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Of course, when we consider the so-called ‘IRS scandal,’ we should all agree that no applicant for federal tax exemption should be treated differently than another based on their disparate political views.  Yet, that is only part of the issue.  Agreement that there should be equality of treatment does not address the form that treatment should take.

The U.S. Internal Revenue Service (IRS) has been accused of applying excessive scrutiny to certain applications for tax exemption under Section 501(c)(4) of the Internal Revenue Code.  The heightened review was allegedly received by groups with names that include references to “Tea Party” or some less common other ‘conservative’ terms.  

A Tuesday, May 21st, Huffington Post article revealed that “[a]n IRS official who asked to talk without being identified said … that the terms that IRS officials used were partisan terms, but that the motivation for the behavior was not driven by partisanship.”  The acting IRS Commissioner, Steven Miller, asserted in recent Congressional testimony that the agency’s actions were “foolish mistakes made in trying to be more efficient.”  Miller attributed some of the problem to a $1 billion cut in the IRS budget at a time when the agency’s exempt organization division must process roughly 70,000 applications every year.

According to Lois Lerner, the Head of the IRS tax exempt organizations division, the “be on the lookout” (or “BOLO”) list criteria was changed in January 2012 to include various conservative and progressive terms including “political action type organizations involved in limiting/expanding government, educating on the Constitution and Bill of Rights, social economic reform/movement.”  IRS officials have asserted that the record indicates an overloaded government staff that was searching for efficient ‘short cuts.’  

While the processing of some tax-exemption applications may have been slow, a new report by the Institute for Research & Education on Human Rights (IREHR) found that only one 501(c)(4) application was denied out of 296 ‘questionable’ applications reviewed for a May 14th draft report by the Treasury Inspector General for Tax Administration.  The only denied application was filed by the Maine chapter of Emerge America, an organization that trains Democratic women to run for office.  

Section 503(c)(4) of the Internal Revenue Code allows an organization to be tax-exempt if it is not “organized for profit” and it is “operated exclusively to promote social welfare.”  The IRS.gov website provides that “a section 501(c)(4) social welfare organization may engage in some political activities, so long as that is not its primary activity.”  Yet, the website also instructs that “[t]he promotion of social welfare does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office.”  

Many observers to the recent so-called scandal, have asserted that the lack of clarity in the tax laws contributed to treatment concerns.  It is unclear what level of political activity should be considered to exceed the permissible limits and whether endorsement of particular candidates should be permitted at all.  

Yet, the end result of an IRS review, and whether tax exemption should be granted or not, is not the subject of this article.  In the question of whether extra scrutiny of an application is merited, the issue is whether the IRS has a sufficient and justifiable reason for concern about that application to merit a ‘deeper look.’  

Certainly, an objective observer without political bias might conclude that a group with “Tea Party” in its name will be likely to get involved in politics to some degree.  A randomly selected site, teaparty911.com, provides a list of “Tea Party Endorsed Candidates” updated through May 15, 2013.

In an August 30, 2012 Facebook post, First Coast Tea Party, a group that was granted 501(c)(4) status in 2011, advertised a rally for the Romney-Ryan Republican presidential ticket.  The advertisement stated that its members should “bring your chairs and your signs, make sure they know that the First Coast Tea Party is and has been helping their campaign.”  In a later Facebook post, the group encouraged its members to “get to the Republican Headquarters and offer and then do some work” because “we cannot lose Florida to Obama.”

Kentucky Tea Party, a group granted 501(c)(4) status in 2009, published a list of “officially tea party endorsed candidates for the 2011 Kentucky primary” and “The Rationale for Romney-Ryan.”  Katy Tea Party Patriots, which filed for 501(c)(4) status in 2009, ran an “Oust Obama 2012” campaign.  Various other tax-exempt organizations, including Tiftarea Tea Party Patriots, Inc. and Central Valley Tea Party Inc., have also been involved in political campaigning and have made numerous political endorsements.

Dictionary.com defines “Tea Party” as “a conservative political movement …”  In fact, there is one word that is associated with the most “political” of all organizations.  Both the “Democratic Party” and the “Republican Party” have in common the use of the word “party.”  Of course, they also share that word with the Tea Party and the intended implications are apparent.  There have been many identified “Tea Party candidates” that have run in recent elections.  

Yet, despite the evident need for efficiencies like a BOLO list and the evident logic of the inclusion of “Tea Party” applicants within that list, the President and multiple Congressional Democrats have condemned the actions of the IRS for their alleged partisanship.  While the facts are still emerging, it is possible that some tax-exemption filings made by progressive groups were given an easier path through the IRS review and approval process.

Any IRS favoritism for one political party or persuasion would be unacceptable.  However, that is an entirely separate issue from the question whether heightened scrutiny was merited for those that did receive it.

In an era when political organizations wield excessive power and the U.S. Supreme Court case, Citizens United, granted them even greater power, the possible long-term effects of the alleged IRS scandal are troubling.  Rather than beginning to give “Tea Party” applications a ‘free pass,’ the scrutiny should continue but we should ensure that it is applied equally and without political bias.

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Comment Preferences

  •  I don't disagree. (0+ / 0-)

    This is a repost of a diary posted earlier today.

    •  Made it clearer. (0+ / 0-)

      Yeah, the earlier version wasn't received in the spirit that I intended it.  I don't think I changed the substance of it much, but I did change the tone and I wanted to emphasize some statements more.  My earlier title, "IRS Should Flag "Tea Party," was intended to be controversial to get attention, but I think people got hung up on the title and a few other sentences.

      This version which goes more directly to my point.  Definitely, Peace.  :)

  •  "primary" activity. (1+ / 0-)
    Recommended by:
    RockyMtnLib

    my ancestor Thag could parallel park the ISS in that loophole.

    I see a very beautiful planet that seems very inviting and peaceful. Unfortunately, it is not.…We're better than this. We must do better. Cmdr Scott Kelley

    by wretchedhive on Fri May 24, 2013 at 05:42:37 PM PDT

  •  Give them an inch and they will take a mile. (2+ / 0-)
    Recommended by:
    second gen, Dr Erich Bloodaxe RN

    The law says "exclusively for the promotion of social welfare."
    www.taxalmanac.org/index.php/Treasury_Regulations,_Subchapter_A,_Sec._1.501(c)(4)-1

    Which got stretched into "primary activity is the promotion of social welfare."

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

    Which got stretched into 51% promotion of social welfare.

  •  Excellent and evenhanded (0+ / 0-)

    approach to this scandal. And the ONLY balanced and cogent post among the many posted here. Great job.

  •  Why? (1+ / 0-)
    Recommended by:
    Nattiq
    we should all agree that no applicant for federal tax exemption should be treated differently than another based on their disparate political views.
    When those political views include, nay, are centered upon not paying taxes, why should an agency tasked with ensuring that everyone pays the taxes they are legally required to not give such a group extra scrutiny when determining whether they are truly able to receive a tax free status?  Especially when the main criterion to receive such a status is a lack of political activity?

    The only scandal that I see here is that ANY of these groups received a tax free status.

  •  This is what I don't get: (1+ / 0-)
    Recommended by:
    ZedMont
    While the processing of some tax-exemption applications may have been slow, a new report by the Institute for Research & Education on Human Rights (IREHR) found that only one 501(c)(4) application was denied out of 296 ‘questionable’ applications reviewed for a May 14th draft report by the Treasury Inspector General for Tax Administration.  The only denied application was filed by the Maine chapter of Emerge America, an organization that trains Democratic women to run for office.
    If only one out of 296 applications that were flagged under this policy turned out to be ineligible, it seems to me that the criteria being used are not effective.  Maybe it seemed at the time like a good way to weed out the bad ones, but I think the results speak for themselves.  
    •  Exactly. Why waste time and money reviewing them (0+ / 0-)

      at all?  A better approach would be for congress to do away with these ridiculous tax exemptions altogether.  Not holding my breath.

      Of all the preposterous assumptions of humanity over humanity, nothing exceeds most of the criticisms made on the habits of the poor by the well-housed, well-warmed, and well-fed. --Herman Melville

      by ZedMont on Sat May 25, 2013 at 07:49:43 AM PDT

      [ Parent ]

      •  I don't want them to do that. (0+ / 0-)

        There are so many non-profit groups out there doing great things (along with some doing lousy things).  I don't want to throw the baby out with the bathwater.

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