The Internal Revenue Service, or IRS, is presently drafting new regulations to tighten the rules governing political activity by nonprofit organizations. The current regulations enable so-called dark-money groups to masquerade as 501(c)(4) “social welfare” organizations and thereby avoid campaign finance disclosure laws. Promulgation of objective, bright-line standards on political activity by nonprofit groups would significantly cut down abuse, as well as make compliance easier for legitimate 501(c) organizations. In addition to clarifying the rules for 501(c) organizations, the IRS should tackle the problem of undisclosed political spending more directly by also amending the regulations for Section 527 of the tax code. Section 527 governs political organizations such as candidate committees, political parties, and political action committees, or PACs. 527 groups are required to publicly disclose their donors—either by registering with the FEC or a state campaign finance agency or by filing publicly disclosed reports with the IRS itself. Rather than simply regulating dark-money groups out of Section 501(c), the IRS should regulate those groups into Section 527. The IRS should promulgate regulations that definitively classify as a 527 organization any group that spends the majority of its funds on advertising that mentions a candidate and is run within a certain number of days preceding an election. These regulations would act as a backstop for the revised 501(c) regulations, ensuring that organizations that engage primarily in political advertising are explicitly required to register as such and to disclose their contributors.
Posted on: Mon, 19 Jan 2015 23:49:57 +0000
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