The Real IRS Scandal

The IRS has admitted that they targeted Tea Party and “patriot” groups for additional scrutiny when they applied for non-profit status over the last couple years, something that is clearly beyond the pale. The real question, which should be answered by the Inspector General of the Treasury Department who is investigating, is who authorized this and who knew about it. There is no evidence at this point that the White House had any role in it, but time and evidence will tell.

At this point, things are looking worse by the minute. Talking Points Memo reports that the same IRS office that is involved here also leaked confidential information about those same groups to ProPublica last year while they were in the process of applying for non-profit status, something that is clearly forbidden by law. TPM also reports that the acting commissioner of the IRS, Steven Miller, was informed about the targeting of these groups a full year ago and nothing was done. That’s all very bad.

But there’s a larger issue here too, one that is likely to be obscured by the politicization of this scandal. Chris Hayes did an excellent job of explaining the deeper problem of how non-profit status is being used to obscure the source of hundreds of millions of dollars in spending to influence the outcome of elections, which is ostensibly forbidden under the IRS code.

“Citizen’s United said essentially any organization of any kind can spend money out of its general treasury to run political ads,” Hayes said, “and that decision brought about a pivotal moment for politics and taxes and campaign spending in this country and we’re still dealing with the fallout.”

Republican strategist Karl Rove and Democratic strategist Bill Burton used the Citizens United ruling to their advantage ahead of the 2012 elections. Both used social welfare nonprofits to run overtly political ads, allowing them to intervene in political campaigns without disclosing their donors. Hayes remarked that their example obviously inspired others to do the same.

“Suddenly, the IRS starts getting a flood of new applications from other political groups and strategists saying, ‘Oh, oh, it turns out I too want to set up a social welfare organization that just so happens to be focused on taking the country back from Barack Hussein Obama,’” he said. “Now, here is the thing the IRS appears to have done unequivocally wrong, that we all agree was absolutely inexcusable. They reacted to all this by targeting one part of the ideological spectrum in looking at whether this flood of new applicants passed the smell test. Being skeptical about a new wave of wolves in sheep’s clothing invading the nonprofit game was entirely appropriate.”

And therein lies the real problem. The designation of “social welfare organization” has become so absurdly broad that it is allowing groups like Karl Rove’s Crossroads GPS to essentially launder vast amounts of money that influences our elections. This has opened up a new way for corporate benefactors to force legislators to do their bidding, by telling them that if they don’t vote the way they want them to vote, or don’t insert language that they want inserted into a bill, they’ll spend $10 million or $20 million to kill their chances for reelection.

The IRS should be scrutinizing every 501(c)(4) application far more closely than they are, regardless of what political ideology they promote. Unfortunately, this scandal is going to make it far more difficult for the IRS to enforce their own rules. The FEC also needs to get involved. We need to end this fictional distinction between “electioneering ads” and “issues ads,” which allow these groups to spend huge amounts of money telling you who to vote for and against while pretending — wink, wink — that they’re not doing that.

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