The Internal Revenue Service may enlarge a still-to-be-released code modification that would clarify how it oversees political nonprofits to also encompass political parties and PACs, Commissioner John Koskinen told Politico.
Koskinen said his agency might yet expand changes it plans in the Internal Revenue Code governing 501(c)(4)s — politically active nonprofit organizations — so that the changes also pertain to entities designated as 527s – basically, parties, campaigns and PACs that exist to contest elections.
"If it's going to be a fair system, it needs to apply across the board. If we have a set of definitions for 501(c)(4)s, what about everybody else?"
He added, "for ease of administration, it makes sense to have" a "common definition," Koskinen told Politico.
Most 527s active at the federal level are registered with the Federal Election Commission. Entities designated 527s must disclose
their contributions and expenditures.
Groups designated as 501(c)(4)s do not have to disclose their donors.
The IRS nonprofit rules are being revamped because of the uproar caused when the agency appeared to single out tea party groups that are 501(c)(4) organizations for extra auditing between 2010 and 2012.
Presently, groups designated 501(c)(4)s under the code must "primarily" function for social welfare purposes, though they may advocate and lobby. The IRS wants to nail down a more precise definition of what "political activity" is so that 501(c)(4)s know what limits apply to any involvement in political campaigns, according to Politico.
It had been surmised that the IRS might modify the code to include other tax-exempt entities besides 501(c)(4)s, for example, 501(c)(3)s (charities), 501(c)(5)s (unions), and 501(c)(6)s (trade groups). It was less clear whether the IRS would move also on 527s, Politico reported.
Liberal-leaning groups welcomed the prospect.
"Applying the same standards to all nonprofits, including 527s, is the most sensible way to make sure the rules are clear, fair and easy to enforce," Emily Peterson-Cassin of Public Citizen told Politico.
Conservatives asked what the point was.
"It doesn't seem to make much sense because [527s] already disclose their donors. I'm not sure what they feel they need to do to regulate in this," said Matt Nese of the Center of Competitive Politics.
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