After more than a year of needling the Internal Revenue Service to tighten standards for election spending by nonprofit groups, advocates for campaign finance reform may have finally provoked the agency to make a change.
Crossroads GPS on the Republican side, Priorities USA on the Democratic side and other, similar, groups have taken advantage of a provision of the tax code that allows them to shield the names of their donors from public view. The provision, Sec. 501(c)4 of the code, was originally written for groups whose purpose is to promote social welfare, including local cultural preservation committees or community associations, but because of the anonymity it allows, it has become the favored way to set up entities that seek to influence elections.
The IRS says intervention in politics cannot be a social welfare group’s primary activity, but exactly what that means has been unclear. Campaign finance lawyers have interpreted the rules to mean that up to 49% of a group’s spending can be political.
Now, however, the IRS says it “will consider proposed changes” to the rules, which date back to 1959.
“The IRS is aware of the current public interest in this issue,” Lois Lerner, director of the exempt organizations division of the IRS, wrote in a letter to Democracy 21 and Campaign Legal Center, campaign finance reform groups that want to curtail the political use of social welfare groups.