President Obama pitches new rules for political nonprofits - Byron Tau
In an aggressive move designed to crack down on free-spending outside political groups, the Obama administration is proposing strict new rules curtailing nonprofits like Karl Rove’s Crossroads GPS and the pro-Obama Priorities USA.
The draft proposal, released Tuesday by the Treasury Department, would keep so-called social welfare 501©(4) nonprofits from getting a tax exemption if they engage in too much “candidate related” political activity.
The groups were at the heart of this summer’s scandal over Internal Revenue Service targeting of tea party and other conservative groups seeking tax exemptions.
The proposal is the first major response to a Treasury inspector general report in May blasting the IRS for added scrutiny of tea party conservative groups seeking tax exemption — a major scandal that led President Barack Obama to fire the acting IRS commissioner and other officials to exit the agency.
The inspector general report recommended the IRS tighten its rules.
The new regulations would affect a broad swath of political nonprofit groups that have come to play an outsized and influential role in federal elections.
Crossroads, founded by George W. Bush adviser Rove, along with its sister super PAC together spent $325 million in 2011 and 2012 against Obama and Senate Democrats. Priorities, set up by former Obama aide Bill Burton, raised $10.7 million in the 2012 cycle.
Dozens of these political nonprofits have used 501©(4) tax status as a way to shield their donors.