The IRS and (c)(4) Political Activity: Choices and Explanations

by - December 10, 2013

The problem for the IRS is how to reach this disputed activity without engaging in political judgments or usurping the role of the FEC or Congress in the regulation of campaign finance. Under the proposed rules, the Service leaves itself the option at any time to find that an organization’s activity, even without express advocacy, is its functional equivalent—meaning that “candidate-related” or political intent is the only “reasonable interpretation” of the activity. Guidance for Tax-Exempt Social Welfare Organizations, 78 Fed. Reg. 71,535, 71,541 (Proposed Nov. 29, 2013) (a communication is candidate-related if it is “susceptible of no reasonable interpretation other than a call for or against” a candidate or candidates of a political party.) But the legal standard is vague, and inevitably so: any legal test that probes for what is, by definition, not “express,” is going to suffer from a lack of clear definition. Is it the test that the Supreme Court adopted in Wisconsin Right to Life for the “functional equivalent” of express advocacy, or the one that the FEC has adopted in its own express advocacy regulations set forth in 11 C.F.R. § 100.22(b)? These are similar but not the same. See Electioneering Communications, 72 Fed. Reg. 72,899, 72,912 (Dec. 26, 2007) (leaving open “the issue of the impact, if any, of [Wisconsin Right to Life] on the [FEC’s own] definition of ‘express advocacy’….”). The standard the FEC has adopted is more open-ended, which is not what the IRS professes to be looking for in setting the goal of clear and definitive rules that limit its involvement in political campaigns.

The IRS and (c)(4) Political Activity: Choices and Explanations - Bob Bauer

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