THE ADMINISTRATION’S PROPOSED RESTRICTIONS ON POLITICAL SPEECH: DOUBLING DOWN ON IRS TARGETING HEARING BEFORE THE SUBCOMMITTEE ON ECONOMIC GROWTH, JOB CREATION AND REGULATORY AFFAIRS OF THE COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM HOUSE OF REPRESENTATIVES ONE HUNDRED THIRTEENTH CONGRESS SECOND SESSION FEBRUARY 27, 2014 Serial No. 113–93 Printed for the use of the Committee on Oversight and Government Reform ( Available via the World Wide Web: http://www.fdsys.gov http://www.house.gov/reform U.S. GOVERNMENT PRINTING OFFICE 87–351 PDF WASHINGTON : 2014 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001 VerDate Aug 31 2005 09:29 Apr 24, 2014 Jkt 000000 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 C:\DOCS\87351.TXT APRIL COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM DARRELL E. ISSA, California, Chairman JOHN L. MICA, Florida ELIJAH E. CUMMINGS, Maryland, Ranking MICHAEL R. TURNER, Ohio Minority Member JOHN J. DUNCAN, JR., Tennessee CAROLYN B. MALONEY, New York PATRICK T. MCHENRY, North Carolina ELEANOR HOLMES NORTON, District of JIM JORDAN, Ohio Columbia JASON CHAFFETZ, Utah JOHN F. TIERNEY, Massachusetts TIM WALBERG, Michigan WM. LACY CLAY, Missouri JAMES LANKFORD, Oklahoma STEPHEN F. LYNCH, Massachusetts JUSTIN AMASH, Michigan JIM COOPER, Tennessee PAUL A. GOSAR, Arizona GERALD E. CONNOLLY, Virginia PATRICK MEEHAN, Pennsylvania JACKIE SPEIER, California SCOTT DESJARLAIS, Tennessee MATTHEW A. CARTWRIGHT, Pennsylvania TREY GOWDY, South Carolina TAMMY DUCKWORTH, Illinois BLAKE FARENTHOLD, Texas ROBIN L. KELLY, Illinois DOC HASTINGS, Washington DANNY K. DAVIS, Illinois CYNTHIA M. LUMMIS, Wyoming PETER WELCH, Vermont ROB WOODALL, Georgia TONY CARDENAS, California THOMAS MASSIE, Kentucky STEVEN A. HORSFORD, Nevada DOUG COLLINS, Georgia MICHELLE LUJAN GRISHAM, New Mexico MARK MEADOWS, North Carolina Vacancy KERRY L. BENTIVOLIO, Michigan RON DESANTIS, Florida LAWRENCE J. BRADY, Staff Director JOHN D. CUADERES, Deputy Staff Director STEPHEN CASTOR, General Counsel LINDA A. GOOD, Chief Clerk DAVID RAPALLO, Minority Staff Director SUBCOMMITTEE ON ECONOMIC GROWTH, JOB CREATION AND REGULATORY AFFAIRS JIM JORDAN, Ohio, Chairman JOHN J. DUNCAN Jr., Tennessee MATTHEW A. CARTWRIGHT, Pennsylvania, PATRICK T. MCHENRY, North Carolina Ranking Minority Member PAUL GOSAR, Arizona TAMMY DUCKWORTH, Illinois PATRICK MEEHAN, Pennsylvania GERALD E. CONNOLLY, Virginia SCOTT DESJARLAIS, Tennessee MARK POCAN, Wisconsin DOC HASTINGS, Washington DANNY K. DAVIS, Illinois CYNTHIA LUMMIS, Wyoming STEVEN A. HORSFORD, Nevada DOUG COLLINS, Georgia MARK MEADOWS, North Carolina KERRY BENTIVOLIO, Michigan RON DESANTIS, Florida (II) VerDate Aug 31 2005 09:29 Apr 24, 2014 Jkt 000000 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 C:\DOCS\87351.TXT APRIL C O N T E N T S Page Hearing held on February 27, 2014 ....................................................................... 1 WITNESSES Ms. Jenny Beth Martin, President and Co-Founder, Tea Party Patriots Oral Statement ................................................................................................. 7 Written Statement ............................................................................................ 10 Ms. Diana Aviv, President and CEO, Independent Sector Oral Statement ................................................................................................. 15 Written Statement ............................................................................................ 17 Ms. Gabriel Rottman, Legislative Counsel/Policy Advisor, American Civil Lib- erties Union Oral Statement ................................................................................................. 24 Written Statement ............................................................................................ 26 The Hon. Wayne Allard, Vice President, Government Relations, American Motorcyclist Association Oral Statement ................................................................................................. 53 Written Statement ............................................................................................ 55 Mr. James R. Mason, III., Senior Counsel, Home School Legal Defense Asso- ciation Oral Statement ................................................................................................. 57 Written Statement ............................................................................................ 59 Mr. Allen Dickerson, Legal Director, Center for Competitive Politics Oral Statement ................................................................................................. 64 Written Statement ............................................................................................ 66 APPENDIX The Hon. Jim Jordan, a member of Congress from the State of Ohio, Opening Statement ............................................................................................................. 130 The Hon. Darrell Issa, a member of Congress from the State of California, Opening Statement .............................................................................................. 132 Letter from Alastar M. Fitzpayne to Chairman Dave Camp, submitted by Chairman Jordan ................................................................................................. 133 Article in the Washington Post: ‘‘Treasury and IRS rules on Nonprofits’ Polit- ical Activity Miss the Mark’’, by Gary D. Bass and Diana Aviv, submitted by Mr. Cartwright ................................................................................................ 138 Email for the record by Richard W. Painter, submitted by Mr. Cartwright ...... 140 (III) VerDate Aug 31 2005 09:29 Apr 24, 2014 Jkt 000000 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 C:\DOCS\87351.TXT APRIL VerDate Aug 31 2005 09:29 Apr 24, 2014 Jkt 000000 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 C:\DOCS\87351.TXT APRIL THE ADMINISTRATION’S PROPOSED RESTRIC- TIONS ON POLITICAL SPEECH: DOUBLING DOWN ON IRS TARGETING Thursday, February 27, 2014, HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON ECONOMIC GROWTH, JOB CREATION & REGULATORY AFFAIRS, COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, Washington, D.C. The subcommittee met, pursuant to call, at 9:35 a.m., in Room 2154, Rayburn House Office Building, Hon. Jim Jordan [chairman of the subcommittee] presiding. Present: Representatives Jordan, DeSantis, DesJarlais, Collins, Meadows, Bentivolio, Cartwright, and Connolly. Also Present: Representative Issa. Staff Present: Lawrence J. Brady, Majority Staff Director; David Brewer, Majority Senior Counsel; Sharon Casey, Majority Senior Assistant Clerk; Drew Colliatie, Majority Professional Staff Mem- ber; Adam P. Fromm, Majority Director of Member Services and Committee Operations; Christopher Hixon, Majority Chief Counsel for Oversight; Katy Rother, Majority Counsel; Laura L. Rush, Ma- jority Deputy Chief Clerk; Rebecca Watkins, Majority Communica- tions Director; Meghan Berroya, Minority Counsel; Aryele Brad- ford, Minority Press Secretary; Susanne Sachsman Grooms, Minor- ity Staff Director/Chief Counsel; Adam Koshkin, Minority Research Assistant; Brian Quinn, Minority Counsel; and Donald Sherman, Minority Counsel. Mr. JORDAN. The committee will come to order. We want to thank our distinguished panel of witnesses for being here today. Members will be trickling in and out. You know how these things are; maybe you have testified before. Members’ sched- ules are busy. But we want to get started and respect everyone’s time. We will do opening statements, then we will get right to each of you and introduce you and swear you in here in just a second. Today’s hearing continues the committee’s ongoing oversight of the IRS’s inappropriate treatment of conservative groups applying for tax-exempt status. The IRS has doubled-down on its targeting and is now seeking to codify their actions. On November 29th, 2013, the IRS issued a proposed regulation under the guise of clarifying the tax-exempt determinations proc- ess. As we will hear today, this rule, if implemented, will stifle speech of social welfare organizations and will systematize the tar- geting of nonprofit organizations. (1) VerDate Aug 31 2005 09:29 Apr 24, 2014 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 C:\DOCS\87351.TXT APRIL 2 The Administration is using the controversy surrounding the tar- geting of tax-exempt groups as a pretense for the need for this reg- ulation. In reality, this is Lois Lerner’s final act in the Administra- tion’s effort to curb political speech. We note that this effort was in the works well before the release of the inspector general’s audit. Through the committee’s investigation, we have uncovered evidence that Ms. Lerner sought to crack down on political speech by certain nonprofit groups as early as 2010, well before the rule was made public. Emails show the IRS was surreptitiously working on this effort off-plan. In fact, the committee’s investigation has revealed that the Administration secretly considered additional regulation of 501(c)(4) organizations for years. In transcribed interviews, Treas- ury officials have confirmed that work on changing the rules for so- cial welfare groups started long before the inspector general’s re- port. For example, Ruth Madrigal, a senior official in the Treasury Department’s Office of Tax Policy, confirmed that she suggested that Treasury conduct its work offline in June of 2012.