House Democrat to Challenge IRS Tax-Exemption Rules

The Washington Post reports that Rep. Chris Van Hollen (D-MD) will file suit today against the Internal Revenue Service’s regulations governing what organizations qualify for tax exempt status.

Current law says the organizations must engage “exclusively” in social welfare activities, but IRS tax code requires only that they are “primarily engaged” in such purposes. That discrepancy has led to confusion for application processors, who have struggled to determine what constitutes political activity and how much should disqualify groups from tax-exemption, according to agency officials.

“I don’t think the IRS should be in the business of determining whether the primary purpose of an organization is political or educational,” Van Hollen said in an interview Tuesday. “The statute is very clear they should not be in that business.”

Dean Patterson, an IRS spokesman, declined to comment on the planned suit but noted that the agency’s 2013-2014 work plan, released on Aug. 9, calls for new guidance on determining of 501(c)(4) eligibility. . . .

Three campaign-finance watchdog groups — Democracy 21, the Campaign Legal Center and Public Citizen — are joining Van Hollen in the lawsuit. They have scheduled a joint teleconference Wednesday to discuss the legal action.

Hat tip: Rick Hasen.

[Note: It’s been a sloppy day. I accidentally identified Van Hollen with an “R” in the body of the post.  It’s fixed now.]