Politics
U.S. Director of Exempt Organizations for the Internal Revenue Service (IRS) Lois Lerner waits to testify at a House Oversight and Government Reform Committee hearing on alleged targeting of political groups seeking tax-exempt status from by the IRS, on Capitol Hill in Washington, May 22, 2013. Lerner, the IRS official who this month revealed the tax agency U.S. Director of Exempt Organizations for the Internal Revenue Service (IRS) Lois Lerner waits to testify at a House Oversight and Government Reform Committee hearing on alleged targeting of political groups seeking tax-exempt status from by the IRS, on Capitol Hill in Washington, May 22, 2013. Lerner, the IRS official who this month revealed the tax agency's targeting of conservative groups asserted her constitutional right not to answer questions before a congressional committee on Wednesday. REUTERS/Jonathan Ernst (UNITED STATES - Tags: POLITICS BUSINESS) - RTXZWM0  

Email: IRS’s Lerner, Treasury Department secretly drafted new rules to restrict nonprofits

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Patrick Howley
Political Reporter

The Obama administration’s Treasury Department and former IRS official Lois Lerner conspired to draft new 501(c)(4) regulations to restrict the activity of conservative groups in a way that would not be disclosed publicly, according to the House Committee on Ways and Means.

The Treasury Department and Lerner started devising the new rules “off-plan,” meaning that their plans would not be published on the public schedule. They planned the new rules in 2012, while the IRS targeting of conservative groups was in full swing, and not after the scandal broke in order to clarify regulations as the administration has suggested.

The rules place would place much more stringent controls on what would be considered political activity by the IRS, effectively limiting the standard practices of a wide array of non-profit groups.

“Don’t know who in your organizations is keeping tabs on c4s, but since we mentioned potentially addressing them (off -plan) in 2013, I’ve got my radar up and this seemed interesting…,” Treasury official Ruth Madrigal wrote in a June 14, 2012 email to Lerner and others obtained by Ways and Means and provided to The Daily Caller.

Ways and Means chairman Rep. Dave Camp blasted the off-the-record plan during a hearing Wednesday with IRS commissioner John Koskinen, and called for the administration’s newly proposed 501(c)(4) rules to be halted until criminal investigations into the IRS targeting scandal are complete.

“If Treasury and the IRS fabricated the rationale for a rule change it would tend to raise questions about the integrity of the rule-making process,” Camp said.

“I want to be perfectly clear – this committee will fight any and all efforts to restrict the rights of groups to organize, speak out and educate the public, just as unions are allowed to do so.  We will get to the bottom of this, and I expect the IRS to produce – quickly – the outstanding documents the committee has requested,” Camp said.

“I believe the IRS has a long way to go in restoring its credibility.  But, you can take a first step by complying with this committee’s request and stopping all action against 501(c)(4) groups until the appropriate investigations are completed.”

The new rules define more previously acceptable activities by nonprofit groups as prohibited “candidate-related political activity.” Communications and activities including voter registration drives and publishing voter guides, among others, are now classified as political activity. Grants and donations that 501(c)(4)’s give to other nonprofits are now subject to new record-keeping and increased scrutiny to prevent the money’s use for broadly-defined political activity.

The rules were “drafted in a manner, in my view, to shut down tea party groups” Rep. Camp said earlier this week.

New IRS commissioner Koskinen said that the rules should “put to rest all of the issues surrounding applications for tax-exempt status.”

But Madrigal’s email to Lerner proves that the regulations were being developed long before the IRS needed to publicly put anything “to rest.”

At least 292 conservative groups were subjected to unfair targeting between 2010 and 2012, against six liberal groups that were allegedly given similar treatment.

“They are both over-broad and under-inclusive,” said Foley & Lardner LLP partner Cleta Mitchell on the new rules.

“They’ve taken everything that 501(c)(4) organizations do in the normal course of business and proposed to convert that all to candidate-related activity, even if a candidate is never mentioned.”

Mitchell said that the rules are being “rushed through” for political purposes.

“The objective is to get the rules in place before the 2014 election,” Mitchell said.

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