In an exchange of letters released Monday by Democracy 21 and the Campaign Legal Center, the IRS has stated that it will consider changes in the rules relating to political activity by 501(c)(4) organizations as it works to identify tax issues that should be addressed through regulations or other published guidance. The IRS letter can be found here. This is a step that some reform-minded groups have eagerly pursued. Perhaps significantly, however, the IRS letter stops short of saying that it will institute the formal rulemaking procedure that had been requested by Democracy 21 and the Campaign Legal Center. Rather, the IRS says merely that the IRS will consider proposed changes.
Further, leaving aside for the moment the underlying policy questions that will be difficult to resolve, the IRS is unlikely to be able to promulgate new rules that would be effective in 2012. The principal reason is timing. The process — analyzing the legal questions (which surely have a different complexion following Citizens United), drafting proposed regulations, issuing an advance notice of proposed rulemaking, allowing for public comment and likely public hearings and preparing a final rule — normally takes many months, if not years. It is now late July, so it is all but certain that no proposed rule will be issued before the election in November. Further, even if the IRS were inclined to move quickly, which is not evident from the face of the IRS letter, any significant change in the rules would have to be limited to prospective effect only in order to avoid legal challenges that the IRS is changing the rules midstream.