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Lawmakers Working on Tax Overhaul Should Fix Nonprofit Rules

Lawmakers Working on Tax Overhaul Should Fix Nonprofit Rules

May 18, 2017

Contact: David Rosen, drosen@citizen.org, (202) 588-7742
Emily Peterson-Cassin, epetersoncassin@citizen.org, (202) 445-1401

WASHINGTON, D.C. – Congressional lawmakers who are tackling the tax code should adopt a better definition of political activity for nonprofits, Public Citizen said in a letter today. The letter (PDF) comes as the U.S. House Ways and Means Committee’s Oversight Subcommittee on Friday considers how to revamp the IRS to help the agency better serve the American people. The work is part of the larger committee’s attempt to rewrite the tax code.

Public Citizen’s Bright Lines Project (BLP), which advocates clearer rules in the area of nonprofit political activity, submitted the letter, which also requested the removal of a policy rider from the FY 17 omnibus that prevents the U.S. Treasury Department and the IRS from making new rules for 501(c)(4) nonprofits. In addition, the letter recommended that current law prohibiting 501(c)(3) organizations from endorsing or opposing candidates remain unchanged.

“[W]e have seen firsthand that imprecision in the tax code not only has caused confusion at the IRS, but that it also has chilled the activities of nonprofit organizations, particularly those organized under section 501(c)(3),” the letter reads. “A better system of rules, such as the Bright Lines Project has proposed, would enable groups to engage fully in nonpartisan civic participation activities, while making enforcement easier for the IRS.”

The letter also says: “The BLP has been working for years to perfect a clear, fair, system of rules that are easy to follow and easy to enforce. We have proposed a series of bright lines closely defining political violations as well as safe harbors so that tax-exempt organizations can engage in nonpartisan speech freely without fear of IRS interference.”