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Objections IRS Rules on Free Speech

Objections IRS Rules on Free Speech

Page 1: Objections IRS Rules on Free Speech

Category:IRS Scandal

Number of Pages:31

Date Created:February 26, 2014

Date Uploaded to the Library:February 27, 2014

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ALAN DYE  (202) 785-9500  CHARLES CHAMBERLAIN (1917-2002)  
JOHN STROUT ANDREW DYE  February 27, 2014  

Submitted via Certified Mail 
Ms. Amy Giuliano CC:PA:LPD:PR (REG-134417-13) Room 5205 Internal Revenue Service 
P.O. Box 7604, Ben Franklin Station Washington, D.C. 20044 
RE: Comments REG-134417-13, Guidance for Tax-Exempt Social Welfare 
Organizations Candidate-Related Political Activities, Fed. Reg. 71535 
(REG-134417-13) (Nov. 29, 2013) 
Dear Ms. Giuliano: behalf Judicial Watch, 501(c)(3) educational organization, submit the following comments concerning the referenced Notice Proposed Rulemaking (the "NPRM"). 

Judicial Watch non-partisan educational foundation that promotes transparency, accountability, and integrity government, politics, and the law. Judicial Watch advocates high standards ethics and morality our nation's public life and seeks ensure that political and judicial officials not abuse the powers entrusted them the American people. For this reason, very concerned about both the opaque process which the proposed regulations were developed, well the context-the apparent abuse authority and potentially unconstitutional and criminal conduct IRS employees with respect the review applications for exemption under 501(c)(4) filed hundreds organizations, the vast majority which were ''tea party" other organizations supporting conservative policy principles and opposing many the initiatives promoted President Obama and his liberal allies-out which the proposed regulations apparently arose. The secret manner which these proposed regulations were developed, and the substantive provisions that would overturn more than years settled precedent regarding what "intervention political campaign," only increase the suspicion that the IRS not attempting administer the law is, but attempting arrogate itself the making the law, function belonging solely Congress, and not the IRS. 

WEBS CHAMBERLAIN BEAN, LLP Comments 501(c)(4) NPRM February 27, 2014 Page2 
Because, discussed below, the Service does not have the authority adopt the rules that have been proposed, respectfully request that the Department Treasury withdraw the proposed rules. the Department and the Internal Revenue Service continue believe that new different rules are needed, then the Service should create Advisory Committee exempt organization political activities, consisting individuals representing organizations exempt under 501(c)(3), (4), (5), and (6), consider the issues and develop recommendations for regulations that would more clearly define and illustrate intervention political campaign. course, light the Service's lack authority, the Service and the Advisory Committee may also recommend appropriate amendments the Internal Revenue Code. addition, because IRS lack authority, and because the serious problems within the proposed regulations, request that the Service hold public hearing receive both oral and written testimony, and request the opportunity testify the hearing. 
Current law 
Section 501(c)(4)(A) the Internal Revenue Code provides for tax-exempt status for ]ivic leagues organizations not organized for profit but operated exclusively for the promotion social welfare, local associations employees, the membership which limited the employees designated person persons particular municipality, and the net earnings which are devoted exclusively charitable, educational, recreational purposes." 
The exemption for the precursor social welfare organizations first appears the Revenue Act 1913. The legislative history contains reason explanation for this inclusion, but the general belief that the U.S. Chamber Commerce pushed for enactment exemptions for both civic and commercial nonprofit organizations. Laura Chisolm, Exempt Organization Advocacy: Matching the Rules the Rationales, Indiana Law Journal 201, 290 charitable, educational, religious, but whose activities benefit the general public. 
Treasury regulations published 19601 state that Treas. Reg. 1.50l(c)(3)-l{t) indicates that the presumably "final" regulations under 50l(c)(3) published T.D. 6500 November 26, 1960, Fed. Reg. 11737, are effective with respect taxable years beginning after July 26, 1959, which appears the date the regulations were published proposed form. The regulations under 501(cX4) were also published T.D. 6500, but not include any similar language. 

WEBSTER, CHAMBERLAIN BEAN, LLP Comments 501(c)(4) NPRM February 27, 2014 Page organization operated exclusively for the promotion social welfare primarily 
engaged promoting some way the common good and general welfare the people the charitable organization falls within the definition charitable set forth paragraph (d)(2) l.50l(c)(3)-1 and not action organization set forth paragraph (c)(3) l.501(c)(3)-l. 
community social welfare organization will qualify for
"The promotion social welfare does not include direct indirect participation intervention political campaigns behalf opposition any candidate for public office." 
Treas. Reg. l.501(c)(4)-l(a)(2)(i) and (ii). 
Since 1960, the Internal Revenue Service has consistently used the rules developed under 50l(c)(3) when considering whether 501(c)(4) engaged intervention political campaign. See, e.g., Rev. Rul. 2004-6 (discussing factors considered when determining 
whether 501(c)(4), (5), (6) engaged lobbying intervening 

Proposed regulations 
After years, and with notice the public that project revise the regulations was even underway, the Service now proposes revise l.501(c)(4)-l(a)(2)(ii) replace the longstanding "participation intervention political campaigns behalf opposition any candidate for public office" standard with "direct indirect candidate-related political activity" ("CRP A"), further defined new sections the regulations. The new definition would apply only activities conducted 501(c)(4) EOs, and the IRS has merely requested comments whether the new definition should subsequently applied EOs described 50l(c)(3), (5), and (6). statutory authorization for the proposed interpretive regulations, the Service relies USC 7805(a), which permits the Service "prescribe all needful rules and regulations for the enforcement this title, including all rules and regulations may necessary reason any alteration law relation internal revenue." However, the Service's rationale for proposing the new regulations has nothing with any "alteration law relation internal revenue," but rests solely alleged confusion among both IRS employees and the public: 

Recently, increased attention has been focused potential 
political campaign intervention 
section 501(c)(4) organizations. recent IRS report relating IRS review applications for 
tax-exempt status states that "[o]ne the significant challenges with the 501(c)(4) [application] 
review process has been the lack clear and concise definition 'political campaign 
intervention."' Internal Revenue Service, "Charting Path Forward the IRS: Initial Assessment 

Comments 50l(c)(4) NPRM 
February 27, 2014 

and Plan Action" (June 24, 2013). addition, "[t]he distinction between campaign 

and social welfare activity, and the the organization's social welfare activities relative its total activities, have created considerable confusion for both the public and the IRS making appropriate section 50l(cX4) determinations." Id. 28. The Treasury Department and the IRS recognize that both the public and the IRS would benefit from clearer definitions these concepts. 
Preamble, Fed. Reg. 71535, 71536 (Nov. 29, 2013). 

However, the IRS' 50-year history consistent interpretation and application the political activity rules under 50l(c)(3) and 50l(c)(4) belie the need for "clear and concise definition political campaign intervention," and the proposed regulations expressly not address "the measurement the organization's social welfare activities relative its total activities." Instead, the merely IRS requests comments from the public that issue. 
Moreover, the extent IRS employees are confused "in making appropriate section 50l(c)(4) determinations," that can blamed only the IRS' failure train its employees the principles applied determine when intervening political campaign, and that determinations must made the basis the facts presented the application, and cannot blamed any defect the current regulations. And despite the quoted statement the preamble, there little evidence "public" confusion regarding what constitutes intervention political campaign. Even there is, the proper remedy for the IRS provide additional guidance under the current regulations, and undertake reasonable efforts educate 50l(c)(4) EOs and their advisors, not adopt plainly unconstitutional regulation that arbitrarily reverses years administrative and judicial precedent. 
Finally, there confusion either the IRS among the public, most likely exists with respect the one issue the IRS failed address 

proposed regulations--how 
measure organization's primary activity. 
The IRS does not have the authority adopt the proposed regulations. the heart sound tax administration interpretation the Code. the responsibility each person the IRS charged with the duty interpreting the law try find the proper interpretation the statutory provision and not adopt strained construction the belief that she "protecting the revenue." The revenue properly protected only when ascertain and apply the proper interpretation the statute. 
Internal Revenue Manual 32.1.1 (2). 

Comments 50l(c)(4) NPRM 
February 27, 2014 shown below, these proposed regulations are not ''the proper interpretation the statute." The Service does not have authority issue these regulations because its interpretation 501(c)(4) not reasonable. See Chevron US.A. Inc. NRDC, 467 U.S. 837 (1984). 
The history 50l(c)(4) and its regulations clearly demonstrate that Congress did not intend such overly broad and 501(c)(4) was enacted Organizations, 1-2 (available legislative comment the statute. not amended them since. interpretation has remained consistent for over years and the current regulations which deference must given, not the proposed regulations. See EEOC Associated Dry Goods Corp., 449 U.S. 590, 600 (1981) (special deference accorded agency's contemporaneous interpretation its founding statutes, especially when the interpretation has remained effect for long period time and Congress has never expressed its disapproval.); see also, Trafficante Metropolitan Life Ins. Co., 409 U.S. 205, 210 (1972); 

Commissioner Social Security Walton, 535 U.S. 212, 219 (2002) (finding the agency's regulation reflected the agency's "own longstanding interpretation.") 
Congress amended 501(c)(4) 1924, re-enacted without change 1986, and amended again 1995. But Congress did not amend the statute disagree with the Service's interpretations that certain activities, e.g., nonpartisan voter education and registration drives (proposed characterized CRPA) promote social welfare. See Associated Dry Goods, 449 U.S. 600 (noting that Congress' silence suggests its consent the Commission's practice). The Service itself has recognized that long-standing regulations left unchanged Congress can "have the effect law." 1988 CPE Text, New Developments !RC 501 (c)(5) and !RC 501(c)(6) ("These regulations have retained the same form since 1928 and, similar the regulations promulgated under IRC 501(c)(5), can presumed have the effect law virtue successive reenactments the statutory provision.") 
Congress has also encouraged the ability nonprofit organizations engage some the activities now defined CRPA. For example, the National Voter Registration Act ("NVRA") one example how these poorly drafted regulations fail take into account decades reliance current regulations and IRS guidance. See FDA Brown Williamson Tobacco Corp., 529 U.S. 120, 133 (2000) (''the meaning one statute may affected other Acts, particularly where Congress has spoken subsequently and more specifically the topic hand."). Under the NVRA (also popularly known the "Motor Voter law"), States may designate "nongovernmental offices," including non-profit organizations, ''voter-registration agencies." This conflict further demonstrates that the proposed regulations are unreasonable and therefore not entitled deference. 

Comments 50l(c)(4) NPRM 
February 27, 2014 

The Federal Election Campaign Act buttresses the argument that the proposed rules are not reasonable and not consistent with Congressional intent. Congress explicitly excluded nonpartisan registration and get-out-the-vote campaigns from the definitions contribution expenditure. U.S.C. 441b(b)(2)(B). Congress also excluded from the definitions contribution and expenditure the establishment, administration, and solicitation contributions separate segregated fund corporation. U.S.C. 441b(b)(2)(C). 
The Service has consistently treated such expenditures 50l(c)(4) organizations not having been spent attempts influence elections. Treas. Reg. l.527-6(b)(2) and (3), the Service "reserved" the treatment certain indirect expenses and expenditures corporation (including 501(c)(4) organization) with connected political action committee that are permissible under the Federal Election Campaign Act ("FECA"). The IRS has stated that until final regulations are issued the treatment these expenditures, these items are not treated exempt function expenditures when made 50l(c) organizations. However, treating administrative expenses incurred 50l(c)(4) for its connected PAC CRPA, the proposed regulations are inconsistent with 1.527-6(b)(2) and (3). discussed more fully below, the proposed regulations' adaptation, Prop. Treas. Reg. l.50l(c)(4)-l(a)(2)(iii)(A)(2), the definition "electioneering communication" USC 434(f)(3)(A), and its incorporation expenditures that are reported the Federal Election Commission Prop. Treas. Reg. 1.50l(c)(4)-l(a)(2)(iii)(A)(3), violates Congress' prohibition the use that definition interpreting and 
administering the Internal Revenue Code. USC 434(t)(7). 
The proposed regulations are also odds with judicial precedent. For example, the Supreme Court held Regan Taxation with Representation Washington, 461 U.S. 540 (1983), that lobbying 501(c)(3) organizations could limited because 501(c)(4) organizations were permitted lobby unlimited amounts. The proposed regulations place substantial limits 501(c)(4) organization's ability engage direct and grassroots lobbying (as more fully discussed below). 
While the IRS may refine its interpretation statute administers, the interpretation must reasonable and consistent with 50l(c)(4), the general statutory framework, the regulatory scheme, and judicial decisions. the years since the current regulations were adopted, the Service has never taken the position that non-partisan voter registration, get-out-thevote, and other issue advocacy are not social welfare activity. Instead, revenue rulings and other guidance, the IRS has explicitly stated that such activities are charitable (and therefore promote social welfare, Treas. Reg. l.501(c)(4)-l(a)(2)), and may undertaken charities (and even private foundations, with respect certain nonpartisan voter registration drives), which are prohibited from intervening political campaign. Further, the Service's longstanding interpretation consistent with other statutes and regulations (e.g., FECA, NVRA, and 

WEBSTER, CHAMBERLAIN BEAN, LLP Comments 50l(c)(4) NPRM February 27, 2014 Page? 

l.527-6(b)(2) and (3)) and judicial decisions. Adopting the proposed regulations would create inconsistency the application the law; would, ironically, create more confusion about the rules that apply 50l(c)(4) and 501(c)(3) EOs; and would treat (discouraged) political activity programs that Congress has encouraged them undertake and that the Supreme Court has said are important element the First Amendment rights affiliated 50l(c)(3) EOs. 

Finally, given the Service's targeting conservative non-profits, the Service cannot claim authority overturn years consistent interpretation with regulations that target these very same groups the middle election year. FDA Brown Williamson Tobacco Corp., 529 U.S. 120, 160 (2000) ("we are confident that Congress could not have intended delegate decision such economic and political significance agency cryptic fashion"). This '"fox-in-the-henhouse syndrome avoided taking seriously, and 
applying rigorously, all cases, statutory limits agencies' authority."' Loving Internal Revenue Service, No. 13-5061 (D.C. Cir. Feb. 11, 2014)(slip op. 17) (quoting City Arlington FCC, 133 Ct. 1863, 1874 (2013)). 

Although the Service has alleged that its true motivation behind promulgating these rules not shut down the speech conservative  501(c)(4) organizations the middle election year, the timing, overbreadth, and under-inclusiveness suggest otherwise. Further, this would not the first time that the impetus for tax statute regulation was shut down the speech opponents. See Judith Kindell and John Francis Reilly, 2002 CPE Text, Election Year Issues 448-451 and n.46 (discussing two other instances Senators amending the tax code punish opponents). Members Congress have for years been pressuring the IRS investigate and take action against 50l(c)(4) EOs, particularly conservative organizations. 
See e.g., 8d12171670f9; publishing the proposed regulations, the Service has done nothing regain the public's trust. Only addressing the deficiencies the proposed regulations can the Service begin demonstrate that will not abuse its authority targeting the speech opponents the Administration power. 
The First Amendment requires substantial revisions the proposed regulations. 
The fact that the proposed regulations are published the Internal Revenue Service does not remove them from the protections the First Amendment. "Even the taxing power enables Congress impose tax not obtaining health insurance, any tax must still comply with other requirements the Constitution." National Federation Independent Business Sebelius, No. 11-393, slip op. (U.S. June 28, 2012), available 

Comments 501(c)(4) NPRM 
February 27, 2014 

The proposed 

must rewritten exclude constitutionally protected speech, e.g., issue advocacy and other non-candidate related communications. the Buckley Court noted: 
The distinction between discussion issues and candidates and advocacy election defeat candidates may often dissolve practical operation. Candidates, especially incumbents, are 
intimately tied public issues 
legislative proposals and government actions. Not only candidates campaign the basis their positions various public issues, but campaigns 

issues public interest. 
Buckley Valeo, 424 U.S. 44-45 (1976). The right speak openly and without constraint public matters the quintessential right secured the First Amendment right free speech. "'Public discussion about the qualifications those who hold positions public trust presents the strongest possible case for applications the safeguards afforded the First Amendment."' Matson Dvorak, Cal. App. 4th 539, 548 (1995) (quoting Aisenson American Broadcasting Co., 220 Cal. App. 146, 

(1990)). "[G]overnment officials and candidates for such office have almost always been considered the paradigm case 'public figures' who should subjected the most thorough scrutiny." Kapellas Kofman, Cal. 20, (1990). This because "[t]he public possesses 'independent interest' the qualifications and performance its public officials." McCoy Hearst Corp., Cal. 835, 859 (1986) (emphasis added). Thus, "[h]aving survived election, public official must prepared accept the insults and invectives directed during the candidate's term office." Yorty Chandler, Cal. App. 467 (1970). 

Buckley and its progeny make clear that: the body speech that can constrained narrow, and the line must necessarily bright permit citizens distinguish between the protected and the regulated and prevent government from regulating protected speech. "Discussion issues cannot suppressed simply because the issues may also pertinent election. Where the First Amendment implicated, the tie goes the speaker, not the censor." Federal Election Commission Wisconsin Right Life, 551 U.S. 449, 474 (2007). The Service cannot disregard the protections required the First Amendment merely for the sake clarity and "clearer definitions." 
The strength our democracy depends upon the ability EOs speak. Alexis Tocqueville queries, "Is that just accident, there really some necessary connection between associations and equality." Tocqueville, Democracy America 514. Tocqueville finds that representative democracy dependent upon strong nonprofit sector, part, because its stabilizing influence: 
Feelings and ideas are renewed, the heart enlarged, and the understanding developed only the 
reciprocal action men one upon another. have shown how these influences are reduced 

Comments 501(c)(4) NPRM 
February 27, 2014 

democratic countries; they must therefore artificially created, and only associations can that. 
almost nothing 
Id. 515-16. concludes, 
Among laws controlling human societies there one more precise and clear, seems me, than 
all the others. men are remain civilized 

civilized, the art association must develop and improve among them the same speed equality conditions spreads. 
Id. 517. The proposed rules hinder the ability 501(c)(4) EOs fully contribute the debate and thereby foster our democratic system. Associational activity should encouraged, rather than prohibited, because protects citizens from overreaching the government. 
The proposed regulations must revised avoid inconsistencies the regulatory framework. practical matter, the proposed regulations must substantially revised avoid inconsistencies the regulatory framework. For example, although the definition "exempt function" under 527 different than the proposed CRPA, what the tax treatment organization that spends more than 50% its expenditures CRPA? 527 organization, even though less than half its expenditures are exempt function expenditures? 
Section 501(c)(4) EOs with connected PAC must decide how treat payments for their PAC solicitation and administrative expenses. Although the 527 regulations ''reserved" treatment these expenses, under the proposed rules those expenses would CRP for purposes 501(c)(4), even though they are not takeri into account for purposes 527(f). 
Section 501(c)(4) EOs with affiliated 50l(c)(3) EOs must determine whether the organizations can still share office space, staff, and resources the 501(c)(3) organization engages CRPA (e.g., nonpartisan voter registration). not hard imagine the confusion that affiliated 501(c)(3) and 501(c)(4) organizations will face they apply two different definitions the same activity. 

The over broad definition candidate will require some  501 organizations keep sets books (see discussion below). 
The proposed regulations will have chilling effect 50l(c)(3) organizations adopted, the proposed regulations are also likely have substantial chilling effect the conduct 501(c)(3) EOs activities that are protected the First Amendment. This effect has three causes. First, small EOs that cannot afford hire knowledgeable legal counsel 

Comments 501(c)(4) NPRM 
February 27, 2014 

will instinctively adopt more restrictive policies out fear inadvertently engaging activities that, even though permissible for 501(c)(3) EO, will, ifthe proposed regulations are adopted, treated CRPA for 501(c)(4) EO. 
Second, even those 501(c)(3) EOs that rely knowledgeable counsel may receive advice act more cautiously, possibly out concern that confused IRS employee might mistakenly believe that 501(c)(3) EOs are bound the CRPA definitions relating political activity. There also the likelihood that the Service will begin interpret 501(c)(3) activities through the CRP lens. 
Third,  501(c)(3) EOs may refrain from participating coalitions involving 501(c)(4) EOs, and may find that donor support for such coalition activity any CRP dries up. 
The same concerns would also implicated the proposed definition CRPA were extended apply 501(c)(5) (c)(6) EOs. 
political activity" arbitrary and unreasonably broad; generally includes many activities that, conducted nonpartisan basis, would not treated intervention political campaign 50l(c)(3) organization; and reaches communications and events that even under the broadest possible standard, have nothing with election. The chart attached Appendix demonstrates how each the activities deemed "candidate-related political activity" ("CRPA") causes 50l(c)(4) organizations treated worse than organizations exempt under 501(c)(3), (5), (6). That is, many nonpartisan voter engagement issue advocacy activities deemed CRPA for 501(c)(4) are not considered intervention political campaign for 501(c)(3), (5), (6) organization. 	Any public communications within days before primary election days before general election that refer clearly identified candidate the election political party represented the general election. 
(1) The treatment such communications political activity violates the Federal Election Campaign Act. 
The Federal Election Campaign Act requires disclosure expenditures for certain "electioneering communications," USC 434(f), and defines electioneering communication: 
(i) The term "electioneering communication" means any broadcast, cable, satellite communication which

Comments 50l(c)(4) NPRM 
February 27, 2014 
refers clearly identified candidate for Federal office; 

(II) made within( aa) days before general, special, runoff election for the office sought the candidate; 

(bb) days before primary preference election, convention caucus political party that has authority nominate candidate, for the office sought the candidate; and 
(III) the case communication 

refers candidate for 

other than President Vice President, targeted the relevant electorate. USC 434(f)(3)(A). 
Section 434(f)(7) prohibits the use that definition for purposes administering the Internal Revenue Code: 
(7) Coordination with title 26. Nothing this subsection may construed establish, modify, otherwise affect the definition political activities electioneering activities (including the definition participating in, intervening in, influencing attempting influence political campaign behalf opposition any candidate for public office) for purposes 

26. the proposed regulations are adopted, the Internal Revenue Service would have violated 434(f)(7) adapting the definition electioneering communication 

434(f)(3)(A) and "establish, modify, otherwise affect the definition political 
electioneering activities ... for purposes title 26." 
(2) The treatment such communications political activity violates the First Amendment. 
The proposed rules include CRP any public communication within days before primary election days before general election that refers one more clearly identified candidates political party represented the general election. 

The proposed rules define "public communication" any communication (1) broadcast, cable satellite; (2) internet website; (3) newspaper, magazine other periodical; the form paid advertising; (5) that otherwise reaches, intended reach, more than 500 persons. "Communication" defined any communication whatever means, including written, printed, electronic, video oral communication. 
Although these definitions may seem similar the blackout periods contained the Bipartisan Campaign Reform Act ("BCRA"), they reach much more speech. The definitions contain none the limitations exceptions contained the FEC's regulations. The FEC limits 

WEBSTER, CHAMBERLAIN BEAN, LLP Comments 501(c)(4) NPRM February 27, 2014 Page 
the reach the blackout ban communications appearing broadcast, cable satellite. CFR 100.29(b). The FEC also includes requirement that the communication ''targeted" the relevant electorate. CFR  100.29(a)(3). Further, FEC regulations exempt communications that are news stories, commentaries, editorials, candidate debates forums. CFR 100.29(c)(2) and (3). 

The inclusion public communications, made within days primary election within days general election, and that refer clearly identified candidate that election-no matter how innocuously incidentally-will effectively prohibit many 501(c)(4) exempt organizations ("EOs') from engaging legislative advocacy during substantial parts years when federal state election occurs. Expanding the FEC definitions makes matters worse. 
With respect candidates for President, during, and even before, each quadrennial election year, the schedule party caucuses, primary elections, party conventions, and the general election such that 501(c)(4) EOs would effectively precluded from engaging any legislative advocacy that mentions--even neutral terms-the position either candidate, 

the incumbent, with respect pending proposed legislation, other actions the 

President Executive Branch agencies, even response judicial decisions. previously noted, "Discussion issues cannot suppressed simply because the issues may also pertinent election. Where the First Amendment implicated, the tie goes the speaker, not the censor." Federal Election Commission Wisconsin Right Life, 551 U.S. 449, 474 (2007). 
Even these restrictions were limited advocacy related issues important voters the election, both are radical restrictions the First Amendment rights 501(c)(4) EOs, and cannot squared with the demands the First Amendment. Regan Taxation with Representation Washington, 461 U.S. 540 (1983), the Supreme Court decided that Congress did not violate the First Amendment the equal protection component the Fifth Amendment permitting veterans' organizations engage substantial lobbying, while denying permission for the same activities 501(c)(3) EOs. However, because 501(c)(3) EOs not
have any other outlet for substantial speech about legislative matters,Justices Blackmun, Brennan, and Marshall conditioned 

concurrence with the Court's decision the ability 501(c)(4) EOs engage substantial legislative advocacy: also agree that the First Amendment does not require the Government subsidize protected 
activity, ante, 546, and that this principle controls disposition TWR's First Amendment 
claim. write separately make clear that view the result under the 

Amendment 50l(c)(3) not permitted establish "connected" 527 organization unless the organization's activities are limited attempting influence the nomination, confirmation, appointment government employees who are not elected officials. 

Comments 501(c)(4) NPRM February 27, 2014 Page 
depends entirely upon the Court's necessary assumption -which share -about the manner which the Internal Revenue Service administers 501. viewed isolation, the lobbying restriction contained 501(cX3) violates the principle, reaffirmed today, ante, 545, "that the government may not deny benefit person because exercises constitutional right." Section 501(cX3) does not merely deny subsidy for lobbying activities, see Cammarano United States, 358 U.S. 498 (1959); deprives otherwise eligible organization its tax-exempt status and its eligibility receive tax-deductible contributions for all its activities, whenever one those activities "substantial lobbying." Because lobbying protected the First Amendment, Eastern Railroad Presidents Conj Noerr Motor Freight, Inc., 365 U.S. 127, 137-138 (1961), 501(c)(3) therefore denies significant benefit organizations choosing exercise their constitutional rights. 
The constitutional defect that would inhere 50l(c)(3) alone avoided 501(c)(4). the Court notes, ante, 544, TWR may use its present 50l(c)(3) organization for its nonlobbying activities and may create 50l(cX4) affiliate pursue its charitable goals through lobbying. The 50l(c)(4) affiliate would not eligible receive tax-deductible contributions. 
Given this relationship between 50l(c)(3) and 50l(c)(4), the Court finds that Congress' purpose imposing the lobbying restriction was merely ensure that "no tax-deductible contributions are used pay for substantial lobbying." Ante, 544, see ante, 545. Consistent with that purpose, "[t]he IRS apparently requires only that the two groups separately incorporated and keep records adequate show that contributions are not used pay for lobbying." Ante, 545, long the IRS goes further than this, perhaps can safely say that "[t]he Code does not deny TWR the right receive deductible support its nonlobbying activity, nor does deny TWR any independent benefit account its intention lobby." Ante, 545. 501(c)(3) organization's right speak not infringed, because free make known its views legislation through its 501(c)(4) affiliate without losing tax benefits for its nonlobbying activities. 
Any significant restriction this channel communication, however, would negate the saving effect 50l(c)(4). must remembered that 501(c)(3) organizations retain their constitutional right speak and petition the Government. Should the IRS attempt limit the control 

organizations exercise over the lobbying their 501(c)(4) affiliates, the First Amendment problems would insurmountable. hardly one person's objection restriction his speech that another person, outside his control, may speak for him. Similarly, attempt prevent 501(c)(4) organizations from behalf their 

50l(c)(3) affiliates would perpetuate 501(c)(3) organizations' make known their 
views legislation without incurring the unconstitutional penalty. Such restrictions would extend far beyond Congress' mere refusal subsidize lobbying. See ante, 544-545, view, any such restriction would render the statutory scheme unconstitutional 

Comments 501(c)(4) NPRM 
February 27, 2014 

unconstitutionally the exercise First Amendment rights); cf. Harris 
Id., pages 551-554 (Blackmun, J., joined Brennan and Marshall, JJ, concurring). 

(3) The arbitrary treatment 501(c)(4) organizations violates the Fifth Amendment. 
The proposed regulations treat the same speech 501(c)(4) organizations differently than the speech 501(c)(3), 501(c)(5), and 501(c)(6) organizations. result, the proposed regulations violate the equal protection component the Due Process Clause the
Fifth Amendment because they burden the fundamental rights only 50l(c)(4) organizations.The Service may not treat the speech 501(c)(4) organizations differently from the same speech other 501(c) organizations solely the basis the identity the speaker criteria wholly unrelated the objective the regulation). See Reed Reed, 404 U.S. 71, 75-76 (1971). classification that implicates fundamental right, including the right free speech, must narrowly tailored serve compelling interest. See Plyler Doe, 457 U.S. 202, 21718 (1982) (classifications that impinge upon exercise fundamental right subject strict scrutiny); Regan Taxation With Representation Wash., 461 U.S. 540, 547 (1983) ("freedom speech" fundamental right for equal protection analysis). 
The Service has not provided any reason for treating the same speech differently based only upon the identity the speaker. non-partisan voter registration indeed CRPA, then 

make difference who engages the speech. The Supreme Court has repeatedly recognized that regulatory scheme not narrowly tailored under-inclusive. "Underinclusiveness raises serious doubts about whether the government fact pursuing the interest invokes, rather than disfavoring particular speaker viewpoint." Brown Entertainment Merchants Ass 
'n, 131 S.Ct. 2729, 2740 (2011). See also Rubin Coors Brewing Co., 514 U.S. 476, 489 (1995) (exemptions and inconsistencies labeling ban brought its purpose into question); City Cincinnati Discovery Network, Inc., 507 U.S. 410, 425 (1993) (ordinance banning some sidewalk news racks and not others was under-inclusive because the 

purported esthetic interest was not met allowing some eyesores remain). 
Nothing inherent 501(c)(4) EOs warrants treating their speech less favorably than that other 501(c) EOs engaged the same speech. nonpartisan voter registration and get-outthe-vote drives are truly candidate-related, then the proposed regulations are under-inclusive for The Due Process Clause the Fifth Amendment does not include express equal protection guarantee. However, Bolling Sharpe, 347 U.S. 497, 499-500 (1954), the Court held that the 

Amendment's due process clause implicitly included equal protection element identical that the Fourteenth Amendment. 

WEBSTER, CHAMBERLAIN BEAN, LLP Comments 501(c)(4) NPRM February 27, 2014 Page 
failing extend the definition all 501(c) organizations. "Prohibited, too, are restrictions distinguishing among different speakers, allowing speech some but not others. See First Nat. Bank Boston Bellotti, 435 U.S. 765, 784 (1978). instruments censor, these categories are interrelated: Speech restrictions based the identity the speaker are all too often simply means control content." Citizens United FEC, 588 U.S. 310, slip op. (2010). "[T]he statute both underinclusive and overinclusive. the first, Congress had been seeking protect dissenting shareholders, would not have banned corporate speech only certain media within days before election. dissenting shareholder's interests would implicated speech any media any time." Id., 46. 
The Service cannot advance its stated interest providing clarity creating arbitrary and irrational regulatory scheme that burdens only 50l(c)(4) organizations engaging activities defined CRPA.4 See Rubin, 514 U.S. 488 ("The failure prohibit the disclosure alcohol content advertising [but not labels containers] makes rational sense the Government's true aim suppress strength wars."). The Service's under-inclusive regulation belies any interest providing clarity, and further evidence its continued efforts target conservative 501(c)(4) organizations. the IRS really wanted address the uncertainty faced 501(c)(4) organizations, would provide long-requested guidance about how measure whether political activity for the "primary" activity social welfare organization. the absence this threshold, there can clarity certainty. 
(4) The arbitrary treatment such communications CRP reaches many communications that reasonable person could conclude have anything with subsequent election. 
The proposed definition would arbitrarily apply even communications others maintained EO's website that may years old and address topics that have nothing with any election. The proposed definition also reaches far beyond candidate-related activity education, news gathering, government accountability efforts, and grassroots lobbying. 
For example, assume that Xis running for President 2016. When was Governor State 2011, the Department Education was sued for allegedly misallocating state grants local education agencies. secondary issue the case was whether was duly appointed Secretary Education, and therefore authorized take the action question. The opinion the State Supreme Court, issued 2013, mentions because, Governor, 2010, appointed the Secretary Education for State The maintains copy the decision library its website, along with other judicial decisions relating state financing education, but the issue the case has long been resolved and has not been discussed the Judicial Watch opposes any regulation that would apply the proposed defmition CRPA other 50l(c) organizations. 

Comments 501(c)(4) NPRM 
February 27, 2014 

Presidential election campaign. cannot seriously argued that, because the maintains library cases and other materials that incidentally mention candidate's name and that have nothing with the Presidential election, has engaged candidate-related political activity. assume that 501(c)(4) whose purpose improve the quality life city schedules its annual fundraising banquet for mid-November, two weeks after the election. invites the mayor, who campaigning for re-election that year, speak the banquet, and accepts. Beginning July and continuing through the week before the banquet, the regularly publishes advertisements the local newspaper, and sends monthly newsletters and other mailings all the residents the city. All these communications state that Mayor Jones will the featured speaker the banquet. None the communications mention the election that the mayor candidate for re-election, nor they include any language reflecting view the mayor's performance office whether should re-elected. Again, reasonable person would conclude that these communications are intended influence the election, and the proposal classify them CRPA arbitrary. 
Similarly, cannot seriously argued that any document which merely mentions individual who currently candidate (but was not when the document was created posted) CRP illustrate the absurd coverage this proposed rule, historical documents 501(c)(4) would deemed CRPA candidate was previously officer director. Certified copies Articles Incorporation would become CRP merely because they contain the signature the secretary state. Posted resumes and past experience nonprofit's officers, board members, and staff would CRP they contain any mention past employment candidate political party. Written and oral testimony before government officials would CRP within the 30-day 60-day blackout period. Litigation documents, including arnicus briefs, would become CRPA they mention candidate, and are filed maintained the filer's website within the blackout period. 

Moreover, all the following events occurred were prominent the news within days before general election: the Iran hostage crisis 1979 (continuing until January 1981 President Reagan becoming the first President open Olympic Garnes the United States 1984; Caspar Weinberger's indictment June 1992; the investigation into the leak that Valerie Plarne was employed the CIA (2004); and Hurricane Sandy 2012. Under the proposed regulations, any communication-factual news report, commentary, otherwise--about these events 50l(c)(4) that mentioned President Bush, any Senator Congressman, 

quite troubling for Judicial Watch, which advocates high standards ethics and morality our nation's public life, and seeks ensure that political and judicial officials not abuse the powers entrusted them the American people. Judicial Watch fulfills its educational mission through litigation, investigations, and public 

Comments 501(c)(4) NPRM 
February 27, 2014 

would have been CRP even the communication did not mention the election that any person mentioned the report was candidate. 
The foregoing examples demonstrate that 
during election year, the arbitrary and irrational reach the proposed 30-day/60-day rule would require all 50l(c)(4) EOs review all information their websites and, they want avoid being engaged CRP account such communications, remove all documents that mention candidate, regardless whether the document has any real nexus with the election. effectively so, 50l(c)(4) will need know the name every person who has declared him-or herself candidate every federal, state, local election from the Presidency down the municipal dogcatcher. This intolerable burden the First Amendment right any 50l(c)(4) speak about public policy issues manner that has real connection any election. 
(5) The restrictions reach communications that, for geographical reasons, are not directed voters election. 

Not all communications are widely distributed. Failing include targeting requirement results the inclusion speech that has nothing with election. For example, under the proposed regulations, 501(c)(4) would engage CRPA were send e-mail invitation its New England members for event held New England featuring U.S. Senator speaker, even though running for re-election California (or anywhere else outside New England). assume that 2017, distributes 1,000 flyers San Francisco supporting charter schools. The flyers mention that public school performance New York City continued decline even after Mayor Bill DeBlasio placed new restrictions charter schools 2014. flyers are distributed anywhere else, the flyer does not mention that Mayor DeBlasio candidate for re-election, and the flyer not posted the EO's website. 
Why this candidate-related political activity? Any communication the expenditures for which are reported the Federal 
Election Commission, including independent expenditures and electioneering communications. 
For purposes the Federal Election Campaign Act, "electioneering communication" any broadcast, cable satellite communication that fulfills all the following conditions: The communication refers clearly identified candidate for federal office; 

Comments 50l(c)(4) NPRM 
February 27, 2014 
The communication publicly distributed shortly before election for the office that candidate seeking; and 
The communication targeted the relevant electorate (U.S. House and Senate candidates only). the extent that these communications are express advocacy for against candidate, they are rightly considered intervention political campaign. However, the proposed definition "electioneering communication" very broad, and shares the same statutory (violation USC 434(f)(7)) and constitutional problems communications during the 30day and 60-day blackout periods, discussed above. 	Distributions any 527 organization. 
Although true that most 527 organizations are established support oppose candidates for elective public office, some may established for the sole purpose influencing the nomination confirmation individuals positions executive branch judges. Because the proposed regulations' expansion the definition "candidate" include such individuals inconsistent with established law, 50l(c)(4) EOs should permitted make 
distributions 527 organizations that limit their nominations and legislative 

confirmations nominees for executive branch judicial positions. 
Some 501(c)(4) organizations have connected PACs (527 organizations) and through support their connected PACs, 50l(c)(4) organizations make distributions 527 organizationThe FECA permits 501(c)(4) organizations pay the administrative and 
solicitation costs its connected PAC. its 527 regulations, the Service reserved the treatment these costs. Yet, despite being permissible under both the FECA and other IRS regulations, the proposed regulations now deem these payments CRP addition, adopted, this paragraph should clarified the effect that distribution does not include payment what essentially commercial transaction, under which, for example, 501(c)(4) purchases advertising the right use booth space event sponsored 527 organization the same better terms any other purchaser. 	Distributions other SOl(c) EOs that engage candidate-related political activity. 

The proposed regulations would prohibit distributions other EOs unless the transferee certifies that does not engage CRPA, the transferor has reason believe that the certification inaccurate unreliable, and the contribution restricted against use for CRP 

February 27, 2014 

This approach unduly restrictive, and contrary the Service's approach grants from private foundations charities that engage lobbying. There, the IRS gave private foundations safe harbor from imposition the tax taxable expenditures general support grant not earmarked for lobbying, and project grant not earmarked for lobbying and less the project budget for non-lobbying activities. Grants public organizations that attempt influence legislation-{i) General support grant. general support grant private foundation the organization described section 509(a) (1), (2), (3) "public charity" for purposes paragraphs (a) (6) and (7) this section) does not constitute taxable expenditure under section 4945(d)(l) the extent that the grant not earmarked, within the meaning 53.4945-2(a)(5)(i), used attempt influence legislation. The preceding sentence applies without regard whether the public charity has made the election under section 501(h). 

Specific project grant. grant, private foundation fund specific project public charity not taxable expenditure the foundation under section 4945(d)(l) the extent that

The grant not earmarked, within the meaning 53.4945-2(a)(5)(i), used attempt influence legislation, and 

The the grant, together with other grants the same private foundation for the same project for the same year, does not exceed the amount budgeted, for the year the grant, 

grantee organization for activities the project that are not attempts influence legislation. the grant for more than one year, the preceding sentence applies each year the grant with the amount the grant measured the amount actually disbursed the private foundation each year divided equally between years, the option the private foundation. The same method measuring the annual amount must used all years grant. This paragraph (a)(6)(ii) applies without regard whether the public charity has made the election under section 


(iii) Reliance upon grantee's budget. For purposes determining the amount budgeted prospective grantee for specific project activities that are not attempts influence legislation under paragraph (a)(6Xii) this section, private foundation may rely budget documents other sufficient evidence supplied the grantee organization signed statement authorized officer, director trustee such grantee organization) showing the proposed budget the specific project, unless the private foundation doubts or, light all the facts and circumstances, reasonably should doubt the accuracy reliability the documents. 
Treas. Reg. 53.4945-2(a)(6). 

WEBSTER, CHAMBERLAIN BEAN, LLP Comments 50l(c)(4) NPRM February 27, 2014 Page any event, grants from 50l(c)(4) another 50l(c) should not deemed political activity (whether defined under current law under the proposed regulation), the grant restricted use other than for political activity. Conduct voter registration drive "get-out-the-vote" drive. 
Nonpartisan voter registration drives and get-out-the vote drives have long been considered outside the scope intervention political campaign, Rev. Rul. 2007-41, Situations and and important "social welfare" activities. They are certainly important the maintenance vital democratic republic, and should continue treated social welfare activities for 501(c)(4) EOs. Nonprofits have been called ''the sleeping giant the democratic process" because their ability reach underrepresented groups the electoral process. Bridgette Rangitsch, Group Unveil National Nonprofit Voter-Participation Campaign, The Chronicle Philanthropy (available 

Moreover, treating the conduct nonpartisan voter registration programs intervention political campaign contrary the permission given Congress for certain private foundations conduct such campaigns. I.R.C. 4945(f). See also PLR 201137012 (concluding that foundation's voter registration program described 4945(t)). 
The proposed rule also contrary the express encouragement Congress, the National Voter Registration Act, that states should designate ''nongovernmental offices" (not otherwise defined) "voter registration agencies" to, nonpartisan basis, distribute voter registration application forms; assist applicants completing the forms; and accept completed forms for transmittal the appropriate State election official. U.S.C. 1973gg-5(a)(3)(B)((ii) and (4). also creates "catch-22" for any 501(c)(4) organization that contracts with the state Minnesota. Minnesota Statutes 201.162 requires that any nonprofit which contracts with state agency carry out obligations the state agency must "provide voter registration services for employees and the public." addition, treating all voter registration and GOTV drives partisan political activity, the rule risks tempting 501(c)(4) EOs with affiliated 501(c)(3) EOs move activities that may may not partisan into the 501(c)(3) EO, even though tax policy should encourage moving those borderline activities from 
the 501(c)(3) the 501(c)(4). 
The rule also includes all voter registration and GOTV drives, whether not related candidates. This would prevent 501(c)(4) organizations from conducting voter registration and GOTV drives increase voter turnout related ballot measures, initiatives, and referendums. 

WEBSTER, CHAMBERLAIN BEAN, LLP Comments 501(c)(4) NPRM February 27, 2014 Page this rule retained, should, minimum, include exceptions for voter registration and GOTV drives that are conducted nonpartisan basis that are designed increase voter turnout for ballot measures, initiatives, and referendums. 	Distribution any material prepared behalf candidate 527 organization including, without limitation, written materials and audio and video recordings. 
Again, until the proposed regulations were 

distribution candidate material 
has long been considered acceptable, long conducted nonpartisan basis, without bias for against any candidate. 
Because legislators and Presidents (subject the 22"d Amendment) are generally presumed candidates 

re-election, assuming they have open campaign committee and have not announced their intent not campaign for re-election, this rule would effectively prohibit 50l(c)(4) from re-distributing, (presumably) linking to, materials prepared behalf public officeholder her official capacity, matter how long-even nearly six years-before the next election. 
For this reason, the rule retained, should include exception for candidateprepared material that addresses public policy issues within the scope the office and without reference election. For example, Senator may publish material addressing important foreign policy issue and distribute her constituents, post her official website. political activity occurs when 501(c)(4) organization re-distributes the material, posts link the context discussing the foreign policy issue without regard any election without reference whether the legislator candidate for re-election for election another office. The same rule should apply the same kind material published candidate who not incumbent officeholder. Such rule would encourage candidates discuss the merits issues without regard election. this rule retained, should also clarified two respects. First, treatment such activities CRPA should conditioned "knowingly distributing" candidate material. Notwithstanding that election rules many jurisdictions require candidates identify and take responsibility for materials they distribute, that does not know the origin candidatepublished material should not required treat its distribution political activity. 
Second, the rule should include exception for links from EO's website the home page candidate's website, provided that the links include all candidates the election, and that all links appear the same webpage and without bias for against candidate. See Rev. Rul. 2007-41, Situation 19. 

Comments 501(c)(4) NPRM 
February 27, 2014 	Preparation distribution voter guide that refers one more clearly identified candidates or, the case general election, one more political parties (including material accompanying the voter guide). 

For years, and recently Rev. Rul. 2007-41, Situation 19, the IRS has considered the preparation and distribution nonpartisan voter guides within the scope activities intended promote social welfare. Like voter registration and GOTV drives, the publication nonpartisan voter guides educates voters about the candidates' views important issues facing the nation, state, municipality, and enables the voters make more informed decisions about the candidates. 
For the reasons discussed above, when 501(c)(3) and 501(c)(4) EOs are related, this treatment all voter guides political activity will tend cause those guides that may may not partisan published the 501(c)(3) affiliate. this rule retained, should include exception for nonpartisan voter guides that consistent with the guidance Rev. Ruls. 78-248, 80-282, and 2007-41. 	Hosting conducting event within days primary election days general election which one more candidates such election appear part the program. 
Again, for years, the IRS has treated nonpartisan events which candidates appear capacity other than candidate, and without any election-related activity, not being intervention political campaign. These include both election-related events, such candidate forums and debates, Rev. Rul. 2007-41, Situations 7-9, and events, e.g., which candidate appears other than candidate, e.g., because public officeholder, because expert topic that the subject the event and that may have nothing with the election. Rev. Rul. 2007-41, Situations 10--13. 
This rule would, e.g., arbitrarily require 501(c)(4) treat political activity the 

dedication its new building (whose timing has nothing with any impending election) which the mayor the municipality appears (assuming candidate for re-election). This directly contrary the conclusion Rev. Rul. 2007-41, Situation 11. 
Again, this rule retained, should include exception for candidate appearances that consistent with the guidance Rev. Rul. 2007-41 and other rulings addressing similar situations. 

WEBSTER, CHAMBERLAIN BEAN!J LLP Comments 50l(c)(4) NPRM February 27, 2014 Page The definition "candidate" unduly broad, and with respect individuals other than candidates for elective public office, beyond the scope the IRS' authority. 

The IRS has authority under 501(c)(4) include the definition "candidate" anyone who not candidate for elective public office. 1976, Congress enacted rules governing the tax-exempt status political committees. 527(e)(2) the Code, Congress expressly defined political activity (an "exempt function"
influencing attempting influence the selection, nomination, appointment any individual any Federal, State, local public office office political organization, the election Presidential Vice-Presidential electors, whether not such individuals electors are selected, nominated, elected, appointed. 
Except for the reference the proposed regulation recall elections, the individuals included this definition are identical those included the definition "candidate" the proposed regulation. 
However, because 1976 Congress could have amended the definition candidate 50l(c)(3)(which also applies for purposes the current regulations under 501(c)(4)), but chose not so, the IRS has authority import the 527(e)(2) definition into 50l(c)(4). recently stated the Court Appeals for the District Columbia: 

The Supreme Court has stated that courts should not lightly presume congressional intent implicitly delegate decisions major economic political significance agencies. See Williamson, 529 U.S. 160 ("we are confident that Congress could not have intended delegate decision such economic and political significance agency cryptic fashion"). 
... Here, Brown Williamson, are confident that Congress did not intend grow such large elephant such small mousehole. 
Loving Internal Revenue Service, No. 13-5061 (D.C. Cir. Feb. 11, 2014)(slip op. 15). 1976 Congress chose, for purposes defining political committees and taxing certain expenditures EOs that are not political committees, define the scope "exempt function" more broadly than has defined "candidate" for purposes qualification for exemption under 50l(c). proposing add "candidates for elective public office," all those who may candidates for appointment any governmental office, the IRS has exceeded whatever authority may have define who candidate for public office. Congress' use "candidate" 501(c)(3)(and applied for purposes 501(c)(4)) has never been understood the IRS the 

WEBSTER, CHAMBERLAIN BEAN, LLP Comments 501(c)(4) NPRM February 27, 2014 Page 
public refer anyone who might nominated applying for employment with government agency non-elected employee official. Again, the Service has proposed upend years administrative and judicial rulings with justification whatsoever. 
The impermissibly broad definition candidate will also result unnecessary complexity and recordkeeping for 501(c)(4) EOs that engage CRPA and that incur exempt function expenditures that may taxable under 527(f). They will required keep one set records with respect amounts spent for CRP which presumably will need reported new part Form 990, Schedule completed only 501(c)(4) EOs that must use different definition political activity than any other organization filing Form 990. They will also required maintain second set records determine the amount that may taxable under 527(f), and reportable Form 1120-POL. 
For 501(c)(4) EOs that receive substantial contributions from businesses, the new records will third set records, because they are also required account for and report their expenditures for political and lobbying activities for purposes 162(e) and 6033(e). The definition "candidate for elective public office" Treas. Reg. 1.50l(c)(3)l(c)(3)(iii) should revised. 
Even though the definition "candidate" the proposed regulations impermissible, the 

should take this opportunity revise the definition "candidate for elective public office." light developments since 1960, the phrase, ''who offers himself, proposed others," unduly vague, and should removed from Treas. Reg. l.50l(c)(3)l(c)(3)(iii). addition, the entire definition should revised set forth below. 

The quoted phrase problem under the current rules, would exacerbated under the proposed regulations (because the breadth both the group "candidates" and the activities that the proposed regulations would arbitrarily treat CRP A), and needs fixed regardless whether the proposed regulations are adopted any form. exempt organization can possibly know all the people who may have offered themselves, been proposed another (or "others") candidate for elective office, let alone any appointive other similar office described 527(e)(2) and the proposed regulations. related issue that the Service, interpreting and administering the prohibition intervention political campaigns, appears have not treated incumbent officeholders candidates for re-election throughout their term office, even though the officeholder has open campaign committee and has not announced his her retirement resignation. For 
example, one PACI audit, communication 

year referring congressman was deemed not political intervention, but the same communication 

WEBSTER, CHAMBERLAIN BEAN, LLP Comments 50l(c)(4) NPRM February 27, 2014 Page 

even-numbered (election) year was considered political intervention. Although this interpretation favorable EOs, there authority for the present regulations. 
For both these reasons, recommend that the definition "candidate for public office" Treas. Reg.  1.501 )(3 )-1( )(3 )(iii) revised read follows: 
With respect any organization, the term candidate for public office means individual who-
(a) candidate for elective public office with any Federal, State, local 

government agency whose primary function regulate the financing election campaigns, i.e., the Federal Election Commission similar State local agency; 
(b) re-elected office, and has established maintains candidate 

campaign committee financial account that may used for the expenses re-election campaign, and that required make periodic reports any Federal, State, local government agency whose primary function regulate the financing election campaigns; 
(c) Has publicly announced that she contestant for elective public office, and the organization has, reasonably should have, actual knowledge the announcement; 

(d) officeholder who the subject recall election, whether not any other candidate the same election. 
Notwithstanding the preceding sentence, with respect any communication that does not expressly advocate the individual's election defeat, individual shall treated candidate for public office before one year before election which she otherwise candidate. 

This proposed revision the definition "candidate for public office" provides greater clarity than the current definition, and provides EOs with the protection "knowledge" standard, based public records actions. also provides EOs with safe harbor for issue advocacy 

other communications made before time when the public does not ordinarily consider such communications expressions relating election. The attribution rules need clarified. particular, the the proposed rules activities conducted "by volunteers acting under the organization's direction supervision" introduces new phrase for which there are recognized standards, and therefore fails provide the clarity the Service claims 

For example, posts notice its website, sends e-mail its constituents, calling for rally City Hall support "living wage" legislation that opposed the mayor. 

WEBSTER, CHAMBERLAIN BEAN LLP Comments 501(c)(4) NPRM February 27, 2014 Page 
The mayor candidate for re-election. During the rally, individuals who are not employees the organization begin chant, "Defeat Mayor Jones," and despite pleas from the organization's leadership, refuse stop. 
Are those attending the rally volunteers for the organization? so, are they acting under its direction supervision? 
The Service has addressed the attribution issue other contexts, and has generally analyzed the issue reference the common law agency. For example, Field Service Advice 1998-209, the IRS wrote: section 501(c)(3) organization acts communicates with others through the authorized actions its 
employees members. There must real apparent authority the organization the actions individuals other than officials [whose authority presumed] before the actions those individuals will attributed the organization. general, the principles agency will applied determine whether individual engaging political activity was acting with the authorization the section 501(c)(3) organization. Actions employees within the context their employment are authorized the organization. 
Acts individuals that are not authorized the section 501(c)(3) organization may attributed the organization explicitly implicitly ratifies the actions. failure disavow the actions the individual under apparent authorization from the section 50l(c)(3) organization may considered ratification the action. effective, the disavowal must made timely manner equal the original action. The organization must also take steps ensure that such unauthorized actions not recur. article published the 2002 IRS CPE text for the Exempt Organizations staff also addresses this issue: IRC 501(c)(3) organization may also act communicate with others through the authorized 
actions its employees members. There must real apparent authorization the IRC 501(c)(3) organization the actions individuals other than officials before the actions those individuals will attributed the organization. general, the principles agency will applied determine whether individual engaging political activity was acting with the authorization the IRC 501(c)(3) organization. 

e.g., G.C.M. 34631 (Oct. 1971). The actions employees within the context their employment generally will considered authorized the organization. 

Acts individuals that are not authorized the IRC 501 )(3) organization may attributed the organization explicitly implicitly ratifies the actions. failure disavow the actions individuals under apparent authorization from the IRC 501(c)(3) organization may considered ratification the actions. effective, the disavowal must made timely 

WEBSTER, CHAMBERLAIN BEAN, LLP Comments 501(c)(4) NPRM February 27, 2014 Page 
manner equal the original actions. The organization must also take steps ensure that such unauthorized actions not recur. 
Kindell and Reilly, Election Year Issues, pages 364-65, accessed clarify the rule, and apply both 501(c)(3) and 501(c)(4) EOs, the regulation adopted final regulation, recommend that the attribution rule removed from this regulation, and inserted new paragraph (vi) the end Treas. Reg.  1.501 )(3 )-1( )(3 which defines "action organization," read follows: 

Attribution. (a) For purposes this subparagraph, activities conducted organization include activities paid for the organization conducted officer, director, employee acting that capacity; conducted any other person who, under the common law principles agency, acting the organization's agent. 

Acts individuals that are not authorized the organization may attributed the organization explicitly implicitly ratifies the actions. failure disavow the actions individuals under apparent authorization from the organization may considered ratification the actions. effective, the disavowal must made timely manner equal the original actions. The organization must also take steps ensure 

such unauthorized actions not recur. 
(c) Communications made organization include communications the creation distribution which paid for the organization that are made official publication the organization (including statements material posted the organization its Web site), part the program official function the organization, officer director acting that capacity, employee other agent authorized communicate behalf the 

and acting that capacity. 
Regardless whether the Service adopts the proposed regulation attribution, such proposed here, the Service should indicate the extent which believes the proposed regulation affirms contradicts Situations 3-6 RevRul. 2007-41. guidance regarding bow allocate expenses incurred 

for that includes both CRP and non-CRP 
For example, assume EO' website includes historical documents that mention the name individual who currently candidate for elective public office. The documents remain the EO's website, because they are important its issue advocacy mission but have noting with the current election. During the period that days before the primary election and days before the general election, the did not incur any direct expense with respect the documents, but incurred costs generally maintain its website. The engaged 

WEBST CHAMBERLAIN BEAN, LLP Comments 501(c)(4) NPRM February 27, 2014 Page other CRP but not with respect its website. How are the costs incurred with respect maintenance the webpages question calculated? 
Because direct costs were incurred, may the report "zero" expenditures for CRPA? some expenditures must reported, how the reportable amount determined? The effective date the regulations should changed. proposed, the effective date the regulations the date the final regulations are published the Federal Register. Although this permissible, will create substantial accounting and reporting problems for all affected organizations. Any organization whose taxable year does not end the date publication will required account for its political activities using two different definitions within the same taxable year. This adds another confusing layer complexity for every affected organization. addition, without advance knowledge when the final regulations will published, affected EOs will need time adjust their accounting systems and train their employees regarding how expenses attributable CRPA are tracked and accounted for. 
For this reason, recommend that, these regulations are published final regulations, the effective date re-set the first day the EO's first taxable year that begins after the later (1) November 2014, (2) days after the date publication. recognize that, depending each affected EO's taxable year, this will delay its implementation the regulations for two years (in few cases). However, given the radical nature the changes proposed after years, that not particularly long period time. 
Conclusions The Service should withdraw the Notice Proposed Rulemaking. 
The Notice Proposed Rulemaking violated the Paperwork Reduction Act failing include all the new recordkeeping that will required 50l(c)(4) organizations the proposed regulations are adopted. 
The Service has authority adopt regulation that departs radically from its prior, long-standing interpretation the definition intervention campaign for public office. 
The proposed regulation also arbitrarily creates separate definition "intervention political campaign" that unconstitutionally applies only 501(c)(4) organizations. See Appendix 

WEBSTER, CHAMBERLAIN BEAN, LLP Comments 50l(c)(4) NPRM February 27, 2014 Page adopted, the proposed regulation would violate the constitutional rights 501(c)(3) organizations that, noted Justice Blackmun Regan Taxation with Representation Washington, must depend affiliated 50l(c)(4) organizations engage substantial lobbying. 

certain activities "candidate-related political activities" even when they are conducted nonpartisan basis. These arbitrary definitions reverse years administrative and judicial interpretations regarding "intervention campaign for public office," and would improperly cause many nonpartisan activities and issue advocacy conducted 501(c)(4) organizations support their civic and social welfare objectives treated political activity. 
The proposed regulation arbitrarily 
The proposed regulation's definition "candidate" impermissibly broad, because the Service has authority overturn Congress' decision effectively ratify the definition Treas. Reg. l.50l(c)(3)-l(c)(3)(iii) not amending that definition when enacted 527 1976, and re-enacting 50l(c)(4) without amendment 1986. addition, the proposed definition "candidate" will create additional complexity for 

501(c)(4) organizations that engage candidate-related political 

because they will 
have keep one set records for purposes measuring and reporting the extent their "candidate-related political activity" Form 990, Schedule and second set records for purposes reporting and paying any tax due exempt function expenditures pursuant 527(f), using Form 1120-POL. the Service does not withdraw the Notice Proposed Rulemaking, should repropose the regulations. 

Even the Service continues believe that new regulations are required, the Service should substantially revise the proposed regulations accordance with the recommendations these comments, and because such revision will substantial, re-propose the regulations new NPRM. recommend that any such revision undertaken based recommendations developed new Advisory Committee exempt organization political activities, composed executives, lawyers, accountants, scholars, and others who provide services to, represent, are otherwise familiar with organizations exempt under 501(c)(3), (4), (5), and (6). This will provide sufficient transparency the project rebuild semblance trust between the Service and the exempt organizations community with respect these issues. Finally, the Service does not withdraw the NPRM, and decides not re-propose the regulations, recommend that adopt the definition "candidate for elective public office" and the attribution rules presented these comments. 

WEBSTER, CHAMBERLAIN BEAN, LLP Comments 50l(c)(4) NPRM February 27, 2014 Page 
Judicial Watch appreciates the opportunity comment. 
consideration these comments. Please contact (202) 785-9500 you have questions would like schedule meeting discuss these comments. 

Charles Watkins 
cc: Judicial Watch 

Restricts Issue Advocacy. Public communications within days  
primary election days general election that refers one  
more clearly identified candidates that election or, the case  
general election, refers one more political parties represented  
that election  
Restricts Free Speech. Contributions (including gift, grant,  
subscription, loan, advance, deposit) money anything value the solicitation contributions behalf of-any organization  
described section 501(c) that engages candidate-related political  
activity unless written representation from authorized officer the  
recipient organization obtained stating that the recipient organization  
does not engage such activity; and the contribution subject  
written restriction that not used for candidate-related political  
Limits Civic Engagement. Conduct nonpartisan voter registration  
Limits Civic Engagement. Conduct nonpartisan get-out-the-vote  
Restricts Issue Advocacy. Distribution any material prepared behalf candidate section 527 organization including,  
without limitation, written materials, and audio and video  
Limits Civic Engagement. Preparation distribution nonpartisan  
voter guide that refers one more clearly identified candidates or,  
the case general election, one more political parties (including  
material the voter  
Limits Civic Engagement. Hosting conducting event (candidate  
forum debate) within days primary election days  
general election which one more candidates such election the