A group of seven Senate Democrats urged the Internal Revenue Service on Monday to impose a strict cap on the amount of political spending by tax-exempt, nonprofit groups.
The senators said the lack of clarity in the IRS rules has allowed political groups to improperly claim 501(c)4 status and may even be allowing donors to these groups to wrongly claim tax deductions for their contributions. The senators promised legislation if the IRS failed to act to fix these problems.
“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.
The letter was signed by Senators Charles E. Schumer, Michael Bennet, Sheldon Whitehouse, Jeff Merkley, Tom Udall, Jeanne Shaheen and Al Franken. It follows an earlier letter, sent to the IRS by the same of group of senators last month, that also urged the IRS to better enforce rules pertaining to 501(c)4 organizations.
Federal law defines 501(c)4 groups as groups engaged exclusively in “social welfare” activities. The IRS, however, has allowed these 501(c)4 groups to venture into political activities as long as civic and charitable work remains their “primary purpose.” This loophole has caused a number of organizations heavily engaged in political work to organize themselves as 501(c)4 groups in order to gain tax-exempt status and shield their donors from the disclosure requirements that apply to more traditional political organizations.
The senators said the IRS should close this loophole by imposing a strict, percentage-based cap on the amount of a nonprofit group’s spending that can go towards political activities. Legal experts have proposed a cutoff of 49 percent to ensure that political activities never command more than half of a group’s total spending. But the senators said even this threshold would be too high and would permit more political work than any nonprofit group should be able to perform.
Taxing contributions to 501(c)4s restricts the amount of speech these organizations can make. That means it doesn't differentiate between political speech and social welfare speech. The First Amendment strictly prohibits the restriction of speech, political or otherwise.
There's a new political ad from American Encore that's airing right now that criticizes Franken for limiting political speech. Since Sen. Franken hasn't denied his signing Sen. Schumer's letter calling for the IRS to put additional scrutiny on TEA Party organizations, it's safe to say that Sen. Franken wants to limit certain types of political speech.
Sen. Franken doesn't have a problem with Tom Steyer, the billionaire who's raising $100,000,000 for Democrats who support green energy. That's fine but Sen. Franken has sent out a bunch of fundraising emails railing against the Koch Brothers, who support fossil fuels.
It isn't free speech if it's selective free speech. That's a dangerous slippery slope that starts with the question of who determines which speech is protected and which speech isn't.
Apparently, in Franken's world, he's the determiner of which speech is protected by the First Amendment and which isn't. That's a frightening thought to people who think that people of all political persuasions should be able to speak to their hearts' content.