The Internal Revenue Service is under fire from both parties for improperly targeting certain groups for additional scrutiny because their names included keywords such as “Tea Party” and “patriot.” But the challenge of addressing the skyrocketing numbers of “social welfare” groups registering for tax exempt status could be lessened by fixing the broken disclosure laws for political advertisers.

Since the Supreme Court’s controversial 5 to 4 ruling in the Citizens United v. FEC case in 2010, the IRS has seen a more than 100 percent increase in the number of groups applying for 501(c)(4) status — the section of the federal tax code that governs non-profit groups dedicated to social welfare — from 1,500 in 2010 to 3,400 in 2012.

Not all 501(c)(4) engage in political activity of any kind — the United States Chess Federation, for example, is a fairly apolitical group. Political 501(c)(4) groups are required to adhere to certain rules, including that they not be “primarily engaged” in electioneering activity. In a failed attempt to sort out which groups were apolitical and which needed additional scrutiny, the IRS reportedly tried a variety of ineffective screening methods, including flagging “patriot” groups as well as groups that focused on making “America a better place to live.”

As long as it is not their primary purpose, Citizens United allows (c)(4) groups to spend unlimited funds on “independent expenditure” ads aimed at swaying voters and the deadlocked Federal Election Commission allows these groups to avoid any disclosure of who bankrolls these advertisements. And since the 2002 law governing political advertisements came before the ruling, it does not adequately address the specific issue of disclosure for independent expenditure ads.

Because of this loophole, groups seeking to influence elections through campaign ads groups and to avoid having to make their donors public have often registered as (c)(4)s, rather than as super PACs (tax-exempt groups which can also raise and spend unlimited amounts on “independent expenditures,” but must make public all large donors). After bankrolling super PACs in the 2012 elections, mega-donors including millionaire investor Foster Friess and billionaire casino mogul Sheldon Adelson have vowed to keep future political spending secret, by giving to opaque 501(c)(4) committees instead. And good government groups have demanded the IRS investigate whether (c)(4)s like Crossroads GPS, the Commission on Growth, Hope and Opportunity, and the American Future Fund are really just super PACs in disguise.

The guidelines for what is and is not an acceptable level of political activity for a (c)(4) has never been clear — a vague “primary purpose” test — and has been little enforced. With limited staff and resources, even before massive furloughs forced by the sequester, the IRS has proved ill-equipped to monitor which (c)(4)s are really (c)(4)s and which ones are pretenders.

Congressional Republicans have thus far blocked efforts to require disclosure of political ad spending by (c)(4) groups. The proposed DISCLOSE Act and the Follow the Money Act would help bring parity to the disclosure rules goverrning independent campaign ads, without impeding on the legitimate activity of (c)(4)s. But if groups like Crossroads GPS were required to disclose the major donors behind their $70 million-plus campaign ad spending, there would be little incentive for them to masquerade as social welfare groups.

If Congress simply treated all spending on independent campaign advertisements uniformly — allowing voters to know who was really speaking and to evaluate the speech accordingly — the IRS would not have to use these clearly imperfect tests to decide what is and isn’t a legitimate 501(c)(4).

Note: ThinkProgress is a project of the Center for American Progress Action Fund (CAPAF), which has been recognized by the IRS as a 501(c)(4) organization. CAPAF does not endorse candidates, nor does it fund “independent expenditures” or any other kind of candidate-related advertising.

The Internal Revenue Service (IRS) acknowledged Friday that it had improperly flagged groups applying for tax-exempt status for additional scrutiny if they contained common Tea Party keywords in their names. Rather than addressing the real problem of political committees masquerading as 501(c)(4) groups to evade public disclosure laws, this approach instead delayed the process for several groups purely on the basis of their names.

Lois Lerner, head of the IRS unit that oversees tax-exempt groups, noted that the number of 501(c)(4) group applications doubled between 2010 and 2012. As a result of this influx, she explained, low-level workers at the agency’s Cincinnati office had flagged about 300 applications for additional review based on a keyword search. None had their status revoked or denied and the IRS apologized for the mistake.

While it unclear whether the IRS workers intentionally targeted conservative groups — an agency spokesman did not immediately respond to a ThinkProgress request for the complete list of keywords used — the office revealed that two of the terms on the list were “Tea Party” and “patriot.” As such, about 75 Tea Party groups were singled out for additional scrutiny.

The spike in 501(c)(4) groups comes after the Supreme Court’s 2010 Citizens United v. FEC decision that outside groups may make unlimited political expenditures. Since then, some 501(c)(4) organizations have begun abusing the system. Though groups engaged in some political activity may qualify as “social welfare groups” and receive tax-exempt status under this section of the tax code, electioneering cannot be their predominant activity.

Karl Rove’s Crossroads GPS, for example, told the IRS that any political ads run by the group would be “limited in amount” and “would not constitute the group’s primary purpose.” Campaign finance reform advocates have argued that, in light of more than $70 million in “independent expenditure” ad spending, the group’s primary purpose is clearly campaign activity. But rather than register with the Federal Election Commission as a political committee, Crossroads GPS continues to claim that it is not such a group and need not publicly identify its funders.

In a joint op/ed Wednesday, the three Republican members of the Federal Election Commission blasted campaign finance reformers and good-government groups for proposing changes to the impotent agency, defending themselves as “fair and impartial” regulators and administrators of campaign finance laws. But this same trio has been responsible for historic deadlock at the Commission and has openly refused to follow the campaign rules enacted by Congress.

FEC Commissioners Caroline Hunter, Donald McGahn II, and Matthew Petersen, all three of whom continue to serve though their terms have expired, wrote that “The agency’s harshest critics disregard the agency’s prime enforcement directive: Enforce the law as it is, not as some wish it to be.” They continue:

Ultimately, charges that the agency “does not enforce the law” ignore the legal parameters set by Congress that have been further limited by the courts. Failure to recognize these constraints would leave political participants at the mercy of unelected bureaucrats, an outcome both Congress and the courts have rejected.

Of course, thanks to these three, the Federal Election Commission has not followed the “legal parameters set by Congress.” Indeed in 2011, McGahn conceded “I’m not enforcing the law as Congress passed it… I plead guilty as charged.” Instead, he argued, he enforced the law based on his own interpretation of what the Supreme Court would want him to do. “In a close call, the tie goes to the speaker, not the regulator… The court has said certain [portions of McCain-Feingold] are unconstitutional.”

But rather than wait for the courts to rule on who should have to disclose the donors funding their electioneering communications, these Republicans instead simply chose to ignore the clear text of the 2002 campaign finance law and have allowed hundreds of outside group ads to be aired with no real disclosure as to who bankrolled the message.

And by waiting as much as five years to take action on obvious violations, they have ensured that campaigns can do virtually anything without fear of any meaningful penalty.

Former Common Cause President Scott Harshbarger once quipped that, ”This is probably the only agency in Washington that has done from the beginning exactly what it was intended to do, which was to do nothing.” But with an unprecedented number of deadlocked votes on even routine enforcement matters, Hunter, McGahn, and Petersen have managed to make historically weak campaign finance enforcement almost non-existent.

The Federal Election Commission will reach an ignominious milestone at midnight Tuesday: every single one of its members’ terms will have expired. But thanks to a quirk in election law — and Washington gridlock — they continue to serve and deadlock on nearly every major issue.

Former Common Cause President Scott Harshbarger once quipped that, ”This is probably the only agency in Washington that has done from the beginning exactly what it was intended to do, which was to do nothing.” The Commission, by design, includes six members — no more than three from each major political party. While appointees are limited to a single, staggered six-year term, they are permitted to stay on indefinitely until they are replaced. No commissioner has been confirmed since the George W. Bush administration and one seat is currently vacant. Five of the six terms had expired by the end of April 2011 — though four of those five are still serving two years later (a fifth stayed on through February 1 of this year).

President Obama has, to date, nominated just one person to the commission. Though his nominee, SEIU Associate General Counsel John J. Sullivan, received unanimous committee support, his nomination was held up by Sen. John McCain (R-AZ) and then-Sen. Russ Feingold (D-WI) in a failed attempt to force more nominees. After a year of waiting, Sullivan withdrew his name from the process.

Last year, a “We the People” White House petition received more than 25,000 signatures demanding that the President nominate new commissioners to replace the anti-enforcement Republican incumbents before the November elections. The White House responded:

While the Administration doesn’t comment publicly about the President’s personnel decisions before he makes them, the Obama Administration is committed to nominating highly qualified individuals to lead the FEC. The agency, and the system of open and fair elections that the FEC is charged with protecting, deserve no less.

The three Republican appointees continue to block meaningful disclosure, deadlock against most enforcement, and ensure toothless enforcement — and will apparently continue to do so indefinitely.

The Republican National Committee’s investigation into its 2012 electoral defeat, dubbed their “Growth & Opportunity Project,” aims to provide a blueprint for how to “grow the Party and improve Republican campaigns.” Among their top proposals for how the GOP can win: dismantling the nation’s already weak campaign finance laws to allow rich people even more influence over politics and politicians.

Though the report’s minority outreach section notes that the GOP must show that it is “not just the party for those at the top of the economic ladder,” the campaign finance “reforms” embraced by its authors would give the wealthiest Americans even more say in the political system than they already have. And while the report tries to spin these changes in Orwellian terms like “restoring the free speech rights of the political parties and candidates,” it candidly admits that the proposed deregulation would “help the RNC return to its rightful position as the national Party leader” and aid in electing more Republicans.

Among the proposals are a repeal of McCain-Feingold “soft money” ban, an increase in how much each campaign may receive from rich donors, a repeal of the limits on how much rich individuals make in total contributions to candidates in each campaign, the elimination of the public financing system for the presidential campaigns and party conventions, and decimation of state and local campaign finance limits and laws, allowing rich individuals and corporations to exert as much influence on political decision-making as they can afford.

It encourages a nationwide assault of state and local laws by creating “model legislation” to “improve state campaign finance laws.” The report proposes coordinating with the corporate-backed ALEC, the group behind model bills to suppress voting and to encourage people like Trayvon Martin’s killer George Zimmerman to shoot first and ask questions later.

And if the states and local governments reject the corporate assault on their political system, the report suggests, the RNC should just turn to the GOP-controlled federal courts:

Where legislation cannot be adopted, litigation should be considered to lessen the burden on the parties’ ability to support their candidates. Where partisan obstruction or other obstacles stand in the way of common-sense improvements to a state’s campaign finance system, litigation may be necessary, particularly where there are constitutional concerns.

The report further argues the country should “increase contribution limits for federal campaigns,” because “in the age of SuperPACs and other such organizations, the contribution limits to federal candidates must be increased so candidates have more control of the message and voters have a better understanding of the viewpoints of candidates rather than of third-party groups.” But even the Supreme Court’s 5-4 Citizens United ruling noted that unlimited spending by outside groups was different from unlimited contributions to political candidates because “by definition, an independent expenditure is political speech presented to the electorate that is not coordinated with a candidate.” This plan would cut the middle-man and allow rich people to buy even more influence and access directly from candidates and elected officials.

Sen. Jon Tester (D-MT)

Sen. Jon Tester’s Senate Campaign Disclosure Parity Act, S. 375, is the rare proposal that would both increase transparency and reduce federal spending. But despite bipartisan support and no obvious opposition, an identical bill died in the last Congress without ever coming up for a vote in a Senate paralyzed by GOP minority obstruction.

An arcane law still allows Senators and Senate candidates to file their campaign finance disclosure statements on paper with the Secretary of the Senate — unlike presidential candidates and campaigns for the House of Representatives — rather than electronically. As a result, those filings are less easily searchable for citizens and require additional processing by the Secretary’s office and the Federal Election Commission. According to Sen. Lamar Alexander (R-TN), who backed the bill in 2012, the inefficiency costs taxpayers an estimated $430,000 annually.

“This common-sense bill allows folks to know right away who’s funding political campaigns and reflects the accountability and transparency Montanans expect from our elected officials and candidates for public office,” Tester explained in a press release announcing the 2013 version of the bill. “It’s 2013 and high-time for the Senate to bring its campaign finance reporting into the 21st century.” The bill has already attracted 28 co-sponsors, including five Republicans.

At a Senate Rules and Administration Committee hearing last year, Chairman Chuck Schumer (D-NY) called the bill a “no-brainer.” Then-Ranking Member Alexander endorsed it and said it “would fix an obvious problem,” noting that the late Sen. Robert Byrd (D-WV) had blocked similar efforts in the past. But, despite his support, Alexander warned that unless Senators be given free reign to attach amendments dealing with “other problems in our current system Members might like to address,” it might not see the light of day for five years.

Due to the Senate’s rules, even non-controversial proposals and appointees can take days of the Senate’s floor time — and members of the minority can block votes on legislation they support unless they are allowed to propose unrelated measures. Though 71 Senators ultimately voted for cloture last month on the nomination of Secretary of Defense Chuck Hagel, the Republican minority filibustered the nomination and tied up the Senate for days. The watered-down filibuster reforms agreed to in January did little to address these problems.

As such, even important and non-controversial legislation like Tester’s Senate Campaign Disclosure Parity Act often fall by the wayside, as happened in 2012.

Rather that try to get a floor vote on small proposals like this, often the best hope is to attach them to larger bills. A spokeswoman for Sen. Tester told ThinkProgress that he hopes to include the bill as part of the FY 2014 Financial Services and General Government appropriations bill.

The growing list of supporters of S. 375 includes Senators Max Baucus (D-MT), Mark Begich (D-AK), Richard Blumenthal (D-CT), Thad Cochran (R-MS), Dick Durbin (D-IL), Al Franken (D-VA), Kirsten Gillibrand (D-NY), Lindsey Graham (R-SC), Chuck Grassley (R-IA), Tom Harkin (D-IA), Johnny Isakson (D-GA), Angus King (I-ME), Amy Klobuchar (D-MN), Patrick Leahy (D-VT), Carl Levin (D-MI), Claire McCaskill (D-MO), Jeff Merkley (D-OR), Lisa Murkowski (R-AK), Jack Reed (D-RI), Jay Rockefeller (D-WV), Chuck Schumer (D-NY), Jeanne Shaheen (D-NH), Jon Tester (D-MT), Mark Udall (D-CO), Tom Udall (D-NM), Elizabeth Warren (D-MA), Sheldon Whitehouse (D-RI), and Ron Wyden (D-OR).

Rep. Chris Van Hollen (D-MD)

Rep. Chris Van Hollen (D-MD) has, in recent years, become the leading force in the U.S. House of Representatives for campaign finance reform. As chief sponsor of the DISCLOSE 2012 Act, which was blocked from even getting a hearing in the Republican-controlled House and filibustered to death by the Republican minority in the Senate, he has been the chief advocate for greater transparency for outside groups like Karl Rove’s Crossroads GPS that keep their donors secret.

In an exclusive interview with ThinkProgress, Van Hollen expressed optimism that his Republican colleagues may be more open to DISCLOSE and other reforms next year after they too faced secret-money attacks in their own campaigns. Public pressure, he said, will be key in getting the legislation and other reforms aimed at mitigating the damage caused by the Supreme Court’s 5-4 Citizens United ruling. And, he noted, he hopes Federal Election Commission and election reform will also be priorities for the Obama administration and the 113th Congress.

Here are some highlights of Van Hollen’s comments:

The DISCLOSE Act:

The best I can say is I hope after this election, we have more converts on this issue. It was very ironic to hear [defeated] House Administration Committee Chairman Dan Lungren (R-CA) complain of all the secret outside money coming into his race. He refused to even hold a hearing on the DISCLOSE Act as Chairman, which meant we had to hold a “rump” hearing, not an official Congressional hearing. I think you’re going to see greater interest from our Republican colleagues. But this will only move with outside pressure. You’ve got people like Sen. Republican Leader Mitch McConnell (R-KY), who is the sworn enemy of disclosure. He did a 180 — he used to be for full transparency and disclosure. He opposed McCain-Feingold saying we need full disclosure, not this. Then he flip-flopped, after Citizens United. What gives me hope is the public is totally on the side of disclosure and transparency – they believe the public has a right to know who’s spending gobs of secret money to influence these elections.

Other Campaign Finance Reforms:

I’m gonna continue to press on a number of fronts, including urging the IRS to determine whether or not a lot of these organizations were using the cover or their tax-exempt status in order to pursue political and electoral objectives, whether they’re meeting the tests that provide them with tax-exempt status and give them the ability to hide their donors… A number of other avenues dealing with shareholder rights with respect to corporate giving: both shareholder notice (at the very least, shareholders should be notified of corporate contributions) and shareholder approval. We saw a major development with Chevron contributing a lot of money to one of the Congressional super PACs [the company gave $2.5 million to the Congressional Leadership Fund, a super PAC that ran attack ads against Democratic candidates]. There are corporations that essentially launder their money through other organizations to hide their identities, it’s important to shine a light on that secret money. A lot of corporations prefer to do their direct expenditure contributions in the dark.

Election Reform:

This is another important area: in addition to blatant efforts of some states to limit the democratic process, you also have indirect impediments placed on participation. Requiring someone to stand in line for 3-4 hours to vote is a limit on their rights. First, you had some states trying to limit the right to early voting. On top of that, [some states] created circumstances where you have long lines. It’s a clear impediment to people’s right to vote. It’s too early to say whether it’s bipartisan, but we’re working on a number of pieces of legislation now to deal with this set of issues. Read more