Proposed 501(c)(4) "dark money" regulations fail to regulate.

Under the magnificently permissive regulations currently in effect, organizations formed and operated for political purposes have been enjoying the benefits of tax-exempt status under Internal Revenue Code section 501(c)(4). Notwithstanding the statutory requirement that the organizations operate "exclusively" for nonpolitical purposes, the Treasury decided that operating "primarily" for nonpolitical purposes means the same thing. That has given 501(c)(4) organizations carte blanche to devote 49.9% of their funds to the most blatantly political activities while remaining tax-exempt.

Now, the Treasury has proposed a new 501(c)(4) regulation to clarify the situation. Does the regulation address the "primarily" issue? No. The Treasury states only that it is "studying" that issue. Rather, the proposed regulation creates a specific set of definitions for what constitutes prohibited "candidate-related political activity." Regrettably, that definition excludes quite a lot of things any normal observer would consider candidate-related political activity. The result: an ill-intentioned 501(c)(4) organization can freely devote 49.9% of its funds to anything it wants, and can spend the other 50.1% on things most normal human beings would consider impermissible political activity.

Just to be clear: an organization that used to be limited to spending 49.9% of its money on evil will now be able to spend 100% of its money on evil. Nice job, Treasury.

I have a sense that the definitions in the regulations may be slanted in favor of the disguised-electioneering type of 501(c)(4) organization and against the actual public benefit type. I don't know enough about how those groups spend their money to have a credible opinion, but it is very interesting that a generally progressive-leaning group is objecting that the regulation could affect such nonpartisan activities as voter registration drives.

This is what the statute says an organization must be to qualify as a 501(c)(4) organization: "operated exclusively for the promotion of social welfare." The regulation should be short and easy to write.