June 19, 2013

I'm sure Lawrence O'Donnell will be crowing over this, since he led the charge to shine light on how the word "exclusively" was transformed into the now-famous "51 percent" test. Huffington Post:

WASHINGTON -- Rep. Chris Van Hollen (D-Md.) said Tuesday that he and two campaign finance watchdog groups would sue the IRS, challenging regulations that allow nonprofit groups to be involved in politics if they're "primarily" devoted to a social welfare purpose.

Van Hollen said he and watchdog groups Campaign Legal Center and Democracy 21 would sue to clarify an IRS regulation that he said was at odds with the law, which requires certain groups to "exclusively" engage in social welfare to earn nonprofit status. The IRS regulation permitting groups “primarily” engaged in social welfare allows the organizations to participate in an undefined amount of political activity, said the congressman, a leading advocate of campaign finance reform and ranking member of the House Budget Committee.

The 1959 IRS regulation has become an issue since the Supreme Court's 2010 Citizens United decision opened the door for nonprofit groups organized under section 501(c)(4) and 501(c)(6) of the tax code to raise and spend corporate and union money on elections without disclosing donors. The scandal involving the agency's singling out conservative groups applying for nonprofit status has increased attention to the regulation, especially among Democratic lawmakers.

"The statute is very clear," Van Hollen said during the keynote address at a conference on money and politics held by the Brennan Center for Justice. "It says that a 501(c)(4) organization is reserved for entities that are engaged 'exclusively' in social welfare activities, and it's not clear to me what part of 'exclusive' the writers of the regulation didn't get when it came to this particular provision of the law."

What a mess this could make, unless lawmakers step up and deal with it before it winds its way through the courts. Every 501c4 organization going back to 1959 could be open to scrutiny. I understand why this approach is being undertaken, but I hope some leverage to actually change the law is the outcome. The hairball this would leave to untangle would be huge and take decades to sort out.

Meanwhile, the Kochs et al have abandoned the 501c4 approach and are going with the 501c6 model, which allows their bogus trade associations to engage in the same activities as previous groups with even less transparency. Think US Chamber of Commerce on steroids. Frightening!

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