I know this issue has already been the subject of a post here, but I wanted to get my two cents in too. I hope that's okay.
Oh, the outrage! How dare the IRS question the honesty of tea party
groups who asserted in legal documents that they were primarily social
welfare organizations, not political groups! Who would ever think such a
thing! And how dare the IRS single them out and not make a move
against liberal groups!
Here we go again, with the usual Republican mountain of outrage,
designed to smear the Obama administration and at the same time ignite
more hatred against the government and particularly against having to
pay taxes. And of course, the tools in the mainstream press are likely
going to do the bidding of their rich masters and run with this phony
scandal all summer long, despite the fact that anyone with an hour or so
to spend can completely deconstruct the whole lying pack of nonsense.
Well, here is what I have found out in my hour of time. First of all, the IRS' scrutiny
was not directed solely at right wing organizations:
"Liberal groups received same IRS letter
that ignited Tea Party outrage...The maelstrom over the revelation that
the IRS targeted anti-tax Tea Party groups applying for tax exempt
status for scrutiny is showing no signs of slowing down, with
Republicans seeing their chance to milk a scandal for political
purposes. But while the politics is heating up, some important context
is emerging, like the fact that liberal groups were targeted as well,
and in fact the only group to have its application denied was a liberal
group."
Well, that's the least of the problems with this latest non-scandal. Now
on to the real outrage. Here are a few excerpts from an official IRS
document* entitled "IRC 501(c)(4)Organizations ByJohn Francis Reilly,
Carter C.Hull, and Barbara A. Braig Allen:"
"IRC 501(c)(4) provides for exemption of:
Civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare.
Local
associations of employees,the membership of which is limited to the
employees of a designated person or persons in a particular municipality
and the net earnings of which are devoted exclusively to charitable,
educational, or recreational purposes.
Organizations that
promote social welfare should primarily promote the common good and
general welfare of the people of the community as a whole. An
organization that primarily benefits a private group of citizens cannot
qualify for IRC 501(c)(4) exempt status.
an organization that
loses its IRC 501(c)(3) status because of excessive lobbying or
political campaign intervention may not be treated as an organization
described in IRC 501(c)(4)."
A few remarks on the above. First of all, let me point out that despite
the clear wording of the above, at some point in the past, the IRS
decided to replace the word "exclusively" with the word "primarily." If
you are interested in why this happened, you are welcome to read more
of this IRS document, which contains numerous short explanations of
cases the IRS has ruled on, which show that many groups which were
clearly social welfare organizations under the meaning of this act had
minor activities which could have resulted in their being denied their
appropriate status (i.e. bingo games run by charities, which could be
seen as a for-profit activity.) Unfortunately, this change in
interpretation left the act open to the most egregious abuse. The
notion, for example, that Karl Rove's political smear factory is a
"social welfare" organization is ludicrous; yet it continues to claim
tax exempt status, due to the IRS's utter failure to enforce this law
with appropriate action.
Now, a few comments from
an article in the
Columbia Journalism Review, which I found via the
Daily Kos post linked to above:
"• Congress requires the IRS to review
every application for tax-exempt status to weed out organizations that
are partisan, political, or that generate private gain. Congress has
imposed this requirement on the IRS, and its predecessor agencies, since
1913.
• When it comes to 501(c)(4) organizations, what the IRS
is supposed to do is draw a distinction between groups that are
“primarily engaged” in politics and groups that really are primarily
engaged in “social welfare”—somehow “promoting the common good and
social welfare of the community.”
• The first scandal here,
meanwhile, is that the social welfare tax exemption is being used by
existing 501(c)(4) organizations, including some very large ones, to
promote partisan political interests—the very activity Congress has
explicitly prohibited for a century"
What must be noted here is not that the IRS exceeded its mandate by examining these organizations, but that it was
legally obligated
to examine all of them; and the real scandal here is that every single
one of these purely political groups was not denied its tax exempt
status. And further, it is even more of a scandal that Rove's group and
the many like it that were formed in the wake of the miserable
Citizens' United
decision were not laughed out of Washington when they applied for tax
exempt status for the hundreds of millions of dollars that their few
thousand rich donors spent to buy elections.
But still, we are treated to the mindless regurgitation of the Republican point of view from our mainstream press, such as
this example from the Voice of the Serious People, the
Washington Post:
"The fact that Tea Party groups —
especially smaller organizations — appear to have been specially singled
out for scrutiny is what most troubles many experts here. Not least
because larger, politically oriented groups like Crossroads GPS and
Priorities USA were able to form 501(c)(4) organizations with little
trouble.
“The targeting aspect of this is god-awful,” agreed
Douglas N. Varley, a Washington-based lawyer with Caplin & Drysdale
who deals with tax-exempt organizations. He adds that the agency’s
special focus on conservative groups is a much bigger deal than the
sheer number of questions that were posed to groups seeking 501(c)(4)
exemption, which isn’t by itself unusual."
The targeting aspect of this was not God-awful. It was one hundred
percent appropriate, as required by law (which this ignorant reporter
would know if he had bothered to do any research beyond regurgitating
Republican talking points.) Is there a person in this country that does
not know that the tea party groups and all of the other Republican
groups like Rove's existed for no other purpose than to elect Republican
candidates? When they applied for tax exempt status, they openly
perjured themselves by claiming that they had any other purpose. It was
the legal responsibility of the IRS to question the legitimacy of their
criminal filings, and what is more it was the legal obligation of the
IRS to deny every single one of these applications. What is "God-awful"
is that the Republican party, along with its stooges in the press, are
intimidating IRS officials into not applying the law, so that they may
enjoy the privilege of openly breaking the law every day that these
organizations exist.
*If you want to read the whole thing (be my guest- I did and it didn't quite kill me,) here it is.