Claims: Obama administration’s new nonprofit rules violate the Paperwork Reduction Act

The Obama administration violated federal law with its new proposed IRS rule for nonprofit groups and for making a false statement about that rule, according to claims by multiple attorneys reviewed by The Daily Caller.

The administration’s extensive new IRS rule for 501(c)(4) nonprofit groups was secretly devised by disgraced former IRS official Lois Lerner and other Obama administration officials while the IRS was targeting conservative nonprofit groups between 2010 and 2012.

The rule, which contains many provisions, 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 nonprofit groups.

The Republican-proposed Stop Targeting of Political Beliefs by the IRS Act to block the new rule passed a House committee Tuesday but is not expected to pass into law. But the Obama administration’s rule may be shut down for its own illegality.

The Paperwork Reduction Act, passed in 1980 and amended in 1995 during the House speakership of Newt Gingrich, requires government agencies to estimate its new programs’ paperwork burden for the public before receiving Office of Management and Budget (OMB) approval.

But the Obama administration’s IRS misstated its new rules’ paperwork burden, a legal expert told TheDC.

“The IRS grossly underestimates the record-keeping burden” of the new rule, Center for Competitive Politics senior fellow Eric Wang told TheDC, claiming two violations of the Paperwork Reduction Act.

The IRS estimated in its “Notice of Proposed Rulemaking” that the new rule would only cost nonprofit groups two extra hours of record-keeping time. But Wang said that the agency’s estimate refers to only one small “sliver” of the new record-keeping requirements put forth by the rule.

“The two-hour estimate they provided is for this new requirement about 501(c)(4) groups giving grants to other 501(c) groups,” which requires the recipient to fill out paperwork certifying that the grants were not used for candidate-related political activity. But that provision is “only one-tenth of the substance of the proposed rule,” according to Wang.

“They are required to provide an estimate of the record-keeping burden for the entirety of the rule, and they’ve only provided an estimate — and a faulty estimate at that — for a narrow provision of the rule,” Wang said.

Wang also claimed that “the [two-hour] estimate is too low even for the grant-making provision,” citing an analogous record-keeping provision for grants on nonprofit groups’ Form 990s, which require five hours for groups to fill out, according to IRS estimates.