Candidates flout law as IRS looks the other way

The post-Citizens United era of unlimited and secretive dark money has become the wild, wild west of politics where candidates and Super PACs disregard the law and intimidate the sheriff. At the very moment people need common sense laws to make sure government remains of, by, and for the people, those charged with enforcing our laws are looking the other way.

The New York Times reported recently that the Internal Revenue Service (IRS), overseen by Commissioner John Koskinen, is preparing to take a pass on enforcing laws that prohibit partisan political operatives from evading disclosure of the donors behind hundreds of millions of dollars flowing into our political system.

{mosads}And the agency’s refusal to do its duty apparently suits many – maybe even most — of its overseers in Congress just fine. Senate Republicans are said to be gearing up for hearing later this month to examine the IRS’s treatment of politically active “social welfare” groups; indications are that the majority wants to upbraid Koskinen for even thinking about a crackdown and will demand that the IRS give the groups permission to spend as much as they like on political campaigns while hiding their donors.

Here’s why. Since 2010, these social welfare non-profits have pumped at least $470 million into campaigns for federal office, according to the Center for Responsive Politics. The total doesn’t count money spent at the state level, or in between campaigns – and there’s plenty more where that came from.

The law governing the groups, Section 501 (c)(4) of the Internal Revenue Code, exempts them from taxes but requires them to report how much money they’re collecting and how they’re spending it. Donors are not permitted to deduct contributions to the groups but they get to remain anonymous to the public. The law also specifies that the social welfare activities the groups pursue cannot include “direct or indirect participation or intervention in political campaigns.”

The legal language appears clear but Koskinen and company have somehow interpreted it to mean that the social welfare groups can actually devote 49 percent of their receipts to political activity. Many groups are at least arguably putting even more than that into campaigns and candidates but the IRS is looking the other way at their conduct too.

The agency got publicly burned on this issue in 2013, when conservative and Tea Party groups using or seeking social welfare status charged that the IRS had singled them out for special scrutiny because of their ideology. The groups offered little proof, but the always-unpopular IRS took a major public relations hit, even though the vast majority of applications under review were from these groups. The agency then took a much-needed stab at writing new rules, but ran into trouble because its proposals too narrowly defined “social welfare,” excluding non-partisan activity like voter registration drives. While the first draft of proposed rules missed the mark, it started an important and long-overdue process.

Against that backdrop, some within the agency would like to lower the IRS’ profile, particularly in an election year.  But with public frustration growing every day over how big money donors are overwhelming the free speech of the rest of us, there has never been a greater need for common sense tax rules clearly distinguishing social welfare and political groups.  

The law is clear, and so is the IRS’s responsibility to enforce it. Social welfare groups that put more than an insubstantial amount of their resources into electing – or defeating – political candidates ought to be reclassified as political committees and ordered to disclose their donors.

Rapoport is president of Common Cause, a national citizen-advocacy organization with 400,000 members and supporters and 35 state affiliates working to keep power accountable to the people.