Free Speech Groups Hail First Amendment Wins in Congressional Deal

Tax and spending packages block IRS, SEC restrictions on political speech

December 16, 2015

First Amendment advocates are heaping praise on a tentative spending deal agreed to by congressional leaders this week, saying it heads off Obama administration attempts to restrict spending on political speech through administrative or executive action.

The "omnibus" spending bill, hammered out in negotiations between congressional leaders this week, would block proposals to restrict political speech by nonprofit groups and to force companies to disclose more information about their political spending.

It would also prevent the implementation of new taxes on contributions to charities and other tax-exempt groups, prevent the federal government from forcing political spending disclosure by federal contractors, and explicitly prohibit IRS employees from conducting business using private email accounts.

The provisions are tucked away in the 2,000-page spending bill and an accompanying package of tax break extensions released by congressional leadership on Tuesday evening. Congress has yet to vote on the legislation, and House Democrats are signaling some reticence regarding previsions to lift the U.S. crude oil export ban.

If the legislation passes, it will mark a major victory for political free speech advocates, according to Phil Kerpen, president of the group American Commitment, which has organized grassroots campaigns to prevent federal restrictions on free speech by nonprofit groups.

"The‎ deal is phenomenal on First Amendment issues," Kerpen said in an email. "Nobody got everything they wanted on economic policy in this deal, but these First Amendment victories will allow advocates to keep fighting without the government limiting political speech."

Chief among those victories is language preventing the IRS from implementing new rules on how 501(c)(4) nonprofit groups can spend money. The agency withdrew regulations last year in the face of public opposition, but said it planned to reintroduce them in 2016.

The bulk of IRS reforms are contained in an accompanying tax package that incorporated language in a bill introduced by Rep. Peter Roskam (R., Ill.) earlier this year.

Designed to combat what Roskam has described as the politicization of the IRS’s treatment of tax-exempt groups, the language would provide such groups with additional information and avenues for recourse as they face IRS examinations.

One provision, which would prohibit IRS employees from conducting government business using private email addresses, appears to address the actions of former IRS official Lois Lerner.

The former head of the agency’s tax-exempt division, Lerner used at least two private email addresses while handling tax exemption applications that, investigations later revealed, disproportionately resulted in delays and denials for conservative and "tea party" groups.

David Keating, president of the Center for Competitive Politics, joked that the provision could be dubbed "the Lois Lerner Memorial Act of 2015."

"I think the investigators were really frustrated that they didn’t get [Lerner’s] emails," Keating said in an interview. "It also raises security issues. The tax laws have a lot of provisions guaranteeing privacy and confidentiality of tax information. If IRS employees are using their Hotmail accounts or something, that’s not exactly secure."

Additionally, the omnibus would also bar forced political spending disclosure efforts by way of executive or administrative action.

One of those provisions targets a proposed White House executive action to require all federal contractors to disclose contributions to nonprofit advocacy groups. Language in the omnibus bars funding for efforts to condition federal contracts on that disclosure.

"Such an order would be bad for free speech and bad for taxpayers," Keating said of the regulations. "It would allow an administration to readily compile a friends and enemies list, which is bad government policy.

"It’s also bad for taxpayers, as contract bids would rise due to the new paperwork burdens involved in compiling such information," he added. "Fewer bidders would also be likely."

Another omnibus provision targets disclosure efforts at the Securities and Exchange Commission. It prohibits the SEC from imposing regulations on publicly traded companies that would require them to disclosure more information about their political spending.

"The effort to pass such a rule is aimed at muzzling trade groups," according to Keating, whose group generally favors looser federal regulations on groups that engage in the political process.

"Corporate support for trade groups should be encouraged, not discouraged," Keating said in an email. "Also, the SEC has many more important rules to write to implement Dodd-Frank."

Most of the free speech-related provisions in the omnibus and tax extender package are temporary, but a measure preventing donations to nonprofit groups from being subject to the federal "gift tax" would be permanent if passed.

That language received broad support from groups across the political spectrum, including American Commitment, CCP, the American Civil Liberties Union, and the Human Rights Campaign.

"I think that’s very important," Keating said of the gift tax ban. "We just have to keep in mind that [the rest of the reforms] are only for this fiscal year."

Published under: Congress , IRS , Taxes