Rep. Chris Van Hollen sued the IRS on Wednesday, seeking to stanch the flow of anonymous campaign cash by forcing the agency to rewrite decades-old regulations on tax-exempt charities.
The Maryland Democrat wants the Internal Revenue Service to tighten its rules on which groups qualify as "social welfare" organizations. The IRS currently allows such organizations — a tax-exempt class of power players known as 501(c)(4)s, whose ranks include Karl Rove's Crossroads GPS and the Obama-aligned Priorities USA — to dabble in political advocacy, so long as they keep such activities secondary to their general charitable work.
But Van Hollen says that such a "primarily charitable, secondarily political" arrangement leaves open a loophole for overtly political organizations to exploit benefits intended to be reserved for charities. Chief among those benefits is that 501(c)(4)s do not have to disclose their donors, and so corporations, unions, and other groups can pour money into advocacy efforts without fearing public backlash — or indeed any public scrutiny at all.
Hoping to lift the curtain on political spending, Van Hollen wants the IRS to rewrite its rules to require 501(c)(4)s to engage exclusively in social-welfare activities, and keep out of political spending entirely. If the groups want to get into politics, Van Hollen said, they should register under a different nonprofit category — known as 527s — that would protect the groups from taxation but require them to disclose all of their donors.