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At least that's Ezra Klein says about the latest news-cycle problem of one IRS office "selective auditing" only certain "501(c)4s."

The IRS was wrong to target the tea party. They should’ve gone after all 501(c)4s.

by Ezra Klein, -- May 10, 2013

The problem wasn’t that the IRS was skeptical of tea party groups registering as 501(c)4s. It’s that it hasn’t been skeptical of Organizing for America, Crossroads GPS, Priorities USA and Heritage Action Fund registering as 501(c)4s. The IRS should be treating all these groups equally and appropriately -- which would mean much more harshly.

The IRS has a responsibility to find the tax cheats, in whatever form they might take; No matter their political affiliations.

If you owe taxes -- well, you owe taxes.  That's kind of the IRS's job: To verify that simple Fact.

Well Ezra Klein goes on to explain that 501(c)4s are supposed to have the primary purpose of promoting the "general welfare" of society as a whole -- in order to gain their Tax Exempt status.  That such organizations are supposed to be primarily "socially-oriented" -- NOT "politically-oriented" -- in order to escape their tax-payer responsibilities.

Social welfare organizations have a couple of neat advantages. They’re tax-exempt -- which means, in effect, that your tax dollars subsidize them. And thanks to a 1958 court case, they don’t have to disclose their donors.

But they’re not meant to be political. A 2003 IRS document says that “organizations that promote social welfare should primarily promote the common good and general welfare of the people of the community as a whole.” It goes on to give pages and pages of examples. “A corporation organized for the purpose of rehabilitating and placing unemployed persons over a stated age,” for instance. Or “a corporation formed to provide a school district with a stadium.” “A memorial association organized to study and develop methods of achieving simplicity and dignity in funeral and memorial services,” qualifies, as does “an organization that conducts an annual festival centered around regional customs and traditions.”

SO, primarily "politically-oriented" organizations have a lot to be "verified" for -- IF they want to go Tax-Free.

The problem is not that the IRS challenged the Tea Party-affiliated 501(c)4s groups -- the problem is that the IRS (in this one office) DID NOT challenge them ALL.

"General Welfare" is heralded in the Constitution as a primary goal of the Nation. I would suspect that 501(c)4s did not even get an "honorable mention" given the sparsity of corporate-entities looking for Tax-amnesty, back in the day. Back then promoting the "General Welfare" was designed around people, not politics, in stark contrast to how our nation now spins today.

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Comment Preferences

  •  Registering a 501 (c) 4 should not be (21+ / 0-)

    anything like automatic. Everyone doing so should need to show that they are not just a partisan political front group and that he money is spent in a politically neutral way.

    We have only just begun and none too soon.

    by global citizen on Tue May 14, 2013 at 06:13:51 AM PDT

  •  they do review every application, (6+ / 0-)

    but they do select some for extra due diligence.

    •  "primarily political," in this context, (4+ / 0-)
      Recommended by:
      Deep Texan, Kane in CA, mmacdDE, jamess

      specifically means supporting candidates for office.  they can have partisan agendas, but they can't spend more than half on supporting or opposing candidates.

      •  There's also the definition of "primarily"... (5+ / 0-)
        but they can't spend more than half on supporting or opposing candidates.
            The idea that "primarily" means "51% or more" is a bit of an artificial construct, too. I don't recall who was discussing it last night on MSNBC, but it was apparently an IRS ruling that since "primarily" wasn't clearly defined in the statute, they would accept 51% rather than the commonly understood notion that "primarily" means "almost all".
             Also, if the 51% spent on the "general welfare" means supporting polling and "informational campaigns" promoting a partisan agenda rather than a neutral community interest, it's distorting the statute as well. I don't think OFA promotes the "general welfare" any more than Crossroads GPS; they're both expressly political organizations that shouldn't be tax-exempt.  

        -7.25, -6.26

        We are men of action; lies do not become us.

        by ER Doc on Tue May 14, 2013 at 07:31:59 AM PDT

        [ Parent ]

    •  As well they should. (0+ / 0-)

      I'm not getting the outrage, it looks a lot like the Bengazi tempest in a teapot. Out of 300 applications singled out for extra scrutiny, a quarter of them were "Tea Party" or "Patriot" .orgs per their own choice of titles. Notice that "Party" strongly suggests political purpose, and "Patriot" is often associated with militia type groups. They deserve the extra scrutiny.

      I want to know what the other 3/4ths of this list includes. I'd lay odds they follow the same type of pattern, but on the Dem or Lib end of the scale. Or the religio scale, reminiscent of the "Moral Majority" and Ralph Reed type outfits. The IRS has a duty to investigate applications for tax-free status - it's their fucking JOB. Since when do they apologize for doing their fucking JOB?!? Makes no sense to me.

      Have you ever heard the IRS apologize for auditing anybody's taxes?

  •  Ask your self this (3+ / 0-)
    Recommended by:
    Kane in CA, elwior, soros

    what if the IRS wanted to "verify" all returns that qualified for an earned income tax credit?

    I think many would be outraged (and rightfully so - that it targets a particular class of people).

    The IRS, from what I have read - is not under fire for their review - it's how they picked those for review with keywords such as "Patriot".  That's just plain wrong regardless of your political philosophy.

    The care of human life and happiness, and not their destruction, is the first and only legitimate object of good government. - Thomas Jefferson

    by ctexrep on Tue May 14, 2013 at 06:18:23 AM PDT

    •  Apples and oranges (8+ / 0-)

      An EITC requires a simple examination of the income on the W-2s submitted with the return.  If the IRS wanted to go beyond that, it would then be an audit.

      The 501(c)4 exemption requires an application separate from return, and an examination as to whether a the applicant is primarily engaged in political activity.  Of necessity, a more detailed examination is required.

      Keep the TVA public.

      by Paleo on Tue May 14, 2013 at 06:25:34 AM PDT

      [ Parent ]

    •  If they see... (12+ / 0-)

      ...people on television wearing funny hats and waving signs that say:

      "I'm Cheating On The Earned-Income Credit!"
      ...then they should be audited.

      The law specifically says that these groups can't endorse candidates nor parties. Yet I have not found a single Tea Party group that did not make endorsements. And they actually were parties. They have "party" in their name!

    •  If they verified ALL returns (3+ / 0-)

      with EITC, I wouldn't have a huge problem with it, though the IRS doesn't have the manpower for it. So they either do random sampling, or use a non-discriminatory filter based on a higher historical record of non-compliance. But what if they intentionally targeted only taxpayers with Hispanic names for a higher level of scrutiny? Or only those that live in particular neighborhoods which were disproportionately minorities? The IRS would be justifiably skewered.

      That's essentially what they did here, but rather than target groups that would have great support here, they targeted the least favored group.

      Neither is acceptable. I would suggest unconstitutional.

      •  They were doing what made sense - paying (1+ / 0-)
        Recommended by:

        a higher level of attention to those that had a name that people who were screaming about not wanting to pay taxes included.  

        Is it "wrong" for police to for drunk drivers around bars?  Since there's a higher likelihood those driving away from a bar will be intoxicated than someone driving away from a grocery store, it only makes sense.  What the IRS did here only made sense, too.  That they haven't explained that and instead apologized is the problem here.

        "If you trust you are not critical; if you are critical you do not trust" by our own Dauphin

        by gustynpip on Tue May 14, 2013 at 10:12:25 AM PDT

        [ Parent ]

        •  Are you really (0+ / 0-)

          associating people who want to change tax laws with criminals? Are people who want the rich to pay more taxes and the poor to pay less taxes also criminals in your mind? If so, there's a lot of criminals around here.

    •  The right wing has no leg to stand on (2+ / 0-)
      Recommended by:
      yella dawg, lostinamerica

      on this issue, given how RW churches have played fast and loose with their tax status for years. Including my personal favorite, on the cover of the Nation a few years ago:  "Democrats:  Get Right with God" on a church's signboard in North Carolina somewhere.  

      "When people spin this in partisan terms to obfuscate the truth, it does a real disservice to normal people not in the big club in DC. Many of them will be hurting...That is why I write."--priceman

      by SouthernLiberalinMD on Tue May 14, 2013 at 09:09:49 AM PDT

      [ Parent ]

      •  Yeah. (1+ / 0-)
        Recommended by:

        Bugs the heck outta me that churches can be so blatantly partisan, pretending that God gets all involved in our damned politics. As if they DO NOT believe their God gave us brains and free will enough to attend to our own earthly political systems.

        A church in Western NC almost lost its tax exempt status during the Bush years for kicking out all members who voted Democratic, and the preacher preaching every week about how he expected his parishoners to vote. When IRS came after them they fired the preacher flat. I think the IRS ought to be checking into all the tax-exempt organizations on a regular and rotating basis. The teabaggers are a fairly new phenomenon as astro-turf corporate funded fakers, and they call themselves a "Party." They deserve the extra scrutiny.

    •  If there were instances of (1+ / 0-)
      Recommended by:

      earned income tax credit fraud suddenly springing up out of nowhere leading to a flood of people who neverbefore claimed them, then yes...that is perfectly alright. And anyone claiming the credit should be willing to account for their honesty if asked.

  •  The upshot of this is that they will just (11+ / 0-)

    grant every application.  They'll be too afraid to challenge them since this exemption, as it's currently written, requires detailed information and some subjectivity in determining whether the majority of an organization's activity is political.

    Keep the TVA public.

    by Paleo on Tue May 14, 2013 at 06:21:34 AM PDT

  •  Most of these "social" programs are a front for (5+ / 0-)
    Recommended by:
    TampaCPA, ER Doc, elwior, lostinamerica, Ender

    political action and everyone knows it, yet they run away laughing scott free and flaunting it in our faces.  And now they will get less "scrutiny" because *boo hoo sniffle sob, they were "targeted" for being the cheats that they are.....Jesus Tapdancing Christ Almighty!!

    •  They don't have to flaunt it (3+ / 0-)
      Recommended by:
      Catte Nappe, Adam B, johnny wurster

      They can be political. It is perfectly legal for them to be 100% political. They don't have to pretend. The limitations are on expenditures related to getting specific candidates elected. They're allowed to spend every penny on promoting policies, like lower taxes, eliminating medicaid, and eliminating any and all gun control measures. Under current law, that's not cheating.

  •  The irony (to me, anyway), is how much (14+ / 0-)

    I had to go through to launch a tiny little 501(c)3 research foundation back in the 1990's. You'd think that I was planning to publicize the nuclear launch codes. The idea that these dubious 501(c)4s are getting what sounds to a rubber-stamp approval by the IRS is maddening!!

    Those who do not understand history are condemned to repeat it... in summer school.

    by cassandracarolina on Tue May 14, 2013 at 07:06:00 AM PDT

  •  That is the problem and it IS a scandal. n/t (1+ / 0-)
    Recommended by:
    •  Not much really (3+ / 0-)
      Recommended by:
      doroma, elwior, jamess

      Weren't all of these self-proclaimed "patriot" groups allowed tax exempt status anyway?

      This is an opportunity for baggers to bash their enemy the IRS.  "Patriots" don't pay taxes.

      Republicans: Taking the country back ... to the 19th century

      by yet another liberal on Tue May 14, 2013 at 07:26:46 AM PDT

      [ Parent ]

      •  Would you consider it a scandal if the IRS was (0+ / 0-)

        specifically targeting Progressive groups?

        •  It's a bad policy on the part of the IRS (1+ / 0-)
          Recommended by:
          johnny wurster

          The IRS stepped in it.  OTOH, I'm not joining in on the tea parties little party.  I'm certain they're exaggerating things and how the hell is a teaparty group community service to start with anyway?

          Republicans: Taking the country back ... to the 19th century

          by yet another liberal on Tue May 14, 2013 at 07:39:01 AM PDT

          [ Parent ]

      •  Not all, and not yet (2+ / 0-)
        According to a letter to the IRS Monday, the ACLJ [American Center for Law and Justice ] said the North East Tarrant Tea Party and the Allen Area Patriots, along with eight other groups across the nation, are still waiting for approval for their tax exempt status.
        The ACLJ said it represented 27 groups, of which 15 had been granted their tax exempt status. It demanded the status be granted immediately for the NETTP and the Allen Area Patriots. It also demanded that the IRS “identify and appropriately discipline all IRS employees” who were involved with the scheme. The letter from the group threatens a lawsuit if there is no action by noon Friday.

        “Texas is a so-called red state, but you’ve got 10 million Democrats here in Texas. And …, there are a whole lot of people here in Texas who need us, and who need us to fight for them.” President Obama

        by Catte Nappe on Tue May 14, 2013 at 08:23:15 AM PDT

        [ Parent ]

  •  As a founding member of a 501 C 3, I found working (5+ / 0-)

    with the IRS was awful.

    They targeted our group because we were a housing trust fund. They tied us up in red tape because other housing trust funds had stolen money.

    It was a pain, and we lost a lost a lot of time in the 2004-2006 getting approved.

    The IRS, like the VA, is a broken agency. It needs work, it needs to change.

    My guess is that politics at the lower levels played a part in this. Also, the insiders in Washington, and nearly everyone at Dailykos, believes the tea party movement is a bunch of low information voters hoodwinked by astro turf groups. If you believe that, and are checking on new 501 C 4's, it makes sense to flag all the groups that you think are stupid. I am not justifying it. However, I do understand it.

  •  They need to investigate all churches, too. (1+ / 0-)
    Recommended by:

    If they are doing politicizing (ha!), they need to be taxed.

    We could balance the entire budget on fairly collected taxes on political churches.

    •  Churches have charters that they have to met for (3+ / 0-)
      Recommended by:
      mmacdDE, viral, Eric Nelson

      their criteria. I don't think handing the IRS tools to go on a witch hunt against churches is a good idea.

      Churches don't donate to political causes but they can allow members to spread their influence.

      If you are a church that believes
      that war is wrong like Quakers, you should be allowed to question the morality of it. If your church acts more like a social club or cult that promotes gun ownership
      and puts political pressure on Congress to reduce gun
      laws, that's another matter. Gun laws are meant to protect the public at large. They promote the "common good".

      The IRS has criteria that they use to establish taxable status. That is their duty. Congress is responsible for creating regulations. They didn't do such a good job
      with Citizens United. That is not the IRS fault. They don't regulate.They issue rulings on the status of the organization based on investigations.

      The real "outrage" in all this is that it is an outrage.
      The GOP and the Tea Party will use this to beat the IRS into submission so that they will allow groups like Tea Party and even Organizing for America to grow.
      Remember how Citizens United came into being and
      why. That is the real outrage.

      Check out Lawrence O'Donnell's show for a better understanding of the history of the 501(c)(4) status
      and how the social welfare classification has changed.

  •  As is often the case ... (3+ / 0-)
    Recommended by:
    merrywidow, jrooth, jamess

    Ezra Klein is correct.  Here's another piece I recommend.

    Which side are you on?

    by ThirstyGator on Tue May 14, 2013 at 07:37:21 AM PDT

  •  Citizens United vs. FEC created this problem (8+ / 0-)

    The tsunami of opaque $billions led to use of 501(4)c groups as a means to disguise political contributions.

  •  That's what I don't get about this... (9+ / 0-)

    It's the IRS's job to verify these organizations aren't political... can anyone be outraged that they took extra special notice of certain highly relevant keywords at the time...

    ...due to them being political...

    ...without, in the same breath, admitting those organizations probably didn't deserve their tax exempt status, and were rightly targeted?

    Now, if they ONLY went after conservative organizations that would be a problem...

    ...but I thought only 1/4 of 300 or so were the "outrage bait"... what of the other 225?

    Technically, there shouldn't be an argument as to whether  they unfairly targeted conservative organizations...

    ...because conservative is a political philosophy, and you really shouldn't be able to identify a political philosophy as a defining attribute of an organization that truly deserves to be a 501(c)4...

    ...but I assume liberals try to bend this too... (and should ALSO be targeted (because "political philosophy" NOT "liberal political philosophy"))

    ...but have they done so in such a sweeping manner?

    I mean, if the IRS found that, all of a sudden, in a significant number of instances in which they reviewed an organization randomly, and it failed, it possessed certain attributes... wouldn't they be negligent in their duties to NOT refine their search to weed out the new phenomenon?

    No matter if that attribute was Patriot, Xenu or Occupy.

    Funny how I doubt only one of those DIDN'T spam the IRS with fraudulent applications of one kind of another.

    •  This is a really good point (0+ / 0-)

      and one I hadn't thought of.  Of course they focused on groups with political words like "patriot" in their names, because they were looking to ferret out the political groups amongst the social/civic groups.

      Of course, now that the IRS has apologized and said mistakes were made, none of this discussion of reality actually matters.

      "When people spin this in partisan terms to obfuscate the truth, it does a real disservice to normal people not in the big club in DC. Many of them will be hurting...That is why I write."--priceman

      by SouthernLiberalinMD on Tue May 14, 2013 at 09:13:06 AM PDT

      [ Parent ]

    •  That is not the IRS's job (0+ / 0-)

      They can be political. They can be 100% political. The limitation is on how much they spend on getting specific candidates elected. They can spend up to 100% of their money on influencing policy. They are allowed to promote lower taxes, repealing the ACA, ending welfare.

      •  Errr, no... (0+ / 0-)
        But they’re not meant to be political. A 2003 IRS document says that “organizations that promote social welfare should primarily promote the common good and general welfare of the people of the community as a whole.”
        Primarily promote the social welfare would mean, at the most, 49% of your activities could be political (and that would still be doing a fairly good job of gaming the system)...

        ...and when you start out with it being able to be identified that you have a political philosophy from your name (let alone what specific philosophy that is) it's probably a good bet that you're NOT doing (even one bit of) the "general welfare" thing you're meant to be doing in order to deserve your tax exempt status...

        ...and someone should be checking to make sure.

        Heh, you might be on the up and up... but, like I said, it's the IRS's job to make sure of that, and not just trust you on it.

        And when groups with "patriot" and "tea party" in their name suddenly start monopolizing the dubious distinction of "failed random check after failed random check"... well, why wouldn't the IRS take note of that and hone in on the red flags? Not because it's of a particular political ideology, but because of the fact that it's a political ideology at all, and readily identifiable in the in the name at that, it's likely something hinky is up...

        ...actually, not even that! Wouldn't it be best if, in the course of refining their searches based on red flags, the IRS was allowed to target certain words that showed up in fail after fail despite the fact they were political words?

        Now, perhaps there was an ideological motivation in the targeting. That would be bad (but, given it was, what, two Bush appointees at the time? Yeah, right, at least in the direction being claimed, one would have to imagine). But if it was just an efficiency thing? Why then the brouhaha?

  •  Everybody has to pay taxes, oh unless you don't. (1+ / 0-)
    Recommended by:

    If you can't figure out 501(c)4, then you are going to pay taxes.

    Maybe instead of defending how it was abused, maybe we should be calling for the elimination of tax exempt status.

    I said I had a farm while I really only had a salad. Jon Stewart

    Validate my parking Validate my parenting Validate my politics Validate my religion And I will be happy.

    by 88kathy on Tue May 14, 2013 at 08:21:32 AM PDT

    •  Are we defending how it was abused? (1+ / 0-)
      Recommended by:

      "When people spin this in partisan terms to obfuscate the truth, it does a real disservice to normal people not in the big club in DC. Many of them will be hurting...That is why I write."--priceman

      by SouthernLiberalinMD on Tue May 14, 2013 at 09:13:52 AM PDT

      [ Parent ]

      •  I think we should be advocating getting rid of (2+ / 0-)
        Recommended by:
        Eric Nelson, SouthernLiberalinMD

        501(c)4 all together. Policy and Party are too intertwined to draw a straight fair line. These groups aren't going to break because they have to chip in with some taxes.

        Everybody knows that talking politics at church is the norm and has been for years.

        PS - I should have said figuring out how it was abused. OOPSIE.

        Validate my parking Validate my parenting Validate my politics Validate my religion And I will be happy.

        by 88kathy on Tue May 14, 2013 at 09:24:08 AM PDT

        [ Parent ]

        •  Oh, OK. (1+ / 0-)
          Recommended by:

          I agree that eliminating 501c4 might be the best thing. Put the civic associations in with 501c3 and everybody else can go into the political category.

          "When people spin this in partisan terms to obfuscate the truth, it does a real disservice to normal people not in the big club in DC. Many of them will be hurting...That is why I write."--priceman

          by SouthernLiberalinMD on Tue May 14, 2013 at 10:41:42 AM PDT

          [ Parent ]

  •  By and larger that is what the IRS did (3+ / 0-)
    Recommended by:
    rschndr, Eric Nelson, jamess

    They were investigating OTHER 501Cs. They weren't all conservative ones. That detail is missing from most of the coverage. The reason they might have been investigating all of the tea party-sh ones was because there were so much more of them.

  •  As every good teabagger knows (0+ / 0-)

    No one dares challenge what the Master Glenn Beck says nor does the IRS have any right to challenge the 912 Foundation since Glenn Beck derives no benefit from it.

  •  Having formed a 501c4 once (1+ / 0-)
    Recommended by:

    I agree with you.

    "When people spin this in partisan terms to obfuscate the truth, it does a real disservice to normal people not in the big club in DC. Many of them will be hurting...That is why I write."--priceman

    by SouthernLiberalinMD on Tue May 14, 2013 at 09:06:03 AM PDT

  •  Most non-profits do not deserve tax exemption (2+ / 0-)
    Recommended by:
    Eric Nelson, jamess

    I agree - and all organizations claiming to be non-profits should be very closely restricted.  I would like to see religious, social and educational groups taxed  as soon as their income exceeds a reasonable level, say 10,000 per active member. Real estate and other assets should be taxed, in my view,  at standard rates except maybe for an actual church building or active office.

    Private educational institutions, ranging from elementary schools to major universities, are major abusers of tax-exempt status and I think they should be treated as regular businesses unless proven otherwise.

    Along the same lines, donations to charity should only be tax-deductible when the charities contribute to the general good, for example cancer research but not spreading the teachings of a particular faith.

    The federal, state and local governments  are, from what I hear, all facing debt crises so it really doesn't make sense to permit such groups to avoid paying their share

  •  I gotta wonder why I'm not a 501(c) (0+ / 0-)

    The whole wide world and everybody in it are ALL SO MUCH BETTER OFF, now that I have spaketh my comment, here.

    Now I must be off to the excrement fragrance contest.

  •  I'm remembering (3+ / 0-)
    Recommended by:
    Eric Nelson, FiredUpInCA, jamess

    all the uproar about the horde of RW groups jumping on the 501c bandwagon.  I do not remember anything about a horde of LW groups doing the same.  (Not that we would go about in a horde.)

    Just sayin', if the majority of new applicants were RW groups, and the majority of scrutiny went to RW apps, there's really not a story in that.

    There certainly are some interesting and unpleasant specifics as to methods, but I would like to see some stats too.  Can't wait to see the full report.

    Guns don't kill people like hammers don't pound nails.

    by rschndr on Tue May 14, 2013 at 09:51:45 AM PDT

  •  Astounding. So basically, (1+ / 0-)
    Recommended by:

    the IRS can't review anybody unless they review EVERYBODY. Which they certainly can't afford to do. So therefore, they will review nobody.


    •  Strawman (0+ / 0-)

      Nobody has claimed that. The selection for higher scrutiny can be random. Or it can be based on historical patterns (i.e., auditing more taxpayers filing Schedule C with their returns than without, or even auditing a higher percentage of high income taxpayers). But the selection filter for higher scrutiny has to have some evidence of a history of non-compliance. They had none in this case. It was purely based on perceived political ideology based on the organization name. This was a witch hunt, and they found no witches.  

      •  Bullshit. (2+ / 0-)
        Recommended by:
        Eric Nelson, lostinamerica

        This was no witch hunt. Are you kidding me? Please.

        The IRS was doing due diligence on people who are clearly anti-tax nuts. Furthermore, the cases of Tea Party groups engaging in scams by operating essentially as for profit entities while claiming to be "social organizations" has been reported since they first came into effect.

        Finally, even if this was a witch hunt, it was a hunt of fucking Republicans. Which in my book is just fine. Fuck em.

        •  How exactly (0+ / 0-)

          are they operating as for profit entities? They are allowed to be 100% political. There is no limitation on how much they can spend to influence policy. Only on the precise method in which they influence policy. They can only spend half their money on direct candidate support.

          As much as I find their anti-tax policies repugnant, there is nothing inconsistent with promoting that policy through a 501 (c)4. Just as the Sierra Club has no limitation in promoting its policies. Just as the renamed OFA can promote its policies.

          Do you really want the IRS deciding which speech is allowed to be promoted and which is not?

  •  Glad you caught Ezra Klein on this jamess (1+ / 0-)
    Recommended by:

    Lawrence O'Donnell had Ezra Klein on discussing this

    O’Donnell: The real IRS scandal happened in 1959
    In 1959 IRS changed the wording from exclusively

    to primarily when defining what constitutes 501(c)4  social welfare tax exempt organization:

    The IRS is facing criticism after news broke that a Cincinnati branch targeted Tea Party-related groups with unequal scrutiny–but according to MSNBC’s Lawrence O’Donnell, the real scandal happened long ago.

    Section 501(c)(4) of the Internal Revenue Code defines tax-exempt social welfare groups like this:

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

    In 1959, under the administration of Dwight Eisenhower, the meaning of this section was changed dramatically when the IRS decided the word “exclusively” could, in effect, be read as “primarily.”

    “For 54 years, the IRS has gotten away with the crime of changing the word ‘exclusively’ to ‘primarily,” said Lawrence O’Donnell on The Last Word  Monday. “The IRS took a hard, clear word like ‘exclusively’ and changed it into a soft word  ’primarily’ and then left it to the IRS agents to determine if your organization was primarily concerned  with the promotion of social welfare.”
     - emphasis added

    Add Ctitzens United on top of that and what was predicted has happened. An anonymous unaccountable (non-diclosed) tool of political muscle favoring those with the most money.


    As Klein says, the IRS “must act in ways above reproach.” O’Donnell agrees with a balanced approach, but “if in 2010, there was a flood of Tea Party applications for tax exempt status and many fewer applications for tax exempt status from liberal political groups, then it only makes mathematical sense that more questions would be directed at Tea Party applications.”
    So since the IRS can't possibly  investigate or possibly audit all cases for tax abuse they use a system of tags (red flags). One of the most common tags for instance is the "home office" tag.

    It sure seems to me like a whole series of poor choices were made along the way and the original tax exempt provision for a genuinely good purpose of social welfare has been corrupted into a political tool.

    Thx jamess

    Link to video with discussion:

  •  Correct me if I'm wrong here but... (1+ / 0-)
    Recommended by:

    Didn't ALL of the groups selected for extra scrutiny pass? So what's the deal?

    Was the technique "Politically insensitive?" You bet.

    Is Klein right that they should have done all of them? Of course.

    But I fail to see what the problem is today.

  •  good diary jamess... (1+ / 0-)
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    seems as though msm is avoiding the issue which is --tax exempt 501(c)4's need to be verified in our Citizens United

    ''A conservative is a man with two perfectly good legs who, however, has never learned to walk forward.'' FDR

    by lostinamerica on Tue May 14, 2013 at 10:38:32 AM PDT

  •  Additionally (1+ / 0-)
    Recommended by:

    all inspectors and investigators focus on one subject or another during the course of their duties. To them EVERYTHING they examine is a "target." I think that politically charged term is being carelessly used in a deliberate effort to pour cold water on the discovery of the Tea Party grift.

  •  Oh and also (1+ / 0-)
    Recommended by:

    IRS has been systematically underfunded by conservatives for decades now. So naturally they have to make determinations as to what to focus on and what not to. One might even say they need to "target" their investigations in hopes of finding the most obvious and lucrative sources of hidden income.

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