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- May 17, 2013
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How the IRS Wants to Prevent Another Tea Party Scandal
Months after the Internal Revenue Service acknowledged that it had singled out for extra scrutiny conservative and Tea Party groups seeking tax exempt status, the agency Tuesday proposed regulations that would clarify some of the rules for those tax-exempt groups.
The situation for tax-exempt social welfare organizations, or 501(c)4s, is pretty complicated, but the new proposals are one attempt to iron out one of the murkier questions: What exactly constitutes "candidate-related political activities?"
None of this is final yet, because the IRS is seeking public comment. And the person President Obama put in charge to oversee the agency's recovery from the scandal, IRS Acting Commissioner Danny Werfel, is still on the job. But here are a few things to know:
What does this have to do with the Tea Party?
Earlier this year, the IRS admitted that it had inappropriately scrutinized the Tea Party and other conservative groups that were applying for tax-exempt status, sometimes delaying their applications for many months.
Though Republicans have suggested that there were political motivations for this, the IRS has insisted that its employees had set aside the applications to figure out whether these groups were engaged in so much political activity they couldn't possibly qualify for tax-exempt status.
In some cases, the IRS actually asked for an inordinate amount of documentation, or probed the groups for information (such as what books were on their reading lists).
What are the rules now?
These groups are governed by a fairly vague standard: They can't be "primarily engaged in express political advocacy but have to be focused mostly on "social welfare" activities.
What does that mean, exactly? Well that's what the IRS wants to know.
The IRS has proposed a definition of "political activities" (we'll get to that later), but it is soliciting comment from the public about what exactly "primarily" means.
Many campaign finance lawyers interpret that to mean that more than 50 percent of their activities have to be nonpolitical. Others interpret that to mean 60 percent, or 80 percent, so on and so forth.
The IRS will eventually decide whether that word "primarily" needs to be clarified, and if so, what it should actually mean.
The IRS is asking for our help. To Decide and Clarify what primarily means.
So what does it mean?