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February 20, 2014

King to IRS: Stop 'dark money' in politics

Sen. Angus King (I-Maine) told the Internal Revenue Service (IRS) Wednesday to stop tax-exempt nonprofit organizations from influencing elections through anonymous donors.

“The increased prevalence of ‘dark money’ in electoral politics has been a troubling development in recent years, and the use of our tax code to shield the identities of donors represents one of its most egregious manifestations,” King said. “It is time for an end to this dark money game.”

Last year, lawmakers criticized the IRS for politically targeting conservative Tea Party groups by denying them tax-exempt status. In November, the IRS issued initial guidance trying to correct the situation by prohibiting groups that engage in political activity from receiving the exemption. 

The new guidance would stop groups “primarily” engaged in politics from receiving the tax exemption.

King wrote a letter to IRS Commissioner John Koskinen saying the proposed rule change was too ambiguous and should ban all groups involved in politics. The exemption was designed for organizations promoting social welfare for whole communities.

“Although the new regulations proposed by the IRS in November provide much needed clarity in defining what kind of activity will be considered political in nature, they do not address the more difficult issue of determining exactly how much political activity should be deemed permissible under section 501(c)(4),” the letter stated. “Most legal experts argue that the ‘primarily’ standard may be reached so long as more than 50 percent of a section 501(c)(4) organization’s activities fulfill the social welfare purpose.”

Republicans have argued that the recent rule change is an attempt by Democrats to chip away at the Supreme Court’s Citizens United case, where it determined that large-scale donors could contribute as much as they want to campaigns anonymously because it was a First Amendment right.

“While I am a staunch defender of free speech, I do not believe that a commitment to this basic right prohibits us from also demanding transparency and accountability, particularly when speech is directed intentionally to influence electoral outcomes,” King wrote. “The American people deserve to know who is funding political messaging and for what purpose, regardless of its political persuasion.”

King said Democratic groups as well as Republican have taken advantage of the tax code which is why it’s important the IRS get the rule language right.

“Regardless of their political affiliation, all tax-exempt organizations wishing to participate in political activity should be subject to the highest level of scrutiny,” King wrote. “Both Democratic and Republican organizations have used this tax provision to shield the identity of their donors while influencing elections.”

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