“When The IRS Targeted Liberals”: Outrage Only Occurs When Lines Between Politics And Social Welfare Are To GOP’s Liking
While few are defending the Internal Revenue Service for targeting some 300 conservative groups, there are two critical pieces of context missing from the conventional wisdom on the “scandal.” First, at least from what we know so far, the groups were not targeted in a political vendetta — but rather were executing a makeshift enforcement test (an ugly one, mind you) for IRS employees tasked with separating political groups not allowed to claim tax-exempt status, from bona fide social welfare organizations. Employees are given almost zero official guidance on how to do that, so they went after Tea Party groups because those seemed like they might be political. Keep in mind, the commissioner of the IRS at the time was a Bush appointee.
The second is that while this is the first time this kind of thing has become a national scandal, it’s not the first time such activity has occurred.
“I wish there was more GOP interest when I raised the same issue during the Bush administration, where they audited a progressive church in my district in what look liked a very selective way,” California Democratic Rep. Adam Schiff said on MSNBC Monday. “I found only one Republican, [North Carolina Rep. Walter Jones], that would join me in calling for an investigation during the Bush administration. I’m glad now that the GOP has found interest in this issue and it ought to be a bipartisan concern.”
The well-known church, All Saints Episcopal in Pasadena, became a bit of a cause célèbre on the left after the IRS threatened to revoke the church’s tax-exempt status over an anti-Iraq War sermon the Sunday before the 2004 election. “Jesus [would say], ‘Mr. President, your doctrine of preemptive war is a failed doctrine,’” rector George Regas said from the dais.
The church, which said progressive activism was in its “DNA,” hired a powerful Washington lawyer and enlisted the help of Schiff, who met with the commissioner of the IRS twice and called for a Government Accountability Office investigation, saying the IRS audit violated the First Amendment and was unduly targeting a political opponent of the Bush administration. “My client is very concerned that the close coordination undertaken by the IRS allowed partisan political concerns to direct the course of the All Saints examination,” church attorney Marcus Owens, who is widely considered one of the country’s leading experts on this area of the law, said at the time. In 2007, the IRS closed the case, decreeing that the church violated rules preventing political intervention, but it did not revoke its nonprofit status.
And while All Saints came under the gun, conservative churches across the country were helping to mobilize voters for Bush with little oversight. In 2006, citing the precedent of All Saints, “a group of religious leaders accused the Internal Revenue Service yesterday of playing politics by ignoring its complaint that two large churches in Ohio are engaging in what it says are political activities, in violation of the tax code,” the New York Times reported at the time. The churches essentially campaigned for a Republican gubernatorial candidate, they alleged, and even flew him on one of their planes.
Meanwhile, Citizens for Ethics in Washington filed two ethics complaints against a church in Minnesota. “You know we can’t publicly endorse as a church and would not for any candidate, but I can tell you personally that I’m going to vote for Michele Bachmann,” pastor Mac Hammond of the Living Word Christian Center in Minnesota said in 2006 before welcoming her to the church. The IRS opened an audit into the church, but it went nowhere after the church appealed the audit on a technicality.
And it wasn’t just churches. In 2004, the IRS went after the NAACP, auditing the nation’s oldest civil rights group after its chairman criticized President Bush for being the first sitting president since Herbert Hoover not to address the organization. “They are saying if you criticize the president we are going to take your tax exemption away from you,” then-chairman Julian Bond said. “It’s pretty obvious that the complainant was someone who doesn’t believe George Bush should be criticized, and it’s obvious of their response that the IRS believes this, too.”
In a letter to the IRS, Democratic Reps. Charles Rangel, Pete Stark and John Conyers wrote: “It is obvious that the timing of this IRS examination is nothing more than an effort to intimidate the members of the NAACP, and the communities the organization represents, in their get-out-the-vote effort nationwide.”
Then, in 2006, the Wall Street Journal broke the story of how a little-known pressure group called Public Interest Watch — which received 97 percent of its funds from Exxon Mobile one year — managed to get the IRS to open an investigation into Greenpeace. Greenpeace had labeled Exxon Mobil the “No. 1 climate criminal.” The IRS acknowledged its audit was initiated by Public Interest Watch and threatened to revoke Greenpeace’s tax-exempt status, but closed the investigation three months later.
As the Journal reporter, Steve Stecklow, later said in an interview, “This comes against a backdrop where a number of conservative groups have been attacking nonprofits and NGOs over their tax-exempt status. There have been hearings on Capitol Hill. There have been a number of conservative groups in Washington who have been quite critical.”
Indeed, the year before that, the Senate held a hearing on nonprofits’ political activity. Republican Sen. Charles Grassley, the then-chairman of the Senate Finance Committee, said the IRS needed better enforcement, but also “legislative changes” to better define the lines between politics and social welfare, since they had not been updated in “a generation.” Unfortunately, neither Congress nor the IRS has defined 501(c)4′s sufficiently to this day, leaving the door open for IRS auditors to make up their own, discriminatory rules.
Those cases mostly involved 501(c)3 organizations, which live in a different section of the tax code for real charities like hospitals and schools. The rules are much stronger and better developed for (c)3′s, in part because they’ve been around longer. But with “social welfare” (c)4 groups, the kind of political activity we saw in 2010 and 2012 is so unprecedented that you get cases like Emerge America, a progressive nonprofit that trains Democratic female candidates for public office. The group has chapters across the country, but in 2011, chapters in Massachusetts, Maine and Nevada were denied 501(c)4 tax-exempt status. Leaders called the situation “bizarre” because in the five years Nevada had waited for approval, the Kentucky chapter was approved, only for the other three to be denied.
A former IRS official told the New York Times that probably meant the applications were sent to different offices, which use slightly different standards. Different offices within the same organization that are supposed to impose the exact same rules in a consistent manner have such uneven conceptions of where to draw the line at a political group, that they can approve one organization and then deny its twin in a different state.
All of these stories suggest that while concern with the IRS posture toward conservative groups now may be merited, to fully understand the situation requires a bit of context and history.
By: Alex Seitz-Wald, Salon, May 14, 2013
“Scamming The Taxpayers”: The IRS Controversy And The Tax-Exempt Charade
As we’re learning more about the IRS giving heightened scrutiny to conservative groups filing for tax-exempt status, we should make one thing clear: If what we’ve heard so far holds up, the people involved should probably get fired, and new safeguards should be put in place to make sure nothing like it happens again. And let it be noted that liberal publications, at least the ones I’ve seen, have all taken that position and have been discussing this story at length.
Now, let’s see if we can understand the context in which this happened. There’s an irony at work here, which is that it may well be that the IRS employees involved were trying to obey the spirit of the law but ended up violating the letter of the law, while for the organizations in question it was the opposite: they were trying to violate the spirit of the law, but probably didn’t violate the letter of the law.
Let’s take the first part, the IRS employees. When a group files for tax-exempt status, the IRS investigates it, asks it some questions, and determines whether it qualifies under section 501(c)(3) or 501(c)(4). The difference between them is that a 501(c)(3) is supposed to be a genuine charity, like your local food bank or Institute for the Study of Foot Fungus, while a 501(c)(4) is still primarily devoted to “social welfare” but is allowed more leeway to engage in some political activities like lobbying and participation in elections, so long as the political activities make up a minority of its time. The biggest practical difference is that donations to (c)(3) groups are tax-deductible, while donations to (c)(4) groups are not.
Once the Supreme Court said in the 2010 Citizens United decision that (c)(4) groups could engage in “express advocacy” (i.e. explicitly saying “Vote for Smith!”), the IRS got flooded with new applications for (c)(4) groups, and its job was to determine if these groups were actually “social-welfare” organizations that also did some politicking on the side, or if they were groups whose main purpose was actually political, in which case, according to the law, they should be denied (c)(4) status. We know very little at this point about what the IRS employees in Cincinnati did and why, but the generous interpretation is that since so many of the applications they were getting in 2010 and 2011 were from Tea Party groups that looked a lot like their sole purpose was to elect Republicans, they looked for some way to handle them all together, so they searched for applications with words like “Tea Party” and “Patriot” in their names and subjected them to extra scrutiny.
Even if their motivations were innocent and they were just struggling to find ways to wade through all these applications and do their jobs properly—in other words, if there was no violation of the spirit of the law—it was still improper for them to sort the applications this way, because it could mean in practice that an ideological test was being applied to which groups got heightened scrutiny. But now let’s look at the other half of the story, the groups applying for tax-exempt status.
The truth is that a great many of the groups that request 501(c)(3) and 501(c)(4) status, of all ideological stripes, are basically pulling a scam on the taxpayers. Maybe that’s a bit harsh, but at the very least they’re engaged in a charade in which they pretend to be “nonpartisan” when in fact they are very, very partisan. For instance, nobody actually believes that groups like the Center for American Progress on the left or the Heritage Foundation on the right aren’t partisan. When there’s an election coming, they mobilize substantial resources to influence it. They blog about how the other side’s candidate is a jerk, they issue reports on how his plans will destroy America, and they do all sorts of things whose unambiguous intent is to make the election come out the way they want it to. CAP and Heritage, along with many other organizations like them, are 501(c)(3) charities, meaning as long as they never issue a formal endorsement and are careful to avoid any express advocacy, they can maintain the fiction that they’re nonpartisan (keep getting tax-deductible contributions, which are easier to obtain than those that aren’t tax-deductible).
And that fiction is even more exaggerated when you get to the (c)(4) groups, particularly the new ones. For instance, when Karl Rove’s Crossroads GPS applied for 501(c)(4) status, it explained to the IRS that it was a social-welfare organization for whom influencing elections wouldn’t be its primary purpose. Instead, the group said “Through issue research, public communications, events with policymakers, and outreach to interested citizens, Crossroads GPS seeks to elevate understanding of consequential national policy issues, and to build grassroots support for legislative and policy changes that promote private sector economic growth, reduce needless government regulations, impose stronger financial discipline, and accountability in government, and strengthen America’s national security.” It claimed that 50 percent of its activities would be “public education,” 20 percent would be “research,” and the remaining 30 percent would be “activity to influence legislation and policymaking.” On the section of the form where the group has to state whether it plans to spend any money to influence elections, it wrote that it “may, in the future” do so, but “Any such activity will be limited in amount, and will not constitute the organization’s primary purpose.”
As everyone knows, this is a joke. Crossroads GPS was created for one purpose and one purpose only: to get Republicans elected. Maybe they found a way to stay within the letter of the law, but there’s no question they were violating its spirit. And the same is true of Priorities USA, the pro-Obama group created in advance of the 2012 election by a couple of former White House staffers. Both are actually twin groups, a (c)(4) and a super PAC, which allows the people running them to keep within the letter of the law by moving spending around between the two. (Stephen Colbert and Trevor Potter memorably explained how all this can be done.)
Without knowing anything about the particular Tea Party groups that were subjected to heightened scrutiny (we’ve only heard about a few so far), the broader context is that you have a lot of groups of all political persuasions that are essentially trying to pull a fast one on the IRS, and through them, the American taxpayer. Keep in mind that tax-exempt status is a gift that we give to groups that can demonstrate they deserve it. Perhaps this part of the tax code should be made stricter, or perhaps it should be made looser so all these charades can stop. But either way, this wouldn’t be a bad time to start that discussion.
By: Paul Waldman, Contributing Editor, The American Prospect, May 13, 2013
“Defying The Laws Of Political Reality”: No Dirty Politics In IRS Investigations Of Tea Party
The conservative blogosphere is all-atwitter this afternoon over the revelation that the Internal Revenue Service targeted various Tea Party groups in the days leading up to the presidential election of 2012.
Sadly for the critics of the president, things are not always as they initially appear to be and the effort to paint the improper IRS activity as a White House directed political dirty trick is unlikely to gain the traction opponents would like to see catch fire.
Keep in mind that the kerfuffle does not involve the targeting of groups for audits seeking evidence of a failure to pay taxes. Rather, the problem involved the IRS’s review of applications filed by the various entities seeking tax-exempt status under the law.
At the time in question, many newly formed political organizations were seeking IRS certification that would allow them to avoid paying taxes on funds raised—the overwhelming majority of these organizations being Tea Party related groups. As the IRS believed that many of those filing for exemptions were stretching the limits of qualification, some low-level staffers at the agency’s Cincinnati, Ohio office decided to target for closer review those organizations with “Tea Party” sounding names, such as “patriot” and, of course, “Tea Party”. In the effort to dig deeper to determine if these groups qualified, the agency people involved asked many of the filing organizations to disclose names of those who had made contributions along with other data they deemed necessary to determine if the group qualified for tax free status.
The problem is that the agents involved were not randomly conducting these checks on all the political organizations seeking tax free status and were specifically targeting the Tea Party related groups.
This was, clearly, improper activity which is why the IRS issued today’s apology.
What’s that you say? You still don’t believe that the White House was not involved in this?
That’s what I thought.
Maybe then, it will interest you to know that there are only two officials at the IRS that are political appointments—the commissioner (who is the boss) and the chief legal counsel. And while you may be thinking that it would be a piece of cake for the White House to place a call to the Commissioner and nudge him into putting a little heat on Tea Party groups so that they would be kept busy defending themselves from government annoyance rather than putting their energies into defeating the President, it would not have been quite so simple a task for the White House to accomplish.
Why?
Because the Commissioner of the Internal Revenue Service during the period in question was Douglas Shulman, a political appointee of President George W. Bush.
In fact, not only was Commissioner Shulman a Bush appointee, he would certainly have had no motivation to do the political bidding of a Democrat president considering that Mr. Shulman had already announced prior to the election that he would be stepping down from his post in November.
If you imagine that the President’s staff had the ability to go around the top political appointee at the IRS and attempt to influence the civil servants who work at the agency, consider how many levels of civil servants the White House staff would have had to persuade to do their bidding given that those who pursued the policy were well down the totem-pole of seniority, working away at the Cincinnati office.
Indeed, to suggest that the White House could get career civil servants to do its political dirty work would truly defy the laws of political reality.
If you doubt this—and you are someone who believes that the State Department behaved improperly in the Benghazi matter—consider the inability of State to direct the three highly placed State Department civil servants who testified before Congress this week to do as the politicians asked. This should give you some indication as to just how impossible it is for elected or politically appointment officials to get government civil servants to participate in their political schemes—let alone keep it all a secret heading into a presidential election.
Of course, all the obvious and logical explanations in the world for what really happened here will prove insufficient when it comes to persuading some Tea Party groups that this was not the work of the White House.
As proof of what we can expect, check out what Tea Party Patriots co-founder Jenny Beth Martin had to say when calling for President Obama to personally apologize—
“It is suspicious that the activity of these ‘low-level workers’ was unknown to IRS leadership at the time it occurred. President Obama must also apologize for his administration ignoring repeated complaints by these broad grassroots organizations of harassment by the IRS in 2012, and make concrete and transparent steps today to ensure this never happens again.”
Clearly, Ms. Martin has very little grasp on how widespread the activities of the IRS are if she imagines that, in the big picture, the relatively small number of reviews of Tea Party related applications in the Cincinnati office was going to somehow capture the attention of the IRS Commissioner…who happens to be a Republican appointee.
One wonders if Ms. Martin’s indignation has anything to do with the fact that she and her husband were indebted to the IRS in the amount of over half a million dollars when they filed bankruptcy in 2008? Maybe it is Ms. Martin who owes the apology?
Still, the opportunity to make some political hay over the error will likely prove irresistible to the GOP.
So, let the Congressional hearings commence! I can’t wait to see Darrell Issa’s movie-style poster hyping these hearings as he did in this one posted to his Twitter site to get us jazzed about his Benghazi hearings—http://b-i.forbesimg.com/rickungar/files/2013/05/issamay6.jpg
Maybe this time he’ll spring for full-color art
By: Rick Ungar, Op-Ed Contributor, Forbes, May 10, 2013
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