GOP Proposes a Way to Clean Up the IRS After the Targeting Scandal

A handful of House Republicans have proposed legislation that would prevent the IRS from making any further decisions about the political activities of groups seeking tax-exempt status.

The bill — a House version of one offered by Sen. Ted Cruz (R-Texas) — was offered in the wake of the IRS targeting scandal, in which the IRS appeared to apply extra scrutiny to tax-exempt applications from conservative groups.

The House has a bill modeled off of a Sen. Ted Cruz (R-Texas) proposal to write new rules for how the IRS scrutinizes groups seeking tax-exempt status. AP Photo/Valley Morning Star, David Pike

That scandal boiled over in the House on Wednesday, when the House voted that former IRS official Lois Lerner is in contempt of Congress for failing to answer questions about the targeting scandal. Republicans hope that vote sets up a referral to a court that orders her to testify.

But regardless of what happens to Lerner, many Republicans say Congress still needs to change the way the IRS operates. The IRS has been trying to determine whether groups are "social welfare" organizations that deserve tax-exempt status and can dabble in politics, or whether their political activities are so extensive they should not be tax exempt.

Democrats have been pushing the IRS to be more aggressive in making sure that groups with tax exempt status do not abuse that status by engaging heavily in political activities. Republicans believe that push is what led the IRS to more closely scrutinize applications from conservative groups.

To get around the problem in the future, Rep. Randy Neugebauer (R-Texas) proposed a bill setting clear guidelines for the IRS. The bill would require the IRS to use the Federal Election Commission's rules for determining when a group should be seen as a political group.

Neugebauer said that change would help remove the IRS from making any judgment at all, at a time when the IRS has said it is looking to write more rules that could exempt more groups from tax-exempt status.

"The FEC has been providing straight-forward guidance on political activity for years," Neugebauer said. "Relying on their definitions not only removes the IRS — and the potential for political targeting — from the equation, but it is also a vast improvement over the IRS proposal to redefine public service activities by civic organizations as political campaign intervention.

"That would be a violation of our First Amendment rights and I'm doing everything in my power to stop this abuse."

Neugebauer added that the bill is needed because there still nothing in place from Congress to guide the IRS, which means it can do as it pleases.

"Until we know everything that happened with the IRS targeting scandal — including who made the decision to target groups, why that decision was made, and who knew about it — we can't be sure that Americans are protected from further targeting," he said. "Ms. Lerner's refusal to answer further questions is preventing us from understanding the magnitude of what happened."

Neugebauer's bill is the House companion to a bill proposed in February by Sen. Ted Cruz (R-Texas). Cruz said Wednesday that he supports the House effort to keep the IRS from trampling the rights of groups to form and speak.

"The IRS has no business meddling with the First Amendment rights of Americans," he said. "Rather than further stifling free speech, the IRS and the Department of Justice should provide the American people with all the facts surrounding the IRS's targeting of certain organizations based on their political activity."