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“The Nakedly Transparent Flouting Of The Tax Laws”: Washington Misses The Point On The Tea Party And The IRS

My pixels have been absent from these precincts while I report a feature story for The Nation, and I’ll have more to say about the ersatz Scandalpalooza being ginned up by Republicans this week, but for now I wanted to drop a quick word about just how overblown the outrage is about the Internal Revenue Service flagging groups with “Tea Party” in their name for extra scrutiny when they apply for 501(c)(4) status. Jeffrey Toobin, in a New Yorker post called “The Real I.R.S. Scandal,” succinctly explains the legal background:

It’s important to review why the Tea Party groups were petitioning the I.R.S. anyway. They were seeking approval to operate under section 501(c)(4) of the Internal Revenue Code. This would require them to be “social welfare,” not political, operations. There are significant advantages to being a 501(c)(4). These groups don’t pay taxes; they don’t have to disclose their donors—unlike traditional political organizations, such as political-action committees. In return for the tax advantage and the secrecy, the 501(c)(4) organizations must refrain from traditional partisan political activity, like endorsing candidates….

Particularly leading up to the 2012 elections, many conservative organizations, nominally 501(c)(4)s, were all but explicitly political in their work. In every meaningful sense, groups like Americans for Prosperity were operating as units of the Republican Party. Democrats organized similar operations, but on a much smaller scale. (They undoubtedly would have done more, but they lacked the Republican base for funding such efforts.)

So the scandal—the real scandal—is that 501(c)(4) groups have been engaged in political activity in such a sustained and open way.

Just how sustained and open a way? Well, in June of last year I reported from the closing weekend of the recall campaign against Republican governor Scott Walker of Wisconsin:

I drive to a microscopic town next to Racine, where a giant open field was a stop on the bus tour in which Americans for Prosperity, the fake grassroots group that fronts for the Koch Brothers, was shipping supporters from, among other places, Illinois, to these here rallies around the state. Not, they claim, to support the Walker campaign—that would violate election law—which they had nothing to do with, but just in the interest of “educating folks in the importance of the reforms.”

The three hundred or so (though National Review counts differently than me) white people—and one black, who stood precisely in the center of the front row and wore an AFP staff T-shirt—heard an AFP staffer hosanna “economic freedom, limited government, and lower taxes.” And that “even Barack Obama’s Bureau of Labor Statistics” said “we’ve created jobs in Wisconsin.” Then he introduced as an “honorary Wisconsinite,” the head of Americans for Prosperity—Wisconsin, Tim Phillips—a Southerner who made a joke about frigid weather. Apparently reverse carpet-bagging is a signal feature of this “grassroots” movement.

Then a third speaker, but I had already wandered off, bored by the conspicuous lack of energy, past a sign reading “Republican’s Are Makers Democrats Are Takers” [sic, of course], and tables featuring free DVDs on both the glories of Scott Walker and the United Nation’s plan to enslave the United States, in the direction of a second, entirely separate, stage across the field put up by the Racine Tea Party. A few minutes later, the rest of the crowd followed me there. For, yes, an entirely separate rally, which had “nothing” to do with the nonpartisan one two hundred yards away that had just ended [wink wink, nudge nudge]. There they heard Walker’s running mate Rebecca Kleefisch rant about the “big union bosses from out of state,” and how the unions were just like Goliath, and her boss was exactly like David.

Me, I fingered my slick Americans for Prosperity—Wisconsin flier, which I later noticed contained the most revealing typo in the history of politics. “The forces of BIG GOVERNMENT would like nothing more than for you to DO NOTHING,” it warned, but promised, “We are gathering citizens together from across Michigan to make phone calls, knock on doors and educate their friends, family and neighbors.”

As Toobin points out, this is the real scandal: the nakedly transparent flouting of the tax laws by groups claiming to be nonpolitical and nonpartisan. Count on the media in Washington to entirely miss that obvious point.


By: Rick Perlstein, The Nation, May 16, 2013

May 21, 2013 - Posted by | Internal Revenue Service, Teaparty | , , , , , ,

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