Freedom Path and Free Speech: New 501(c)(4) Challenge to Constitutionality of IRS’s Speech-Related Regulations

A newly filed lawsuit by Freedom Path, Inc. squarely pits the First Amendment’s free speech protections against the IRS’s questionable “facts and circumstances” test for evaluating politically-tinged issue advocacy activities of tax-exempt organizations.  Freedom Path is a conservative section 501(c)(4) social welfare organization that engages in issue advocacy activities affecting politics.  In its lawsuit filed April 28, 2014, against former IRS official Lois Lerner, other “unknown” IRS officials, and the IRS itself, Freedom Path claims it was unfairly targeted.  Freedom Path’s complaint describes unreasonable IRS delays in processing its tax-exemption application, unwarranted requests for additional information, and illegal release of confidential information by IRS officials to the media.

As Freedom Path asserts in its complaint, “this lawsuit presents a rare opportunity to challenge Defendant IRS’s unconstitutionally vague and ambiguous ‘facts and circumstances’ test used to analyze [Freedom Path’s] activities, a test which is in direct conflict with the U.S. Supreme Court’s clear guidelines relating to issue advocacy and campaign speech in Federal Election Commission v. Wisconsin Right to Life, Inc.”  (WRTL).   The significance of Freedom Path’s lawsuit is that it seeks to enforce the rule of law – that is, to make the IRS obey the US Supreme Court’s landmark decision as the supreme law of the land.

A.          Freedom Path’s Constitutional Journey  

Freedom Path’s odyssey began in March 2011, when it applied to the IRS for recognition as a section 501(c)(4) social welfare organization.   Freedom Path then waited for nearly one full year, with no substantive response from the IRS. 

According to its complaint, Freedom Path next received “voluminous and probing requests for additional information” from the IRS in February 2012. Despite serious problems with the requests, Freedom Path responded with comprehensive answers on June 3, 2012.  The IRS then waited until February 2013 to follow up.  In the meantime, the IRS allegedly disclosed Freedom Path’s confidential tax information to an investigative news organization called ProPublica, which then publicly disclosed it.

Church and State/Church in Court: Recent Application and Limits

When a lawsuit happens within a worshiping body, may a civil court get involved?  Despite congregational members’ best efforts to get along, sometimes it just doesn’t happen.  Push comes to shove, and there’s a lawsuit. Then what?  And what about the separation of church and state?

Thomas Jefferson’s famous “separation” only goes so far.       

Free Speech Rights Affirmed; Campaign Contribution Limits Removed: The 5-4 McCutcheon Decision and Its Implications

In a narrow but strong affirmation of First Amendment political speech freedoms, the U.S. Supreme Court struck down the aggregate campaign contributions limits in McCutcheon v. Federal Election Commission.  In doing so, the Court upheld the primary importance of keeping political speech as unrestricted as possible.

Writing for a plurality opinion (and joined by Justice Thomas, who concurred separately to indicate that he would protect political speech even further), Justice Roberts began by articulating the bedrock principle that there is “no right more basic in our democracy than the right to participate in electing our political leaders.”   Further, political speech is to be encouraged, not limited:  “The First Amendment is designed and intended to remove governmental restraints from the arena of public discussion, putting the decision as to what views shall be voiced largely into the hands of each of us."

Consequently, any government restraint of political speech – no matter how well intentioned – must be evaluated carefully.   In particular, the government must have not only a legitimate objective for limiting political speech, but also a compellingly “close fit” between such limitations and the means selected to achieve such objective.

The statute at issue limited individual and total contribution amounts to political campaigns.  (These limitations are contained in the Federal Election Campaign Act of 1971, as amended by the Bipartisan Campaign Reform Act of 2002).  The government argued that both the individual and aggregate financial limitations were critical to preventing “quid pro quo” corruption – that is, undue influence by people on politicians.  The Court agreed that the individual limitation satisfied the constitutional test for a “close fit,” because it could reasonably be expected to reduce the risk of essentially “buying” political influence over a specific candidate.  The Court disagreed, however, that the same rationale would equally apply to aggregate limitations.