Free the IRS from regulating political speech

The Supreme Court pushed the IRS into the morass of regulating political speech with its Citizens United decision. Congress needs to pull the IRS out of the political swamp.

|
Molly Riley/AP
Rep. Michele Bachmann (R) of Minnesota (center) speaks during a news conference with tea party leaders about the IRS targeting tea party groups, Thursday, May 16, 2013, on Capitol Hill in Washington. Some analysts say the IRS has been pushed into a no-win position of trying to regulate political speech.

A final thought, I hope, on the IRS/tea party scandal: Why do we want the IRS  regulating political speech?  It seems crazy on its face, yet that is exactly the system we have created.

True, the agency bungled its scrutiny of conservative political groups seeking tax-exemptions. But should it even be deciding which political organizations should get favored tax treatment and which should not? Why is a tax collection agency regulating political speech at all?

That this is happening at all is an accident of history. The section of the law political organizations are using to win tax-exempt status was never intended for this purpose. Section 501(c)(4) has been around for a hundred years, but its purpose was to grant tax-exempt status to social welfare organizations such as community groups and citizens associations.

In the wake of the Supreme Court’s 2010 Citizens United decision, (c)(4) status became a popular mechanism for bankrolling political campaigns. Citizen’s United made it possible for unions and businesses to spend unlimited amounts of money on politics, but the vehicle they used for funneling cash to campaigns, Sec. 527 organizations, required public disclosure of their gifts.

501(c)(4)s are different. They can collect massive amounts of money anonymously.  

But they have one restriction. They may lobby, but their primary purpose must be social welfare, not financing political campaigns.

And this has thrown the IRS into a cesspool. What does primary purpose mean? And what does campaigning mean? Where do you draw the line between lobbying and politicking? The law demands that the IRS make those distinctions. It must, in other words, define political speech—a role for which is seems particularly ill-suited.

IRS agents don’t have much help. The statute is murky. Case law is vague. The agency’s own guidelines require that these applications be decided on a case-by-case “facts and circumstances” basis.

So the IRS is put in an untenable position. On one hand, it has been under pressure to crack down on what some see as abuses (I wrote a Tax Vox blog urging the agency to act back in 2010). Yet, when it tried, it was rightly accused of political partisanship. True, it could have avoided much of the current mess if it was more even-handed in its investigation of these groups. But can the IRS ever define what is a permissible political activity and what is not? Should it even try?

Worse, no politician will ever defend the agency from criticism. Whatever the IRS does, elected officials of both parties will throw it under the bus at the first hint of criticism.  Just watch President Obama.   

What’s the answer? Alan Viard at AEI urges Congress to write rules that better delineate political activity by tax-exempts. The New York Times has called on Congress to retain (c)(4) status but only for groups that have no political activity.  

I’d get the IRS out of the political speech business entirely.  If Congress wants to regulate campaign finance, it ought to do so explicitly rather than through an ad hoc structure built around an obscure section of the tax law governing citizens associations. Congress could, for instance, simply pass a law requiring public disclosure of all campaign gifts, no matter how they are delivered. That one step would largely dry up requests for (c)(4) status.

Congress could reserve tax-exempt status for those organizations that completely eschew politics. We’d all be free to say what we want and give money to whom we want. But this activity would be entirely disconnected from tax-exempt status.  Fellow Forbes.com blogger Peter J. Reilly made a similar argument yesterday. So has Bloomberg’s Josh Barro.

I know, you’re going to ask what agency would regulate this, the Federal Elections Commission? Well, you’re right, the FEC is a punchline today.  But Congress could fix that. Besides, the FEC’s failures don’t justify dumping this mess into the lap of the IRS. Honestly, I’d rather have the Transportation Dept. regulating political speech than the IRS.     

In effect, Congress and the Supreme Court have thrown the IRS into a lose-lose situation. And the agency has lost. Why are we surprised?

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to Free the IRS from regulating political speech
Read this article in
https://www.csmonitor.com/Business/Tax-VOX/2013/0516/Free-the-IRS-from-regulating-political-speech
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe