Senators warn IRS to ignore political pressure to rewrite super-PAC rules

Republican leaders in the Senate are urging the Internal Revenue Service (IRS) to resist political pressure to update tax rules pertaining to 501(c)(4) groups, or super-PACs.

In a letter sent Monday, Sen. Orrin Hatch (Utah) and nine other GOP members, urged IRS Commissioner Douglas Shulman to resist "partisan political gains" when it comes to updating decades-old rules pertaining to the nonprofit groups. Signing on to the letter were members of Senate GOP leadership, including Senate Minority Leader Mitch McConnell (Ky.) and Senate Minority Whip Jon Kyl (Ariz.).

They want to know if the IRS has already begun work on updating regulations pertaining to those groups, warning that any quick alterations in the midst of a heated political fight over super-PAC spending could undermine the agency's apolitical reputation.

"Public confidence in the non-partisan integrity of the agency demands that you issue no sub-regulatory guidance nor engage in any similar efforts that would effectuate immediate changes without a lengthy period of review, separated in time from the current heated political environment," they wrote.

In March, seven Senate Democrats sent a letter to Shulman, calling on the IRS to update its regulations on 501(c)(4) groups, requiring that any group identifying as such must adhere to a strict percentage-based cap on political activities. They also said the IRS should require all such groups to disclose upfront to donors how much of their activity is political. The lawmakers added that if the IRS failed to adjust its rules accordingly, they planned to push a bill to do so.

"We urge the IRS to take these steps immediately to prevent abuse of the tax code by political groups focused on federal election activities. But if the IRS is unable to issue administrative guidance in this area then we plan to introduce legislation to accomplish these important changes,” the senators wrote.

But the Republican members in Monday's letter dismissed those concerns as not pragmatic, but political.

"We believe these petitions have less to do with concerns about the sanctity of the tax code and more about setting the tone for the upcoming presidential election, and we urge you to resist allowing the IRS rule-making process to be subverted to achieve partisan political gains," they wrote.

Republican concern was piqued by Shulman's July response to the Democratic urging. In his response, Shulman said the IRS was aware of the concerns and "will consider proposed changes" to the pertinent regulations.

The GOP members said the "ambiguity" of his response raises questions as to whether the IRS is already working on updating the rules, even though it did not identify it as a priority for the years of 2011 and 2012. The members were quick to say they did not have a position on the issue, but urged the IRS to take a more deliberate road in considering updates to existing rules after being pressed on the matter by public officials.

"The regulatory process should be measured, and undertaken with great care," they wrote.

Joining McConnell and Kyl on the letter were Republican Sens. Chuck Grassley (Iowa), Pat Roberts (Kan.), Mike Enzi (Wyo.), John Cornyn (Texas), John Thune (S.D.), Lamar Alexander (Tenn.), and Kay Bailey Hutchison (Texas).

Sen. Charles Schumer (D-N.Y.), who co-signed the March letter sent by Democrats, contended Monday that Republicans were the ones applying the pressure.

"The only thing missing from the Republicans’ letter is the ‘or else,'" he said in a statement. "This unsubtle threat is clearly designed to put a chilling effect on the agency’s enforcement of the law. The IRS should not be bullied into looking the other way."

This post updated at 5:27 pm.