Democracy Campaign Director Dan Smith’s Statement on Today’s Senate Hearing on IRS Political Activity Rulemaking

Media Contacts
Dan Smith


“While some members of the Senate Judiciary Committee would scrap the IRS effort to address the growing problem of dark money flowing to election campaigns via ‘social welfare’ organizations, U.S. PIRG stands with a wide variety of nonprofits to renew its call for action on this important issue.

“In the wake of the Supreme Court’s Citizens United decision, the rules governing nonprofits’ participation in political campaigns are more important than ever.  With the door opened for nonprofits to spend directly on elections, we have seen political operatives organize new nonprofits to take advantage of the tax code and flood recent elections with a wave of secret money whose source is impossible to track. 

“The IRS grants nonprofit status only to organizations that primarily serve a social-welfare purpose. The IRS also clearly states that electoral intervention is not a social-welfare service. But the IRS has never established a rule to clarify what it means by “primary purpose,” and under its watch, dark money nonprofits have spent significant amounts on electoral campaigns, with the benefit to civil society being questionable at best.

“We hope the IRS will continue its important work to prevent abuse of the tax-exempt system by political operatives, while making improvements in the next round of drafting to encourage appropriate public engagement by nonprofits.”