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Public Statements

Executive Session

Floor Speech

Location: Washington, DC


Mr. UDALL of New Mexico. Mr. President, I have been watching today as various speakers have come to the floor. I want to join in the outrage about what has happened at the IRS, the idea that the IRS would pick specific groups and target them. In this case, apparently they used the name ``patriot'' and they searched through incoming applications for 501(c)(4)s--and the term ``tea party''--and they were obviously focusing on one side of the political spectrum. They should not have done that.

There is no doubt that the people who are writing me, that people in America have watched this and feel a sense of outrage. They should be outraged. They are outraged, and I am outraged.

One of the things we have to understand as a result of this is that the IRS has tremendous power. It has the power to audit. It has the power to request information. It has the power to refer for criminal conduct. I think in many cases the IRS is probably more feared than the prosecutor's offices, which also have tremendous power. As many know, I have had some real experience there, having been a Federal prosecutor, having been a State attorney general. That is power that should be used in a very careful way. You do not pick one part of the political spectrum and target people when you are entering a phase of a prosecution or an audit, as the IRS was doing. I think our President, who is a lawyer, understands that. President Obama has called for the resignation of the top IRS official. That official has resigned. That is the right thing to do. Such action is inexcusable. No one disputes that. More disciplinary action is likely. The FBI is investigating, and I hope they do a full, thorough, and complete investigation. Of course, as I said before, the IRS should not be targeting specific sides of the political spectrum.

But in thinking about this, there is another failure, and we should talk about that at the same time. The IRS does not have clear rules for nonprofit groups and political activity. We need transparency about what is allowed and what is not allowed. Those rules should be applied to all groups across the board on all sides of the political spectrum. Front groups for huge amounts of campaign money are continually allowed to file false statements with the IRS and get away with it. Over and over again, they do this. This is wrong whether the group is liberal or conservative, Democratic or Republican. This is wrong across the board.

How does this happen? We know that lots of secretive groups want to funnel cash to influence elections, to get their candidates elected. But campaign finance rules are supposed to have transparency. How do these groups, left or right, keep their money secret? They hide behind an organization that is listed with the IRS called a 501(c)(4). They ask for permission under the IRS to be a 501(c)(4) status organization. That is a tax-exempt, nonprofit corporation regulated by the IRS.

These groups have one big hurdle to jump through. The 501(c)(4) has to be set up ``for the promotion of social welfare.'' In fact, the law says it must be exclusively--the law Congress wrote says it must be exclusively for social welfare. That is the law Congress wrote. It seems pretty clear, doesn't it? It seems as though Congress was saying what it intended. But the IRS muddied the water by deciding ``exclusively'' actually means ``primarily.'' ``Primarily engaged in social welfare activity'' means at least 51 percent of the time--not 100 percent of the time, 51 percent of the time. This is baffling, and it is completely misguided.

To make it more confusing, the IRS regulations state that ``the promotion of social welfare does not include direct or indirect participation, or intervention, in political campaigns on behalf or in opposition to any candidate for public office.'' To establish a 501(c)(4) corporation, the organizers must file a form with the IRS pledging that they do not plan to spend money to influence elections. It appears that many of these groups have lied on their applications for nonprofit status. It also appears that they are allowed to get away with it. That is corrupt, and it is also a crime--and nothing appears to be done about it. That is a scandal right there. As the IRS stands by, these groups, whatever their political affiliation, mock Federal tax laws.

The Center for Responsive Politics noted that in the 2012 election, 501(c)(4) groups spent $254 million to support or oppose candidates. Why would someone donate to a 501(c)(4) instead of giving money to the parties or to the campaigns of candidates they support? Simple--to avoid disclosure. If someone gives $1,000 to a political campaign, that is required to be reported and the donor is known. It is out there. It is in the public. But if someone gives $1,000 to a 501(c)(4) that is improperly engaging in political activity, the public remains in the dark. So if someone gives $1,000 to a 501(c)(4), nobody knows about it, but it can go out under these rules and engage in political activity.

This secret money is a bipartisan outrage. They are seeking to influence elections, not promote social welfare. This has to change. I have long argued that it must change. Since 2010 many of us have come to this floor calling for vitally needed reforms, demanding that we change the way we do business. I believe that requires a constitutional amendment overturning the disastrous Buckley and Citizens United decisions by the Supreme Court, restoring to Congress and the States the authority to regulate elections.

We have also pushed for the DISCLOSE Act. That legislation would have taken the IRS out of the business of investigating these groups--a job it is failing to do anyway. It would have required open reporting with the Federal Election Commission. The DISCLOSE Act doesn't ban any group, but it does say the American people have a right to know who is trying to influence their vote, who is paying for all those ads on television.

There is a saying in Washington from the Watergate era: ``Follow the money.'' That is what I am trying to do. Where does the money come from and where is the money going? Not a single Republican voted for the DISCLOSE Act--not one. In fact, they filibustered it, blocked it from an up-or-down vote.

Partisan bias and abuse by the IRS cannot be tolerated. President Obama is not tolerating it. But Americans are also fed up with the deception by shadowy groups that continue to drown our elections in anonymous cash. The fact that these secret political money groups also serve as tax breaks for extremely wealthy people adds insult to injury.

We need clear rules from the IRS. Exclusive means exclusive, in my book. When the Congress says ``exclusive,'' it means exclusive, and we need to enforce those rules equally on all applicants for tax-exempt status, every single one. If you are a charity or true social welfare organization, you should not pay taxes. There is no need to publicize your donors. But if you are looking to influence Americans' votes and how Americans vote, the voters should know who you are. There must be disclosure at the very least.

We have to change the way we do business. The failure of IRS bureaucrats--billionaires writing political checks but hiding in the shadows and avoiding taxes--this has to change. The time has come to change this.

I yield the floor. I suggest the absence of a quorum.


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