State Politics

US House expected to pass IRS bills on tax day

The House is expected to pass a group of bills on tax day aimed at reining in the IRS, including one by Rep. George Holding that would streamline the way the agency handles groups that claim tax-exempt status.

The bills spring from oversight hearings in 2013 that found that Internal Revenue Service employees were targeting conservative groups for special scrutiny.

“We found that the IRS is an agency in turmoil,” said Holding, a Republican from Raleigh and a former U.S. attorney.

But it’s also intimidating, and nobody can avoid it, he said.

Holding’s bill, HR 1295, would change the way the IRS grants tax-exempt status to nonprofit groups known as 501(C)(4)s, after a section of the tax code. It’s one of a group of related bills that will be up for votes on Wednesday.

In the past, groups had to apply for tax-exempt status. Holding’s bill lets them simply inform the IRS when they start up. The agency has the ability to examine the groups when it examines a form, the 990, that such organizations are required to file annually about their mission, programs and finances.

Doing away with the application process would save time at the IRS and would remove any temptation for employees to set aside applications of groups they don’t like, Holding said.

His bill also provides a review process for groups who are turned down for tax-exempt status on the basis of their 990 forms.

The bottom line of his bill and the other related legislation is that “the American people don’t need to live in fear that the IRS is targeting or making decisions based on people’s political activities, whether it’s to the right or to the left. That’s a frightening situation,” Holding said.

The Justice Department has said it will not prosecute Lois Lerner, former director of the Exempt Organizations division, after she had refused to testify at a House hearing in 2014 about the extra scrutiny of certain groups.

Bipartisan support for the bills is expected.