IRS to Rewrite Rules governing Tea Party groups, other nonprofits

The IRS said Thursday it will go back and rewrite the proposed rules governing nonprofit groups and political activity, bowing to overwhelming opposition from tea party groups and free speech advocates on both ends of the ideological spectrum who feared the tax agency would hurt political debate.

In a statement, the IRS said it still intends to update its rules but will put off a hearing until after it issues a new version — and gave no timetable for moving ahead.

Conservatives hailed the move as a victory, saying that issuing a new version of the rule before the hearing is tantamount to starting over. Meanwhile, Democrats on Capitol Hill said the move was a setback for their efforts to try to push wealthy donors to the periphery of political debate.

“This delay is deeply disappointing and a real setback for democracy and faith in government” said Sen. Charles E. Schumer, New York Democrat. “The only hope we have is when the IRS goes back, they don’t succumb to any form of political pressure and enact a very tough rule that will equally curtail liberal and conservative groups.”

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