Dem senators push IRS to cap political activity

A group of Democratic senators urged the Obama administration on Thursday to cap the amount of political activity that tax-exempt 501(c)(4) groups can engage in at 5 to 15 percent.

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The 15 senators, in public comments on a proposed regulation change that grew out of the IRS targeting controversy, said that the rules need to ensure that 501(c)(4)s can’t use their tax-exempt status to go around campaign finance rules.

“You will undoubtedly receive complaints from certain corners that these proposed rules will infringe on First Amendment speech rights,” Sens. Charles SchumerChuck SchumerDemocrats press Schumer on removing Confederate statues from Capitol Democrats' do-or-die moment Biden touts 'progress' during 'candid' meetings on .5T plan MORE (D-N.Y.), Sheldon WhitehouseSheldon WhitehouseDemocrats draw red lines in spending fight What Republicans should demand in exchange for raising the debt ceiling Climate hawks pressure Biden to replace Fed chair MORE (D-R.I.) and the other senators wrote to the Treasury Department and the IRS.

“Such complaints are without merit: these rules would not restrict anyone’s right to speak, or to spend money to influence elections,” the senators added. “If implemented properly, the rules will only close a loophole that has until now allowed donors to evade campaign finance law disclosure requirements.”

Treasury and the IRS rolled out the new rules last November, months after the IRS acknowledged and apologized for singling out Tea Party groups. The public comment period on the regulations ends Thursday, with more than 120,000 comments having already been lodged.

Top Republicans have said that the new rules would infringe on First Amendment rights by essentially codifying the IRS’s extra scrutiny of conservative groups. The proposed regulations would apply to tax-exempt groups across the ideological spectrum.

Tea Party groups are coming out hard against the proposed rules, and are fighting alongside the nation's largest business lobby.

The U.S. Chamber of Commerce on Thursday raised a slew of objections, arguing the administration is seeking to create a "no speech zone" through "breathtaking overreach."

“This unworkable proposal demonstrates the obvious: the IRS has neither the expertise nor the authority to regulate First Amendment political speech, and should not be used by the administration for political ends,” said Lily Fu Claffee, the Chamber’s general counsel and chief legal officer. 

“The proposed rule tramples speech that has never been regulated before, and puts the tax rules in hopeless conflict with themselves and other laws. We urge Treasury and the IRS to withdraw their fundamentally unsound proposal.”

The House voted on Wednesday to delay the rules for a year, and GOP leaders have also called on the IRS commissioner, John Koskinen, to withdraw the regulations.

Under the proposals, 501(c)(4) groups could not count “candidate-related” activity toward their social welfare mission. But the Obama administration also asks for input about how much political activity those groups should be allowed, because of a disparity between the law and current regulations.

In addition to calling for no more than 15 percent political activity, the Democratic senators also urged Treasury and the IRS to exempt nonpartisan voter registration efforts from the definition of candidate-related activity.

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— This story was updated at 4:57 p.m.