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The Obama administration moved Tuesday to limit the expansive role that nonprofit groups play in politics, proposing a regulation that would rein in ­certain tax-exempt organizations that have been able to spend hundreds of millions of dollars in recent elections without revealing their donors.

Under the proposed rule, groups such as Crossroads GPS, co-founded by GOP strategist Karl Rove, and the Democratic-allied League of Conservation Voters would no longer be able to claim some of their routine activities as part of their work as “social welfare” organizations.

Instead, the new Treasury Department regulation would define things such as distributing voter guides, registering people to vote and running ads that mention elected officials close to Election Day as “candidate-related political activities.” The rule would substantially roll back the level of political activity open to “social welfare” groups.

Once enacted, the new restrictions would represent a major shift for such organizations, set up under Section 501(c)(4) of the federal tax code, which have great latitude to engage in elections — a freedom they have increasingly exercised in recent years.

The proposal Tuesday is a preliminary but significant step to clamp down on tax-exempt groups that have altered the political landscape in the past decade, fueled by the unlimited donations that traditional political parties can no longer accept.

Election-law attorneys said they anticipate strong resistance to the proposal during an extensive comment period and legal challenges once the rule is enacted. They warned that the rule could push political money into new vehicles such as private partnerships, which can engage in politics without disclosing their backers.

The initiative was largely cheered by campaign finance reform advocates as an important effort to limit the use of secret money in campaigns. They urged Treasury to also issue a regulation defining how much — if any — political activity social welfare and other nonprofit groups should be able to engage in.

“We are at a point now where we have had wholesale evasion of campaign finance law,” said Fred Wertheimer, president of Democracy 21, a group that seeks to reduce the influence of money in politics.

In the 2012 election, social welfare groups reported spending $256 million on campaigns, according to the nonpartisan Center for Responsive Politics — a figure believed to be a fraction of their total political expenditures.

“The need for this regulation has been apparent and became more so after we went through the IRS debacle earlier this year,” said election-law attorney Kenneth Gross, the former enforcement chief at the FEC who now represents candidates from both major political parties.

Mark J. Mazur, assistant secretary for tax policy at Treasury, called the new rule “a first critical step toward creating clear-cut definitions of political activity by tax-exempt social welfare organizations.”
More at http://www.washingtonpost.com/politics/obama-administration-proposes-n
ew-rule-that-would-rein-in-political-activity-of-nonprofits/2013/11/26/505f5e28-56ca-11e3-8304-caf30787c0a9_story.html?hpid=z5

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