Democrats Not Budging on New IRS Rules
Harry Reid is set to kill a compromise that would delay them in order to get a Ukraine bill passed.


Eliana Johnson

Republicans will have to go back to the drawing board in their attempts to delay proposed Internal Revenue Service regulations if Senate majority leader Harry Reid drops provisions affecting the International Monetary Fund from a bill before Congress right now, as he is reportedly considering.

The IRS regulations, which would limit the political activity of 501(c)(4) social-welfare groups, have drawn heated criticism from nonprofits on the right and left who claim the IRS is unduly infringing on their right to free speech.

In the ongoing negotiations over a bill to fund aid to Ukraine, Republicans in both chambers told Democrats privately that they would cede ground on the IMF provision — which gives more influence within the organization to developing countries and, Republicans say, diminishes that of the United States — if Democrats agreed to delay the proposed rules.


The horse-trading was never intended to become public. If Democrats agreed to the delay, they would quietly add language to the Federal Register officially delaying the IRS regulations for a year while Republicans compromised on the IMF language. The two issues were not supposed to be publicly connected, sources familiar with the negotiations say.

That changed when Tennessee senator Bob Corker, the ranking Republican on the Senate Foreign Relations Committee, told Politico on March 11 that Republicans might give in to Democratic demands on the IMF if Democrats yielded on the IRS rules. “For Republicans, especially in the House, to even be willing to deal with the IMF issue, I know [the IRS rules are] very important, and for many Republicans in the Senate,” Corker said.

Democrats this week have put the Republicans’ demand on the IRS rules in the context of a larger offensive against the billionaire Koch brothers, whose 501(c)(4) groups have already spent millions on attack ads against vulnerable Democratic incumbents. These are the same groups whose political activities would be curtailed by the proposed IRS regulations the GOP is seeking to forestall.

“Republicans objected to moving forward with this aid package in order to protect the ability of the Koch brothers and other GOP donors to hide behind shadowy front groups — groups that spend millions on misleading political attack ads,” Reid said on the Senate floor on Monday. “Republicans objected to moving forward with this aid package unless Democrats agreed to allow the Kochs and billionaires like them to continue to anonymously spend millions trying to buy America’s democracy. It’s hard to believe, but that’s the truth.”

Senate minority leader Mitch McConnell on Tuesday tacitly acknowledged that the deal was off, insisting that Democrats drop the IMF provision. “This bill cannot pass the House or become law in its current form—it must be amended,” he said. “And in order for it to become law, the controversial IMF provision must be removed.” 

The backroom negotiations over the Ukraine funding bill isn’t the first time Republicans have pushed Democrats on the IRS regulations behind the scenes.