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December 17, 2015

Budget Deal Would Block IRS From Changing Nonprofit Politicking Rules

The budget agreement struck this week by congressional leaders includes a temporary bar on the Internal Revenue Service using federal funds to revise rules on political spending on tax-exempt "social welfare" groups, reports The Washington Post. If enacted, the omnibus spending bill would effectively suspend efforts by the IRS to set clearer guidelines on permissible politicking by such nonprofits, which have conduits for hundreds of millions of dollars in campaign cash.

Unlike formally political entities like PACs, 501(c)(4)s are not required to identify their contributors. Campaign-finance watchdog groups contend campaigns are using nonprofits as an end-run around disclosure rules on political spending, but House Speaker Paul Ryan said the provision will stop the IRS "from suppressing civic participation in 501(c)(4) organizations." The IRS backed off a proposed reform in 2014 in the face of bipartisan opposition and appeared unlikely to take up the issue again before the 2016 election.