President Looks to Diminsh Tax-Exempt Organizations’ Activity

President Obama is seeking to restrain political activity of nonprofits, including corporations, but perhaps not unions.  Nicholas Confessore has the story in the New York Times.

New rules proposed by the Treasury Department and the Internal Revenue Service would clarify both how the I.R.S. defines political activity and how much nonprofits are allowed to spend on it. The proposal covers not just television advertising, but bread-and-butter political work like candidate forums and get-out-the-vote drives.

Long demanded by government watchdogs and Democrats who say the flow of money through tax-exempt groups is corrupting the political system, the changes would be the first wholesale shift in a generation in the regulations governing political activity by nonprofits.

The move follows years of legal and regulatory shifts, including the Supreme Court’s Citizens United ruling in 2010, that have steadily loosened the rules governing political spending, particularly by those with the biggest bank accounts: corporations, unions and wealthy individuals.

But the proposal also thrusts the I.R.S. into what is sure to be a polarizing regulatory battle, with some Republicans immediately criticizing the proposal on Tuesday as an attack on free speech and a ploy to undermine congressional investigations into the agency’s handling of applications from Tea Party groups.

The new rules would not prohibit political activity by nonprofits.

But by seeking to establish clearer limits for campaign-related spending by groups claiming tax exemption, the I.R.S. proposal could have an enormous impact on some of the biggest groups, forcing them to either limit their election spending or register as openly political organizations, such as super PACs.

Nick Ryan, the founder of the American Future Fund, which spent at least $25 million on political advertising last year, said, “Unfortunately, it appears that the same bureaucrats that attempted to suppress the speech of conservative groups in recent years has now put together new rules that apply to (c)4 groups but do not apply to liberal groups like labor unions.â€

“I wish I could say I am surprised,†Mr. Ryan added, “but I am not.†The final rules are unlikely to be issued until after the 2014 election, after a public comment period.