Comments oppose IRS proposed rule restricting speech by 501(c)(4) groups

Comments oppose IRS proposed rule restricting speech by 501(c)(4) groups

Yesterday, I filed comments against the IRS’s proposed rules restricting speech by 501(c)(4) groups (which the IRS has suggested could be expanded in the future to also restrict speech by 501(c)(3) groups like think-tanks). Over 140,000 comments have been submitted by the public in response to the proposed rule, overwhelmingly in opposition to it.

My comments, filed on behalf of the Competitive Enterprise Institute, focus on the Treasury Department’s improper attempt to redefine non-partisan criticism of non-elected government officials, including communications with lawmakers about executive-branch and judicial nominations, as “candidate-related political activity,” in order to restrict such activity by 501(c)(4) groups.

Our comments also discuss how the proposed rule would unconstitutionally restrict non-profits’ advice to the executive branch about nominations.

We also agree with the Heritage Foundation that the Treasury Department lacks statutory authority to impose the proposed rules.

As I earlier noted in The Wall Street Journal,

Those rules restrict even truthful, nonpartisan criticism of IRS and bureaucratic wrongdoing by classifying it as “candidate-related political activity.” For example, if an IRS official subjects citizens to incredibly burdensome demands for irrelevant information just to harass them for their political or religious beliefs, no 501(c)(4) group could later criticize that official’s nomination to be IRS commissioner, without engaging in restricted activity. That’s because the IRS’s proposed regulation defines even unelected government officials, like agency heads and judges, as “candidates” if they have been nominated for a position requiring Senate confirmation. The IRS’s proposed rules are an attack on the First Amendment that will make it easier for the government to get away with harassing political dissenters and whistleblowers in the future.

The proposed rules are even more dangerous than they appear, since the IRS notice containing the proposed rules expressly raised the possibility that these speech restrictions will later be expanded, in two disturbing ways, as we described earlier. First, the IRS suggests that this broad definition of the restricted category of speech (“candidate-related political activity”) in its proposed rule may later be applied to 501(c)(3) groups (which are not permitted to engage in candidate-related political activity at all, unlike 501(c)(4)’s, which can currently engage in it as a minority of their overall activity). That would effectively gag 501(c)(3) groups from discussing a wide range of judicial and executive nominations or speaking out about wrongdoing by nominees for such posts. Second, the IRS suggests that it may curb 501(c)(4)s’ ability to engage in such expressive “activity” even a minority of the time, by not just broadly defining such restricted activity as inimical to social welfare, but also requiring them to “exclusively” promote the IRS’s narrow definition of what constitutes “social welfare.”

We earlier discussed how the IRS violated the First Amendment by targeting Tea Party and other groups for costly and burdensome investigations, and demanding lots of burdensome and irrelevant information from those groups that had nothing to do with whether they actually were eligible for 501(c)(4) status. As we explained, such investigative harassment would have violated federal appeals court rulings like White v. Lee, 227 F.3d 1214 (9th Cir. 2000), even if it had not been aimed at conservative groups, but rather at both conservative and liberal groups alike. (Note that donations to 501(c)(4) groups are not tax-deductible, unlike donations to 501(c)(3) groups).

Our comments to the IRS can be found here at this link.


Hans Bader

Hans Bader

Hans Bader practices law in Washington, D.C. After studying economics and history at the University of Virginia and law at Harvard, he practiced civil-rights, international-trade, and constitutional law. Hans also writes for CNS News and has appeared on C-SPAN’s “Washington Journal.”

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