The IRS backtracks on proposed political activity rules for nonprofits.
Faced with an unprecedented flood of feedback on proposed rules to tamp down political activity by 501(c)(4) groups, the IRS has scrapped its original draft regulations and is starting over.
The proposed rules, issued last fall, were intended to clarify how much political activity is allowable for groups that hold tax-exempt status as social welfare organizations. The rules would have expanded the definition of “candidate-related political activity” by 501(c)(4) groups to include activities such as candidate forums, get-out-the-vote efforts, and voter education. The IRS also asked for comments on whether the new rules should be applied to 501(c)(5) labor groups and 501(c)(6) trade and professional associations as well.
The agency received more than 150,000 comments on the proposal, a record for a single rule, though many are duplicative. Still, IRS Commissioner John Koskinen says that all of the comments will be carefully read and considered. “If 42,000 people all said the same thing, it would be important to know that 42,000 people felt that way,” he told reporters earlier this year.
In May, the agency announced that it would withdraw the proposed rules and make revisions based on the feedback. Officials also put plans for a public hearing on hold. “Given the diversity of views expressed and the volume of substantive input, we have concluded that it would be more efficient and useful to hold a public hearing after we publish the revised proposed regulation,” the IRS said in a statement.
ASAE submitted comments to the IRS asserting that the expanded definition of political activity in the proposed rule would regulate far more speech or advocacy than is warranted and could create a chilling effect on the role nonprofit organizations play in fostering civic engagement and democracy.
The new proposed rules will be out in early 2015, the IRS said. An additional comment period and hearings will follow.
Chris Vest, CAE, is director of public policy at ASAE. Email: [email protected]