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Is the lynch mob, which has included me, wrong about the IRS scandal?

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When the scandal at the Internal Revenue Service first came to light, my immediate reaction was that “heads should roll” (see HERE).

My next reaction was that President Obama should quickly address this issue “in no uncertain terms” (see HERE).

These reactions, like those of most other folks of all political stripes, were in keeping with the great American tradition of hating the IRS.  After all, these tax collectors are taking our hard-earned money, are they not? And the system is rigged to favor the well-connected, is it not?

Yeah, you can’t go wrong bashing the IRS.

Or can you?

By Tuesday of this week, I began to wonder if the posse of which I was a part “was missing the main point in all of this” (see HERE). I had to ask myself if we were ignoring a much larger problem with regard to how the IRS deals with political groups of the left and right alike. The answer to that question, I have now concluded, is a resounding yes.

The tipping point for me was THIS COLUMN by David Cay Johnston in the Columbia Journalism Review:

There is a scandal in all of this—several, actually, and some are more significant than the one that is getting all the attention. As the story unfolds, here are some important points to keep in mind:

• Missing from much coverage is the relevant recent history—the role of the Supreme Court’s 2010 Citizens United decision and how it prompted a deluge of requests from new organizations seeking tax-exempt status under tax code Section 501(c)(4) as “social welfare” organizations—despite the fact that many of these are blatantly political operations.

• Congress requires the IRS to review every application for tax-exempt status to weed out organizations that are partisan, political, or that generate private gain. Congress has imposed this requirement on the IRS, and its predecessor agencies, since 1913.

• When it comes to 501(c)(4) organizations, what the IRS is supposed to do is draw a distinction between groups that are “primarily engaged” in politics and groups that really are primarily engaged in “social welfare”—somehow “promoting the common good and social welfare of the community.” It’s kind of mushy…

• The first scandal here, meanwhile, is that the social welfare tax exemption is being used by existing 501(c)(4) organizations, including some very large ones, to promote partisan political interests—the very activity Congress has explicitly prohibited for a century…

• Also worth pointing out: None of the organizations that the IRS scrutinized as a result of the ill-considered screening-by-name regime was denied tax exempt status.

• The second—and widely ignored—scandal in this unfolding story is that the IRS is drowning. Congress is demanding that the agency do more and more with less and less…

——–

Oh, and then there’s THIS:

Everyone agrees that the IRS shouldn’t have targeted groups with “Tea Party” or “Patriot” in their names for special scrutiny in awarding tax-exempt status. NBC News reports two agents have been disciplined for doing so, and the Justice Department announced a criminal probe. But so far no one has identified a single conservative group that was denied status in the controversial review, though some faced bureaucratic hurdles and had their tax-exempt status delayed.

In fact, the only known 501(c)(4) applicant to have its status denied happens to be a progressive group: the Maine chapter of Emerge America, which trains Democratic women to run for office. Although the group did no electoral work, and didn’t participate in independent expenditure campaign activity either, its partisan status apparently disqualified it from being categorized as working for the “common good.”

Ironically, the national organization and its earlier chapters had gotten tax-exempt status by the IRS during the Bush administration in 2006. But it appears as though the Maine group’s rejection triggered a review of the entire organization, and Emerge America and all of its chapters had their tax-exempt status revoked.

 

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12 Comments

  1. expdoc

    http://online.wsj.com/article/SB10001424127887323716304578483823268932776.html?mod=WSJ_Opinion_LEADTop

    IRS defenders have said in recent days that the operation wasn’t really partisan because tea party and similar groups only made up a third of all groups flagged for additional scrutiny. But according to the report, “all cases with Tea Party, Patriots, or 9/12 in their names were forwarded to the team of specialists” (our emphasis). Of the 296 applications that were selected as “potential political cases,” 91 of them, or 31%, were selected for scrutiny even though they showed no evidence of major political campaign activity.

    Once they were selected, the report confirms they were slow-tracked: While a few applications got attention, the vast majority sat interminably as the 2012 campaign rolled on. According to the report, “No work was completed on the majority of these applications for 13 months.” And “all applications that were forwarded to the team of specialists experienced substantial delays in processing.” The political cases took the IRS some 574 days on average to process compared to 238 days for other nonprofit applications.

    Those delays effectively sidelined the political activity of groups that would have opposed the re-election of President Obama and other Democratic priorities. The report acknowledges that “For I.R.C. § 501(c)(3) organizations, this means that potential donors and grantors could be reluctant to provide donations or grants. In addition, some organizations withdrew their applications and others may not have begun conducting planned charitable or social welfare work.”

    ***
    It’s no surprise, then, that Democrats have been angling to blame all this on the Supreme Court’s 2010 decision to allow more independent campaign spending. House Minority Leader Nancy Pelosi responded to the scandal by saying that “We must overturn Citizens United, which has exacerbated the challenges posed by some of these so-called ‘social welfare’ organizations.” So a Supreme Court decision justifies selective tax enforcement?

    Ms. Pelosi’s remarks are revealing because they underscore that Democratic agitation to restrict political speech may have driven this IRS dragnet. In a September 2010 letter to then-IRS Commissioner Doug Shulman, Montana Senator Max Baucus encouraged the IRS to investigate the use of nonprofit status by conservative groups. Noting media reports on conservative groups like Crossroads GPS, American Action Network and Americans for Job Security, Mr. Baucus wrote that there are “serious questions about whether such organizations are operating in compliance with the Internal Revenue Code.”

    In March 2012, New York Senator Chuck Schumer and six other Democrats signed a letter demanding that the IRS put a “cap” on spending by nonprofits or face legislation. In the meantime, they wrote, the groups should be forced to “show their math” to prove that they deserve the tax-exempt status they are applying for. “The IRS should already possess the authority to issue immediate guidance on this matter,” the Senators wrote.

    Before he was fired Wednesday, Mr. Miller, the acting IRS commissioner identified two “rogue” Cincinnati workers as the puppeteers behind the overly “aggressive” enforcement. But don’t be surprised if they thought they were merely following the direction of Senate Democrats.

  2. Robert

    I feel bad for Mr. Miller. Wasn’t he just the acting IRS commissioner for the past 6 months? This activity didn’t happen on his duty. Was Mr. Miller given information about the overt prejudice against conservative organizations seeking the 501 C3/4 status? and he failed to act on it, or was he just in the wrong place at the wrong time and someone had to be sacrificed? It’s brutal out there.

    How did this scandal become elevated to the status it has? Who brought this matter to the attention of the partisans, to make it be the story of prejudice and discrimination it has become? Is this another Karl Rove inspired witch hunt?

  3. doc: The real scandal is that the IRS grants tax-exempt status to any political organization, left or right. There’s a law against that, and it’s not being enforced.

  4. Craig Knauss

    Anonymous doc,

    You cut and pasted a lot of text. So what’s your point? We know it’s happened and we know it’s being resolved. We also know that the vast majority of IRS workers are Civil Service and are not political appointees and therefore are not under the direct control of the Executive Branch. Again, what’s your point?

    Do you want us to believe that Republicans have never done this? We know they have. Or do you want us to believe that organizations that spread hate and lies or advocate overthrow of the U.S. government should have tax exempt status? We know you wouldn’t give that status to the Black Panthers or Symbianese Liberation Army. And your posting states, “Those delays effectively sidelined the political activity of groups that would have opposed the re-election of President Obama and other Democratic priorities.” Really? Which ones? Do you want us to believe the Tea Party Patriots couldn’t function without tax exempt status? How about the Aryan Nation or KKK? Did they stop functioning?

    Personally, I believe there are way too many organizations, such as religious, with tax exempt status. And that puts more tax burden on those of us who do pay our taxes.

  5. expdoc

    Craig,

    How is it being resolved? Can the organizations that were attempting to form legal entities to support policies contrary to the Obama agenda in the last election get back the ability to participate in that election? How about the intimidation of asking such organizations for things like donor lists?

    Do you oppose the first amendment? I don’t.

    You are guilty of the same thing that the IRS is guilty of with this quote “Or do you want us to believe that organizations that spread hate and lies or advocate overthrow of the U.S. government should have tax exempt status?”

    In the end, I agree with you that too many groups have tax exempt status, but if we are going to give it to groups like this we must demand that the rules are enforced equally. In this case, they clearly were not enforced equally and this was done for a political purpose. Now we just need to figure out at whose direction this was done.

  6. Steverino

    Perhaps an investigation will bring to light the many tax cheats and havens under the guise of “social welfare”.

  7. Neftali

    At no time was the Obama Administration aware of what the Obama Administration was doing. – Jay Carney

  8. Neftali wants Jay Carney to say that the president knew everything about these so-called scandals — even if the president didn’t.

    Nothing less will satisfy the Obamaphobes.

    My message to all these people is this: The Republican extremists will overplay their hand regarding these “scandals.” If they think they’ll get anywhere with an impeachment effort, they’re crazier than I thought they were. It ain’t gonna happen.

  9. By the way, the report from Gallup this afternoon on its three-day tracking poll shows Obama’s approval rating up one percentage point from yesterday.

    The approval number has been higher than the disapproval rating since last August. These “scandals” might yet diminish Obama’s standing with the public — in fact, I’m expecting a little fallout pretty soon — but it hasn’t happened yet.

  10. expdoc

    Impeachment talk is crazy talk, at least based on what we know now. I am not sure we have all the information on either the IRS issue or the AP issue at this time.

    I do find it interesting that the fact our dear blog leader is most concerned with is the President’s approval rating. I would think he might be very intersted in any potential violation of the freedom of the press and certainly in any overreach by the IRS.

    I bet if a Bush was in the White Hous he would be apoplectic.

  11. Robert

    The Republican hierarchy isn’t going to stop the impeachment threats until they get a Democratic president to resign like Nixon did. And then I’m not sure they will be satisfied.

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