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It turns out that at the same time that the IRS was giving TEA Partiers the runaround, its officials were secretly plotting new, more intrusive rules to govern C4s and give the IRS greater latitude to keep undesirable groups from having their say.
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IRS to Politically Engaged Citizen Groups: Shut Up
Andrew M. Grossman, The Cato Institute
Surveying 19th-century America, Alexis de Tocqueville marveled at the proliferation and importance of civic associations, writing: "Everywhere that, at the head of a new undertaking, you see the government in France and a great lord in England, count on it that you will perceive an association in the United States."

It took a few centuries, but America is starting to look more like France and England did in Tocqueville's time. Our would-be lords are seizing the prerogative to carry out the public good -- as they see it, of course. And they're enlisting the IRS to do the dirty work.

Their targets are so-called "social welfare organizations" organized under Section 501(c)(4) of the tax code. C4s, as they're known, are charged with promoting the common good, and for that, they are exempt from the taxes that apply to for-profit corporations.

Just as in Tocqueville's day, different associations have different visions of the common good. The AARP, Sierra Club and American Motorcyclist Association rarely see eye to eye on any given issue. But each is free to pursue its own vision, whether that's pushing for greater Medicare benefits or running ads opposing a gas-tax hike.

This free-for-all is detestable to those who think that the marketplace of ideas ought to be vigorously regulated. And they're now vying for the upper hand. The first indication of trouble was nearly a year ago, when an IRS official disclosed "inappropriate" targeting of TEA Party groups seeking C4 status.

Recently, President Obama laid the blame on "bone-headed decisions" by a few IRS workers, but the evidence shows this is a concerted effort directed right from the top.

It turns out that at the same time that the IRS was giving TEA Partiers the runaround, its officials were secretly plotting new, more intrusive rules to govern C4s and give the IRS greater latitude to keep undesirable groups from having their say. IRS rules have long required that C4s have a "primary purpose" other than engaging in partisan politics, but has given organizations broad leeway to pursue their goals. Crucially, it has never regarded speech on legislation, public policy and the issues of the day -- as opposed to speech that urges a vote for or against a particular candidate -- as "political."

The proposed rule -- slipped out the door on Black Friday -- would keep the vague "primary purpose" requirement, but allow IRS officials broader leeway to characterize different kinds of spending as "political." The proposal ropes in any public communication that so much as mentions a candidate within 60 days of an election (or 30 days of a primary), voter guides that lay out candidates' records on the issues and transfers of funds from one C4 to another. Any C4 that racks up a few of these "political" activities will risk the IRS yanking its tax-exempt status.

In other words, the TEA Party targeting was just a trial run, and the new rule formalizes the IRS's role as the speech police. To be sure, "political" activities aren't outright banned. But C4s know the IRS police carries a big stick, and if they fail to toe the line, there will be consequences, which begin with endless administrative proceedings and staggering legal fees and can lead all the way to financial ruin.

The approach is not new. The Supreme Court saw right through a similar scheme in the 1960s when Rhode Island empowered an all-knowing "Commission to Encourage Morality in Youth" to warn booksellers that their wares were objectionably smutty and request their "cooperation" in upholding obscenity statutes. The court has also turned back regulations on issue-oriented speech arguably made with the purpose of influencing elections, reasoning that citizens are at least entitled to a clear line between which words are and are not permissible.

The principle of these cases is straightforward: Vague threats and standards do not comport with the right to "uninhibited, robust, and wide-open" public debate that the First Amendment guarantees. Citizens shouldn't have to preclear their communications with the bureaucracy or go to court to learn whether the government may punish them for their words. History teaches that censorship is no less effective, and certainly no less objectionable, when accomplished by uncertainty and fear rather than by outright prohibition.

The proposed rule marches us toward a world of uncertainty and fear. Not lacking in audacity, the Obama administration claims its motivation is to clarify the law governing C4s. This is true only in that its proposal makes the administration's message to certain politically engaged associations crystal clear: Shut up.

The whole point of this new take on "social welfare" is to rule out holding elected officials to account, particularly around election time.

What would Tocqueville say to that?

Andrew M. Grossman is an adjunct scholar at the Cato Institute and practices appellate and constitutional litigation in the Washington office of Baker Hostetler. Refer to original article for related links and important documentation.

READ FULL SOURCE ARTICLE: 02/26/2014








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