IRS Will not Modify 501(c)(4) Regulations

IRS headquarters in Washington, D.C. / AP

The Internal Revenue Service announced on Thursday that it would scrap a proposed rule modifying agency regulations on 501(c)(4) "social welfare" groups in the face of an onslaught of public opposition to the rule.

IRS said it would revisit the regulations in the future, though it declined to specify when, Bloomberg BusinessWeek reported on Thursday.

The regulations were introduced in the wake of a scandal over IRS officials who singled out tea party groups for additional scrutiny in their applications for (c)(4) status.

After the IRS released the new rules, groups across the political spectrum objected with more than 150,000 comments, calling them too broad and an attack on free speech. Opponents included the American Civil Liberties Union and the American Family Association.

Republicans called on the IRS and the Treasury Department to start over. Until today, the IRS had said it was planning a public hearing in the next few months.

"It is likely that we will make some changes to the proposed regulation in light of the comments we have received," the IRS said in a statement today. "Given the diversity of views expressed and the volume of substantive input, we have concluded that it would be more efficient and useful to hold a public hearing after we publish the revised proposed regulation."

Sen. Orrin Hatch (R., Utah), the ranking Republican on the Senate Finance Committee, called the move "a long overdue step in the right direction."

The IRS is right to abandon its previously proposed rules governing 501(c)(4) organizations that threatened free speech and the rights of all American citizens to participate in the democratic process.  I am glad the IRS heard the concerns of hundreds of thousands of Americans, and I will continue to advocate for an IRS that is independent and nonpartisan.