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Standing Up for Free Speech: Six Arguments Against IRS Non-Profit Rules

On July 17, we posted a warning about the incipient effort by the Internal Revenue Service's (IRS) controversial proposal to constrain non-profit advocacy organizations from participating in the political process. Though the rules were postponed due to substantial public opposition, IRS officials say the effort will be renewed next year.

The controversy centers on proposed IRS regulations intended to more narrowly define the extent to which non-profit 501(c)(4) "social welfare" organizations can participate in politically oriented activities.

But the rules go beyond "clarifying" permissible activities, as the IRS would have it, and would threaten freedom of speech by sharply curtailing when and how civic advocacy groups can engage in political debate.

Originally proposed in late 2013, the IRS received more than 160,000 public comments on the new regulation. That number is twice the total of all comments on all other Treasury and IRS proposals in the last seven years, IRS Commissioner Joel Koskinen noted in an April speech to the National Press Club.

The lion's share of the comments are opposed to the new rule, citing a range of concerns about the chilling effects IRS regulation would have on freedom of speech and open political debate.

Here's a sampling of thought provoking arguments from opponents, from a variety of points of view, which together make the case that the IRS and the Obama administration should trash this ill-considered assault on free speech once and for all.

1) Vague Rules are Bad Rules

A group of eight distinguished First Amendment advocates--including attorney Floyd Abrams, former American Civil Liberties Union (ACLU) chief Nadine Strossen, and other legal and civil liberties experts--argues that the regulation's vagueness poses a danger:

"Vague rules are particularly suspicious in the First Amendment area, because uncertainty about the meaning of the law is a handmaiden of chilling effect on political speech and association....

But just as dangerous as vague laws in the First Amendment area are seriously overbroad ones, i.e. laws which reach well beyond the valid area of government proscription and regulation.

It is our submission that particularly in this regard the key elements of the proposed new regulation are deeply deficient and will cast a pall over the vital exercise of First Amendment rights by non-profit organizations, the key constituents of 'civil society' which make our democracy so vibrant."

2) The IRS Has No Business Regulating Political Speech

The Center for Competitive Politics argues the IRS rules would threaten not only constitutional protections of freedom of speech, but also freedom of association. CCP also suggests campaign finance enforcement is inappropriate for a tax collection agency, and should be the purview of the Federal Elections Commission:

"Finally, and most importantly, this straightforward approach offers real clarity without dragging the IRS further into the thicket of political regulation, a tangle which it--and the Service's reputation for the neutral, nonpartisan collection of revenue--may never recover."

3) The Rules Are for the Benefit of Bureaucrats, Not Citizens

The Free Speech Coalition also questions whether the IRS has the authority to enact such sweeping regulations, arguing that if there should be stronger regulation of social welfare nonprofits, the IRS should present that case to Congress. The FSC is skeptical of the push for new regulations, suggesting the rules serve the needs and desires of scandal-scarred bureaucrats rather than citizens:

"In defending itself against investigations, the IRS has explained that its existing regulations are unclear--a view the FSC does not share.

"It would be ironic indeed that the occasion of a political scandal within the IRS itself would be used by the IRS as a rationale to asset greater governmental control over the operation of many thousands of private, nonprofit organizations."

4) The Danger of Unintended Consequences

The rules are rife with unintended consequences, primarily from the various restrictions on "electioneering" that would stifle non-partisan activities like hosting candidate forums and publishing issue-based voter guides. For example, The American Council on Education (ACE) expresses concern that the rules could be applied to other types of non-profit organizations, including colleges and universities, and would dampen on-campus political participation:

"Given our long-standing commitment to civic engagement, we are deeply concerned about potential restrictions on long-permissible speech and other non-partisan campaign-related activities, many of which take place on our campuses. These activities go to the heart of the role our institutions play as 'intellectual and public commons.'

"We strongly believe that student learning would be harmed, political discourse on campus chilled and our civic mission severely undercut [by these restrictions]."

5) Picking on the Little Guy

The ACLU raises numerous questions about the ways in which the IRS rule "threatens to discourage or sterilize an enormous amount of political discourse in America." The fear of losing tax-exempt status would serve to drive many voices, particularly those of smaller organizations that may lack the legal expertise for compliance, to absent themselves from public debate:

"Denial or revocation of such status can prove harmful, especially for controversial groups that rely on assurances of anonymity to attract donors....

[T]he uncertainty generated by the proposed rule will disproportionately affect smaller and single-issue groups with limited resources. All of these consequences will chill or sanitize public debate over issues squarely in the public interest, which threatens to harm--not help--our policy outcomes."

6) The Foot in the Door for Further Regulation

The U.S. Chamber of Commerce comment, while reprising many of the above arguments, also notes the danger that the proposed regulations will be later extended to cover other types of non-profit organizations, such as trade associations and business advocacy groups. This would be threaten the ability of business groups to advocate for the issues that matter to their communities: 

"If certain business objectives can be achieved only through legislation, as the IRS recognizes, then it follows that a trade association should be able to support the election of legislators who will further those objectives and to oppose legislators who will hinder them. Those express advocacy activities are plainly germane to the trade association's legitimate purpose....

"The proposed rule is arbitrary, irrational and overbroad; beyond the statutory authority of the IRS and Treasury Department; and unconstitutional. The proposal should be withdrawn, and consideration of these issues left where they belong--in Congress." 

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