House Oversight Committee Chairman James Comer (R., Ky.) is opening an investigation into how the IRS is enforcing its lobbying restrictions on tax-exempt organizations.
Comer wrote a letter to IRS Commissioner Daniel Werfel Wednesday and suggested the agency is withholding enforcement efforts against lobbying by 501 (c)(3) tax-exempt organizations designed for charitable purposes.
“Tax exempt status under Section 501(c)(3) of the Internal Revenue Code (IRC) and implementing regulations requires that exempted entities are ‘operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational’ and related purposes,” Comer’s letter reads.
“Despite these limitations on political and lobbying activities by 501(c)(3) designated entities, activist advocacy organizations, such as One Fair Wage, Inc., seem to view their charitable work as indistinguishable from their substantial lobbying pursuits,” he added.
Comer uses left-wing activist group One Fair Wage as an example of the blurry distinctions between nonprofit charities and political lobbying organizations.
One Fair Wage’s website touts its efforts to push legislation and ballot measures in 25 states by mobilizing grassroots supporters to pressure lawmakers into supporting laws purporting to increase wages. Organizers for One Fair Wage are tasked with meeting active members of the group and encouraging them to attend meetings, rallies and events to join the group’s advocacy campaign.
One Fair Wage says it has its network of nearly 300,000 service-sector workers including workers reliant on tipped wages, a policy the activist group attributes to the legacy of slavery and discriminatory hiring practices against black Americans.
The activist group’s donation page lists its 501(c)(3) status and directs supporters towards its separate 501(c)(4) sister organization for political advocacy. One Fair Wage Action, the 501(c)(4) contributions are not tax deductible unlike donations to the nonprofit 501(c)(3) wing of the organization.
Tax-exempt organizations classified under Section 501(c)(4) are permitted to engage in political advocacy if it is not the group’s primary purpose. These groups cannot get involved with political campaigns for or against particular candidates as part of their political advocacy.
The IRS previously targeted conservative groups by selectively scrutinizing the organizations and delaying requests for tax-exempt status. Former direct of the IRS exempt organizations division Lois Lerner and her colleagues orchestrated the IRS scandal perpetrated against Tea Party groups. The Justice Department settled with dozens of conservative groups in 2017 and the IRS admitted wrongdoing.
Comer is seeking documents from the IRS pertaining to internal guidance and training on enforcement connected to 501(c)(3) entities and he is specifically demanding documents and communications related to One Fair Wage.
The IRS has until February 28th to comply with Comer’s request.