The House is expected to pass a group of bills on tax day aimed at reining in the IRS, including one by Rep. George Holding, R-N.C., that would streamline the way the agency handles groups that claim tax-exempt status.
The bills spring from oversight hearings in 2013 that found that Internal Revenue Service employees were targeting conservative groups for special scrutiny.
“We found that the IRS is an agency in turmoil,” said Holding, a Republican from Raleigh and a former U.S. attorney.
But it’s also intimidating, and nobody can avoid it, he said.
Holding’s bill, HR 1295, would change the way the IRS grants tax-exempt status to nonprofit groups known as 501(c)(4)s, after a section of the tax code. It’s one of a group of related bills that will be up for votes on Wednesday.
In the past, groups had to apply for tax-exempt status. Holding’s bill lets them simply inform the IRS when they start up. The agency has the ability to examine the groups when it examines a form, the 990, that such organizations are required to file annually about their mission, programs and finances.
Doing away with the application process would save time at the IRS and would remove any temptation for employees to set aside applications of groups they don’t like, Holding said.
His bill also provides a review process for groups who are turned down for tax-exempt status on the basis of their 990 forms.
The bottom line of his bill and the other related legislation is that “the American people don’t need to live in fear that the IRS is targeting or making decisions based on people’s political activities, whether it’s to the right or to the left. That’s a frightening situation,” Holding said.
IRS official Lois Lerner, former director of the Exempt Organizations division, refused to testify at a House hearing in 2014 about the extra scrutiny of certain groups, citing her rights under the Fifth Amendment. The House voted to find Lerner in contempt of Congress.
The Justice Department, however, disagreed with the legal basis of that decision and said in a letter to House Speaker John Boehner two weeks ago that it wouldn’t prosecute Lerner. She’d retired from the IRS after the scandal.
Rep. Charles Boustany, R-La., speaking Saturday in the weekly Republican address, said some of the other IRS bills the House is voting on would include “steps like requiring the IRS to fire employees that use their position for political purposes, prohibiting the IRS employees from using personal email accounts to conduct official business, and improving access to the courts for groups that feel they’ve been wronged by the IRS.”
The bills are expected to get bipartisan support.
In March, when the Ways and Means Committee approved Holding’s bill and six others, Rep. Sander Levin, D-Mich., the ranking member, said he supported all of them.
The law requires 501 (c) (4) groups to be operated for the “promotion of social welfare,” but they’re also allowed to participate in political activity as long as politics isn’t their main purpose. The groups are able to collect donations without disclosing the identity of the donors.
The Supreme Court decision in 2010 in Citizens United v. Federal Election Commission allows groups to spend unlimited amounts of money in elections as long as they don’t coordinate their efforts with candidates. The Center for Responsive Politics, a research group that tracks money in politics, has reported that the number of politically active 501 (c) (4) groups and the amounts they spend have greatly increased since the court’s ruling.
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