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As Comment Period Ends, Hearings Confirm Need for Clear IRS Rules on Nonprofits

Feb. 27, 2014

As Comment Period Ends, Hearings Confirm Need for Clear IRS Rules on Nonprofits

New, Clear Rules Are Needed to Prevent Confusion, Encourage Civic Participation

Note: Today, the House Committee on Oversight and Government Reform meets to discuss the IRS’ proposed rulemaking pertaining to nonprofit groups that engage in political activity. The public comment period for that rulemaking ends today.

WASHINGTON, D.C. – As the public comment period for proposed IRS rules for 501(c)(4) organizations ends, the Bright Lines Project urges the agency to adopt rules that would increase civic participation by nonprofits and end abuses by ‘dark money’ groups of the tax code.

Despite the longstanding need for clear rules of the road that would apply to all nonprofits, Republicans on the House Committee on Oversight and Government Reform today continue to rail against creating a reasonable definition for political intervention. Diana Aviv, the chief executive of Independent Sector, a Bright Lines Project endorser, will testify that while the proposed rules need improvement, change is vital to the well-being of nonprofits of all stripes.

“The IRS has an opportunity to give nonprofits the clarity they have needed for years,” said Lisa Gilbert, director of Public Citizen’s Congress Watch division, which oversees the Bright Lines Project. “A few loud voices shouldn’t stop them from moving forward with a rulemaking when there is wide support for this type of change.”

In addition, the House voted Wednesday to pass House Resolution 3865, sponsored by U.S. Rep. Dave Camp (R-Mich.), which would prevent the IRS from finalizing the rules for one year. While Camp’s bill would not affect whether the IRS considers comments, it would slow the pace of these important reforms. The bill is unlikely to pass in the Senate.

“There is no justification for delaying this rulemaking,” said Craig Holman, government affairs lobbyist for Public Citizen’s Congress Watch division. “Doing so will leave the door open for hundreds of millions of dollars of undisclosed ‘dark money’ to flow into federal elections due to abuses of the tax code.”

The Bright Lines Project has been working for years to create clear, fair rules that would apply to all nonprofits and would encourage nonpartisan civic engagement while removing opportunities for abuse. The IRS’ new rules seek to resolve the ambiguity of the current “facts and circumstances” test that allowed 501(c)(4)s, so-called “social welfare” groups, to spend millions of dollars on elections in 2012 without disclosing their donors.