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Wed 15 May, 2013 01:18 pm
By Michael Hiltzik
May 15, 2013, 8:38 a.m.
It can be hard to figure out any Washington "scandal" without a scorecard, and harder when it involves an opaque agency such as the IRS.
That's the case with one of the scandals du jour, which revolves around the IRS' scrutiny of political organizations seeking a tax exemption. So here -- as a companion piece to my column on the subject, and with the help of a just-released report from the agency's inspector general -- we're providing a quick guide to what's wrong and maybe not-so-wrong with what the IRS was up to.
Why was the IRS scrutinizing applicants for tax exemptions? Certain nonprofit “social welfare” organizations are entitled to tax exemptions under section 501(c)4 of the tax code -- they’re known as C4s. But they’re not permitted to do significant electioneering. The IRS was trying to winnow out applicants that might have been campaign organizations masquerading as “social welfare” groups.
Why would a political group want to be a C4? Mostly because C4s don’t have to disclose the names of their donors. For some donors, especially corporations and rich persons, anonymity is as good as gold. Starting in 2010, suspicions ran high that campaign groups were seeking C4 designations they didn’t deserve.
What did the IRS do wrong? The inspector general concluded that staff at the IRS used “inappropriate criteria” to identify C4 applicants that might be crossing the line into politics. Starting in early 2010, they screened applicants for names with “political sounding” terms such as “tea party,” “patriots,” or “9/12.”
Did IRS higher-ups OK this? No. The inspector general found that supervisors ordered the criteria changed when they learned about them in mid-2011. Eventually -- in January 2012 -- the criteria were changed to “political action type organizations involved in limiting/expanding government, educating on the Constitution and Bill of Rights, social economic reform/movement.”
Did President Obama or any other administration figures know? The IG report says no. It says IRS officials all state that the screening was not influenced “by any individual or organization outside the IRS.”
Were conservative groups the only ones given special scrutiny? No. Of 298 applications given special attention, only 96 had those three terms in their names. The IG doesn’t characterize the other 202.
Were most of these applicants innocent? Not necessarily. The IG also says that nearly 70% of the applications selected for special scrutiny actually did show indications of “significant” political activity that might have invalidated their C4 status.
Why were IRS staff looking for a shortcut? Because their workload had mushroomed. Applications for C4 status rose from 1,735 in 2010 to 3,357 last year. Meanwhile, budget cuts had reduced the staffing of the Cincinnati office processing the applications.
Shouldn’t this be a routine process? Yes, but it isn’t, because the standards for permissible political activity are vague. The C4 law says an organization must be “exclusively” devoted to social welfare -- it’s designed to cover community groups like volunteer fire departments, homeowner associations and cultural organizations. The IRS has interpreted this to mean that a group can be a C4 if no more than 49% of its activity is electioneering. But it’s unclear how to define this political activity or calculate the percentage. The poor souls on the IRS front lines have to figure that out. The IG says they tried to do so without any help from management.
Did the staff do anything else wrong? The IG says a questionnaire sent to 170 of the 298 applicants was too intrusive. Among the “unnecessary” questions, the IG says, were the names of donors, the plans of officers or directors to run for office, and the applicant groups’ positions on various public issues.
Did the IRS reject tea party groups’ applications? No. None of those with “tea party,” “patriots,” or “9/12” in their names were rejected. Indeed, the IG says that several groups that should have been rejected actually were approved.
Conservative groups were filing for C4s and C3s on a four to one basis when compared to filings by liberal groups. There is no doubt that the IRS people were trying to do a decent job approving or disapproving the applications.
What “Social Welfare” Work Do Tea Party Groups Perform?
Does Karl Rove hold bake sales?
By Brian Palmer|Posted Thursday, May 16, 2013, at 2:54 PM
President Obama demanded and received the resignation of the acting commissioner of the IRS on Wednesday. The agency gave special scrutiny to conservative groups applying for 501(c)(4) status, which is reserved for “social welfare” organizations. Many Explainer readers have asked the obvious question: What social welfare functions do Tea Party groups perform?
They educate you on the dangers of big government. In its application for 501(c)(4) status, Karl Rove’s Crossroads GPS claimed it would spend 20 percent of its resources on research, 30 percent to influence policy, and 50 percent on educating the public on such issues as the national debt, health care, and pension reform. The conservative Center for Individual Freedom told the IRS its education efforts would focus on “promoting individual freedom and constitutional protection.” Liberal 501(c)(4)s also claim to be primarily educational. America’s Families First, for example, claims to educate the public on “creating jobs for the middle class” and “improving public education.”
Public education, even regarding political issues, constitutes social welfare as the IRS understands the term. The agency doesn’t require 501(c)(4) groups to hold bake sales for the school marching band or walks for cancer research. Those sorts of activities are undertaken by charities, which typically organize under 501(c)(3) of the Internal Revenue Code. By the agency’s own admission, social welfare is a “very broad category,” and it undoubtedly includes issue advocacy. In the IRS’s view, pro-choice and anti-abortion groups are both working to improve public welfare.
The challenge is determining when public education efforts become electioneering, which is not considered social welfare work and can constitute only a minor portion of a 501(c)(4) group’s activities. The IRS has a multi-prong test, including such factors as whether the advocacy occurs close to an election, whether an advertisement mentions a candidate by name, and whether the group has a long-standing position on an issue. (Christian churches, which are typically 501(c)(3) organizations and barred from political advocacy, are allowed to engage in anti-abortion campaigning, for example, because their opposition didn’t emerge simply for purposes of defeating individual political candidates.)
Although this so-called “facts and circumstances” test is murky, most tax experts think it would be workable if the IRS had the resources to enforce it. In practice, political 501(c)(4) groups on both sides of the ideological divide flagrantly violate the anti-electioneering rule, and the IRS only rarely responds. Just before the 2010 election, for example, Crossroads GPS ran a television advertisement accusing Pennsylvania Rep. Joe Sestak of voting to “gut Medicare” and “raise taxes over $5 billion.” During the same election season, the left-leaning Women's Voices Women Vote Action Fund ran an ad claiming that Colorado Senate candidate Ken Buck “refused to prosecute an admitted rapist” as district attorney. Political 501(c)(4) groups claim that such advertisements constitute social welfare work rather than campaigning because they don’t explicitly call on viewers to vote a certain way. That’s why so many recent ads have ended with statements like “Tell Ken Buck Colorado women deserve respect” rather than “vote against Ken Buck.”
Big government is too ******* big.
This is the perfect opportunity to reduce the size of government.
Replace the tax code with the flat tax, fair tax or 9,9,9 and carry on.
@H2O MAN,
Actually, the size and scope of our federal government needs to be the focus of we the people.
Republicans and Democrats are taking advantage of we the people - this is unacceptable to me.
What about you?
Abuse of power at this level will unite we the people.
Set aside your individual political preferences and unite.
Now is the time for we the people to restrict the size and scope of our government - before it's too late.
Politicians on both sides worked together to create this Idiocracy we live in.
We the people must unite and work together to greatly simplify our individual lives.
The size and scope of our federal government needs to be greatly reduced right away.
Our government is broken.
I don't blame Obama, I blame all elected officials and the individuals they employ directly.
Phony IRS “Scandal” — We’ve Been O’Keefe’d Again
Posted on May 15, 2013 by Dave Johnson
Guess what. We’ve been O’Keefe’d again. It turns out that the “IRS Targeted Conservatives” story is just one more made up, phony, right-wing victimization fantasy lie.
James O’Keefe is the guy who made a video supposedly showing him in a “pimp costume” getting advice from ACORN employees on ow to run a prostitution ring. Except the video was doctored, he never wore a “pimp costume” and ACORN employees never did any such thing. But the story sounded good … so it went wide and ACORN was defunded by Congress.
And here we go again. It turns out the IRS was NOT singling out “Tea Party” groups for audits. The IRS was scrutinizing ALL groups applying for c4 status by asking additional questions. No audits. And only SOME (1/3) of those groups were conservatives — OTHERS were liberal, etc. Doesn’t matter, the right put out a victimization story making it sound like only conservatives were targeted for political reasons. (And Christians are a persecuted minority, Whites are discriminated against, etc.) The “mainstream” news media picked up and spread the lie, and here we are.
Again: Only 1/3 of the organizations that received extra scrutiny were conservative. The rest are not identified, but liberal and progressive organizations are reporting that their applications received the same scrutiny as conservatives. (And by the way almost 70% of the applications that were flagged WERE engaged in campaign activity that would disqualify them from c4 status.)
See:
Bloomberg News: IRS Sent Same Letter to Democrats That Fed Tea Party Row
Daily Kos: Liberal groups received same IRS letter that ignited Tea Party outrage
Washington Monthly: Two Rather Important Details About the IRS “Scandal”
From the Inspector General’s report on what happened, page 8:
Figure 4 shows that approximately one-third of the applications identified for processing by the team of specialists included Tea Party, Patriots, or 9/12 in their names, while the remainder did not. According to the Director, Rulings and Agreements, the fact that the team of specialists worked applications that did not involve the Tea Party, Patriots, or 9/12 groups demonstrated that the IRS was not politically biased in its identification of applications for processing by the team of specialists.
Look at how MANY of us fell for one more “pimp costume” story.
James O’Keefe never wore a “pimp costume” into an ACORN office, and conservative groups were not singled out for scrutiny by the IRS. But because of the right’s ability to spread these smears both are now firmly “true” in the public mind. Partly because the rest of us fell for it and helped amplify it.
The Obama IRS cover-up is real.
Obama's abuse of IRS power is real.
Obama's plan to have the IRS enforce ObamaCare is real.
Obama's attempt to distance himself from all of this is real.
@Advocate,
Advocate wrote:
Did IRS higher-ups OK this? No.
It turns out that IRS higher-ups did OK this.
This is weird. One sock puppet spouting a lot of bullshit and another one agreeing. If those tea party guys did anything wrong they deserve the full force of the law. Full marks to the IRS for growing a pair.
@contrex,
I think it's fair to consider the selective enforcement a problem in itself. Granted, an audit is not considered a punishment, but in fact, it is. As is the additional time involved in receiving tax exempt status. Hold up that status till after a critical election and one party has won. The other has lost.
@roger,
roger wrote:
I think it's fair to consider the selective enforcement a problem in itself. Granted, an audit is not considered a punishment, but in fact, it is. As is the additional time involved in receiving tax exempt status. Hold up that status till after a critical election and one party has won. The other has lost.
I don't think the term "selective enforcement" is the correct one here. I would prefer "political profiling." I don't think that IRS would enforce the law differently, but would give priority to the applications filed by certain groups most likely to make misrepresentations on their applications.
@Advocate,
Either way, it an abuse of power and Obama's fingerprints are all over it.
BTW, Obama is the only one that benefited from all of this.
@Advocate,
Advocate wrote:
I don't think the term "selective enforcement" is the correct one here. I would prefer "political profiling." I don't think that IRS would enforce the law differently, but would give priority to the applications filed by certain groups most likely to make misrepresentations on their applications.
If you like political profiling better than selective enforcement, that's fine. The rest is your usual horseshit.
@roger,
roger wrote:
Advocate wrote:
I don't think the term "selective enforcement" is the correct one here. I would prefer "political profiling." I don't think that IRS would enforce the law differently, but would give priority to the applications filed by certain groups most likely to make misrepresentations on their applications.
If you like political profiling better than selective enforcement, that's fine. The rest is your usual horseshit.
Roger, do you always have to resort to excrement-laden retorts? I guess I was nitpicking, but didn't deserve that kind of ugly nastiness.
@Advocate,
Advocate wrote:
Roger, do you always have to resort to excrement-laden retorts? I guess I was nitpicking, but didn't deserve that kind of ugly nastiness.
Actually, I try to save it for special occasions. Now, doesn't that make you feel special?
@roger,
It certainly makes you look like the jerk that you are.
@Advocate,
Advocate wrote:Roger, do you always have to resort to excrement-laden retorts?
As ye sow, so shall ye reap...
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