501(c)(4) groups must be "operated EXCLUSIVELY for the promotion of social welfare"-- what's not to understand about that?

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Democratic congressman sues IRS over political rules
By Gregory Korte, August 21, 2013

A Democratic congressman filed suit against the Internal Revenue Service on Wednesday, seeking to overturn a 54-year-old rule that allows social welfare groups to engage in political activity.

Rep. Chris Van Hollen, D-Md., seeks to force the IRS to draft new rules requiring that the tax-exempt 501(c)(4) groups comply with the section of the Internal Revenue Code for which they're named. That section requires such groups to be "operated exclusively for the promotion of social welfare."

"The law is clear. What do you want us to do, put an exclamation point after exclusively?" Van Hollen told reporters.

But since 1959, the IRS has followed a rule that allowed 501(c)(4) groups to engage in political activity, as long as it wasn't their primary mission. That rule has been widely interpreted as allowing such tax-exempt groups to spend 49% of their money on politics — without disclosing where that money came from.

After the Supreme Court's 2010 ruling in the Citizens United case paved the way for unlimited corporate and union spending to elect or defeat political candidates, political spending from 501(c)(4) groups has tripled, from $83 million in 2008 to $256 million in 2012, according to the Center for Responsive Politics.

The lawsuit, filed Wednesday in federal court in Washington, also comes amid a growing debate about how the IRS oversees tax-exempt groups involved in political activity. In May, the agency admitted that it had wrongly held up applications from Tea Party groups beginning in 2010. Republicans say the groups were unfairly targeted based on their political beliefs; Democrats say the IRS simply took an unfortunate shortcut in trying to resolve the complicated legal issues surrounding political activities by tax-exempt groups.

But Van Hollen isn't happy with how the Obama administration has responded to the Tea Party affair. The lawsuit seeks to overturn a new "safe harbor" provision enacted by acting IRS Commissioner Danny Werfel. That provision allows groups whose activities are less than 40% political to have their tax-exempt applications fast-tracked, but Van Hollen argues that provision is arbitrary.

The Treasury Department would not comment on the lawsuit. But in a little-noticed planning document released this month, the government listed 324 policy areas it will re-examine in the coming year, including guidance "relating to measurement of an organization's primary activity and whether it is operated primarily for the promotion of social welfare, including guidance relating to political campaign intervention."

Van Hollen, the former chairman of the Democratic Congressional Campaign Committee, filed the suit in his official capacity. He was joined by three groups that seek to limit money in politics: Democracy 21, Public Citizen and the Campaign Legal Center.

The American Center for Law and Justice, which represents 41 Tea Party groups suing the IRS over alleged political targeting, said the action Van Hollen seeks to force would "raise serious First Amendment issues."

"Political speech is protected by the First Amendment," chief counsel Jay Sekulow said. "Anonymous pamphleteering is as old as our country, and deserves just as much constitutional protection."

Van Hollen, he said, is in the wrong venue. "If he wants to change the code, he should do that through the legislative process," Sekulow said. "This would be a court way overstepping its bounds."
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