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 {00506285.DOC; 1}  The Bright Lines Project: Clarifying IRS Rules on Political Intervention Drafting Committee Explanation Interim Draft  July 12, 2013 Built upon four years of discussion and feedback, a committee of nine tax law experts, chaired by Greg Colvin (with Beth Kingsley as vice chair), has developed a set of six proposed rules which are designed to clarify the IRS regulations governing nonprofit organizations’ political activities. This document contains the propos ed rules, as well as explanations and a numbe r of examples prepared by Committee members and Public Citizen staff. The Colvin Committee also includes Eve Borenstein, Terence Dougherty, Rosemary Fei, Jim  Joseph, Abby Levine , John Pomeran z, and Ezra R eese. Craig Holman and Lisa G ilbert, of Public Citiz en’s Congress Watch, have also contributed.  For further information, please contact Tom Halloran at [email protected] or 202-454- 5131. This draft represents the c urrent state of the proje ct as of July, 2013. Introduction In recent months, a report by the Treasury Inspector General for Tax Administration revealed that over a two year period, improper search criteria were used by inadequately supervised IRS agents to select the exemption applications of 501 (c)(4) organizations, as well as some 501(c)(3), (c)(5), and (c)(6) groups, for special scrutiny. The criteria were intended to identify advocacy organizations that might be involved in political campaign activity, but some of the terms used (e.g. “tea party”) were biased in that they were more likely to refer to conservative than to liberal applicants. It has become apparent that a major factor in this systematic breakdown of the review process was the lack of clear, neutral, objective standards by which IRS employees and managers could determine whether applicants were engaged in political intervention. In other words, the difficulty experienced in the nonprofit world, with many organizations very unsure of how to comply with the IRS’ vague “facts and circumstances” approach to

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