A new coalition has formed to oppose passage of the 527 Reform Act of 2005 (S. 271 and H.R. 513). The Coalition to Protect Independent Political Speech sent a letter to Congress signed by more than 100 nonprofits urging rejection of the bill, noting, “These organizations have contributed to the revitalization of American democracy, helping bring millions of people back to the process of governing the country by bringing them back to the polls.” The Senate Rules Committee has scheduled a hearing for March 8. The 527 Reform Act of 2005 proposes to make all groups “described in Section 527” of the tax code regulated political committees unless they fit into a limited number of narrow exemptions. The exemptions would be lost if the group spent more than $1,000 on a public communication that “promotes, supports, opposes or attacks” a federal candidate in the year prior to the election. There is no definition of what kind of communication “promotes, supports, opposes or attacks” a federal candidate, so that criticism of elected officials, without mention of an election, could trigger federal regulatory authority. The bill would also subject many state and local political committees to federal regulation. The broad-based coalition of 501(c) organizations objects to the bill because it would regulate independent groups that do not present a threat of corruption to the political system, and establish a rationale for regulation that could easily be extended to 501(c) groups. The coalition letter cites the significant role of independent 527s in getting out the vote in 2004, noting that, “The 2004 elections saw the greatest increase in voter participation since 1968, due, in significant part, to the work of these independent organizations.” Their funds were used to “knock on doors in communities with some of the lowest historic voter turnouts in the country.” 527s are credited with expanding the scope of the debate by raising controversial issues. The letter said groups signing the letter prefer “to see public policy based on facts, not propaganda,” urging Congress to consider facts that show in 2004:

• Candidates and parties outspent independent 527s by ten to one
• Independent 527s must register with the Internal Revenue Service (IRS) and file detailed reports that are publicly available
• 527s that coordinate with candidates or parties face substantial penalties.

On Feb. 28 the coalition held a briefing in Washington, DC, that provided background and analysis on the issues surrounding regulation of 527s. Three election law attorneys noted that:

• The IRS recognizes many different types of groups under Section 527
• Under the bill a politically motivated complaint could be filed at the Federal Election Commission (FEC) that a 501(c) group is “described in Section 527,” resulting in an investigation by the FEC and possible conflicting regulation between the FEC and IRS
• The overall impact of the proposed legislation would be to weaken independent political voices in American politics.