Dems say IRS vote is about Fox News

The House voted Wednesday to delay a controversial IRS rule dealing with tax-exempt groups, an issue Democrats charged was being used only to generate coverage on Fox News.

The bill was approved in a 243-176 vote after a bitter debate in which both parties accused each other of using tax rules to game elections. Fourteen Democrats voted with Republicans to support the bill, titled the Stop Targeting of Political Beliefs by the IRS Act.

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The legislation delays for one year an IRS rule that would stop 501(c)(4) groups with tax-exempt status from certain political activities, like voter registration drives. Republicans say that rule is an attempt to formalize an IRS policy that disadvantages conservative groups.

Republicans last year hammered the IRS for the decision by its workers to delay the tax-exempt status of several conservative groups. And they say limiting the political activities of 501(c)(4) groups would let the IRS continue this discrimination.

"The intent of the rules proposed by the Obama Administration is clear — to legalize the IRS's inappropriate targeting of conservative groups," said House Ways and Means Committee Chairman Dave Camp (R-Mich.). "These proposed rules severely limit groups' rights to engage in public debate by labeling activities such as candidate forums, get out the vote efforts, and voter registration as 'political activity' for 501(c)(4) groups."

Camp and other Republicans said at the very least, the IRS rule should be delayed until the investigations are wrapped up.

Democrats have said those delays were the result of mismanagement, and were not the result of an orchestrated political scheme. Republicans say the IRS mostly targeted conservative groups, and only delayed the applications of conservative groups.

Still, Democrats used today's debate to accuse the GOP of trying to keep the scandal alive — two accused Republicans of pushing the bill to give Fox News something to talk about. Rep. Joe Crowley (D-N.Y.) said Fox News is the "chief mouthpiece" keeping the scandal alive, and Rep. Jim McDermott (D-Wash.) said the bill was "crafted to make the producers at Fox television happy."

Ways and Means ranking member Rep. Sandy Levin (D-Mich.) called the targeting scandal an "alleged scandal" because there is no evidence of political purpose.

"Was there corruption, political interference, White House involvement, an enemies list, as the Republicans have claimed since day one? Absolutely not," he said.

Levin argued that the IRS's inspector general has recommended something along the lines of the pending regulation in order to prevent future delays to granting tax-exempt status. Democrats have said confusion over the nature of various tax-exempt groups is partly what led to the scandal.

But Camp rejected the idea that the IRS was confused, and said IRS workers were simply flagging groups with conservative-sounding names for further scrutiny. He also said his committee has heard evidence that the IRS was considering this regulation in secret, well before the scandal broke last year.

"While the administration claims that the proposed rule is a response to the Inspector General's audit report, IRS employees told Committee staff in transcribed interviews that discussions about the rule started much earlier – in Spring 2011," Camp said.

More broadly, Democrats said the GOP bill is not aimed at protecting the rights of groups to speak politically. Instead, they said it's aimed at protecting the ability of conservative groups to keep their donors secret.

Levin said election-related spending by 501(c)(4) groups has exploded, from $1 million in 2006 to $256 million in 2012. And he said the top three groups, which account for more than half of all spending, are conservative.

Levin said Karl Rove's Crossroads GPS, and the Koch brothers' Americans for Prosperity and American Future Fund are those top groups. He said passing the House bill would allow these groups to continue influencing elections, without having to reveal anything about their donors.

"The designation '(c)(4)' presently allows organizations to keep their donors secret," he said. "That's the secrecy that Republicans are trying to preserve.

"Why? Because the three largest spenders, representing fully 51 percent of the total, are a who's-who list of Republican operatives."

The House vote sends the bill to the Senate, which is likely to ignore the bill given Democratic opposition. That opposition was expressed by the Obama administration, which said Tuesday that President Obama would veto the bill.

The White House defended the idea that rules on 501(c)(4) groups need to be clarified.

"The relevant Treasury and IRS rules have been in place since 1959 and are broadly recognized as unclear," the White House said. "The proposed legislation would prevent any revisions or clarifications to those rules.

"Thus, it could prevent the IRS from administering the tax code more effectively and from providing greater clarity to organizations seeking tax-exempt status."

The White House also argued that the Treasury Department and the IRS have gone through a proper rulemaking, and have received thousands of comments that are still under review. Levin said during the debate that all those comments are likely to delay the regulation for at least a year, regardless of whether the House bill passes.

"These regulations aren't likely to come out this year anyway, with all these comments," he said. 

Full House consideration of the bill ended with a vote on a proposal from Rep. Jared Polis (D-Colo.) to change the name of the bill to the Protecting Anonymous Special Interests Act. The House killed that proposal in a 177-241 vote — one Republican voted for it, and 13 Democrats voted against it.