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Democrats call for cap on political activities of ‘social welfare’ groups

A dozen Democratic senators on Thursday proposed a new limit on how much political activity is allowed for the nonprofit advocacy groups that have become increasingly powerful in recent elections, asking to cap the amount at 5 to 15 percent of the organizations’ efforts.

(AP Photo/Susan Walsh) (Susan Walsh/AP)

The lawmakers, led in part by Rhode Island’s Sen. Sheldon Whitehouse, have said they will sign a letter to Treasury Secretary Jack Lew and Internal Revenue Service Commissioner John Koskinen calling for the “bright-line rule” to help clarify how much campaign work tax-exempt 501 (c)(4) organizations can engage in.

The proposal comes amid an ongoing debate over whether the IRS has targeted conservative advocacy groups for extra scrutiny and concerns from the left and right about draft Treasury guidelines that would define political activities for the groups.

A May report from the IRS inspector general said a lack of specific guidance on allowable activities may have caused the IRS to inappropriately single out nonprofit organizations with words such as “tea party” and “patriot” in their names for special review.

Current rules for 501 (c)(4)s appear to conflict. IRS code says the tax-exempt groups must be “exclusively” involved in promoting social welfare, but Treasury regulations say they only have to be “primarily engaged” in such work.

The letter from the Senate Democrats said current tax law supports prohibiting political activity altogether for social welfare groups, but that allowing some degree is “reasonable as long as such intervention is a small portion of each organization’s total activities.”

Treasury’s controversial proposal would define the “campaign-related political activities” that count against a group’s social welfare mission, but the draft rules place voter registration and get-out-the-vote efforts into that category. Liberals have said the plan goes too far, while conservatives argue that it would silence free speech.

The lawmakers said in their letter that the rule change should exclude voter registration and get-out-the-vote drives, but it described the free-speech concerns as lacking merit, saying “these rules would not restrict anyone’s right to speak, or to spend money to influence elections.”

So-called “social welfare” groups have pumped hundreds of millions of dollars into election-related ads since the Supreme Court’s 2010 Citizens United decision, which said the government cannot restrict independent political expenditures from certain types of groups.

The Treasury Department has set a deadline of 11:59 p.m. on Thursday for submitting comments on the draft regulations, which were released in December. As of Thursday afternoon, more than 122,000 comments were submitted online.

The senators who signed Thursday’s letter included: Whitehouse; Richard Blumenthal (D-Conn.); Chris Coons (D-Del.); Tom Harkin (D-Iowa); Martin Heinrich (D-N.M.); Mazie Hirono (D-Hawaii); Robert Menendez (D-N.J.); Jack Reed (D-R.I.); Bernie Sanders (I-Vt.); Charles Schumer (D-N.Y.); Jon Tester (D-Mont.); Tom Udall (D-N.M.) and Elizabeth Warren (D-Mass.).

Follow Josh Hicks on TwitterFacebook or Google+. Connect by e-mail at  josh.hicks@washpost.comVisit The Federal Eye, The Fed Page and Post Politics for more federal news. E-mail with news tips and other suggestions.

Josh Hicks covers Maryland politics and government. He previously anchored the Post’s Federal Eye blog, focusing on federal accountability and workforce issues.



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