Taxes

The Nerve of the IRS

Posted on: May 23rd, 2013 by ecthompsonmd No Comments

 

The craziness of the IRS "scandal" cannot be underlined or emphasized enough. The fact that the IRS decided to scrutinize a group of Americans who basically state that they hate paying taxes and would go to any means to avoid paying taxes should not be a surprise to anyone. In my mind, scrutinizing tea party groups is a little like asking Willie Sutton why does he rob banks. (His famous answer, "because that's where the money is," maybe an urban myth but I like it nonetheless.) Since the disastrous, thoughtless Citizens United decision, the number of 501(c) 4 organizations have skyrocketed from a little over 1700 to well over 3300. The majority of these 501(c) 4 groups were, wait for it… Conservative, tea party groups.

More from the Vanity Fair:

Unfortunately, given the way this I.R.S. scandal slid so easily into ideological definitions, I fear that few non-politicos are recognizing the real disgrace here: that the federal government—Congress, the White House, the tax agency, and the Supreme Court—has created a situation where blatantly political organizations are able to legally break the law by pretending they’re something that they’re not.

The key to this obscene state of affairs is an entity known as a 501(c)(4), named for the section of the tax code that created it. Supposedly, these are civic associations or organizations devoted to social welfare, which can operate tax-free, but whose donors aren’t allowed to deduct their contributions. Fair enough.... Read More →

Feeding Frenzy

Posted on: May 20th, 2013 by ecthompsonmd No Comments

 

IRS

When you place the phrase "feeding frenzy" into Google you get over 28,000,000 references. The first several references apply to an online game in which you play a fish and you eat other fish to become the "big fish". Once you scroll past the games, you come to a video in which a diver is caught in the middle of a shark feeding frenzy. This is kind of what we watched on Friday. The IRS was caught in the middle of a conservative feeding frenzy. When you think about it, there are few things that conservatives love more than beating up the IRS. If you can't actually cut taxes, the next best thing has to be pummeling the IRS.

Representative Dave Camp, chairman of the Ways and Means Committee and a Republican from Michigan, is in conservative nirvana. He had a relatively long set-up in which he talked about the Constitution and the Bill of Rights and then he got to his main point, "Mr. Miller, with all due respect, this systemic abuse cannot be fixed with just one resignation, or two. And as much as I expect more people need to go, the reality is this is not a personnel problem. This is a problem that the IRS being too large, too powerful, too intrusive, and too abusive of honest, hard-working taxpayers." He continues, "There isn't a person I come into contact with at home or anyone in this country, frankly, who does not fear the IRS. They fear getting something wrong in their tax filings. And they fear the IRS' ability to audit them and wreak havoc in their lives, especially when all they are trying to do is improve their lives, let alone, God forbid, try to make America a better place to live, which is what the IRS targeted them for."... Read More →

More on the IRS

Posted on: May 17th, 2013 by ecthompsonmd No Comments

 

IRS and the Tea Party

Let's take our time and look at this IRS scandal once again. Basically, the IRS singled out groups that included "tea party" or "patriot" in their names for extra scrutiny. Does this make sense? If we can avoid hyperbole and exaggeration for just one second, why should a political organization apply for tax-exempt status from the IRS? Oh, and as we're examining this, let's remember that the TEA in tea party stands for Taxed Enough Already.

When we think about organizations that apply for tax-exempt status, what comes to mind? The Red Cross. United Way. Boys and Girls Club of America.

From the IRS:

If your organization is not organized for profit and will be operated only to promote social welfare to benefit the community, you should file Form 1024 to apply for recognition of exemption from federal income tax under section 501(c)(4). The discussion that follows describes the information you must provide when applying. For application procedures, see chapter 1.

To qualify for exemption under section 501(c)(4), the organization's net earnings must be devoted only to charitable, educational, or recreational purposes. In addition, no part of the organization's net earnings can inure to the benefit of any private shareholder or individual. If the organization provides an excess benefit to certain persons, an excise tax may be imposed. See Excise tax on excess benefit transactions , under Excess Benefit Transactions in chapter 5 for more information about this tax.
Examples.   Types of organizations that are considered to be social welfare organizations are civic associations and volunteer fire companies.

... Read More →

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