Wednesday, May 15, 2013

IRS- The Latest Republican Phony Scandal

Oh, the outrage!  How dare the IRS question the honesty of tea party groups who asserted in legal documents that they were primarily social welfare organizations, not political groups!  Who would ever think such a thing!  And how dare the IRS single them out and not make a move against liberal groups!

Here we go again, with the usual Republican mountain of outrage, designed to smear the Obama administration and at the same time ignite more hatred against the government and particularly against having to pay taxes.  And of course, the tools in the mainstream press are likely going to do the bidding of their rich masters and run with this phony scandal all summer long, despite the fact that anyone with an hour or so to spend can completely deconstruct the whole lying pack of nonsense.

Well, here is what I have found out in my hour of time.  First of all, the IRS' scrutiny was not directed solely at right wing organizations:

"Liberal groups received same IRS letter that ignited Tea Party outrage...The maelstrom over the revelation that the IRS targeted anti-tax Tea Party groups applying for tax exempt status for scrutiny is showing no signs of slowing down, with Republicans seeing their chance to milk a scandal for political purposes. But while the politics is heating up, some important context is emerging, like the fact that liberal groups were targeted as well, and in fact the only group to have its application denied was a liberal group."

Well, that's the least of the problems with this latest non-scandal. Now on to the real outrage.  Here are a few excerpts from an official IRS document* entitled "IRC 501(c)(4)Organizations   ByJohn Francis Reilly, Carter C.Hull, and Barbara A. Braig Allen:"

 "IRC 501(c)(4) provides for exemption of:

Civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare.

Local associations of employees,the membership of which is limited to the employees of a designated person or persons in a particular municipality and the net earnings of which are devoted exclusively to charitable, educational, or recreational purposes.

Organizations that promote social welfare should primarily promote the common good and general welfare of the people of the community as a whole.  An organization that primarily benefits a private group of citizens cannot qualify for IRC 501(c)(4) exempt status.

an organization that loses its IRC 501(c)(3) status because of excessive lobbying or political campaign intervention may not be treated as an organization described in IRC 501(c)(4)."

A few remarks on the above.  First of all, let me point out that despite the clear wording of the above, at some point in the past, the IRS decided to replace the word "exclusively" with the word "primarily."  If you are interested in why this happened, you are welcome to read more of this IRS document, which contains numerous short explanations of cases the IRS has ruled on, which show that many groups which were clearly social welfare organizations under the meaning of this act had minor activities which could have resulted in their being denied their appropriate status (i.e. bingo games run by charities, which could be seen as a for-profit activity.)  Unfortunately, this change in interpretation left the act open to the most egregious abuse.  The notion, for example, that Karl Rove's political smear factory is a "social welfare" organization is ludicrous; yet it continues to claim tax exempt status, due to the IRS's utter failure to enforce this law with appropriate action.

Now, a few comments from an article in the Columbia Journalism Review, which I found via the Daily Kos post linked to above:
"• 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.”

• 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"

What must be noted here is not that the IRS exceeded its mandate by examining these organizations, but that it was legally obligated to examine all of them; and the real scandal here is that every single one of these purely political groups was not denied its tax exempt status.  And further, it is even more of a scandal that Rove's group and the many like it that were formed in the wake of the miserable Citizens' United decision were not laughed out of Washington when they applied for tax exempt status for the hundreds of millions of dollars that their few thousand rich donors spent to buy elections. 

But still, we are treated to the mindless regurgitation of the Republican point of view from our mainstream press, such as this example from the Voice of the Serious People, the Washington Post:

 "The fact that Tea Party groups — especially smaller organizations — appear to have been specially singled out for scrutiny is what most troubles many experts here. Not least because larger, politically oriented groups like Crossroads GPS and Priorities USA were able to form 501(c)(4) organizations with little trouble.

“The targeting aspect of this is god-awful,” agreed Douglas N. Varley, a Washington-based lawyer with Caplin & Drysdale who deals with tax-exempt organizations. He adds that the agency’s special focus on conservative groups is a much bigger deal than the sheer number of questions that were posed to groups seeking 501(c)(4) exemption, which isn’t by itself unusual."

The targeting aspect of this was not God-awful.  It was one hundred percent appropriate, as required by law (which this ignorant reporter would know if he had bothered to do any research beyond regurgitating Republican talking points.)  Is there a person in this country that does not know that the tea party groups and all of the other Republican groups like Rove's existed for no other purpose than to elect Republican candidates?  When they applied for tax exempt status, they openly perjured themselves by claiming that they had any other purpose.  It was the legal responsibility of the IRS to question the legitimacy of their criminal filings, and what is more it was the legal obligation of the IRS to deny every single one of these applications.  What is "God-awful" is that the Republican party, along with its stooges in the press, are intimidating IRS officials into not applying the law, so that they may enjoy the privilege of openly breaking the law every day that these organizations exist.

 *If you want to read the whole thing (be my guest- I did and it didn't quite kill me,) here it is.


Anonymous said...

EXCELLENT rip-up! I spent my first half-hour reading the TaxAlmanac, then IRS (c)(4) and the John Francis Reilly, Carter C. Hull, and
Barbara A. Braig Allen corruption of the law. I spent the rest of my hour reading what you wrote! :)
I'm right there with you on us about to "fall to fascism." I feel like a Dietrich Bonhoeffer for pre-nazi America. Let's see: It goes, Large Corps see profit opp -> lobby it through ALEC to (esp.) state reps -> draft cookie-cutter legislation to affect profit opp -> reps take fake bill and make real ones. Privatize prisons? More arrests,more $. Privatize schools/encourage home schooling? Only the rich will have educations, esp. educations full enough to home school kids. Of course, corps can bring business back to America, because we will have a 99% working poor pool to draw from.
Anyways -- good stuff!
P.S. -- you on Twitter?

Anonymous said...

left wing tool...whoops, make that fool

Anonymous said...

How often do you pray? Detail the content of your prayers? Can you name any left wing/progressive 501(c)(4) applicant that received those questions? The answer - it did not happen. Fact and fantasy can frequently be blurred in the minds of entrenched ideologues.