Bid to rein in groups criticized
WASHINGTON — The Obama administration on Tuesday began a bid to rein in the use of tax-exempt groups for political campaigning.
The effort is an attempt to reduce the role of loosely regulated big-money political outfits such as GOP political guru Karl Rove's Crossroads GPS and the pro-Obama Priorities USA.
The Internal Revenue Service and the Treasury Department said they want to prohibit such groups from using “candidate-related political activity” such as running ads, registering voters or distributing campaign literature as activities that qualify them to be tax-exempt “social welfare” organizations.
The agencies say there will be a lengthy comment period before any regulations will be finalized. That means groups such as Crossroads and Priorities USA will be able to collect millions of dollars from anonymous donors before next year's campaign.
“This proposed guidance is a first critical step toward creating clear-cut definitions of political activity by tax-exempt social welfare organizations,” said Mark Mazur, treasury assistant secretary for tax policy. “We are committed to getting this right before issuing final guidance that may affect a broad group of organizations. It will take time to work through the regulatory process and carefully consider all public feedback as we strive to ensure that the standards for tax-exemption are clear and can be applied consistently.”
Organized under section 501(c)(4) of the tax code, such groups are able to raise millions of dollars to influence elections. But they can be small-scale Tea Party groups, many of which say they were harassed by the IRS when they sought tax-exempt status.
House Ways and Means Committee Chairman Dave Camp, R-Mich., was skeptical of the administration's move.
“There continues to be an ongoing investigation, with many documents yet to be uncovered, into how the IRS systematically targeted and abused conservative-leaning groups,” he said. “This smacks of the administration trying to shut down potential critics.”
The 2010 Citizens United Supreme Court decision lifted the limits on donations by labor unions and companies to 501(c)(4) groups, allowing Crossroads, the largest of them, to raise large sums outside the limits that apply to candidates' campaigns and traditional party committees.
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