The IRS Persists
It says most of what social-welfare organizations do is “candidate-related political speech.”


Camp’s investigation follows a May 2013 report from the Treasury Department’s inspector general that found the IRS used “inappropriate criteria” beginning in early 2010 to identify and target conservative groups. Applications were delayed (some for more than three years) and many groups were asked to provide “lists of past and future donors.”

This was obviously illegal, so the administration has lit upon a new tactic. But the proposed IRS rules, which Camp is trying to delay for one year, would have the effect of stifling nonprofits on both the right and the left. As Eliana Johnson has reported, such liberal groups as the ACLU and such major labor unions as the Service Employees International Union are now speaking out against the scheme, fearing that the rules are too broadly drawn and would have a chilling effect on free speech. For the Left, it’s one thing to scrutinize on an ad hoc basis groups funded by the Koch brothers but quite another to impede a group like Organizing for Action, the 501(c)(4) that advocates specifically for the president’s policy agenda and would be effectively shut down by the new IRS rules.

Unsurprisingly, large swaths of the compliant media endorse the government’s attempt to silence nonprofits. Many insist that social-welfare organizations that want to engage in political speech be listed as political organizations under section 527 of the IRS code, which requires groups to disclose their donors. Last week, the New York Times editorial board came out in support of the proposed rules and even argued that they “should be far more explicit that no amount of political activity is acceptable for any group that refuses to disclose contributors.” The Center for Responsive Politics (itself a tax-exempt nonprofit) shares this sentiment and has launched The Shadow Money Trail, an “exclusive series about the funding behind politically active nonprofit organizations that do not publicly disclose their donors.”

We’ve been down this road before. In 1958, the U.S. Supreme Court ruled in NAACP v. Alabama that the government cannot force a private group to disclose its membership. The state’s suit against the NAACP was prompted by the group’s involvement in the Montgomery bus boycott of 1955 and its efforts to assist black students seeking admission to the state university. After filing suit, the segregationists running the State of Alabama then issued a subpoena for the NAACP’s records, including the names and addresses of its “agents” in the state. The idea was to intimidate the group, threaten its members, and shut them up. The Court saw this for what it was and ruled that forcing the NAACP to disclose its membership risked exposing them “to economic reprisal, loss of employment, threat of physical coercion, and other manifestations of public hostility.”

Do donors to 501(c)(4) groups today face the same dangers that the NAACP’s members did in the 1950s? No — but that’s not really the point. Donors across the ideological spectrum still face threats and harassment for political advocacy — last year’s IRS scandal itself is a shining example — which is why anonymity must be protected. In its ruling, the Court held that “immunity from state scrutiny of petitioner’s membership lists is here so related to the right of petitioner’s members to pursue their lawful private interests privately and to associate freely with others in doing so as to come within the protection of the Fourteenth Amendment.” The Court further held that freedom to associate with groups dedicated to the “advancement of beliefs and ideas” is an inseparable part of the due-process clause of the Fourteenth Amendment. Since 1959, the rules that protect anonymity of donors to 501(c)(4)s has gone unquestioned — until now.

The point, apparently lost on the likes of the New York Times editorial board and many in the Texas legislature, is that denying anonymity to citizens who support groups engaged in political speech is merely another way to silence them. Likewise, redefining everything a tax-exempt nonprofit does as taxable, or beyond the scope of its primary purpose, robs it of its ability to function.

That, of course, is the real purpose of the IRS rules — to finish what the agency’s “intolerable and inexcusable” conduct started four years ago.

— John Daniel Davidson is a senior health-care-policy analyst at the Texas Public Policy Foundation and a 2013 Lincoln Fellow of the Claremont Institute.