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By Eliza Newlin Carney, CQ-Roll Call (TNS)

WASHINGTON — Both Republicans on Capitol Hill and the Obama administration have brought fresh artillery to their war over the IRS and its policing of politically active tax-exempt groups.

GOP leaders are taking advantage of their new Senate majority and expanded House ranks to step up ongoing probes into IRS targeting of 501(c)4 social welfare groups, including Tea Party organizations. Republicans in both chambers have also introduced legislation that would block the IRS from issuing any new regulations to constrain political activity by tax-exempt groups until early 2017.

The Stop Targeting Political Beliefs by the IRS Act would “halt further action on the IRS’ proposed targeting regulations until the Justice Department and congressional investigating into the IRS’ previous targeting are complete,” Senator Pat Roberts (R-KS) said when introducing the bill last month with Senator Jeff Flake (R-AZ). An identical House bill was introduced by Reps. Paul D. Ryan (R-WI) and Peter Roskam (R-IL).

President Barack Obama asked for an 18 percent IRS funding boost in his recent budget request. Obama proposes $12.9 billion for the agency in fiscal 2016, up from the $10.9 billion in fiscal 2015. Agency officials have warned that budget cuts and growing workloads are damaging IRS operations and will downgrade taxpayer service during the coming filing season.

The administration’s budget also includes little-noticed language that would require tax-exempt groups to file Form 990s electronically. The Form 990 includes no information on an organization’s donors, but it does disclose the names of officers and information on salaries, expenditures and grants that can shed light on politically active tax-exempt groups.

Undisclosed political spending on both sides of the aisle has shot up dramatically since the Supreme Court’s Citizens United v. Federal Election Commission ruling in 2010. At a recent gathering of donors allied with the billionaire industrialists Charles and David Koch, conservative organizers announced plans to spend an astonishing $889 million in advance of the 2016 presidential election.

The administration’s e-filing proposal “is a common sense fix to a needlessly complicated system,” according to Robert Maguire, political nonprofits investigator for the Center for Responsive Politics. The center has logged countless hours chasing down Form 990s, which cannot be searched electronically at the IRS, from often uncooperative tax-free groups.

The plan probably won’t win much support from Republicans angry with the IRS. At a recent Senate Finance Committee hearing, Chairman Orrin G. Hatch of Utah and his Republican colleagues ran through their litany of complaints. These include extravagant IRS conferences, bonuses for tax-delinquent employees, salaries for workers engaged in labor union work, the agency’s implementation of the Affordable Care Act and Earned Income Tax Credit fraud.

Few IRS problems have incensed Republicans more, however, than the federal Inspector General’s revelation in 2013 that the IRS had improperly targeted Tea Party and other groups seeking tax exemption. Liberal groups were targeted, too, but Republicans say the IRS intrusions and delays disproportionately hurt conservatives.

The IRS tried to fix this problem by drafting new regulations for how it would define political activity by tax-exempt groups. But these were roundly assailed as overbroad and chilling to free speech on both sides of the aisle, and generated a record 160,000 comments. The IRS withdrew that plan and is now back to the drawing board, but Hatch urged IRS Commissioner John Koskinen at the recent Finance Committee hearing not to reissue draft rules at all.

“I think this would be a mistake, and I hope you don’t go down that path of trying to limit political speech,” Hatch told Koskinen. “That would only further entangle your agency in needless political debate and controversy.”

Koskinen assured Hatch the targeting mistakes “should never have been made, and they should not be made again.” But he also pointed out that the Inspector General’s report specifically directed the IRS to clear up its imprecise regulations governing election activity by tax-exempt groups. These rely on a hazy “facts and circumstances” standard to define when advocacy groups step over the line from social welfare into politics.

The Inspector General recommended the IRS “try to clarify the standard that’s in the regulations now so that people … externally and internally would have a better idea what’s permissible, what counts and what doesn’t count,” Koskinen explained.

A half-dozen ongoing investigations will no doubt shed fresh light this year on what went wrong at the IRS. But the agency got in trouble partly because its employees were stretched thin, and were struggling to follow ambiguous rules that even they did not understand. Blocking the IRS from clarifying its rules and curtailing its budget risk making those problems worse, not better.

As Senate Finance Committee Democrat Tom Carper, of Delaware, noted at the recent hearing, “It is clear that if we continue to underfund this critical agency, while asking it to increase its workload, we’re simply setting the IRS up to fail.”

Photo via Wikimedia Commons

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