Hatch Slams 501(c)(4) Proposed Rules; Backs Bill To Delay Implementation

In Speech on the Senate Floor, Utah Senator Says, “We need to call this what it is. This is an affront to free speech and the right of all American citizens to participate in the democratic process. This is an attempt by the Obama Administration to further marginalize its critics and keep them on the sidelines. It is a blatant effort to continue the harassment and intimidation that has already been taking place at the IRS over the last few years.”

WASHINGTON – Finance Committee Ranking Member Orrin Hatch (R-Utah) today joined U.S. Senators Jeff Flake (R-Ariz.) and Pat Roberts (R-Kan.) to announce the Stop Targeting of Political Beliefs by the IRS Act, legislation to prevent the U.S. Department of Treasury and the Internal Revenue Service (IRS) from implementing a proposed rule that would significantly limit 501(c)(4) tax-exempt organization activities and restrict the First Amendment rights of groups that have criticized of the Obama administration.

“The fact of the matter is these proposed regulations demonstrate that the IRS is willing and able to carry the President’s political water, even when the agency is, by law, supposed to be independent and non-partisan,” said Hatch during a speech on the Senate floor. “That’s why this legislation we’ve introduced today is so important. We need to send a message to the administration that it can’t tamper with the rules of free speech just because it doesn’t like what’s being said.”

Under current law, 501(c)(4) organizations, or social welfare groups, can engage in political activities on a limited basis so long as their primary activity is the promotion of social welfare.

Last November, the IRS proposed new regulations that would fundamentally alter the nature of the activities that these organizations can engage in, limiting their free speech rights, and effectively forcing grassroots organizations across the country to shut down. The final regulations are due to take effect right before the 2014 midterm elections.

Hatch continued, “We need to call this what it is. This is an affront to free speech and the right of all American citizens to participate in the democratic process. This is an attempt by the Obama Administration to further marginalize its critics and keep them on the sidelines. It is a blatant effort to continue the harassment and intimidation that has already been taking place at the IRS over the last few years.”

The Stop Targeting of Political Beliefs by the IRS Act would delay the implementation of the Obama Administration rules for one year. Companion legislation is being marked up today in the House Ways and Means Committee.

“This is the least we can do to protect free speech,” Hatch concluded. “People from all across the political spectrum – from the ACLU to the U.S. Chamber of Commerce to the unions – have recognized just how egregious this proposed rule is. It needs to be stopped. And, our bill would stop it.”

Below is the text of Hatch’s full speech delivered on the Senate floor today:

Mr. President, I rise today in support of the Stop Targeting of Political Beliefs by the IRS Act, the bill introduced today by the junior Senator from Arizona and the senior Senator from Kansas. This is a Senate companion to the bill being marked up today in the House Ways and Means Committee.

This is an important piece of legislation that will protect free speech and ensure, at least for the time being, that the Internal Revenue Service is not used as yet another political arm of the administration.

As we all know, last November, the IRS unveiled proposed regulations that would fundamentally alter the nature of the activities that tax exempt 501(c)(4) organizations can engage in.

Under current regulations, 501(c)(4) organizations – or social welfare groups – can engage in political activities on a limited basis so long as their primary activity is the promotion of social welfare.

However, they remain free to educate the public on important issues, even those that may be politically charged, because that falls within the exempt purpose of promoting social welfare. They can also conduct voter registration drives and distribute voter guides outlining candidates’ positions on issues important to the organization.

Under the proposed regulation, virtually all of these activities would be considered political activity and would be considered inconsistent with various groups’ exemptions under 501(c)(4).

As a practical matter, this would mean that grassroots organizations all over the country would be forced to shut down.

And, Mr. President, that’s precisely the point.

The Obama Administration doesn’t want grassroots organizations – even those that are legitimately non-partisan – educating the public on the issues of the day.

They don’t want tax-exempt organizations to be able to tell voters where candidates and politicians stand on the issues.

And, they certainly don’t want these types of groups participating in the political process in any meaningful way.

That’s why we’re seeing these regulations. That’s why they were drafted in the first place. And, that’s why the administration seems set to finalize them right before the 2014 midterm elections, or, at the very latest, before the 2016 Presidential election.

We need to call this what it is, Mr. President.

This is an affront to free speech and the right of all American citizens to participate in the democratic process.

This is an attempt by the Obama Administration to further marginalize its critics and keep them on the sidelines.

It is a blatant effort to continue the harassment and intimidation that has already been taking place at the IRS over the last few years.

This regulation is just one of many problems we see at the IRS. Indeed, the American people have ample reason to doubt the credibility of the IRS, particularly when it comes to dealing with organizations that might be critical of the President and his policies.

The IRS is currently under investigation in three separate congressional committees for its targeting of conservative organizations during the run up to the 2010 and 2012 elections.

On top of that, the agency recently came under widespread condemnation when, in the midst of these ongoing investigations, they announced that they were reinstating bonuses that had been canceled in response to the targeting scandal.

It’s almost as if they believe there was no scandal at all.

Of course, if you’ve been listening to other people in the Obama Administration, that type of thinking appears to be the predominant view.

Several weeks ago, for example, leaks from the Justice Department indicated that no criminal charges were likely to be filed in the targeting scandal, even though the scandal is still under investigation.

And, on Super Bowl Sunday, President Obama said in an interview that there was not a “smidgen” of corruption at the IRS.

Well, Mr. President, when it comes to suppressing free speech, there is far more than a smidgen of corruption at the IRS. And, if anything, these proposed regulations on 501(c)(4)s are additional proof.

When the proposed rule was first made public, the IRS said that it was drafted in response to the 2013 TIGTA report that revealed all the issues the agency was having with regard to 501(c)(4) applications. However, as we learned in a House Ways and Means Committee hearing last week, these regulations were under consideration for two years before that report was issued.

Two years!

On top of that, the regulations were pursued outside of the normal channels for IRS and Treasury Department regulatory efforts, in a manner that some IRS officials labeled “off-plan.” Off-plan, in this case, means hidden from the public.

Now why does the IRS need to hide a draft regulation from the public when a regulation project is normally listed on a public Treasury guidance plan?

I suppose we can only speculate, but I think it’s fair to assume that they didn’t want the public to know that the regulations were in the works.

And, they expect the American people to believe that there is no political motivation for these regulations?

Give me a break.

The fact of the matter is these proposed regulations demonstrate that the IRS is willing and able to carry the President’s political water, even when the agency is, by law, supposed to be independent and non-partisan.

That’s why this legislation we’ve introduced today is so important. We need to send a message to the administration that it can’t tamper with the rules of free speech just because it doesn’t like what’s being said. 

If enacted, this legislation would delay the implementation for these rules for a year.
This is the least we can do to protect free speech, Mr. President.

People from all across the political spectrum – from the ACLU to the U.S. Chamber of Commerce to the unions – have recognized just how egregious this proposed rule is.

It needs to be stopped. And, our bill would stop it.

I urge my colleagues to support this legislation. Indeed, everyone who supports the right of ordinary citizens to participate in the political process – whether they are Republican or Democrat – should support this bill.

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