The Tea Party might have been right about the IRS improperly applying the law, just not in the way they think. As opposed to the discredited claim-that-will-not-die that the IRS targeted Tea Party groups, and only Tea Party groups, a new lawsuit alleges that the agency is not correctly applying the requirements of the Internal Revenue Code for “social welfare organizations,” known as 501(c)(4) groups. Van Hollen, et al v. Internal Revenue Service, et al, No. 1:13-cv-01276, complaint (D.D.C., Aug. 21, 2013) (I love using legal citation forms that probably aren’t quite right, on the off chance that someone on a law review reads this and gets all eye-twitchy.)

Here’s the actual statute defining a 501(c)(4) tax-exempt organization:

(4)(A) Civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare, or local associations of employees, the membership of which is limited to the employees of a designated person or persons in a particular municipality, and the net earnings of which are devoted exclusively to charitable, educational, or recreational purposes.

(B) Subparagraph (A) shall not apply to an entity unless no part of the net earnings of such entity inures to the benefit of any private shareholder or individual.

26 U.S.C. § 501(c)(4) (emphasis added).

The regulation that the IRS uses to interpret and enforce that statute specifically states that “direct or indirect participation or intervention in political campaigns” for or against a candidate does not constitute “the promotion of social welfare.” 26 C.F.R. § 1.501(c)(4)-1(a)(2)(ii).

Here’s how the regulation defines “promotion of social welfare”: Continue reading →