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Bloomberg: Democrats Push for Limits on Nonprofit Election Spending

February 14, 2014
In The News

Bloomberg Politics

House Democrats, led by Peter Welch of Vermont, are pushing back against Republican efforts to block any new Internal Revenue Service rules governing nonprofit groups, which are spending millions of dollars on campaigns while keeping their donors hidden.

In a letter to the IRS this month, 22 House Democrats reiterated their support for new rules preventing nonprofits from spending money on politics. Their argument is that tax law says such groups must be “operated exclusively” for the promotion of social welfare, whlie IRS regulations now say the groups must be “primarily engaged” in such activities.

The Republican-controlled House Ways and Means Committee on Feb. 11 passed legislation delaying any new IRS rules for one year. Chairman Dave Camp of Michigan has argued that rules limiting the political participation of nonprofits that hide their donors were “designed to put conservative groups out of business,”  even though such organizations would face no restrictions if they registered as political committees and disclosed their donors.

Such nonprofits, which include Crossroads GPS, Americans for Prosperity and Priorities USA, spent $265 million in 2012 to help elect Republicans, compared with $35 milliion to help elect Democrats, according to the Center for Responsive Politics.

Campaign-finance lobbyist Craig Holman of Public Citizen, which supports efforts to restrict nonprofits from spending millions on campaigns while keeping their donors hidden, said any delay in new rules would “only increase the opportunities for hundreds of millions of dollars of undisclosed ‘dark money’ to flow into federal elections due to abuses of the tax code.”

The IRS has faced criticism for flagging groups that used “tea party” and “patriot” in their names for extra scrutiny when deciding whether to grant nonprofit status. Such organizations are primarily Republican-leaning. At the same time, the IRS also questioned Democratic-leaning organizations and revoked the nonprofit status of one such group.