‘This could be dramatic’

In recent years, political organizations have exploited flaws in the campaign-finance system in a way that seems almost farcical. That may be poised to change in a big way.

For example, a group like Karl Rove’s attack operation, Crossroads GPS, or the Koch brothers’ Americans for Prosperity, can declare itself a “social welfare” organization, as opposed to a political action committee. Once they enjoy tax-exempt status as a 501(c)4 group, these brazenly partisan outfits can raise enormous amounts of money as non-profit organizations – while keeping their donors lists entirely secret from everyone.

As Nicholas Confessore reports this afternoon, the Obama administration is eyeing new rules that would “curtail” the campaign activities of these groups that enjoy tax-exempt status, but shouldn’t.

The proposed rules, announced by the Treasury Department and the Internal Revenue Service, would expand and clarify how the I.R.S. defines political activity and then establish clearer limits for how much activity nonprofits can engage in. Such a change – long urged by government watchdog groups – would be the first wholesale shift in a generation in the regulations governing political activity. […]

The rules would not prohibit political activity by nonprofit organizations. But by establishing clearer limits for campaign-related spending, the new rules could have a significant impact on the big-spending nonprofit groups that have played a central role in national politics in recent years, spending hundreds of millions of dollars on political advertising and voter outreach.

Marcus Owens, a former chief of the IRS’s exempt organizations division, told the Times, “Depending on the details, this could be dramatic.”

Quite right. The proposed guidance, for example, would say that “social welfare” organizations couldn’t engage in campaign  activities such as airing television ads within 60 days of an election.

We’ll learn more about the detail soon, but the goal here is to start applying meaningful definitions – and setting credible limits – on what a “social welfare,” tax-exempt, non-profit group can do to influence the outcome of elections. No matter what the guidance says, the parameters likely won’t be in place to influence the 2014 cycle, but in 2016 and beyond, the administration’s proposed changes have the potential to make an enormous impact on U.S. elections.

Steve Benin MSBNC

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