By Contributor on November 29, 2013

By Kim Barker

The IRS and Treasury Department announced proposed guidelines clarifying the definition of political activities for social welfare nonprofits Tuesday afternoon, a move that could restrict the spending of the dark money groups that dumped more than $254 million of anonymous money into the 2012 elections. Read the guidelines here.

However, the guidelines, which finally define what constitutes "candidate-related political activity," aren't a done deal. They will take some time for public comment and debate, and more time to finalize. (The IRS asks that all comments and requests for a public hearing be submitted by Feb. 27.) Experts also cautioned that the real test of oversight on the political spending by nonprofits will be how these regulations are enforced, something that the IRS has been so far reticent to do.

The proposed regulations "are only as good as the extent of compliance with them, which history would indicate requires a realistic threat of enforcement and significant sanctions on the groups involved and probably the individuals running those groups," said Lloyd Hitoshi Mayer, a law professor and associate dean at the University of Notre Dame who specializes in nonprofits and campaign finance.

Social welfare nonprofits are allowed to spend money on election ads without reporting their donors, as long as they can prove that social welfare -- and not politics -- is their primary purpose. But the IRS guidelines for political spending have been vague. They state that the agency will apply a "facts and circumstances" test to each ad, meaning that if an ad walks and talks like a political ad, it's a political ad.

ProPublica and others have written extensively about how many social welfare nonprofits have exploited loopholes in Federal Election Commission and IRS rules since the Supreme Court's 2010 Citizens United ruling opened the door to unlimited election spending by corporations and nonprofits.

Some of the groups spend more than political action committees. GOP strategist Karl Rove's group Crossroads GPS, for example, told the IRS it spent more than $74.5 million on election activities in 2012, more than any other dark money group and all but two super PACs, which are allowed to raise and spend unlimited amounts of money from reported donors.

The proposed regulations could dramatically change how the nonprofits spend money. The proposal defines political activity as including any expenditures reported to the FEC and any grants to other tax-exempt organizations that do candidate-related political activity. (We wrote yesterday about one such grant from Rove's group.) Political activity would also include voter-registration drives and "get out the vote" drives -- even for nonpartisan groups. It would also include holding events featuring candidates within two months of a general election.

"This proposed guidance is a first critical step toward creating clear-cut definitions of political activity by tax-exempt social welfare organizations," said Mark Mazur, Treasury's assistant secretary for tax policy, in a statement. "We are committed to getting this right before issuing final guidance that may affect a broad group of organizations. It will take time to work through the regulatory process and carefully consider all public feedback as we strive to ensure that the standards for tax-exemption are clear and can be applied consistently."

Until now, many groups have counted some ads reported to the FEC -- those that stop short of telling people how to vote -- toward their education mission. Some groups have also counted direct political spending reported to the FEC as part of their social welfare mission. Most nonprofits have counted grants to politically active social welfare nonprofits as part of their social welfare mission.

The regulations represent the first time the IRS has pushed back against political activity by these groups since revealing that the agency targeted the applications of conservative groups for extra review in May, kicking off a political firestorm. (Conservative groups accounted for about 85 percent of the spending by social welfare nonprofits in 2012.)

The proposed regulations appear similar to ones used by the IRS last summer for groups that wanted to expedite approval of their applications. However, the new regulations don't propose a limit on spending, unlike last summer's rules, which said no more than 40 percent of a group's expenditures could be made on political activities.

If adopted, the rules would also make social welfare nonprofits operate much differently than unions and trade associations, nonprofits that are also allowed to spend money on political activity. If that happens, it's likely trade associations like the U.S. Chamber of Commerce will become the vehicle of choice for anonymous money in politics, experts said.

The IRS Moves to Limit Dark Money -- But Enforcement Still a Question (via ProPublica, November 26, 2013)

Photo: Flickr user epSos .de, creative commons licensed.

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Manifesto: The Mad Farmer Liberation Front

Love the quick profit, the annual raise,
vacation with pay. Want more 
of everything ready made. Be afraid 
to know your neighbors and to die.
And you will have a window in your head.
Not even your future will be a mystery 
any more. Your mind will be punched in a card 
and shut away in a little drawer.
When they want you to buy something 
they will call you. When they want you
to die for profit they will let you know. 
So, friends, every day do something
that won’t compute. Love the Lord. 
Love the world. Work for nothing. 
Take all that you have and be poor.
Love someone who does not deserve it. 
Denounce the government and embrace 
the flag. Hope to live in that free 
republic for which it stands. 
Give your approval to all you cannot
understand. Praise ignorance, for what man 
has not encountered he has not destroyed.
Ask the questions that have no answers. 
Invest in the millennium. Plant sequoias.
Say that your main crop is the forest
that you did not plant,
that you will not live to harvest.


Say that the leaves are harvested 
when they have rotted into the mold.
Call that profit. Prophesy such returns.
Put your faith in the two inches of humus 
that will build under the trees
every thousand years.
Listen to carrion—put your ear
close, and hear the faint chattering
of the songs that are to come. 
Expect the end of the world. Laugh. 
Laughter is immeasurable. Be joyful
though you have considered all the facts. 
So long as women do not go cheap 
for power, please women more than men.
Ask yourself: Will this satisfy 
a woman satisfied to bear a child?
Will this disturb the sleep 
of a woman near to giving birth? 
Go with your love to the fields.
Lie easy in the shade. Rest your head 
in her lap. Swear allegiance 
to what is nighest your thoughts.
As soon as the generals and the politicos 
can predict the motions of your mind, 
lose it. Leave it as a sign 
to mark the false trail, the way 
you didn’t go. Be like the fox 
who makes more tracks than necessary, 
some in the wrong direction.
Practice resurrection.

Wendell Berry is a poet, farmer, and environmentalist in Kentucky. This poem, first published in 1973, is reprinted by permission of the author and appears in his “New Collected Poems” (Counterpoint).

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