The Obama Administration Moves to Silence 501(c)(4) Organizations

by John Hinderaker in Campaign finance regulation, IRS, Obama Administration Scandals


The “IRS scandal” consists of the fact that the agency targeted Tea Party groups and other identifiably conservative organizations for special scrutiny, denying them tax-exempt 501(c)(3) and (c)(4) status in advance of the 2012 election. The tactic worked, as many conservative groups were effectively taken out of action during that election cycle. In the aftermath of the scandal, the Obama administration is moving to institutionalize its discrimination against conservative groups in the form of new IRS regulations defining the political activity in which 501(c)(4) organizations can participate.
The proposed regulations are here. A key provision is that a 501(c)(4) organization cannot engage in any activity that mentions a candidate for office or a political party within 60 days of a general election. The regulation is facially neutral as between conservative and liberal groups, but its effect will fall overwhelmingly on conservative organizations, as NPR points out:

The new U.S. Treasury/Internal Revenue Service rules aimed at clarifying what constitutes political activity for tax-exempt “social welfare” organizations are likely to give more heartburn to conservative groups than their liberal counterparts.
In 2012, conservatives pumped nearly eight times the money through their 501 (c) groups than liberals did, according to the Center for Responsive Politics’ OpenSecrets.org website. …
CRP reported that conservatives spent $265.2 million through 501 (c) groups compared to $34.7 spent by liberal groups during the 2012 cycle.
NPR News’ Peter Overby, who covers campaign finance issues, provided us with an even more refined breakdown since the CRP data is for all groups in the 501 c category.
Peter reports that of the 28 social-welfare organizations that are known as 501 (c) (4) groups and spent at least $1 million in the 2012 election cycle, 20 were conservative. They spent a total $204 million.
Liberals made up seven of the $1 million-plus groups. Combined they spent $33 million.

So for the Obama administration, it’s an easy calculation: 501(c)(4) groups are conservative by a margin of more than six to one, so let’s just knock them all out of action. Doing so will have no impact on the Democrats’ major funding source, the unions, since they are 501(c)(5) organizations. A reader who is extraordinarily knowledgeable on this topic writes:

This to me explains why the IRS has proposed these new regs that will essentially sideline/limit/eliminate c4 activity in the 2014 midterms. The Democrats don’t rely upon c4s and the c4s that support them aren’t as successful as the conservative/free market c4s. The Democrats rely on the unions (which are 501c5 organizations) to fund their activities. Therefore, the Administration and the IRS targeted these proposed c4 regs to take their most successful opponents off the field.
Given the Administration’s fixation/obsession with conservative/free market c4s since the 2010 midterms which led to the 2012 targeting overwhelmingly of conservative/free market c3s and c4s that delayed or forbade many of these groups from participating in the 2012 cycle, the proposed new regulations are the ultimate power play by the Administration. The proposed regulations will codify the underground illegal targeting of last cycle. There is little doubt the proposed regs violate the First Amendment (the fact pattern in the Citizens United case involved FEC regulations almost identical to the proposed regs as they sought to limit a c4′s issue communications 30 days within a primary and 60 days before a general election). Thus, it appears the Administration doesn’t care that their proposals are unconstitutional – they just will do whatever it takes to win.

As we have seen repeatedly during the Age of Obama, the Constitution is no barrier to executive action that aids the Democratic Party.
Republicans are trying to fight back. Representative David Camp, chairman of the House Ways and Means Committee, has introduced legislation to prevent the IRS from implementing new 501(c)(4) regulations for one year. Presumably Camp’s bill can get through the House, but it will never pass Harry Reid’s Democratic Senate. On Wednesday, the Oversight Subcommittee of Camp’s Ways and Means Committee will hold a hearing at which John Koskinen, newly appointed head of the IRS, will be the only witness. The committee’s notice of hearing describes the subject matter as follows:

The hearing will focus on a variety of issues facing the IRS, including the ongoing investigation into the IRS’s targeting of certain tax exempt organizations, proposed regulations regarding 501(c)(4) groups, IRS responsibilities under the ACA, the 501(c)(3) backlog, and improper payments.

Darrell Issa’s Committee on Oversight and Government Reform is getting into the act, too. Its Subcommittee on Economic Growth, Job Creation and Regulatory Affairs will hold a hearing on Thursday that “will examine the IRS’s inappropriate treatment of applicants for tax exempt status and the Administration’s response.” The subcommittee sent out a letter explaining the point of the hearing:

In the aftermath of the [Treasury Inspector General for Tax Administration's] audit being made public, President Obama called the targeting [of conservative groups] “inexcusable” and proclaimed that he would “not tolerate this kind of behavior in any agency, but especially in the IRS, given the power that it has and the reach that it has into all of our lives.”

More recently, of course, Obama has walked back that indignation, assuring us that there is “not even a smidgen” of corruption in the IRS’s treatment of groups opposed to the administration.

Attorney General Eric Holder likewise bemoaned the targeting as “outrageous and unacceptable,” and announced that the Department of Justice would immediately investigate the matter in coordination with the Federal Bureau of Investigation. After numerous attempts to obtain information about the investigation, the Committee learned that the Department assigned Barbara Bosserman to this investigation.
In recent weeks, the Committee has obtained information that raises serious concerns about the integrity of the Administration’s investigation. Current and former IRS employees who have been interviewed in the course of the Administration’s investigation have indicated that Ms. Bosserman is playing a leading role in the investigation. Publicly available Federal Election Commission records show that Ms. Bosserman has contributed almost $7,000 to President Obama’s political campaigns and the Democratic National Committee in recent years. Further, a recent report indicates that Ms. Bosserman participated in a bill-signing event at the White House in October 2009 as the guest of President Obama.

Barbara Bosserman, Obama donor

Ms. Bosserman has been invited to appear at the hearing. My guess is that she will decline the invitation. But Cleta Mitchell, who represents a number of clients who have been victimized by Obama’s IRS, will testify, as will Catherine Engelbrecht, Jay Sekulow and Becky Gerritson. You might remember Ms. Gerritson, founder of the Wetumpka TEA Party, who has testified before the Ways and Means Committee. She was a sensation:

I am not here as a serf or vassal. I am not begging my lords for mercy. I’m a born free American woman, wife, mother and citizen. And I’m telling my government that you’ve forgotten your place. It’s not your responsibility to look out for my well-being, and to monitor my speech. It’s not your right to assert an agenda. Your post, the post that you occupy, exists to preserve American liberty. You’ve sworn to perform that duty. And you have faltered.

Video at the link.
Among those who do political commentary for a living, it is a truism that no subject is more deadly than campaign finance. Historically, Americans have tuned out discussions of that topic. But it is important, because the Obama administration’s misuse of the IRS, and its current effort to institutionalize that misuse through new regulations that would put 501(c)(4)s effectively out of business, are part of the Democrats’ broad-based effort to silence conservatives. It is worth paying attention to what happens in this week’s House committee hearings.
And bear in mind that these hearings wouldn’t be held, and there would be no Congressional push-back against the Obama administration’s corruption, if Republicans didn’t control the House. That control can’t be taken for granted. The Democrats are raising more money than the Republicans, and they are targeting many good Republican conservatives for defeat. If you want to stand up against the Obama administration’s unconstitutional usurpations, contribute to the National Republican Congressional Committee and to your own Congressman, if he or she is a Republican; or else to your Republican challenger or to worthy Republican candidates around the country, of whom there are a great many. The future of the Republic may well be at stake.


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