “CRPA” (for “campaign-related political activity,” a new term of art in the rules) would forfeit its (c)(4) status and have to disclose its major contributors.

Amazingly, the new rules anticipate that the 30/60-day provision will cover things on a tax-exempt organization’s website that are posted before the blackout and remain up during that time.

In other words, if former Secretary of State Clinton runs for president in 2016, this very column would qualify as CRPA because we just mentioned her name. If we posted it to our site, we would have to either remove it during the blackout period or figure out some way to count it against our permissible allotment of CRPA. The ACLU’s website contains literally tens of thousands of webpages that would qualify, making such a purge a nearly impossible regulatory burden to comply with.

The rules also cover strongly worded issue ads nowhere near an election that could be regarded by some voters as a covert plea in support or in opposition to a candidate (like “tell Senator Doe that her support for Obamacare is bad for America”). And, they would sweep in fully non-partisan voter registration, education, and mobilization efforts, as well as non-partisan candidate forums.

Now, it’s true that, unlike the McCain-Feingold ban, this isn’t an outright restriction. Practically, however, the sweep of the rules will cause groups to avoid or pull punches on a lot of sharply worded issue advocacy, and the 30/60-day blackout would directly restrict speech by forcing groups to purge their websites of CRPA.

Legally, there’s something like the Hippocratic Oath when it comes to laws that implicate the First Amendment. They must, first and foremost, do no harm to protected speech. These new rules take the opposite tack. They encourage the government to “burn down the house to roast the pig.”

That’s a problem in America.

Macleod-Ball is chief of staff and Rottman is legislative counsel/policy advisor in the ACLU’s Washington Legislative Office. They both specialize in free speech.