WASHINGTON (Reuters) - A senior Internal Revenue Service official on Wednesday put a number for the first time on how many political groups, including some "Tea Party" organizations, have gained IRS tax-exempt status In recent years.
About 50 groups received the designation in 2010 and 2011, out of about 200 that applied, said Steven Miller, deputy IRS commissioner for enforcement, at a congressional hearing.
Tax-exempt groups are raising and spending record amounts of money in attempts to sway the November 6 elections, bolstered by the Supreme Court's landmark "Citizens United" ruling in 2010 that eliminated limits on political contributions in federal elections.
The groups, classified as 501(c)(4) "social welfare" organizations in the tax code, can raise unlimited campaign contributions and do not need to disclose their fundraising donors. This distinguishes the tax-exempt groups from Super-PACs, which do reveal contributors.
Consumer groups have been pushing the IRS to clarify the standards for these political groups to ensure that they are not abusing their tax-exempt status.
Requests for 501(c)(4) status have jumped in recent years, Miller said.
"We continue to work those cases," he said. "This is an area obviously that for us is somewhat difficult" to regulate.
The 501(c)(4) groups cannot endorse a candidate or political party, Miller said. But, he added, the IRS does not have a "bright line" test for assessing their political activity.
With no test to determine the extent of a political group's campaign work, the IRS may be assigning tax-exempt status arbitrarily, tax lawyers said.
"I would love to hear (IRS) try to eloquently describe the difference between the 50 approved and the 150 which were left hanging," said Ofer Lion, a lawyer with Hunton and Williams LLP.
Some Tea Party groups have received extensive questionnaires from the IRS as part of their tax-exempt applications. The questions ask, for instance, about groups' donors and contribution amounts, said Jay Sekulow, chief counsel at The American Center for Law and Justice, a conservative legal group representing some Tea Party organizations.
Eight of the 25 Tea Party groups represented by the ACLJ have gotten tax-exempt status, he said. Other applications have been pending for two years.
Other advocacy groups with 501(c)(4) divisions include the National Rifle Association and the Sierra Club.
Some congressional Democrats have criticized the IRS for what they say is lax enforcement of the tax-exempt political groups. Analysts said the IRS is unlikely to step into the partisan crossfire by revoking a political group's tax-exempt status before the election.
"The IRS would like to just keep everything as is through November," said Paul Streckfus, a former IRS official in the tax-exempt division and publisher of the EO Tax Journal, which writes about tax-exempt organizations.
Reporting by Patrick Temple-West; editing by Kevin Drawbaugh and Mohammad Zargham