A new administration proposal to limit the political activity of tax-exempt groups could fall short of forcing “dark money” out of campaigns, experts say. The new Treasury Department and Internal Revenue Service proposals, which are expected to spark extensive debate, would bar so-called 501(c)(4) organizations from counting certain political activity as part of their social welfare work. But the IRS and Treasury are still going to accept recommendations on how much political activity a group can engage in while still receiving the prized 501(c)(4) status — and their decision is crucial to lawmakers and outside groups trying to ensure that big-time political contributors are public knowledge. But no matter how the decision comes down, campaign finance experts predict lawyers will eventually be able to find a way to help donors avoid public disclosure. “One thing we’ve learned is that very few fixes in this area of the law are permanent, and it requires a consistent regulatory response since lawyers can find their way around these rules,” said Rick Hasen, an election law expert at the University of California, Irvine. According to the current law, groups classified as 501(c)(4), which can accept unlimited amounts of donations, are to be exclusively engaged in promoting social welfare.
But Treasury regulations say social welfare can be the groups’ primary purpose, leading to what experts say are blurry lines about what those organizations are allowed to do. The 501(c)(4) groups generally try to keep a majority of their work in the social welfare sphere as they try to keep their exemption.
Those groups have become much more prominent players in campaigns since the Supreme Court’s 2010 Citizens United decision. A select group of 501(c)(4)s spent more than $300 million in the 2012 cycle, with the majority of that money going to help Republican candidates.
Groups trying to limit “dark money” — like Citizens for Responsibility and Ethics in Washington (CREW) and Democracy 21 — praised the Obama administration for making progress on the issue.
But they also acknowledge that their fight is far from over, and it remains to be seen how much transparency the new rules will create.
Full Article: Experts: ‘Dark money’ here to stay | TheHill.