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Section 501(c)(4) of the Internal Revenue Code provides for a tax exemption to

Civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare.

Local associations of employees, the membership of which is limited to the employees of a designated person or persons in a particular municipality and the net earnings of which are devoted exclusively to charitable, educational, or recreational purposes.

However, such an organization or association is not entitled to an exemption under 501(c)(4) if it enages in "political activity."  This is determined by examining

The IRS considers the following factors that tend to show an advocacy communication is political campaign activity when evaluating a communication on a public policy issue:

The communication identifies a candidate for public office;

The timing of the communication coincides with
an electoral campaign;

The communication targets voters in a particular election;

The communication identifies the candidate’s position on the public policy issue that is the subject of the communication;

The position of the candidate on the public policy issue has been raised as distinguishing the candidate from others in the campaign, either in the communication itself or in other public communications; and

The communication is not part of an ongoing series of
substantially similar advocacy communications by the
organization on the same issue.

http://www.irs.gov/...

As a result of the Citizens United decision, applications for 501(c)(4) exemptions spiked. doubling between 2010 and 2012:

http://thinkprogress.org/...

As a result,

Because the timing of that doubling coincided with a rise in political activism on the right rather than the left, a lot of the politicized groups attempting to register as 501(c)4s were describing their purpose in tea party terms. A popular conceit, for instance, was that they existed to educate on the Constitution — even if the particular pedagogical method meant participating in Republican Party primaries and pressuring incumbent politicians.

In looking for that kind of language in 2010, the Cincinnati employees were attempting to create a usable shortcut. Like Willie Sutton robbing banks, they were going where the action was. But they needed a clearer test that also identified the language of the left, even if left-leaning groups weren’t exhibiting the same surge in activism. And, frankly, it shouldn’t have been left to career employees in Cincinnati. The IRS needed clearer rules coming from the top. But the top didn’t know what to do with these 501(c)4s, in part because it feared a situation precisely like this one.

It is worth remembering an important fact here: The IRS is supposed to reject groups that are primarily political from registering as 501(c)4s. If they’re going to do that, then they need some kind of test that helps them flag problematic applicants. And that test will have to be a bit impressionistic. It will mean taking the political rhetoric of the moment and watching for it in applications. It will require digging into the finances and activities of groups on the left and the right that seem to be political even as they’re promising their activities are primarily non-political.

http://www.washingtonpost.com/...

Thus, it was not as if the IRS just decided to target right-wing groups wily nilly, or for revenge, as happened during the Nixon era.  Rather it was trying to come up with a way to determine which organizations were and which were not entitled to the 501(c)4 exemption.  Since the majority of applications were from right-wing groups, it was only natural that the focus was on them.  However, as wonkblog points out, that's still no excuse for not coming up with key word searches and a test for left of center applicants as well.

The IRS does need some kind of test that helps them weed out political organizations attempting to register as tax-exempt 501(c)4 social welfare groups. But that test has to be studiously, unquestionably neutral.
Rather than simply issuing an apology, which I think was unwarranted in any event, the IRS should have put the apology into the context just set forth.  It was the incorrectly decided Citizens United decision that forced the IRS, with its limited resources, to utilize a shortcut in an effort to process the spike in applications.  It is that decision that is the source of the problem.
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