Rep. Chris Van Hollen (D-Md.) is joining with two campaign finance watchdog groups, Campaign Legal Center and Democracy 21, to sue the IRS for its regulations that give “wiggle room” to nonprofit groups allowing them to engage in political actions. The regulations state that nonprofit groups can act politically if they are “primarily” devoted for social welfare.
Van Hollen said, “The statute is very clear. It says that a 501(c)(4) organization is reserved for entities that are engaged ‘exclusively’ in social welfare activities, and it’s not clear to me what part of ‘exclusive’ the writers of the regulation didn’t get when it came to this particular provision of the law.”
The IRS regulation, written in 1959, was not a subject for dispute until the Supreme Court ruled in the Citizens United case that nonprofit under section 501(c)(4) and 501(c)(6) of the tax code could obtain corporate and union money and spend it on elections without disclosing donors.
Van Hollen asserted that the Campaign Legal Center and Democracy 21 have requested that the IRS review the regulations and define what is meant by “primarily.” Van Hollen added, “We have now exhausted the administrative remedies and we do now plan to move forward. I plan to move forward with these groups to file a lawsuit against the IRS to enforce the plain meaning of the law, and frankly get the IRS out of the business of trying to draw these fine distinctions between whether something is 49 percent or 48 percent, or whatever it may be, political activity.”
Van Hollen and his compatriots contend that the regulation allows some 501(c)(4) and 501(c)(6) nonprofits to spend 51 percent of their funds or time on their social welfare purpose and claim that such action constitutes action “primarily” in the interest of social welfare. The Senate Finance committee, controlled by Democrats, has asked for “primarily” to be changed to “exclusively.”