Camp: Pause IRS Regs on NonProfits

Photograph by Andrew Harrer/Bloomberg

Representative Dave Camp, a Republican from Michigan and chairman of the House Ways and Means Committee, left, during a hearing with Representative Sander Levin, a Democrat from Michigan, in Washington, D.C., on Oct. 29, 2013.

The Republican chairman of the House Ways and Means Committee wants to press the pause button on Internal Revenue Service regulations that will shape how nonprofit groups can engage in politics.

Rep. Dave Camp of Michigan proposed a bill that would prevent the IRS from issuing regulations that clarify or change whether groups qualify for tax exemption under Section 501(c)(4) of the tax code. The moratorium would last for one year.

The IRS proposed regulations last year as part of its response to the controversy surrounding its treatment of Tea Party groups seeking tax-exempt status. The rules, which aren’t expected to affect the 2014 election cycle, would set a clearer definition for political activity, including campaign ads, voter registration drives and events featuring candidates.

Under the tax code, 501(c)(4) groups must be organized “exclusively” for promoting social welfare, which the IRS has interpreted to mean that they can’t be primarily involved in politics. That definition, along with the lack of a requirement that groups disclose their donors, has made social welfare groups an attractive vehicle for anonymous involvement in politics. Democrats have urged the IRS to adopt clearer, more restrictive rules and say the lack of clarity led to the IRS actions that scrutinized some groups because they had Tea Party in their names.

The rules are premature while several investigations continue, Camp said in an issued statement.

“We cannot allow these draft regulations to go into effect,” he said. “Congress must make sure every American’s right to participate and engage in civic debate is protected, and this legislation will provide some much-needed assurance that IRS targeting and surveillance will not continue.”

The proposed rules don’t say how much political activity would disqualify a group. The IRS is currently collecting comments on its proposal, including whether a version of it should apply to other types of nonprofit organizations, such as labor unions.

 

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