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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Comments

  1. says

    The frustrating thing about this is that this is something that should be fixed by Congress, but given the make-up of Congress, and it’s inability to get anything done, it won’t get fixed.

  2. abb3w says

    Targeting groups with “tea party” and “patriot” in the name for additional scrutiny when they applied for 501(c)4 non-profit status seems not so clearly beyond the pale. Such names seem a pretty clear signal that the group is likely to be political rather than social welfare in orientation. It would seem only to go beyond the pale if groups on the left whose names were also waving a red flag in comparable manner were not scrutinized.

    However, there’s going to be a lot of sound and fury regardless.

  3. Alverant says

    Why is this a big deal now when during W’s administration the IRS was doing worse to left-leaning churches and anti-war non-profits? I’m not saying two wrongs make a right, but the right-wing noise machine was rather quiet when it was W’s administration going beyond the pale. After all this wasn’t just a few agents in one city, this was a national effort.

    Then you have the FBI and AG office also playing politics. Where was the teabagger outrage then?

  4. says

    Why is extra scrutiny of reigh-wing loony groups bad? These groups have been openly attacking the legitimacy of our curent government, demonizing any person or policy related to taxes of any sort, and sometimes even violence against government officials and violent overthrow of the US government. Why should they NOT get extra scrutiny when they apply for tax-exempt status?

  5. says

    Oops, left out a word there — “…and sometimes even all-but-explicitly condoning violence against government officials and violent overthrow of the US government.”

  6. oranje says

    I definitely don’t know enough about this, but is this like the claim that car dealerships were closed during the bailout because they were Republicans? As in, what percentage of applications for 501(c)(4) status were from one side of the ideological spectrum.

    Of course, they should all get added scrutiny. But, in my opinion, more astroturfing comes from one side of the political spectrum than the other.

  7. dugglebogey says

    The real scandal here is not that they are targeting obviously conservative groups, since they are obvious political entities and therefore should not be granted tax-exempt status.

    The only scandal would be if they could prove that the same obvious liberal groups are being given a pass, such as groups with “progressive” in the name. That’s the smoking gun here.

  8. gwangung says

    My rather imperfect understanding was that some liberal groups were shut down and none of the Tea Party groups were shut down.

  9. says

    I am outraged, OUTRAGED, I TELL YOU. That this was done. That it was done while Obamandingo is in the WH. That it was carried out under the control of a fiercely partisan demoncratic zealot… wait, what’s this?

    http://www.nytimes.com/2012/10/11/business/douglas-shulman-head-of-the-internal-revenue-service-to-step-down.html?_r=0

    Nothing to see here, move along, move along.

    “Of course, they should all get added scrutiny. But, in my opinion, most astroturfing comes from one side of the political spectrum.”

    Sorry, I think you were off by a couple of standard deviations.

    The left has few if any deep-pocketed surreptitiously funded tax exempt organizations. I’ll be thrilled to stand corrected but if there out there they are the exemplar of powerlessness.

    7

  10. says

    What gwangung said. Did any legitimate organization suffer actual harm as a result of the IRS’s “bias?”

    This isn’t a case of financially-stressed people applying for public benefits to stave off imminent loss of food or lodging; this is a case of organizations looking for extra help to keep on doing something they were already financially capable of doing — something that is legitimate but not immediately necessary to save lives or prevent financial ruin.

    The only scandal I see here (so far) is the overblown sense of entitlement that views extra scrutiny of a request for exemption from taxes as a horrible injustice.

  11. schelde says

    Is there any evidence that non conservative groups were given a pass? Frankly, looking at the specific cases cited, it seems that conservative groups looking to break the law were flagged for trying to break the law. The only wrong doing seems to be the inappropriate release of some of the applications before a decision was made to approve or deny the application.

    So, were any obviously political non profits with non conservative agendas approved by this office?

  12. Artor says

    Considering that part of the Teabagger mantra is that all taxes are bad, I don’t see why it was inappropriate for the IRS to give them an extra hairy-eyeball. If a vocally racist group applied for a grant from the NAACP, don’t you think it would be wise for the NAACP to look extremely close at their policies and behavior, if not denying them outright? If a liberal group that advocated secession, “2nd Amendment Solutions,” or tax-avoidance applied for tax-exempt status, I’d fully expect them to get some hard scrutiny too.

  13. says

    The Republicans are hyping up this “scandal” because they have to shout down all attempts to question the privileges they’ve been taking for granted since the founding of the USA. If the IRS can take a hard look at loony-right anti-government groups and get away with it, that will make it easier for the public to question an even more sacred cow — tax-exempt status for organized religion.

    The reich-wing noise machine has an agenda here, and it goes well beyond IRS policies.

  14. says

    Also having trouble seeing the problem with extra scrutiny, in and of itself.

    Indeed, I’m not even sure the leaking is bad in and of itself: after all, whistleblowing & leaking can shed light on government abuses and illegal acts (even though leaks are, of course, illegal).

  15. scienceavenger says

    Isn’t it interesting that the party who dismisses the racist and sexist implications of their nearly all-white makeup suddenly sees their overrepresentation in an investigation as ipso facto evidence of a bias against them?

    Birth certificates, Wright, Ayers, Alinsky, Fast and Furious, Solyndra, Benghazi, IRS, zzzzz…. At least they’ve made DVRing through my news shows take up less time that I can more valuably use watching the NBA playoffs…or paint dry.

  16. Dennis N says

    I’m of two minds on this. The government should not be partisan in its execution. But on the other hand, I would like to see the evidence that a) conservative groups were harmed in some way or b) liberal groups were given a pass in some way.

  17. says

    “There is no evidence at this point that the White House had any role in it, but time and evidence will tell.”

    Ah ha! So he was in on it!
     

    “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.”

    And their coverage, consisting of mostly stories like “Rove and others launder money anonymously, release misleading ads, taint elections and make a joke out of 501s” clearly had a liberal axe to grind, against Rove and others, who laundered money anonymously, released misleading ads, tainted elections, and made a joke out of 501s.

  18. abb3w says

    The official treasury report on the problem appears to be available here. Warning: it is written in High Bureaucratese.

  19. says

    From the article cited by sanford:

    There’s just one minor problem: the exact purpose of the IRS office in question IS to look at political groups. Specifically, to weed out purely political groups that promote or oppose candidates from obtaining a tax status that’s supposed to go to nonprofit educational organizations. The crime of the IRS agents in Cincinnati? They were doing their job.

    But what about the specific targeting of Tea Party groups? Doesn’t that show that this was all just a witch hunt against groups with right wing ideologies? Uh, no. It came up at exactly the time the office was getting flooded with a bunch of hastily prepared applications spewing from the Tea Party’s messy birth. The edict went out expressly because the office was being flooded with a bunch of hastily prepared, clearly political, applications all using very similar terms… What if those applications had all been from groups using Muslim Brotherhood in their titles? Would the same pundits still be on the air screaming about the IRS getting all political?

  20. gshelley says

    Given how they completely ignore their own rules with regard to churches, I’ve found it hard to care about this, though was amused by Obama’s statement that “The IRS must apply the law in a fair and impartial way, and its employees must act with utmost integrity”

  21. matthewhodson says

    Coming soon to a democracy near you Washington Voting…

    Tired of the wrong candidate being elected?
    With the Washington voting system this will never happen.
    Every person gets a single vote, then everyone who has a dollar can get another vote or 5 more or however many are needed to secure the right candidate.
    No more need for flowery promises or messy hatchet job campaigns.
    The Washington system is pure democracy – one dollar one vote!

  22. throwaway, extra beefy super queasy says

    None were denied, but some may have been delayed, which is a harm.

    I’m not following you here. Was there some dire tax preparation emergency for the group? I’m not sure which harm you’re imagining specifically, but if it’s about the scrutiny causing the groups to keep a higher slush fund just in case the tax-exempt status was denied, then I don’t see this as a harm. This isn’t a burden on the group since they should be prepared for that outcome in the first place.

  23. Alverant says

    Dennis N, if you get a bunch of applications with similar sounding names then it’s going to send up a red flag for fraud. That’s not profiling and having some extra scrutiny because of suspicious behavior is just part of life. Saying the delay was harm is like saying that a credit card company holding off on a suspect payment until it verifies that the card holder made the purchase is harm.

  24. says

    Adding fuel to the fire, the acting director of the IRS (who was in a position to know what was going on in his previous position) resigned last evening:

    http://www.latimes.com/news/politics/la-pn-obama-irs-commissioner-resignation-20130515,0,1521161.story

    It borders on conspiracy theory to suggest that a Bush appointee would deliberately create a situation where the Teabaggists WERE unfairly singled out but that is the only logical explanation that has Douglas Shulman in that role as Commissioner of the IRS.

    This manufactroversey is getting traction and it’s because the same cast of characters in the House and Senate and at the various FuckTheNew’sCorpse outlets AND EVERY MOTHA’FUCKIN’ TEABAGGIST 504(c) (4) has taken to cable and the toobzwaves to shout about it–as was screaming about teh DHS Bullitz!

    I googled DHS+1.5B bullets+buying (and a few variations) and got LOTS of pages of conspiracy theories. Oddly the U.S. gummint seems reluctant to put documents about ammunition and weapons procurement out there for the public to scrutinize. It’s fortunate for us that previous administrations did not refuse to release documents about things like U.S. energy policy meetings between Dorklord Cheney and Ol’ Bidneth interests in the WH.

  25. alwayscurious says

    How many applications were denied? Oh none, zero, nada.

    After a year or two for some of the applications, which is also inappropriate. After a set amount of inaction, the IRS should have either denied the application or grudgingly approved it. Four months of inactivity on a contested application should be grounds for summary judgement, if only to keep the pipelines flowing. Summary denial seems fair–they can always reapply. Bureaucratic indecision is special level of hell that the ignorant don’t deserve.

    I also would like to see the IRS hire field agents with enforcement teeth for dismantling agencies that abuse this status. But the terror of law enforcement abusing the law is too much to contemplate when it’s the kind of laws one might be breaking.

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