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Patricia O'Connell
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Jan Baran Discusses IRS Proposal on Tax-Exempt Groups’ Political Activity

The Wall Street Journal, Bloomberg News
December 2, 2013

Jan Witold Baran, co-chair of Wiley Rein’s Election Law & Government Ethics Practice, spoke with several media outlets last week about the Internal Revenue Service’s (IRS) proposal to place new limits on tax-exempt organizations’ political activities.  He was quoted by The Wall Street Journal and Bloomberg News on November 27, and in a November 29 article published by Communications Daily and Washington Internet Daily.

The proposed rules would cover tax-exempt groups designated as “social welfare” organizations under Section 501(c)(4) of the Internal Revenue Code.  While a group is ineligible for tax-exempt status if political campaigning is its primary activity, existing IRS rules are unclear on how much campaigning 501(c)(4) groups can do and what constitutes political activity, The Wall Street Journal reported.

The IRS currently uses a “facts and circumstances” test to determine whether an organization’s activities are primarily political.  Those types of assessments helped lead to allegations this year that conservative groups seeking 501(c)(4) status had been targeted for IRS scrutiny, according to the Journal article.

“The old ‘facts and circumstances’ rule is vague, capricious, and unenforceable,” Mr. Baran told The Journal.  “Clearer definitions of what constitutes political participation are sorely needed.”

But some of the IRS’s proposed descriptions of “candidate-related political activity” are “potentially overbroad,” said Mr. Baran, who previously served as general counsel to George H.W. Bush’s presidential campaign and the Republican National Committee.