Tea Party Warns of 'Permanent Damage' from Proposed IRS Rules

WASHINGTON – A co-founder of the nation’s largest Tea Party organization told a House panel Thursday that proposed regulations limiting the political activity groups can engage in and still meet tax-exempt status will inflict “permanent damage” on the advocacy efforts of grassroots organizations.


Jenny Beth Martin, president of the Tea Party Patriots, told the House Subcommittee on Economic Growth, Job Creation and Regulatory Affairs that the rules proffered by the Internal Revenue Service to limit political activity will “silence” organizations and lead to an “infringement on the rights of the American people to freely associate, speak their minds and petition their government.”

“We have produced voters’ guides, hosted candidates’ debates, encouraged voter registration, supported get-out-the-vote efforts and assisted local groups in lobbying on specific local and national legislation,” Martin said. “We have invited members of Congress to speak at our rallies and events not as candidates but as experts on important topics. We have posted news about national events on our social media sites.”

“The current rules recognize all these activities as non-political,” she said. “The proposed rules would classify them all as political.”

Should the regulations ultimately meet with approval from the Obama administration, grassroots organizations will have to, among other things, disclose the identity of their donors, a requirement that could inhibit fundraising. Outfits largely funded by unidentified contributors have emerged as a significant political power in the last few years. The Center for Responsive Politics reports that such donations have gone from $87.2 million in 2008 to $256.3 million in 2012.

The new IRS initiative, announced in November, has left organizations on both sides of the political divide distressed. The agency is looking to update and clarify rules regarding the type of political activities various “social welfare” groups operating under section 501(c)(4) of the federal tax code can engage in while maintaining their status. The agency decided to review the section dealing with tax-exempt organizations in wake of an ongoing controversy involving political groups, most of which lean conservative, that have had their tax-exempt applications delayed, rejected or subjected to probing questions.


Under current law, groups seeking status under 501(c)(4) can only operate “exclusively for the promotion of social welfare.” But they are permitted to engage in additional activities as long as their “primary” emphasis remains on social welfare.

The proposed regulations would prohibit social welfare groups from involving themselves in get-out-the-vote drives or printing voters’ guides. They would be prohibited from contributing money or other items of value to a candidate or a political party and they face a limited time period when they can directly cite a candidate in a campaign ad or on a website.

Thursday marked the final day of a three-month public comment period on the proposed rule changes. More than 100,000 individuals and groups, ranging from the American Civil Liberties Union to Martin’s Tea Party Patriots, have weighed in, with many expressing strong objections.

On Wednesday, the House, in a 243-176 vote, passed the Stop Targeting of Political Beliefs by the IRS Act of 2014, which prohibits the IRS from asking taxpayers questions regarding religious, political or social beliefs for one year, a direct stab at the proposed IRS regulations. The proposal has drawn the support of Senate Republican Leader Mitch McConnell, of Kentucky.

“Grassroots groups right across the political map are upset at what they view as an assault on their First Amendment rights,” McConnell said. “All you have to do is read their own words. One group of primarily left-leaning First Amendment advocates said the new regulation would ‘impose serious burdens on free speech and hinder the democratic processes it serves.’ An official with the ACLU described the IRS’ proposed regulation as creating ‘the worst of all worlds.’”

James R. Mason, III, senior counsel for the Home School Legal Defense Association, said his 501(c)(4) group opposes the proposed rule “in its entirety” because it “unlawfully restricts the First Amendment free speech rights of millions of Americans who belong to social welfare organizations and who depend on these organizations to influence public policy and society in beneficial ways.”


“The proposed rule would threaten the ability of HSLDA to advocate for homeschool freedom at the local, state, and federal level and would threaten the ability of HSLDA to share what elected officials, judges, and government officials are saying about homeschooling, both good and bad,” Mason said. “Each and every provision of the proposed rule would have a serious negative effect on HSLDA’s ability to advocate for homeschool freedom as we have done since our founding in 1983.”

Mason also maintained the proposed rule oversteps the jurisdiction of the Internal Revenue Service.

Gabriel Rottman, legislative counsel/policy advisor for the American Civil Liberties Union, said the organization has problems with the IRS package “from a First Amendment perspective and as a simple matter of workability.”

“America’s constitutional democracy depends on vigorous and unfettered debate,” Rottman said. “We acknowledge that sometimes political pugilists do not play by Marquis of Queensberry rules. But the First Amendment to the Constitution demands that political speech be protected from government interference with only the narrowest of limitations.”

While the ACLU commends the IRS for attempting to address some of the perceived problems with the current regulations, Rottman said “we continue to advocate for a true bright line test that will preserve the ability of groups at all points on the political spectrum to advocate vigorously on the issues of the day without fear.”

The IRS has not indicated when it might render a final determination on the proposed rule change.



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