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View Diary: 501(c)(3)s, 501(c)(4)s, and the rest. A primer. (86 comments)

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    The diary states:

    Before Citizens United, corporations could not engage in pro-federal candidate independent speech. Now they can, and that includes 501(c)(4) corporations. That's why applications rose dramatically in 2010.
    Council of Philanthropy has an interesting observation:
    Both Steven Miller, the agency’s acting commissioner until he stepped down Wednesday, and Lois Lerner, director of the agency’s exempt-organization division, have said over the past week that IRS officials started the scrutiny after observing a surge in applications for status as 501(c)(4) “social welfare” groups. Both officials cited an increase from about 1,500 applications in 2010 and to nearly 3,500 in 2012. President Obama ask Mr. Miller to resign on Wednesday.

    The scrutiny began, however, in March 2010, before an uptick could have been observed, according to data contained in the audit released Tuesday from the Treasury Department’s inspector general for tax administration.

    The number of 501(c)(4) applications for all of 2010 was actually less than in 2009.

    . . .

    The audit says the IRS began to use “inappropriate criteria” to single out applications in March 2010. By April 2010, a “sensitive case report” was issued on “Tea Party cases,” indicating that managers in Cincinnati were aware of the sensitive nature of the reviews.

    According to the audit, 1,735 groups applied for 501(c)(4) exemption for the federal fiscal year that ended September 30, 2010—six months after the IRS began its scrutiny. That was down slightly from 1,751 the prior year.

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