Sunlight to IRS: Don’t give up on rules for dark money groups


Today, the Sunlight foundation submitted comments to the Internal Revenue Service, urging the agency to redraft proposed rules regarding political activity of nonprofits — but not to give up on its effort to clarify whether and to what extent nonprofit organizations may engage in political activity.

A picture of the grand IRS building from across Constitution Avenue with a blue sky background.
The IRS. Photo credit: Cliff1066/Flickr

It’s been half a century since the IRS updated its rules regarding political activities by nonprofit organizations, and a lot has changed since then. Most significantly, the Supreme Court ruled in Citizens United that corporations can spend unlimited amounts on political campaigns, spawning $300 million in dark money spending by so-called social welfare organizations. The money, which comes from secret donors, has a devastating influence on our democracy, buying access and influence to elected officials and shaping the debate on Capitol Hill to reflect special interests rather than the public interest.

The IRS’ first attempt to scrutinize whether social welfare organizations were inappropriately engaging in political activities was a clumsy and ill-advised effort that targeted organizations based on their names. The result was an endless series of hearings on Capitol Hill designed to point fingers and ascribe blame. It failed to provide the IRS with any guidance as to how to repair its broken rules in order to fairly and accurately determine whether a group is a true social welfare organization — entitled to tax-exempt status and secret donors — or whether it is a political organization, able to benefit from tax exemption but required to make the names of its donors public.

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Without the benefit of congressional leadership, the agency drafted proposed rules to try to clarify what types of activities would be permitted by social welfare groups. There has been vehement opposition to the effort, with critics calling for the agency to give up any attempt to update its rules. The Sunlight Foundation strongly urges the IRS to ignore those who would call for maintaining the status quo, and instead offers suggestions for redrafting the proposed rules. The IRS must craft rules that will not prevent groups from engaging in non-election related activities while ensuring that a donors to political groups are publicly disclosed in order to deter corruption and the appearance of corruption.

You can read Sunlight’s comments to the IRS below: