Senate Committee Calls for Bright Line Rules for Nonprofits

The Permanent Subcommittee on Investigations has weighed in on the progress the Internal Revenue Service (IRS) has made after last years’ “scandal,” and the majority is advocating bright line rules for political activity for nonprofits.

Committee members criticized the current facts and circumstances test and called for its replacement, lending their voice to the many nonprofits and citizens that have been calling for a bright-line definition of political activity applicable to all nonprofits. Such a rule would make it easier for nonprofits to engage in our democracy without fear of jeopardizing their nonprofit status.

“The facts and circumstances test used by the IRS was criticized as difficult to administer by every IRS official interviewed,” says the report.  It goes on to say that the test “produced subjective and inconsistent decisions on applications.”

The minority staff filed a separate report, and did not discuss the facts and circumstances test or provide recommendations for the future. The full report is available here.

The IRS is currently engaged in a rulemaking that could provide the sort of easily administered definition the report – and Public Citizen’s Bright Lines Project – calls for. A new draft of the rules is expected early next year.

Emily Peterson-Cassin is the Bright Lines Project Coordinator for Public Citizen’s Congress Watch division

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