IRS Not Equipped to Police Nonprofits’ Speech, PUFP Warns Congress

September 5, 2023 | Luke Wachob

In a letter sent to the U.S. House Ways and Means Committee on September 4, 2023, People United for Privacy (PUFP) warned Congress against allowing the IRS to issue new regulations governing the political activities of 501(c)(3) and 501(c)(4) nonprofit organizations.

PUFP’s comments explain that the IRS lacks the necessary expertise and structural safeguards to ensure First Amendment rights are protected when regulating in this highly sensitive area. Moreover, the IRS has a proven history of targeting nonprofits and donors for their speech about government, public policy, and elected officials. As the comments advise, the Federal Election Commission (FEC), not the IRS, has exclusive jurisdiction to regulate federal campaign activity.

“Far from conferring the IRS with more authority to regulate in this area, all of the problems the [Request for Information] identifies with the current regulatory approach would be better addressed by alleviating the IRS of its jurisdiction over political activity altogether,” wrote PUFP Vice President Matt Nese and Counsel Eric Wang.

The comments were sent in response to a Request for Information (RFI) about the alleged political activities of nonprofit organizations issued by Republican leaders of the Committee on August 14. The RFI specifically asks whether the IRS should issue new guidance on what constitutes “political campaign intervention” by a nonprofit, asks for feedback on possible revisions to Form 990 (an IRS form that often contains confidential, redacted donor information), and wonders aloud what policy and enforcement changes may be needed in this area. IRS efforts to redefine and crack down on alleged political activity by nonprofits, however, have led to disaster in the past.

“The agency’s shortcomings in this area have been on full display – and the subject of widespread condemnation – over the last decade, from the Tea Party targeting scandal in the early 2010s, to the agency’s ham-fisted response in issuing an ill-considered and ill-fated proposed rulemaking on political activity, to leaks by the agency of conservative organizations’ private donor information,” the comments explain.

In light of these incidents, Republicans in Congress have successfully fought for budget riders that prohibit the IRS from issuing new regulations for nonprofit political activity in each of the last eight omnibus appropriations bills. PUFP’s comments urge the Committee to remember the lessons of the IRS targeting scandal and emphasize the importance of nonprofit donor privacy for all kinds of causes.

“Nonprofits and the Americans who support them may disagree sharply on various policy issues, but they’re united in agreement on protecting their privacy. The logic is simple: A threat to the privacy of one organization or cause is a threat to that right for all others. Privacy rights are not guaranteed in a vacuum,” Nese and Wang caution.

To read the full letter, click here, or go to: