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