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IRS Scandal Revisited

IRS Building

IRS Building (Photo credit: afagen)

Since I last wrote about the IRS’s improper targeting of Tea Party groups for scrutiny of their tax-exemption applications, it appears the situation is less nefarious than originally thought. The culprit appears to be incompetence, lack of guidance, and an absence of clear guidelines as opposed to outright partisan targeting of political opponents.

What we have learned since May 14:

To play Devil’s advocate, one can make an argument that the IRS was doing their job. Groups that have the words “anti-government” and “anti-tax” in their names or in their mission statements could be red flags for abusing/ignoring IRS tax-exemption rules, so they were profiled. This is similar to law enforcement profiling of Muslims (FBI and CIA searching for terrorists) and other minority groups (New York City’s Stop-and-Frisk program), which many conservatives support. Still, progressives would be outraged if IRS officials were targeting liberal groups, so they must be just as concerned when it is done to conservative groups.

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The bigger issue is that while there are real social welfare groups, some political groups are without doubt hiding behind the 501(c)(4) designation so that they can raise money without being subject to disclosure. That needs to change. If they want to be involved in politics, they should organize as a 527, where they will still receive tax-exempt status but have to reveal their contributors.

Republicans in Congress continue to search for a connection between the IRS and the White House in this scandal. We’ll see how it all transpires… Our leaders still need to be focusing on jobs, but sadly, that seems to be much less of a priority for them at the moment. Scandals are so much more fun.

Cross-posted at The Feisty Liberal

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Enough of the “Impeach Obama!” nonsense

President Obama’s past few weeks have been pretty dismal. The Benghazi tragedy has garnered increased attention, so the White House released associated emails to quell accusations of a cover-up; subsequently and to the administration’s benefit in this matter, it was discovered that a Republican staffer had doctored an email; then McClatchy reported that Ambassador Stevens turned down two offers for increased security one month prior to the attacks. It was also revealed that the IRS had been targeting conservative social welfare groups requesting tax-exemption, though that is looking increasingly more like ineptitude, lack of resources, and the absence of clearly defined parameters for determining 501(c)(4) tax-exemption rather than outright politics. Then it came to light that the Department of Justice had been spying on reporters’ emails at the Associated Press.

Republicans are crying foul, they are mounting numerous congressional hearings, and some are even tossing about the “I” word–impeachment. Of course, this is hardly the first time Republicans have called for impeachment since Barack Obama took office. Some have even wanted to impeach him because they were, and still are, convinced he is not an American, and therefore his presidency is illegitimate. They refuse to drop the “Birther” conspiracy no matter how many times President Obama’s birth certificate has been released to the public or how often Hawaiian officials testify to the veracity of said document.

More Americans might take these Obama “scandals” seriously, except for the fact that there was silence from these same quarters in the wake of the George W. Bush administration scandals. Some examples from the Bush-era include:  Alberto Gonzalez and the U.S. Attorney firings; the Abu Ghraib prisoner torture and abuse scandal; the NSA warrantless wiretapping program; IRS targeting of the NAACP in 2004 and a Pasadena Church in 2005 for criticizing various Bush administration policies; the outing of CIA operative Valerie Plame after her husband Ambassador Joseph Wilson wrote an op-ed in the New York Times refuting Bush’s claim that Saddam Hussein had sought to obtain uranium from Africa (Niger); torture and indefinite detention; and the list goes on.

If none of the above Bush administration scandals warranted impeachment, risking the lives and futures of American soldiers and their families as well as hundreds of thousands of Iraqis by lying and manipulating evidence in order to justify a war in Iraq certainly was an impeachable offense. (See Iraq Ten Years Later: The Cost of America’s War of Choice for more details of the consequences of Bush’s preemptive war.) Sadly, cowardly Democrats aided and abetted this travesty.

Numerous misrepresentations were fed to Americans about Saddam Hussein’s WMD capabilities. Two are highlighted below:

  • “The evidence indicates that Iraq is reconstituting its nuclear weapons program … Iraq has attempted to purchase high-strength aluminum tubes and other equipment needed for gas centrifuges, which are used to enrich uranium for nuclear weapons.” George W. Bush (This has been proven to be false; the aluminum tubes were not capable of uranium enrichment.)
  • “The British government has learned that Saddam Hussein recently sought significant quantities of uranium from Africa.” George W. Bush (See Joseph Wilson’s op-ed above.)

What is so confounding about the GOP Benghazi obsession is their almost maniacal outrage over the death of four Americans. While no death is acceptable, where was/is that same level of outrage over the nearly 4,500 American soldiers killed in Iraq? It seems Republicans’ anger is terribly misplaced when comparing these two situations. Understanding this, their relentless pursuit to find a scandal related to Benghazi reeks of politics.

When wrongdoing is uncovered, yes, it should be investigated and the guilty parties held responsible. This post is not condoning any Obama administration wrongdoing but merely pointing out the hypocrisy surrounding all the hype.  So please, those calling for it, stop with the “Impeach Obama!” nonsense.

Cross-posted at The Feisty Liberal

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The IRS should review all 501(c)(4) organizations

“The IRS should be treating all these groups equally and appropriately — which would mean much more harshly. Instead, the IRS has permitted 501(c)4s to grow into something monstrous. And if they cower in the aftermath of this embarrassment, it might make matters even worse.”    ~ Ezra Klein in The Washington Post.

The IRS has recently come under intense criticism for its scrutiny of conservative 501(c)(4) organizations over the past three years. Media reported last Friday that in Cincinnati the IRS has been targeting tax-exempt groups with “Tea Party,” “patriot,” and “9/12” in their names as well as those “critical of the government.” I have written about 501(c)(4) organizations previously. These tax-exempt social welfare organizations are forbidden to promote political candidates or actively campaign. In addition, operating under the 501(c)(4) designation allows them to raise money without requiring them to release their donors’ names.

Since 2010, the number of social welfare organizations has more than doubled, from 1500 to 3400 in 2012. Conservative groups are responsible for most of this proliferation. The increase is no accident. The January 2010 Supreme Court ruling in favor of Citizens United unleashed a tsunami of political fundraising and spending, as Super PACs and 501(c)(4)s organized. It is worth noting that nonprofits outspent Super PACs in the 2010 midterm election cycle. In 2012, conservative groups outspent liberal ones by $451.9 million.*

In light of the increased number of 501(c)(4)s and given the above spending totals, one can understand why they might have been on the IRS’ radar. Still, targeting specific groups reeks of partisanship and politics and degrades trust in government. The IRS is supposed to be a nonpartisan, apolitical agency. Sadly, this debacle provides congressional Republicans another excuse to hold hearings—rightly so in this case—as opposed to legislating.

300 social welfare groups were reviewed and 25% singled out using keywords, but none of these groups’ tax-exempt status was revoked. Opensecrets.org provides a chart for 2012, revealing that “none of the top ten biggest spending politically active nonprofits would’ve been identified by IRS keywords targeting Tea Party groups. The eleventh biggest — Patriot Majority — would have, but it is a liberal group with close union affiliations.” Peruse the 2012 data for yourself here.

Talk show radio host Michael Smerconish tweeted yesterday:

“Just imagine if IRS provided NO scrutiny of any group with Tea Party or 9/12 in title, and just conferred tax exempt status? =ly problematic.”

Yes, that would be problematic. Anyone who has been paying attention suspects that many 501(c)(4)s crossed, or are very close to crossing, the line of social awareness into electioneering. Furthermore, keeping donor lists secret sparks suspicion that these groups may be operating outside the rules their tax-exempt status dictates.

Watch-dog groups have been advocating that the IRS more closely scrutinize 501(c)(4)s, particularly the larger ones and those that were established/run by former political operatives and former elected officials. Karl Rove, Dick Armey, and Jim Messina all head up, or headed up, social welfare organizations: Crossroads GPS, FreedomWorks (Armey severed ties in November 2012), and Organizing for Action, respectively.

The current rules for these organizations are vague. The IRS’s major mistake was failure to establish clearer guidelines for reviewing tax-exemption applications once the rapid proliferation of 501(c)(4)s began. If social welfare groups want to focus on political activity, they must relinquish their tax-exempt status, or auditors must reject it. Moreover, if these groups go beyond educating the public about  issues or lobbying legislators and inject their influence into elections, we the people have the right to know who is funding them.

There will be congressional hearings to uncover the full story. Guidelines for reviewing tax-exemption applications must be more clearly stated. Americans need reassurance that government oversight is applied equally. Ezra Klein and Kevin Drum make excellent arguments here and here as to why scrutiny should be increased for all social welfare groups. Klein also warns that this incident, and the associated attacks against the IRS and its employees, could result in IRS auditors becoming more hesitant to perform their oversight jobs. In this age of secret money groups, that would be a shame.

* The total includes political spending from all groups, irrespective of tax designation.

Listen to the NPR report this morning on Morning Edition.

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