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WASHINGTON (Reuters) - U.S. Republicans claimed victory on Thursday after the Internal Revenue Service said it will delay and rewrite proposed rules for tax-exempt, social welfare groups that were at the heart of the agency's a political controversy last year.
"This proposed rule was wrong from the start," said Republican Representative Dave Camp, chairman of the tax-writing committee in the House of Representatives.
"Hopefully the IRS and the Obama Administration will think twice before ever trying to go down this path again," he said in a statement.
Since the rules were introduced in November 2013, Republicans have tried to stop them from being finalized.
The proposed rules would limit the political activities of social welfare groups that fall under Section 501(c)(4) of the U.S. tax code. The IRS had not been expected to finalize the rules this year.
The IRS has been inundated with a historic number of demands for changes to the rules, prompting the need to overhaul them, the agency said.
"It would be more efficient and useful to hold a public hearing after we publish the revised proposed regulation," the IRS said in a statement. While Republicans applauded the delay, Democrats blasted the change.
"This delay is deeply disappointing and a real setback for democracy," Democratic Senator Charles Schumer said in a statement.
Last year, the IRS became embroiled in a scandal after it revealed that the agency gave extra scrutiny to conservative "Tea Party" groups applying for 501(c)(4) status from 2010 to 2012.
Reporting by Patrick Temple-West; Editing by Kevin Drawbaugh and Tom Brown