Another way that money is slowly taking greater control of politics and eroding the rule of law. What is the point of laws if Congress doesn’t fund enforcement?
In the past decade, people, companies and unions have dispensed more than $1 billion in dark money, according to the Center for Responsive Politics…
Such spending is legal because of a massive loophole. Section 501(c)(4) of the U.S. tax code allows organizations to make independent expenditures on politics while concealing their donors’ names — as long as politics isn’t the organization’s “primary activity.” The Internal Revenue Service has the daunting task of trying to determine when nonprofits in that category, known colloquially as C4s, violate that vague standard.
But the IRS’ attempts to police this class of nonprofits have almost completely broken down, a ProPublica investigation reveals. Since 2015, thousands of complaints have streamed in — from citizens, public interest groups, IRS agents, government officials and more — that C4s are abusing the rules…
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But how does one define an organization’s “primary activity”? For decades, the point was largely moot. Big funders used other means to funnel money to campaigns. Then came a series of Supreme Court rulings, the best known of which was the Citizens United decision in 2010, that loosened restrictions on political contributions. In that case, the court concluded that, like people, corporations and unions could spend unlimited funds for elections.
The Citizens United decision was followed by a surge in the formation of politically focused organizations seeking IRS approval as C4s. In 2012, at least $250 million passed through such groups and into efforts to elect candidates, an 80-fold increase from eight years prior.
That boom occurred at the same time that Congress began chipping away at the IRS budget. The combination left Lerner’s exempt organization unit overwhelmed…
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…the inspector general had proposed fixing the way it scrutinizes nonprofits. “We believe [the targeting] could be due to the lack of specific guidance on how to determine the ‘primary activity’” of a social welfare nonprofit, the report stated.
The IRS responded by advocating a restrictive approach: C4s should be barred from any campaign-related activity. Those guidelines, released in late 2013, prompted 150,000 comments, the most public feedback in IRS history. Several Republican members of Congress circulated bills to block such a change.
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Ultimately, Congress disagreed. In December 2015, 17 lines were inserted into an 888-page appropriations bill: “None of the funds made available in this or any other Act may be used ... to issue, revise, or finalize any regulation, revenue ruling, or other guidance … to determine whether an organization is operated exclusively for the promotion of social welfare.”
The House leadership, under then-Speaker Paul Ryan, inserted the ban in the final rounds of the bill’s negotiations, according to six people familiar with the rider. (Ryan did not respond to a request for comment.)…
Koskinen told ProPublica he was surprised and disappointed. “The goal wasn’t to hamper anybody, but to help,” he said. “Leaving the situation murky is not doing any nonprofits any favors, and in fact is leaving more room for IRS employees to use their discretion and judgment.”
Since 2015, the lines have been carried over in each new appropriations bill. They remain in effect today.