Washington — Remember Lois Lerner?
Her 15 minutes of fame — or notoriety — may be over, but her specter still haunts Congress. Witness the passage by the House on Wednesday — Tax Day — of a package of bills aimed at tightening things up at the Internal Revenue Service.
Lerner was the IRS official who emerged as the poster child of the 2013 IRS targeting scandal. The scandal involved what investigators termed the inappropriate scrutiny of organizations applying for tax-exempt status as social-welfare groups, which are regulated by IRS limitations on their political activity. The agency decided which groups to subject to heightened review based on key words, so that organizations with “tea party” in their names, for example, got a thorough going-over. The result was long delays in reviewing the applications, sometimes accompanied by intrusive questions.
The onus fell most heavily on conservative groups, and Republicans made political hay out of the scandal. Lerner was found in contempt of Congress and retired from the IRS in September 2013.
The House unanimously passed several bills Wednesday designed to make sure targeting never happens again. Among other things, the bills give social-welfare groups more ability to contest an IRS determination that the groups don’t meet the agency’s criteria for tax-exempt organizations.
But there may be a simpler solution, suggests the Campaign Legal Center, a nonprofit, nonpartisan watchdog organization: Enforce the law as written.
In a letter this month to IRS Commissioner John Koskinen, the CLC took issue with his comments about the rules governing political activity by social-welfare groups, reported as: “The framework Congress has is you get to pick where you want to be. If you spend at this point less than 49 percent of your money on politics, you can be (tax-exempt).”
But in fact, the CLC maintains, Congress has done no such thing.
The prevailing law, enacted many years ago, states that to qualify for a tax exemption, a social-welfare group must be engaged “exclusively” in the promotion of social welfare — which, the IRS itself has recognized, does not include attempts to influence elections.
But the IRS on its own has decided that “exclusively” means “primarily.” To compound matters, the agency has never formally determined what “primarily” means. What’s happened, the CLC letter says, is that “aggressive practitioners have argued that anything up to 49 percent would be permissible under the regulation, and this view has not been challenged by the IRS as it should have been.”
So, many of these social-welfare groups spend millions on attack ads in political campaigns, claiming that represents less than half of their activity, with the rest involving promotion of social welfare (which, according to some of the groups, means airing “issue ads” that don’t call specifically for the election or defeat of a candidate but come pretty close).
In the 2014 U.S. Senate race in Louisiana, the single biggest spender on direct elect/defeat activity was Patriot Majority USA, a social-welfare group that shelled out more than $3 million in a futile effort to re-elect Democrat Mary Landrieu. Republican winner Bill Cassidy benefited from even more total spending by several social-welfare organizations.
What does it matter?
“It really boils down to whether groups have to disclose their donors for political activity,” Paul S. Ryan, of the CLC, said.
A social-welfare organization need not disclose its donors, and it can give without limit. Were it to register as a political group, it could keep its tax-exempt status, but its contributors would be on the public record — so anyone could see which deep-pocketed players are giving how much to whom and could speculate about what they’re getting for their money.
As it is, politically active social welfare organizations, shielded from the sunlight, are known as dark-money groups. Several potential presidential candidates benefit from them, including Gov. Bobby Jindal: The principal social-welfare activity of America Next, a dark-money group that Jindal serves as honorary chairman, seems to be to promote his policy proposals. And America Next can contribute money of untraceable origin without limit to the super PAC his friends have set up to boost his White House candidacy (which he has not officially declared).
The IRS could change its interpretation of the law, and the CLC has suggested as much. Or there’s another way to enforce plain English: an act of Congress.
Gregory Roberts is chief of The Advocate Washington bureau. His email address is groberts@the advocate.com, and he is on Twitter, @GregRobertsDC. For more coverage of national government and politics, follow The Advocate Politics Blog at http://blogs.the advocate.com/politicsblog.