Deal blocks the IRS from cracking down on 'dark money' groups

The year-end government spending bill released early Wednesday bars the IRS from issuing a rule in 2016 that would define the political activity allowed by nonprofit organizations.

Democrats and advocates for financial reform have argued that the current rule allows 501(c)(4) groups to abuse the system and pour millions of “dark money” dollars into elections.

“It’s outrageous that lawmakers are interfering with the most modest measures to increase disclosure of political spending,” said Lisa Gilbert, director of Public Citizen’s Congress Watch division. “The American people want — and deserve — to know who is trying to buy our elections.”

If the bill, which is expected to get a vote Friday, passes with this rider left intact, Gilbert said Congress will be ignoring the clear need to deal with bad actors who are gaming the tax code to avoid disclosure.

The language, however, is a win for Republicans who have been pushing back against the rule since it was first proposed, arguing that it would allow the IRS to intimidate and harass the administration's political opponents.

Advocates for financial reform are also outraged over another rider in the spending bill that blocks the Securities and Exchange Commission (SEC) from forcing publicly traded companies to disclose their political spending.

More than 100,000 people have signed a petition at PresidentObamasLegacy.org that calls on President Obama to issue an executive order that requires federal contractors to disclose their political spending within 24 hours; calls on the heads of the SEC, IRS, and Federal Communications Commission to use their authority to unmask secret political donors; and fills all five Federal Election Commission openings with nominees who will enforce the law.

Rootstrikers, which generated the petition with a coalition of 18 others groups, said the president must publicly respond to the petition within 60 days because it’s integrated with the White House's We The People app.