A battle between leaders of the two parties over campaign finance rules intensified this week as Sen. Chuck Schumer (D-NY) accused Republicans of flat-out threatening the Internal Revenue Service after they warned the agency not to tighten oversight of anonymous money groups misusing the tax code. The squabble is about how forcefully to crack down on groups approved under special 501(c)(4) tax status by claiming to primarily engage in “social welfare,” but which pour significant resources into political activities. Democrats want a strict cap on how much money they may spend for politics; Republicans prefer the ambiguity of the status quo. Beneath the issue is a sea of anonymous spending in which pro-GOP groups are drowning Democrats. By using 501(c)(4) status, these “political charities” are allowed to keep their donors anonymous, leaving voters unable to evaluate which interests might be funding ads or what their motives are.
In March, Schumer and six Democratic colleagues sent IRS Commissioner Douglas Shulman a letter asking for a “bright line test” for approval of tax-exempt status that imposes “a strict, percentage-based cap on the amount of a nonprofit group’s spending that can go towards political activities. We urge the IRS to take these steps immediately to prevent abuse of the tax code by political groups focused on federal election activities,” the Democratic senators wrote. They continued that “if the IRS is unable to issue administrative guidance in this area then we plan to introduce legislation to accomplish these important changes.”
In response, 12 Republican senators — including Minority Leader Mitch McConnell (R-KY), Minority Whip Jon Kyl (R-AZ) and Finance Committee Ranking Member Orrin Hatch (R-UT) — sent the IRS a letter warning them not to do just that, arguing that stricter enforcement could get mired in a political agenda.