“Targeting Conservative And Liberal Groups Alike”: The So-Called IRS Scandal Ends With a Whimper
With Edward Snowdon on his whirlwind tour of countries unfriendly to the United States and the Supreme Court handing down a bunch of important decisions, this is a good week for stories to get lost in the back pages. So you may not have noticed that late yesterday, the IRS scandal, supposedly Worse Than Watergate™, came to a sputtering halt with the release of new documents in the investigation. The whole scandal, you’ll recall, is about how conservative groups applying for 501(c)(4) status were given extra scrutiny, while other kinds of groups just slid by. Well, it turns out, not so much:
The instructions that Internal Revenue Service officials used to look for applicants seeking tax-exempt status with “Tea Party” and “Patriots” in their titles also included groups whose names included the words “Progressive” and “Occupy,” according to I.R.S. documents released Monday.
The documents appeared to back up contentions by I.R.S. officials and some Democrats that the agency did not intend to single out conservative groups for special scrutiny. Instead, the documents say, officials were trying to use “key word” shortcuts to find overtly political organizations — both liberal and conservative — that were after tax favors by saying they were social welfare organizations.
But the practice appeared to go much farther than that. One such “be on the lookout” list included medical marijuana groups, organizations that were promoting President Obama’s health care law, and applications that dealt “with disputed territories in the Middle East.”
Taken together, the documents seem to change the terms of a scandal that exploded over accusations that the I.R.S. had tried to stifle a nascent conservative political movement. Instead, the dispute now revolves around questionable sorting tactics used by I.R.S. application screeners.
Questionable sorting tactics! Not quite the scandal of the century. So why did the Inspector General’s report that started this whole thing characterize it only as the singling out of conservative groups, ignoring the fact that liberal groups got treated unfairly too, and with the same means, the BOLO (“be on the lookout” memo) that instructed agents to give special scrutiny to certain kinds of groups? Steve Benen points out that the Inspector General (IG) was responding to a request from Darrell Issa to investigate the treatment of conservative groups, so that’s the likely reason his inquiry was restricted in that way. So Issa first asked the IG for a restricted investigation, then he released excerpts of interviews with IRS officials cherry-picked to make things look worse than they actually were, and now this.
But this “scandal” was already dying. Despite the most fervent wishes of conservatives, there hasn’t been any actual evidence showing that orders to crush the Tea Party came right from the White House. So in the last few weeks they’ve been reduced to arguing that there was a conspiracy of winks and nods, whereby everybody just knew what to do, even if nobody actually told anybody what to do. President Obama gave a speech criticizing “dark money,” and IRS agents swung into action! Or maybe there was a real conspiracy, but we just haven’t found it yet despite all the looking (“Some person or persons made the decision to target, harass, delay and abuse,” wrote Peggy Noonan. “Some person or persons communicated the decision. Some persons executed them.”). You can sustain that for a while, but eventually, you have to produce something real. You can’t just speculate forever.
And frankly, I’m not sure there’s anything wrong with these BOLO lists per se. If you have a situation where a bunch of similar groups are being created all at the same time and they all appear to be political groups masquerading as social welfare organizations, it’s perfectly reasonable to group them together and have the same agents develop an understanding of what they do and whether they deserve tax-exempt status. The problem isn’t that they got put into a pile, it’s what happens afterward. And what’s been really appalling from what we’ve learned is that the IRS agents seemed to have only the barest understanding of what the law was and how they were supposed to apply it. Maybe once this is all over, we can get around to fixing that.
By: Paul Waldman, Contributing Editor, The American Prospect, June 25, 2013
“Wink, Wink”: House GOP Committee Ignores The Tea Party’s Non-Exempt Political Shenanigans
When a gaggle of local Tea Party leaders came before the House Ways and Means Committee, complaining that their organizations had been unfairly and unconstitutionally “targeted by the Internal Revenue Service for their personal beliefs,” the reception by the Republicans who control the committee was predictably credulous. Once more the June 4 hearings provided Tea Party groups an opportunity to play the victim and listen to politicians praise their courage and patriotism.
But a closer examination of these particular Tea Party outfits by the Institute for Research and Education on Human Rights found copious evidence of political activity that might well have disqualified their requests for 501(c)(4) non-profit status – notably the San Fernando Valley Patriots, the Wetumpka Tea Party, and the Laurens County Tea Party.
In weepy tones, Karen Kenney, the founder of the San Fernando Valley Patriots (SFVP), told the committee of her concern “about the jackboot of tyranny upon the field of our Founding documents. To whisper the letters I-R-S strikes a shrill note on Main St., USA, but when this behemoth tramples upon America’s grassroots, few hear the snapping sounds.”
Kenney’s emotional testimony was long on the language of patriotism, but short on the facts of the case. Her testimony, like the entire hearing, ignored the dubious political conduct engaged in by her group, which appeared to have trampled all over IRS non-profit regulations.
Consider the group’s Meetup site, run by Kenney, which bluntly states: “Our aim is to promote — by political action or events – the core Constitutional and conservative values that built America [emphasis added].”
Indeed, Kenney and the San Fernando Valley Patriots actively engaged in partisan political campaigning. This year, they organized rallies for the only Republican in the Los Angeles mayoral race. Listed as the organizer and event host, Kenney wrote, “We have a total of 15 campaign or city issues posters, plus some U.S. flags to draw attention to Kevin James’ campaign for Mayor of Los Angeles. Our silent ‘rally’ with smiling patriots is a fun way to get boots on the ground for a true fiscal-conservative and our friend, Kevin.”
The San Fernando group also appears to have openly endorsed other candidates. Its website published a list of endorsed candidates and ballot measures for the Los Angeles County election. The post clearly states that the list names the candidates that “we are recommending.” In another post, the group tried to pass the endorsement list off as a “Voter Guide,” but it only contains a list of candidates the group had approved. On another page, Kenney posts her own “SFVP Selected Personal Choices (Karen Kenney, coordinator, SFV Patriots)” for the election, listing the candidates she endorsed for mayor, city attorney, and board of trustees.
Still another SFVP webpage features a declaration by Lydia Gutierrez: “I have looked over the list of candidates and I am making the following recommendations. Seat 2: John C. Burke. Seat 4: Jozef Essavi. Seat 6: Tom Oliver. After you have marked these three candidates on your ballot, please forward these recommendations email with 10 voters you know who care about our young people’s future.”
Nor did the SFVP neglect national and statewide political contests. In October, 2012, the group organized a get-out-the-vote flash mob in front of the local headquarters for GOP presidential candidate Mitt Romney and GOP state senate candidate Todd Zink. The group also hosted a brainstorming session in October, 2011 “on local and state politics with a GOP insider!”
SFVP is an affiliate of the national faction known as the Tea Party Patriots, an outfit with its own history of questionable political involvement.
Such activities clearly represent the “indications of significant political campaign intervention” highlighted by the May 14 report of the Treasury Inspector General for Tax Administration – namely, indications that would tend to disqualify a group from obtaining IRS non-profit status. Yet none of these activities were discussed during the hearing supposedly investigating the tax-exemption controversy.
Becky Gerritson of the Alabama-based Wetumpka Tea Party did her best to heighten the melodrama of the hearings. Gerritson emphasized her Tea Party entitlement, making a federal tax exemption sound like a birthright for her and her group. “I am not here today as a serf or a vassal. I am not begging my lords for mercy,” she told the committee. “I am a born-free American woman – wife, mother and citizen – and I’m telling my government that you have forgotten your place.”
But the Wetumpka Tea Party’s political activism was well-documented prior to the hearing, notably in a New York Times article by Nicholas Confessore and Michael Luo. Confessore and Luo reported that the Wetumpka Tea Party “organized a day of training for its members and other Tea Party activists across the region in the run-up to the 2012 election. The training was held under the auspices of the Adopt-a-State program, a nationwide effort that encouraged Tea Party groups in safely red or blue states to support Tea Party groups in battleground states working to get out the vote for Republicans.” Yet nobody on the House committee asked Gerritson about the political activities of her group.
Dianne Belsom, president of the South Carolina-based Laurens County Tea Party, testified about some of the questions posed to her group by the IRS concerning their request for tax exempt status. Of the nine questions she mentioned, all indicated that the agency’s officials were trying to determine how deeply her group had engaged in significant political interventions. She was asked to describe “how much time/resources are devoted to vetting candidates,” and to specify “amounts expended in support of any candidate for federal, state, or local public office.” Other supposedly “invasive” items requested by the IRS included asking for the group’s articles of incorporation.
Even a cursory examination of the Laurens County group’s website shows plenty of reason for the IRS to have become concerned. The website notes proudly that in July, 2012, Belsom “spoke and outlined our strategy for the remainder of the year, with a large focus on how to defeat Obamacare and get the more conservative candidates elected. At a September, 2012, meeting the Tea Party group also voted on candidate endorsements.
In December, 2011, Belsom told The State newspaper that the Tea Party was working politically against President Obama, and that, despite disagreements over candidates, “There’s agreement that we need to replace Obama and get our country going back in the right direction.” The Laurens County Tea Party also served as a co-sponsor, with the Tea Party Express and CNN, of a September, 2011 Republican presidential debate in Tampa, Florida.
Aside from the Tea Party groups, representatives of several other conservative organizations testified about problems regarding the status of their tax-exemption applications, though none of those groups were apparently part of the keyword targeting by the IRS. John Eastman, chairman of the National Organization for Marriage, a group opposing marriage equality for gays and lesbians, testified about an alleged IRS leak of their donor list. Sue Martinek of the Coalition for Life of Iowa testified about questions the organization had to answer regarding its application for 501(c)(3) status back in 2008. (The Inspector General’s report did not examine 501(c)(3) applications, however, only those for would-be 501(c)(4) “social welfare” organizations.)
Kevin Kookogey, founder and president of Linchpins of Liberty, which applied for 501(c)(3) status and conducts conservative training for young people, testified that his group had been waiting 29 months to gain non-profit status. He failed to mention that despite this two-year-plus period, his group’s board of directors still had not been fully constituted and remains “under construction.” Having a fully constituted board of directors is an important requirement for any prospective non-profit organization, as the board is legally and financially responsible for the conduct of the organization.
In the end, the Republican leadership demonstrated no interest in ascertaining the actual facts of Tea Party involvement in prohibited political activity. Instead, Republican committee members simply used the Tea Party witnesses as props to score political points against the Obama administration.
While apologizing to the witnesses and calling the IRS handling of the matter “inept,” “stupid” and “a whole lot of other things,” Congressman Jim McDermott (D-WA) nevertheless insisted on raising the central issue. “I’d like to remind everyone what we’re talking about here. None of your organizations were kept from organizing or silenced. We’re talking about whether or not the American taxpayers will subsidize your work. We’re talking about a tax break. If you didn’t come in and ask for this tax break, you would’ve never had a question asked of you. You can go out there and say anything you want in the world.”
Congressman Sander Levin (D-MI) noted early in the hearing that while 298 organizations were set aside for review, only 96, or a third, contained “Tea Party,” “9/12,” or “Patriot” in their names, while 202 did not. In fact, according to the draft report by the Treasury Inspector General for Tax Administration, none of the 296 questionable applicants had been denied a tax exemption by the IRS The unaddressed scandal is that the IRS let so many of these groups get away with what appear to be severe violations of the law. Toward the hearing’s conclusion, Rep. Bill Pascrell (D-NJ) indicated that the IRS’ flagging of groups by name had been wrong but noted, “No one has a God-given right to a tax-exempt status.” Tell that to the Tea Party.
By: Devin Burghart, The National Memo, Jube 6, 2013
“Where There’s Smoke, There’s Money”: Tobacco Giant Reynolds American Inc Funded Conservative Nonprofits
Tobacco giant Reynolds American Inc. last year helped fund several of the nation’s most politically active — and secretive — nonprofit organizations, according to a company document reviewed by the Center for Public Integrity.
Reynolds American’s contributions include $175,000 to Americans for Tax Reform, a nonprofit led by anti-tax activist Grover Norquist, and $50,000 to Americans for Prosperity, a free-market advocacy outfit heavily backed by billionaire brothers Charles and David Koch.
The tobacco company’s donations are just a fraction of the nearly $50 million that those two groups reported spending on political advocacy ads during the 2012 election cycle, almost exclusively on negative advertising. Federal records show that Americans for Prosperity alone sponsored more than $33 million in attack ads that directly targeted President Barack Obama.
But the money, which Reynolds American says it disclosed in a corporate governance document at the behest of an unnamed shareholder, provides rare insight into how some of the most powerful politically active 501(c)(4) “social welfare” nonprofits are bankrolled.
Reynolds American is the parent company of R.J. Reynolds Tobacco, which makes Camel and Winston brand cigarettes.
“The shareholder specifically requested that we disclose information about 501(c)(4)s, and in the interests of greater transparency, we agreed,” Reynolds American spokeswoman Jane Seccombe said.
Large corporations — tobacco companies or otherwise — almost never release information about their giving to such groups, and it’s most unusual for the groups themselves to voluntarily disclose who donates to them.
These groups, which obtain their nonprofit status because they say their “primary purpose” is not political activity, are generally under no legal obligation to detail their funding sources. Super PACs and other recognized political committees, by contrast, must report the names of their contributors who give more than $200 and the amounts they give.
Yet during the 2012 election cycle, various social welfare nonprofit organizations, emboldened by the U.S. Supreme Court’s Citizens United v. Federal Election Commission decision in January 2010, spent more than $250 million to promote or attack federal political candidates, according to the nonpartisan Center for Responsive Politics. The source of most of that money remains a mystery.
Reynolds American’s other contributions last year to 501(c)(4) groups include $100,000 to the Partnership for Ohio’s Future, an organization run by the Ohio Chamber of Commerce that spent several million dollars in a failed 2012 ballot initiative campaign to uphold a law limiting public workers’ collective bargaining rights. It also gave $12,500 to the National Taxpayers Union, a 501(c)(4) group that backed Republican candidates last year with modest expenditures.
Ohio Chamber of Commerce Executive Vice President Linda Woggon told the Center for Public Integrity she wasn’t aware that Reynolds American planned to disclose its donation to Partnership for Ohio’s Future.
But Woggon said she did not have a problem with officials there doing so, adding that “the decision is up to the company.”
Americans for Prosperity, which in 2011 reported to the IRS it received more than $25.4 million in contributions and grants, “leaves it up to our supporters” to decide whether to reveal their donations,” spokesman Levi Russell said.
“It’s their right, and we respect it,” he said.
Officials at Americans for Tax Reform, which in 2011 reported to the IRS that it received nearly $4 million in contributions and grants, did not reply to several requests for comment.
Within the tobacco industry, Reynolds American competitor Lorillard, which manufactures Newport brand cigarettes, has no nonprofit donation disclosure policy in place.
Ronald Whitford, the company’s associate general counsel, said Lorillard “could look at possibly enhancing disclosure in the future.”
Altria, the world’s largest tobacco company, does make contributions to politically active nonprofit organizations, spokesman Bill Phelps said — but he would not name any beneficiaries.
Altria’s corporate policy only requires it disclose its contributions to 501(c)(4) nonprofits in narrow circumstances, none of which applied to its 2012 donations, Phelps said.
For example, Altria, which makes Marlboros, the top-selling cigarettes, would publicly disclose a contribution if a nonprofit used at least $50,000 specifically for “political activities” as defined by the Internal Revenue Service — but only if the nonprofit informed Altria of this fact.
The IRS considers political activity to be the “participation in, or intervention in, any political campaign on behalf of (or in opposition to) any candidate for public office.”
Therefore, by its own rules, Altria would not disclose contributions that a 501(c)(4) used to fund so-called “issue advertisements” that are sometimes barely distinguishable from ads that directly advocate for or against a politician.
Politically active nonprofit groups such as Americans for Prosperity and Crossroads GPS, which was co-founded by GOP strategist Karl Rove, together spent millions of dollars on these kinds of communications last year.
Reynolds American’s written corporate policy on nonprofit donation disclosure is similar to that of Altria. But the policy “represents the minimum disclosure threshold,” said Seccombe, the company spokeswoman.
Reynolds American specifically acknowledged its donation to Americans for Tax Reform “because of expected stakeholder interest, not because the contributions were intended to be used or were in fact used for ‘political activity’ as that term is meant for purposes of the Internal Revenue Code,” Seccombe added.
She declined to speculate on which 501(c)(4) organizations Reynolds American will donate to this year. But officials will release information on its 2013 donations early next year, she said.
The company’s actions, although limited and hardly in real time, “set a precedent” and are “to be commended,” said Bruce Freed, president of the Center for Political Accountability, which tracks and advocates for political transparency by corporations.
“We just haven’t seen this with other companies related to their giving to (c)(4)’s,” Freed said.
By: David Levinthal, The Center for Public Integrity, May 31, 2013
“Dumb, Pathetic And Predictable”: Karl Rove’s Limitless Capacity For Self-Pity
Nearly three years ago, Senate Majority Whip Dick Durbin (D-Ill.) noticed a problem with Karl Rove’s attack operation, American Crossroads. The group sought and received tax-exempt status from the IRS, but it was clearly a partisan political operation, not a “social welfare” group, raising vast sums from anonymous donors. The senator urged the tax agency to investigate whether Crossroads deserved the generous tax benefit.
Rove, who in 2005 accused Durbin of trying to kill American troops by criticizing George W. Bush, apparently holds a grudge.
Rove unloaded with both barrels on the Illinois Democrat, blasting him in an interview with Sean Hannity on Fox News and in a column in The Wall Street Journal. Rove is charging that Durbin’s sending a letter in 2010 to Internal Revenue Service officials, asking them to investigate American Crossroads, was nothing less than a bid to “silence conservatives.”
“What was going on is obvious: Mr. Durbin wanted the IRS to silence conservatives,” Rove wrote. … “[I]n the glare of public attention, using the IRS to cripple or destroy opponents looks corrupt. Abuse of power always is.”
There’s a near-constant strain of self-pity and victimization that underscores Rove’s approach to politics, which makes this new argument rather predictable. Nevertheless, on the merits, the argument is also quite dumb.
I can appreciate why the IRS controversy offers Republican media personalities an attractive excuse for self-indulgence, settling old scores against perceived enemies, but neither Durbin nor any other Democratic officials tried to “silence” anyone. The entire line of attack is nonsense.
In 2010, Durbin saw Rove’s group flouting a loophole in the tax law, taking advantage of a tax benefit it almost certainly was not entitled to. Durbin didn’t say American Crossroads shouldn’t exist, and certainly didn’t argue that the attack operation lacks the right of free speech, but simply said the group did not deserve to be tax-exempt and asked the IRS to take a closer look. (It’s unclear if the IRS acted on the request.)
If Rove wants to argue that his political group deserves to be tax-exempt, fine, let’s have the debate. But that’s not an argument the Republican pundit wants to have. Instead, it’s better for fundraising and base-mobilization for Rove to use his media platform to complain, “Dick Durbin was mean to me three years ago.”
It’s misleading; it’s based on a faulty premise; and it’s kind of pathetic.
By: Steve Benen, The Maddow Blog, May 31, 2013
“Arrested Governance”: Do Everything You Can To Sabotage Government To Keep It From Operating Effectively
The Internal Revenue Service was closed today, as employees were furloughed due to sequestration’s budget cuts. Conservatives found this to be an occasion for side-splitting humor; Sarah Palin, for example, tweeted, “The IRS is closed today, feel free to use your phones.” Get it, because the IRS was tapping … um … well, never mind. In any case, today is a reminder that this scandal could be an opportunity for reform that clarifies the law on political and non-political groups, leads to a greater professionalization of the agency, and makes future misconduct less likely. Or it could wind up being just the opposite.
As Kevin Drum reminded us yesterday, one of the low moments of the Gingrich years in Congress was a series of hearings meant to expose IRS wrongdoing, in which horror stories of the agency’s abuse of taxpayers were told to lawmakers eager to hear them. In response, the IRS’s authority was curtailed and its budget slashed. The predictable consequence was less enforcement of tax laws (warming Republicans’ hearts, no doubt), but also an agency that had to do more with less.
If anyone was forced to do more with less, it was the office in Cincinnati, where a small number of poorly trained employees had to process thousands of new applications from groups seeking tax-exempt status after 2010. That isn’t to say there was no wrongdoing, but if you want an agency that does its job well and upholds the highest standards of professionalism, cutting its resources is not the way to get it.
But that could well happen again, and Republicans would be only too happy about it. It would be of a piece with the way they approach so much of what passes for their attempts at governing: Do everything you can to sabotage government and keep it from operating effectively, and then when it falls short, shout “See?!? We told you government can’t do anything right!”
By: Paul Waldman, Contributing Editor, The American Prospect, May 24, 2013
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