Democrats defend IRS cap on political activity by tax-exempt groups

The proposed IRS rules that would rein in politically-engaged nonprofits are a "step in the right direction," a group of Senate Democrats said in a letter Thursday, urging the agency to adopt the rules in spite of "strident but misplaced concerns about the First Amendment."

For months, congressional Republicans have pushed the IRS to drop its proposed rules, arguing that they would only encourage the agency to harass groups that attempt to speak out politically. The draft rules were unveiled in the wake of revelations that the IRS unfairly scrutinized certain conservative and progressive groups, using certain key words.

Democrats -- including President Obama -- insist that the unfair scrutiny of certain groups amounted to "boneheaded decisions" made at the agency rather than political corruption. If anything, they said, it illustrated the need to rein in the burgeoning number of groups seeking to be designated as tax-exempt, nonprofit "social welfare" organizations -- which are allowed to spend unlimited sums of money on politics as long as politics isn't their main focus.

"The goal of new rules is not to silence speech, but to require that the speakers with the loudest voices in our elections identify themselves, so that we can truly have 'effective disclosure' that will 'provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters,'" wrote the 15 Democrats who signed the letter to the IRS and the Treasury Department.

The Democrats, led by Sen. Sheldon Whitehouse, D-R.I., said they don't agree with the draft rules exactly as they are written. As the draft is written, the IRS would limit the "candidate-related political activity" that "social welfare" groups can conduct, defining that activity to include certain communications that expressly advocate for a certain candidate, giving certain grants or donations, and other activities like voter registration drives.

The senators said that nonpartisan activities with social welfare benefits -- such as voter registration drives -- should be excluded from the definition of "candidate-related political activity." They also said that the IRS should include a "bright-line" limit on the level of "candidate-related political activity" allowed. They suggested limiting those groups to dedicating five to 15 percent of their spending to political activity.

The proposed rule change has clearly hit a nerve with the public -- after the IRS opened the draft rules up for public comment, more than 140,000 comments were submitted. Earlier in the month, when there were only about 21,000 comments, IRS Commissioner John Koskinen told Congress that the draft rules had already set a new record for the number of comments any draft federal regulations have ever received.

In addition to Whitehouse, the letter was signed by Democratic Sens. Charles Schumer of New York, Patrick Leahy of Vermont, Tom Harkin of Iowa, Jack Reed of Rhode Island, Tom Carper of Delaware, Robert Menendez of New Jersey, Bernie Sanders of Vermont, Jon Tester of Montana, Tom Udall of New Mexico, Chris Coons of Delaware, Richard Blumenthal of Connecticut, Mazie Hirono of Hawaii, Martin Heinrich of New Mexico, and Elizabeth Warren of Massachusetts.