Rep. Chris Van Hollen to file lawsuit against IRS over tax-exemption rules

August 20, 2013

A key House Democrat plans to file a lawsuit Wednesday challenging the Internal Revenue Service’s interpretation of a law that governs tax-exemption eligibility for social welfare groups.

(Jacquelyn Martin/AP) - Rep. Chris Van Hollen (D-Md.).
(Jacquelyn Martin/AP) – Rep. Chris Van Hollen (D-Md.).

Rep. Chris Van Hollen (D-Md.), the ranking member of the House Budget Committee whose office announced the action, will serve as lead plaintiff in the case, joining campaign-finance watchdogs Democracy 21, the Campaign Legal Center and Public Citizen.

The lawsuit will address one of the main concerns that surfaced with the recent IRS targeting controversy: Differences between federal law and the IRS rules on eligibility for 501(c)(4) candidates.

Current law says the organizations must engage “exclusively” in so-called “social welfare” activities, while IRS regulations require that their “primary” purpose fall into that category.

Citizens for Responsibility and Ethics in Washington has filed a lawsuit similar to the one from Van Hollen.

The IRS controversy arose from an inspector general’s audit that found the agency had inappropriately pulled aside some tax-exemption applicants for extra scrutiny based on their names, which often suggested certain political ideologies.

Republicans have pressed to determine whether the behavior was part of an effort to stifle conservative activism during the 2010 and 2012 election cycles, but Democrats have largely attributed the problem to poor management and a lack of consistency with the rules on tax-exemption eligibility.

“I don’t think the IRS should be in the business of determining whether the primary purpose of an organization is political or educational,” Van Hollen said in an interview Tuesday. “The statute is very clear they should not be in that business.”

The IRS did not immediately provide a reaction to the expected lawsuit. William Allison, a spokesman for the GOP side of the House Budget Committee, declined to comment.

To connect with Josh Hicks, follow his Twitter feed or email josh.hicks@washpost.comFor more federal news, visit The Federal Eye, The Fed Page and Post Politics. E-mail federalworker@washpost.com with news tips and other suggestions.

Josh Hicks covers the federal government and anchors the Federal Eye blog. He reported for newspapers in the Detroit and Seattle suburbs before joining the Post as a contributor to Glenn Kessler’s Fact Checker blog in 2011.
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