Calls for Reform of IRS Rules Face Resistance from Dark Money Advocates


Eight groups, including the Sunlight Foundation, sent letters to the House and Senate, urging Members of Congress to adopt legislation closing down the loophole that allows so-called social welfare organizations to engage in political activities. The murky law was at the root of the controversies surrounding the IRS’s improper targeting of certain groups’ applications for 501(c)(4) status.

At congressional hearings this week, many members of the Senate Finance Committee and House Oversight and Government Reform Committee raised the issue of fixing the broken IRS rules that allow social welfare organizations to engage in substantial electioneering activities. Many noted that engaging in campaign activities is explicitly contrary to the law that says such organizations must engage “exclusively” in social welfare activities. Campaign activities are not “social welfare” activities.

If it results in a clarification of the law, the IRS debacle will have a silver lining. But there is still a great deal of resistance to efforts that would ensure that groups that engage in political activities disclose their donors. Chairman Issa of the House Oversight and Government Reform Committee rejected the idea that it was appropriate for his committee to address the question of any possible fixes—begging the question: what happened to the “reform” part of his committee? And in the Washington Post today, Senator Mitch McConnell uses the IRS case as a twisted justification to endorse dark money in our elections. His sanctimonious criticism of transparency measures ignores Supreme Court precedent as well as decades of support (including his own) for disclosure as a narrowly tailored method to address political corruption.

(It’s also remarkably hypocritical that McConnell would use the 1958 Supreme Court decision in Alabama v. NAACP to justify his position. That case prohibited government mandated disclosure of membership lists–not campaign finance records–when, on balance, threats to the group’s first amendment rights were thought to outweigh the public’s interest in disclosure. McConnell was less than concerned about the NAACP precedent when, under his direction, he repeatedly blocked an electronic filing bill in the Senate by insisting on an amendment that would require membership organizations disclose their members’ names any time a group filed an ethics complaint against a sitting senator. Apparently McConnell has his own balancing test, heavily weighted towards his own interest as opposed to the public interest.)

Narrow changes to tax law would ensure that groups intending to impact our elections disclose their donors, while fully protecting the anonymous speech of organizations that are legitimately engaged in social welfare activities. Clarifying the laws would also decrease the likelihood of future instances of improper targeting by the IRS.