Dear Commissioner Koskinen, 



On behalf of the 1.3 million members and supporters of the Council for Citizens Against Government Waste (CCAGW), I submit these comments in response to the Notice of Proposed Rulemaking issued by the Internal Revenue Service (IRS) on November 29, 2013.


The IRS’s proposed rules would place significant limits on 501(c)(4), or “social welfare,” organizations, which can currently engage in partisan political campaign activities, so long as these activities do not become the organization’s primary activity. These rules would undermine and significantly alter the standard practices that have been in place for 50 years and have allowed such organizations to conduct activities such as voter registration drives, publish voting guides and records, and organize candidate debates. The IRS proposal would arbitrarily designate such common practices as “Candidate-Related Political Activity.” The new rules would not only prohibit long-standing practices, they would also severely restrain free speech by restricting any criticism of an incumbent federal, state, or local politician within 30 days of a primary or 60 days of a general election, and effectively requiring groups to remove any reference to politicians from their websites or any other publications during those time periods. The rules would not apply to labor unions, which are 501(c)(5) organizations, or trade associations, which qualify under Section 501(c)(6) of the tax code. In addition, the IRS apparently began working on these new rules at the same time the agency was targeting conservative groups, lending credence to the argument that the new rules are politically motivated.



It is reasonable to question whether the IRS should even be involved in categorizing what is and is not political activity. In a June 2013 report to Congress, National Taxpayer Advocate Nina Olson suggested that “it may be advisable to separate political determinations from the function of revenue collection.” Such advice is particularly noteworthy at a time when the IRS has demonstrated an inability to effectively execute its core functions, including the protection of taxpayers against tax refund fraud and the reduction of improper payments.


Each year, countless Americans are defrauded by a growing cabal of sophisticated criminals who steal the identities of these unsuspecting victims and use their names to submit fraudulent tax returns. Not only are these scam artists getting away with millions at the expense of hard-working, legitimate taxpayers, in a July 2012 report, the Treasury Inspector General for Tax Administration (TIGTA) projected that American taxpayers will lose $21 billion in tax dollars to fraudulent returns related to identity theft in the next five years.

A separate TIGTA report on improper payments, released on August 28, 2013, revealed that the IRS is still not in compliance with the requirements of Executive Order 13520, which requires the agency to establish annual improper payment reduction targets. Instead of clamoring for more personnel in the current climate of severely constrained resources, the agency should focus its efforts toward its core function of efficient and effective collection of tax revenue, while protecting taxpayers against refund fraud and improper payments, without sinking itself into a counterproductive, politically-motivated quagmire.



Protecting freedom of speech should be the first priority of government. These proposed regulations chill free speech and prevent citizens from educating each other about important policy matters. Tens of thousands of 501(c)(4) organizations have been granted tax-exempt status by the IRS in order to engage in advocacy and lobbying activities. Many of these groups hold politicians at every level of government accountable for the expenditure of tax dollars. Taxpayers have made it clear that they oppose these new rules; as of 11:59 p.m. on February 26, 2014, the proposed IRS rule had received 116,140 comments, a higher volume of comments than other popular issues, such as the Keystone XL Pipeline, greenhouse gas emission standards, and the use of mobile wireless devices on airplanes.



This latest power grab by the IRS must be stopped. H.R. 3865, the Stop Targeting of Political Beliefs by the IRS Act of 2014, introduced by Chairman Dave Camp (R-Mich.) would prohibit, for one year, the Department of the Treasury and the IRS from enacting any changes to the rules governing 501 (c)(4) organizations. On February 26, 2014, the House of Representatives approved this legislation by a vote of 243-176. The president has issued a veto threat for H.R. 3865, setting up a contentious battle if Chairman Camp’s legislation is approved by the Senate. I urge you to preempt this battle and protect the First Amendment rights of social welfare, non-profit organizations by withdrawing these onerous rules. 



Sincerely,



Tom Schatz
, President, CCAGW