The IRS and the Question of Intent

June 14, 2013
posted by Bob Bauer

Here is another reply by Greg Colvin, answering the second post here on the topic. Colvin picks up on the last word of the June 5 posting—“intent”—and argues that it is well settled that the IRS does not look into intent when judging political activity. He also defends the liberalizing effect that the proposed rules would have on certain voter education activity.

Greg, it seems, may be overstating his assurances that “intent” is not, as a matter of law, a permissible factor in the test of whether a 501(c)(4) organization is engaged in “political intervention.” This is an important issue for those disinclined to have the federal tax law enforcement agency ferreting out the possible political intent of issue advocacy communications.

Certainly a number of those calling for the IRS to enforce the intervention rules more aggressively are grounding their claim in very significant part on an allegation of campaign-related intent. See Letter from the Campaign Legal Center and Democracy 21 to the Commissioner of the Internal Revenue Service and the Director of the Exempt Organization Division (October 5, 2010) (applying the facts and circumstances test in arguing that certain ads “leave little doubt that they are intended to influence the 2010 congressional elections…”) (emphasis added). They are not alone in holding this view. Professor Francis Hill, an authority on tax law at the University of Miami, has written that intent would be captured in the IRS’s facts and circumstances test:

The distinction [between educational and political communications] rests on the intended consequences of the communication. If the communication is intended to persuade voters or contributors to support one or more candidates for public office, the communication violates the political prohibition…The available guidance supports the view that the Service is treating purpose or intent here as it does in other areas of tax as a facts and circumstances determination.

Frances R. Hill, Softer Money: Exempt Organizations and Campaign Finance, The Exempt Organization Tax Review (2001) at 49-50.

So the irrelevance of “intent” alleged by Colvin to be “settled for over a decade” seems less than well settled. At any rate, the facts and circumstances test cannot help but draw the agency into deliberations over intent. Greg’s own project shows how this is the case, by retaining a role for “facts and circumstances” inquiries that authorize the IRS to consider whether a communication includes “political code words” or addresses “wedge issues” or can show a basis for targeting [other than targeting to close elections]. The Bright Lines Project: Clarifying IRS Rules on Political Intervention (Interim Draft, May 23, 2013) at 30. What confidence should the subject of an IRS inquiry have that questions such as these do not constitute a probe into “intent”? And under Greg’s reading of the “facts and circumstances” test, reflecting in his own proposal, an organization defending against a charge of “political intervention” can point to “disclaimers of partisanship”—which sounds much like a showing of the right, i.e. non-political, intent. Id.

The IRS does not employ, and Greg’s Project does not recommend, an express advocacy test that would looks simply to whether certain clearly specified words are used or avoided. As the Supreme Court asserted in Federal Election Commission v. Wisconsin Right to Life, 551 U.S. 449 (2007), a test for express advocacy or its functional equivalent addresses the problems posed by “intent and effects” tests. The IRS, however, has resolutely rejected reliance on “express advocacy.” Kindell and Reilly, Election Year Issues, Exempt Organizations Technical Continuing Professional Education Text 335, 346-349 (2002). Instead, through the use of a “facts and circumstances” test, the IRS can examine a range of facts, including those that bear on intent.

Colvin’s Project is dedicated to making the rules as we have them clearer and more manageable, but the question raised here, in this and prior posts, is whether it is good law and policy to commit the IRS to figuring out who is trying to influence elections.

Category: Outside Groups

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