The League joined other organizations in sending a letter to the U.S. Treasury Department and Internal Revenue Service (IRS) encouraging them to move forward with the rulemaking process to provide guidance for tax-exempt social welfare organizations on candidate related political activities. The League has also submitted comments to the IRS related to this matter.

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March 5, 2014

The Honorable Jacob Lew
Secretary of the Treasury
Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220

The Honorable John A. Koskinen
Commissioner of Internal Revenue
Internal Revenue Service
1111 Constitution Avenue, NW
Washington, D.C. 20224

Dear Secretary Lew and Commissioner Koskinen

On November 29, 2013, the Treasury Department and Internal Revenue Service jointly proposed to revise the existing federal regulations regarding electoral activities by tax-exempt section 501(c)(4) social welfare organizations.

The rulemaking proceeding was set forth in “Notice of Proposed Rulemaking REG-134413, “Guidance for Tax-Exempt Social Welfare Organizations on Candidate-Related Political Activities,’” 78 Fed. Reg. 71535.

The IRS revision of its regulations governing section 501(c)(4) tax status became essential following the 2010 Citizens United decision and the resulting explosion of secret money in federal elections. More than $250 million in secret contributions was spent by section 501(c)(4) “social welfare” organizations in the 2012 federal elections.

The injection of huge amounts of “dark money” contributions into federal elections is a direct result of the existing flawed IRS regulations, adopted more than a half century ago, and the absence of a clear definition of electoral activity by nonprofit groups, combined with the Citizens United decision striking the prohibition on corporate expenditures.

Federal election-related spending by groups claiming section 501(c)(4) tax status far exceeds what is permissible under the Internal Revenue Code.

Last week, the initial comment period ended for the proposal contained in the Notice of Proposed Rulemaking.

Our groups strongly urge you to move forward expeditiously with the rulemaking proceeding and to issue new regulations in a timely manner to correct the manifest flaws in the existing rules.

Our organizations include Americans for Campaign Reform, Brennan Center for Justice, Campaign Legal Center, Citizens for Responsibility and Ethics in Washington (CREW), Common Cause, Democracy 21, Demos, League of Women Voters, Public Citizen, The Sunlight Foundation and U.S. PIRG.

Many of the groups signing this letter submitted comments on the proposed rule, agreeing with parts of the proposal and disagreeing with other parts. For example, there is a widespread consensus that nonpartisan voter activities should not be treated as “candidate-related political activity.”

All of our groups agree, however, that it is vitally important for the Treasury Department and the IRS to proceed with the rulemaking and to issue new regulations to prevent the continuation of massive abuses of the tax laws by some groups claiming section 501(c)(4) tax status.

Without new regulations issued by the IRS, section 501(c)(4) groups will continue to misuse the tax laws to spend hundreds of millions of dollars in secret contributions in federal elections and voters will continue to be denied essential campaign finance information they have a right to know.

We strongly urge you to proceed expeditiously with the rulemaking proceeding and to issue necessary new regulations in a timely manner.

Americans for Campaign Reform
Brennan Center for Justice
Campaign Legal Center
Citizens for Responsibility and Ethics in Washington (CREW)
Common Cause
League of Women Voters
Democracy 21
Demos
Public Citizen
The Sunlight Foundation
U.S. PIRG