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How big is the IRS scandal? Does it surprise you at all?

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 How far do you think this scandal goes? Does it surprise you to learn that the IRS is likely doing this to people?

"The IRS inspector general will release an audit sometime this week, but congressional aides gave several media outlets a draft of the audit. According to the document, IRS employees in the Cincinnati office used several troublesome phrases to single out 501(c)4 applicants for review — including, at various points between 2010 and May 2012, groups that 'criticize how the country is being run,' aim to educate Americans 'on the Constitution and Bill of Rights,' and lobby to 'make America a better place to live.'" [full story here]

 



by on May. 13, 2013 at 11:14 AM
Replies (31-40):
katy_kay08
by on May. 13, 2013 at 4:50 PM

The IRS-Tea Party Scandal: Many Political Groups Should Not Be Tax-Exempt

Co-organizer of Washington DC Tea Party JoAnn Abbott listens during a Tea Party Town Hall meeting February 8, 2011 at the National Press Club in Washington, DC. (Image credit: Getty Images via @daylife)

Let’s start with the obvious. Those IRS employees who singled out conservative groups for scrutiny over their tax-exempt status were wrong, wrong, wrong.  Any whiff of politics at the agency is unacceptable, and this is far more than a whiff. In time, we shall see how far up the agency food chain the scandal goes.

But this unsavory episode should also shine a light on the law that gives tax-exempt status to political groups of all ideological stripes, often described by the code section that grants their exemption—501(c)(4)s.  That is especially true since one outcome of this scandal will be to give these partisan groups even more freedom to operate outside of at least the spirit of the law.

The only way to stop the proliferation of what are often-secret campaign money laundries is for Congress to change the law that grants these groups this form of tax-exempt status.

As I wrote in a blog post back in 2010, the tax law is relatively clear about what a (c)(4) can and cannot do. The IRS defines these groups as “civic leagues, social welfare organizations, and local associations of employees.” Their net earnings are supposed to be used for charitable, educational, or recreational purposes. They may lobby and participate in political activities but their primary purpose must not be campaigning.

Thanks to smart lawyers who have exploited an outdated law, the tax-exempt status of many groups may be perfectly legal. But others simply do not pass the smell test.  Does anybody really claim the primary activity of these organizations is anything other than getting their favorite candidates elected to political office, or defeating those they disagree with?

If you have doubts, here is what one group, teaparty.org, says about itself onits website:

We are going to build on the foundation of success we used to elect more governors, grab more seats in the House of Representatives and force the Washington establishment to respect the demands of “We The People.”

In contrast to public charities organized as 501(c)(3)s, contributions to (c)(4)s are not tax-deductible. So why would they want (c)(4) status? One reason: It allows them to hide the names of their donors.

In the past, these groups would have claimed tax-exempt status as Sec. 527 organizations. There are no contribution limits, no restrictions on who may give, and no limits on how they spend their money (except they cannot advocate for a specific candidate). But 527s must disclose the names of the fat cats who use them to finance political campaigns.  And groups that thrive on political dark money will do almost anything to avoid transparency. So they walked through the (c)(4) door opened by the Supreme Court’s 2010 Citizens United decision.

Because the law is so ambiguous and because IRS scrutiny of these groups is so fraught with political landmines (as the recent unpleasantness proves), the IRS had been reluctant to review this issue all.  Now it seems, the agency took a much-needed hard look at some groups, but did so in a clumsy and seemingly partisan way.

Regrettably, by apparently focusing only on conservative (c)(4)s, the IRS has only succeeded in making all these groups—on the political right and the left– even more immune from investigation.

The solution, then, is for Congress to change the law. Many of these groups are not social welfare organizations by any reasonable standard. They clearly exist for political purposes. Many are unabashedly partisan—supporting only Democrats or only Republicans.

Last month, Sen. Tom Coburn (R-OK) introduced a bill to eliminate the tax-exempt status of professional sports leagues, such as the NFL (yes, Virginia, the NFL is tax-exempt).  That’s an excellent idea, but maybe he ought to expand it to include practitioners of America’s other favorite sport—politics.

yourspecialkid
by Platinum Member on May. 13, 2013 at 4:51 PM
1 mom liked this
Not according to SCOTUS. There are oodles of lib groups with the same status.

Quoting katy_kay08:

The IRS had the audacity to review applications for tax exempt status of political groups seeking to avoid paying taxes?!  Oh the horror!

Political groups seeking to influence elections are not eligible for tax exemptions.  IMO the "scandal" is in how many of these conservative groups attempted to fraudulently gain tax exempt status.  

Billiejeens
by on May. 13, 2013 at 6:53 PM
2 moms liked this
Quoting yourspecialkid:




Media Matters is Tax Exempt, if they qualify, everyone qualifies.
yourspecialkid
by Platinum Member on May. 13, 2013 at 8:26 PM

 

Quoting Billiejeens:

Quoting yourspecialkid:




Media Matters is Tax Exempt, if they qualify, everyone qualifies.

 The CBS evening news was talking about this mess and they noted the number of tax exempt groups from both parties that ran political ads during the last election.  This is exactly what SCOTUS ruled they could do.  I don't know what Katy-Kay was thinking..unless she wasn't really thinking...just wanted to provide a smarty pants response.

 

grandmab125
by Gold Member on May. 13, 2013 at 11:44 PM

 Educate yourself.  501c(4) groups:

"501(c)(4) organizations are generally civic leagues and other corporations operated exclusively for the promotion of social welfare, or local associations of employees with membership limited to a designated company or people in a particular municipality or neighborhood, and with net earnings devoted exclusively to charitable, educational, or recreational purposes.[31] 501(c)(4) organizations may lobby for legislation, and unlike 501(c)(3) organizations they may also participate in political campaigns and elections, as long as its primary activity is the promotion of social welfare.[32] The tax exemption for 501(c)(4) organizations applies to most of their operations, but contributions may be subject to gift tax, and income spent on political activities - generally the advocacy of a particular candidate in an election - is taxable.[33]"

 

 

Quoting katy_kay08:

The IRS had the audacity to review applications for tax exempt status of political groups seeking to avoid paying taxes?!  Oh the horror!

Political groups seeking to influence elections are not eligible for tax exemptions.  IMO the "scandal" is in how many of these conservative groups attempted to fraudulently gain tax exempt status.  

 

grandma B

grandmab125
by Gold Member on May. 13, 2013 at 11:47 PM
1 mom liked this

 And we can add to that:  Moveon.org, Organizing for America (Obama's old campaign fund raising group - renamed), Center for American Progress, SEIU, AFLCIO, AFSCME, NEA, IBEW, UAW, American Federation of Teachers, Teamsters, etc....all are 501c(4) exempt groups.

Quoting Billiejeens:

Quoting yourspecialkid:




Media Matters is Tax Exempt, if they qualify, everyone qualifies.

 

grandma B

SpiritedWitch
by Member on May. 14, 2013 at 1:02 AM

Let's see ... Washington, government, scandal ... Nope. Doesn't surprise me at all.

SSDD for DC

autodidact
by Platinum Member on May. 14, 2013 at 2:31 AM


So you didn't read the article?

Quoting Farmlady09:

I'm not surprised or shocked ~ just sad. This is what the liberal elitists (with their 'we know better and everyone should listen) sheeple mentality have brought us to. It's now a crime to stand up for what is in the Constitution, a crime to demand that your rights be upheld, and a crime to try and remind people what those rights are. Uncle Sammy no longer recognizes 'we the people' as the government. Why should he? Far too many of the people have ceded their rights in some bizarre effort to 'control' the neighbors because they think they know better.

The American Dream is just a myth now ... the government is corrupt from the top down and it's using every resource it can to grab control instead of serving. Since idiots are now the majority, it's now open season on those who understand this isn't the way things are supposed to be ... while the sheeple bleat about how smart they are and the good of the flock. Smh ~ wake up sheeple (especially those of you bleating that we should forget about Benghazi).




Autodidact, Unrepentant Heathen

RandRMomma
by Maya on May. 14, 2013 at 3:12 AM
No, it doesn't. The government has been corrupt for decades. People are just acting like they're just now starting to see it because a certain someone is POTUS. Hell, it can be argued that the government has been corrupt since it was first started.
Donna6503
by Gold Member on May. 14, 2013 at 6:40 AM
It's big, not as big, as the right will make it out to be, still it will can a few folks.

The next big scandal story will be the EPA, look for a filibuster to take place with the new EPA director nomination.
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