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 he robs banks. (His famous answer, “because that’s where the money is,” may be an urban myth but I like it nonetheless.) Since the disastrous, thoughtless Citizens United decision, the number of 501(c) 4 organizations has 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.
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.
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.
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 Transactionsin 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.
The Internal Revenue Service (IRS)acknowledged Friday that it had improperly flagged groups applying for tax-exempt status for additional scrutiny if they contained common Tea Party keywords in their names. Rather than addressing the real problem of political committees masquerading as 501(c)(4) groups to evade public disclosure laws, this approach instead delayed the process for several groups purely on the basis of their names.
Lois Lerner, head of the IRS unit that oversees tax-exempt groups, noted that the number of 501(c)(4) group applications doubled between 2010 and 2012. As a result of this influx, she explained, low-level workers at the agency’s Cincinnati office had flagged about 300 applications for additional review based on a keyword search. None had their status revoked or denied and the IRS apologized for the mistake.
While it unclear whether the IRS workers intentionally targeted conservative groups — an agency spokesman did not immediately respond to a ThinkProgress request for the complete list of keywords used — the office revealed that two of the terms on the list were “Tea Party” and “patriot.” As such, about 75 Tea Party groups were singled out for additional scrutiny.