New House Bill Would Deregulate the IRS

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House Republicans reintroduced legislation that would bar the Internal Revenue Service from drafting basic protocol until it’s investigated for actions it allegedly carried out two years ago.

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Story Transcript

THOMAS HEDGES, TRNN PRODUCER: On Wednesday, House Republicans reintroduced a bill from 2013 that targets the Internal Revenue Service. The legislation would bar the agency from reforming some of its internal guidelines until it is investigated for its alleged abuses from two years ago.

PAUL RYAN, U.S. REPRESENTATIVE (R-WI): The Internal Revenue Service comes to Congress couple of years ago and misleads us and says no targeting is occurring. And it said it was a few rogue agents in Cincinnati. That said it was also one progressives. All of those things have been proven untrue. This is not being forthcoming. This is being misleading again. This is a pattern of abuse, a pattern of behavior that is not giving us any confidence that this agency is being impartial.

HEDGES: With both chambers of Congress under GOP control, Republicans are resurfacing the bill, which would, quote,

“halt further action on the IRS’s proposed targeting regulations until the Justice Department and congressional investigating into the IRS’s previous targeting are complete.”

DALE EISMAN, ACTING DIRECTOR OF COMMUNICATIONS, COMMON CAUSE: Basically, it would stop any attempt by the IRS to write these new rules. I think that’s the intent, at least until the Congress has completed an investigation of the activity beforehand that–the pursuit, supposedly, of these Tea Party groups.

HEDGES: Dale Eisman is acting director of communications at Common Cause, a nonpartisan government watchdog organization. He says that the real scandal was and still is that many nonprofit groups were abusing their tax-exempt status and acting as political entities, thanks to the 2010 Citizens United case, which allowed private donors to funnel unlimited amounts of money through these groups. Eisman says that the IRS took shortcuts when there was a surge in applications for what’s known as 501(c)4 tax-exempt status.

EISMAN: Suddenly a lot of groups recognized that this was a way to raise a lot of money to advance candidates and causes and that they could do so without having to disclose their donors by forming a 501(c)4. These are supposed to be, I think, as you mentioned, social welfare organizations. But, in fact, the law is not as specific as we would like about what constitutes social welfare.

HEDGES: The problem dates back to 1959, when the Treasury Department changed language in the tax code to say that (c)4 groups no longer had to, quote, exclusively deal in social welfare, but only primarily. Lawyers since have said that this means (c)4s must dedicate a minimum of 51 percent of their activity to social welfare. The remaining 49 percent, however, can be dedicated to political activity, an interpretation that Eisman says is misguided.

EISMAN: If they’re engaged in political advocacy, that they ought to be classed as what the law calls Section 527 groups, which keeps them, allows them to keep a tax exemption but requires that they disclose their donors.

HEDGES: This broad window for interpretation has stifled the IRS on how it should enforce the regulations that 501(c)4s are supposed to follow. In a hearing earlier this month, IRS commissioner John Koskinen implored the Senate to draw up guidelines for how the agency can approach the issue.

EISMAN: The bottom line is that they need clearer rules about what constitutes or what the limits are of the social welfare designation and what kinds of groups and what kinds of activities, at what point do you cross that threshold and become an advocacy organization that is a 527.

HEDGES: However, Wednesday’s proposed regulation would further impede that needed process. It would not only require a full investigation to take place into the IRS’s actions from two years ago, but would also prohibit the agency from writing any new regulations until 2017. Eisman doesn’t foresee any dissenting voices in Congress, Democrat or Republican. That was echoed in the silence on Capitol Hill after it was revealed the Koch brothers would spend close to $1 billion on the 2016 elections.

EISMAN: I don’t think it’s all surprising that folks who are going to benefit from that kind of spending would defend it. You know, I would certainly say that oftentimes Democrats aren’t quick to speak up when big money is being spent on their behalf. And we have just as much of a problem with that as we do with the Koch brothers.

HEDGES: For The Real News, Thomas Hedges, Washington.

End

DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.