Monday, July 23, 2012

IRS Considering Changing 501(c)(4) Governing Rules

The Internal Revenue Service (IRS) is considering changing a rule that allows social welfare nonprofits to run attack ads while not disclosing their donors.

According to a recently published letter from Lois Lerner, the director of the IRS's exempt organizations division, the agency is "aware of the current public interest in this issue," and that they will consider changes to the rules. The letter was sent on July 17 to two campaign finance reform groups, Democracy 21 and Campaign Legal Center, according to The Huffington Post.

The two advocacy groups had long pressed the IRS to not only review the regulations governing 501(c)(4)s, but also to investigate specific groups, including the Republican-leaning Crossroads GPS and the pro-Obama group Priorities USA. Both of these organizations have received increased scrutiny this election cycle, as critics claim that they should not be tax-exempt because their primary purpose is to advocate for a specific candidate.

Democracy 21 President Fred Wertheimer told The Huffington Post that the response from Lerner was significant, since it was the first time the IRS has publicly stated that they will consider changes to the regulations. He also pointed out that by mentioning the date the regulations were first put in place -- 1959 -- Lerner acknowledged they do not reflect current circumstances, such as the United States Supreme Court's Citizens United decision.

Both Wertheimer and Campaign Legal Center Executive Director J. Gerald Herbert responded to the IRS today with a letter pressing the agency to move quickly to investigate social welfare groups spending large amounts of money on the 2012 elections while hiding their donors from the public.

You can read the full story in The Huffington Post.

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