Democrats Use IRS Hearing to Call for 501(c)(4) Oversight

Senate Democrats joined Republican colleagues Tuesday in criticizing the Internal Revenue Service for targeting conservative groups but also used a Finance Committee hearing to call for greater controls on political activity by nonprofit organizations, Reuters reports.

Though largely focused on the tax agency’s extra scrutiny of Tea Party and other right-wing groups seeking 501(c)(4) status, the scandal has also renewed attention on the rapid rise in campaign spending by such “social welfare” groups, which are not required to disclose their donors.

“Notwithstanding the troubling and unacceptable conduct of the IRS, if political organizations do not want to be scrutinized by the government, they shouldn’t seek privileges like tax-free status and anonymity for their donors,” said Sen. Ron Wyden, an Oregon Democrat. He said such groups should be classified as “527″ entities, which are also tax-exempt but must identify contributors.

J. Russell George, the Treasury Department inspector whose report on IRS screening of conservative groups brought the scandal to a head, told the Senate panel his office will shortly launch a review of the agency’s oversight of “campaign intervention” by 501(c)(4)s, Politico writes.

The probe will also examine nonprofit entities led by unions and business and trade groups and is expected to take six months to a year, according to the office of the inspector general for tax administration.

See the latest Chronicle of Philanthropy coverage of the IRS scandal.