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Inside Political Law Updates on developments in campaign finance, lobbying & government ethics law

Checkmate!

Posted in Tax

Yesterday, 10 Republican members of the U.S. Senate, led by Senator Orrin Hatch, wrote to the IRS and urged it to resist calls to limit the amount of political activity that 501(c)(4) social welfare organizations are permitted to engage in under a Treasury Regulation that has been in effect for 52 years.  Yesterday’s letter follows up on a letter to the IRS submitted by 12 Republic Senators on March 14, 2012.

The signatories of yesterday’s letter are troubled by the IRS letter that we blogged about here.  The authors are concerned that the IRS may “allow[] the IRS rulemaking process to be subverted to achieve partisan political gains” and argue for a “lengthy period of review, separated in time from the current heated political environment.”

Democratic members of the U.S. Senate have not been silent in this debate.  Seven Democratic Senators, led by Senator Charles E. Schumer, wrote to the IRS earlier this year, urging the IRS to impose on 501(c)(4) organizations a bright-line, percentage based cap on the amount of political spending.

Checkmate!  The IRS is now in a position where it will be difficult, if not impossible, to please both sides of the Senatorial aisle.  This all but insures that there will be no changes before the elections in November. 

Interestingly, one issue that appears not to have been raised in the flurry of correspondence is a question highlighted by Citizens UnitedIf political speech is a protected First Amendment right, is the existing regulation’s blanket position that political activity does not promote social welfare still valid or appropriate?