Surprise! The so-called IRS scandal has nothing to do with taxes!
It’s probably safe to say that many Americans think the current “scandal” at the Internal Revenue Service is about who has to pay how much in taxes.
But that’s not the case, as Steven Rattner MAKES CLEAR:
One of the bigger ironies about the I.R.S. imbroglio is that it had nothing to do with taxes. These newly formed entities didn’t seek 501(c)(4) status to avoid taxes — these groups don’t earn profits and therefore don’t pay any taxes, regardless of their status. The important benefit that came from achieving 501(c)(4) status was freedom from having to disclose the names of any of their donors.
That’s right, what the I.R.S. was really deciding in these cases is which organizations have to disclose their funders and which don’t. And what it was trying to do — however dumbly it went about it — was to reduce the abuse of the campaign-finance rules, not the tax laws.
Without 501(c)(4) status, these groups would have had to organize as what are known colloquially as “super PACs.” While this would have afforded them greater flexibility to overtly support candidates, the names of their donors would have to be made public.