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April 25, 2015

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What was the IRS thinking?

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Well, this is a fine mess.

After years of moaning about various “conspiracies” against them, conservative activists finally have a real (i.e., not manufactured by Fox or inflated by Rush Limbaugh) piece of evidence to take before the court of public opinion.

Meaning, of course, last week’s revelation that the Internal Revenue Service has been giving extra scrutiny to groups with the words “Tea Party” or “patriot” in their names. Extra scrutiny from the IRS is about as welcome as extra scrutiny from the proctologist, so one can hardly blame conservative groups for complaining, as they’ve done since last year. Unfortunately, those complaints got no traction until Friday, when the IRS admitted the practice. Lois Lerner, director of the IRS division in charge of tax exemption, was speaking at an American Bar Association conference in response to a question about whether the conservative groups had been singled out. She admitted they were.

These groups reportedly amounted to about a quarter of the 300 organizations flagged for review between 2010 and 2012, but according to Lerner, there was no political intent. Rather, she says, the words became a shortcut used by employees to help them sort through the explosion of groups seeking tax exemption under the Internal Revenue Code. The relevant Code section, 501 (c) (4), requires that any exempt group be working to promote “social welfare” and that political action not constitute its “primary activity.” The groups the IRS flagged were not necessarily denied exemption, but were subjected to extensive questioning and required to produce membership lists and donor information.

Tuesday, the Justice Department launched an investigation. Two congressional committees are also looking into the matter. Every taxpayer not employed by the Obama administration should welcome the news.

Under the most charitable interpretation of the facts, this unit of the IRS used god-awful judgment. Under the least charitable, it engaged in ideological harassment inimical to and violative of, the First Amendment.

Taxpayers deserve to know which it is. And how long it has been going on. And whether groups of other ideological stripes have been similarly targeted. And how the malfeasance — assuming it is malfeasance — will be punished. And what safeguards will be put into place to ensure this sort of thing never happens again.

Frankly, Congress needs to address the regulations governing which groups get tax exemption in the first place. The existing standard noted above is porous enough that groups most people would define as political (Crossroads GPS, Priorities USA) are somehow nevertheless declared tax exempt, free to flood campaigns with unlimited money from sources they are not required to disclose.

One could argue, then, that the Tea Party and patriot groups singled out by the IRS are guilty mainly of playing the same old cynical shell game that has become all too familiar in recent years. But until that game is outlawed, the rules are what the rules are and they must apply evenly, regardless of ideological faith.

Some observers will find the controversial Tea Party and patriot groups less than sympathetic illustrations of that point. But every group is controversial to somebody. And only by vigilance toward everyone’s rights do we protect anyone’s rights.

It’s too easy to imagine some future IRS office using different shortcut words (“pro-choice,” let’s say or “Islamic”) to sort through applications for tax exemption. That possibility ought to temper any temptation among tea party foes to be cavalier toward this abridgement of conservatives’ rights. Better they should be thankful nothing like this has happened to them.


Leonard Pitts Jr. is a columnist for the Miami Herald.

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  1. Firing the Acting Commissioner Steve Miller is like putting a band aid on hemorrhaging blood. He took over in November 2012, years after the targeting practices were instituted.

    This president and his administration need to understand that voluntary compliance is the underlying I.R.S principle. Screwing tax paying Americans, a dying breed, will backfire. If millions upon millions of taxpayers decide to screw the I.R.S. back, and not file and pay, there won't be enough agents and funds to stop it.

    Carmine D

  2. Most of the 501[c][4] applications under scrutiny have been filed since the "Citizens united decision of 2010. Approximately one third have some kind of identifier relating to the Tea Party. In that period in increased scrutiny only one has been disapproved, a progressive Democratic womens' group from Maine. Of the scrutinized, more than half have been approved. Why the increased scrutiny? When Congress passed the law authorizing these groups they did not define the terms used or provide guidance to the IRS as to rules. The IRS has consequently been quite slow to write rules and implement them given the highly contentious nature of this issue. The giants of 501[c][4] like Crossroads and American for Prosperity have used this lack of guidance to establish defacto rules. The IRS is doing what it is paid to do....scrutinize organizations for compliance with tax law and rules. Oh, the guy who "resigned"....appointed by Bush to get this under control. Heck of a job, Brownie!!!

  3. Why are Future and Carmine buying into yet another right wing-nut conspiracy theory? Right or wrong, the IRS tactic has a long history, and Republican'ts only gripe when it's right-wing organizations that are caught. Were primarily conservative organizations caught this time? Apparently. But the increased scrutiny began shortly after Citizen's United. Oddly enough, the right wing started its major effort to enroll organizations under 501(c][4] shortly after Citizens United. And the left wing was VERY slow to catch up. With the right supplying most of the applications is it a "conspiracy" that the right's applications were the majority of those scrutinized? If so, how did it enhance that "conspiracy theory" that three left-wing organizations were ALSO scrutinized? And that only ONE organization has been denied - a left-leaning organization!

    It's easy enough to read 501(c][4] - try . Note that no substantial part (contrary to popular opinion)
    of the primary activity of ANY qualified organization may involve carrying on propaganda, or otherwise attempting, to influence legislation and that NO qualified organization may "...participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.

    The first restriction may have a bit of wriggle room. The second has NONE! IRS has been criticized for asking organizations about their intended political activities - that seems to be a very reasonable request under the law.

  4. Pat, Robert:

    Ever been targeted by I.R.S. for an audit?

    Carmine D

  5. "What was the IRS thinking?
    They were thinking that they better keep the conservative groups under wraps, like they were told to do.
    Simple and quite obvious. Of course there are those that will say otherwise, as usual, even after the IRS admitted to targeting these groups."


    You're right. The liberal love fest Dems here are wrong. They are Obama robots.

    Carmine D

  6. antigov:

    My question to Pat and Robert above applies to you too. Ever been targeted by I.R.S. for an audit?

    Carmine D

  7. antigov:

    I didn't ask you if you were ever audited by I.R.S. I asked you if you were ever targeted for an audit by I.R.S. Do you understand the difference?

    Carmine D

  8. Here's what targeting by I.R.S. is antigov, since you obviously don't know:

    "Beginning in early 2010, the report says, IRS officials in Cincinnati began using "inappropriate criteria that identified for review Tea Party and other organizations applying for tax-exempt status based upon their names or policy positions instead of indications of potential political campaign intervention." The Cincinnati workers also developed a spreadsheet that was dubbed "Be On The Look Out" with key words to target conservative groups.

    Over the next 18 months those groups found their applications delayed, and they were served with aggressive and burdensome questionnaires as part of the process of applying for tax-exempt status. Of the 170 groups that got requests for extra information, the Treasury report finds that 98 or 58% of the requests were unnecessary.

    IRS defenders have said in recent days that the operation wasn't really partisan because tea party and similar groups only made up a third of all groups flagged for additional scrutiny. But according to the report, "all cases with Tea Party, Patriots, or 9/12 in their names were forwarded to the team of specialists" (our emphasis). Of the 296 applications that were selected as "potential political cases," 91 of them, or 31%, were selected for scrutiny even though they showed no evidence of major political campaign activity.

    Once they were selected, the report confirms they were slow-tracked: While a few applications got attention, the vast majority sat interminably as the 2012 campaign rolled on. According to the report, "No work was completed on the majority of these applications for 13 months." And "all applications that were forwarded to the team of specialists experienced substantial delays in processing." The political cases took the IRS some 574 days on average to process compared to 238 days for other nonprofit applications.

    Those delays effectively sidelined the political activity of groups that would have opposed the re-election of President Obama and other Democratic priorities. The report acknowledges that "For I.R.C. 501(c)(3) organizations, this means that potential donors and grantors could be reluctant to provide donations or grants. In addition, some organizations withdrew their applications and others may not have begun conducting planned charitable or social welfare work."

    Carmine D

  9. The fact that you [antigov] said that I would be audited [seemingly because of what I posted and not the correctness and completeness of my tax return] tells me you think I will be "targeted." That's illegal according to I.R.S. laws [see my above excerpted quote to you]. Interestingly, you saying they would audit me, when you actually mean "target" me, tells me you believe I.R.S. breaks the law.

    Carmine D

  10. Well, then you will understand when I tell you that I, and my business, were targeted by I.R.S. because my last name ended in a vowel.

    Carmine D

  11. BTW after 3 years and $50K, I won. Judge told I.R.S to fire the agent in charge and he was fired. Then, I went to work for the Feds for 33 years, thanks to the judge. And I retired on a gov't pension. The two virtues of right and justice came together.

    Carmine D

  12. Incarceration is the ONLY answer for the misbehavior and criminal activity. Why are employees assigned these illegal operations not turning in supervisors and management? Because the power structure AND OBAMA ADMINISTRATION more than tacitly DIRECT the illegal activity. (Carmine, I was audited once and owed zero, nada, zip. And, yes, the audit proces is not enjoyable.)

  13. Here's another irony, Carmine. eleemosynary tax-exempt churches are REQUIRED TO BE NON-POLITICAL. During the Obama campaign the churches came right out and challenged IRS et al saying they had every intention of scaling up political activity and twisting arms of the congregation to vote liberal. IRS IGNORES those blatantly violating their representations and targets start-up groups....

  14. Roslenda & Chuck333:

    The I.R.S. allegations, totally unfounded and unproven, allow I.R.S. to freeze and put liens against all personal and business assets and bank accounts. These I.R.S procedures, totally legal and done without any due process, lock business owners out of all access to money. Essentially shutting/closing down business operations. Such is the power, intrusion into, and abuse by our Federal government AND I.R.S. in particular.

    Carmine D

  15. Carmine, I know about IRS power. I'm an Enrolled Agent and have dealt with IRS staff at many levels. The Nevada district is mucho more screwed up that say, Wisconsin or Minnesota. From some of the stories I hear, IRS treats many of its employees as if they were delinquent taxpayers. By the way, I believe IRS needs that authority to file liens and seize assets--I've seen too many businesses that DON'T PAY THEIR PAYROLL TAXES but abscond with the money. Doesn't mean I endorse the misuse of that authority--the Collection Agents have the responsibility to advise and warn business managers that enforced collection is gonna happen--but we can't expect those agents to tell each of several managers/owners--the business entity is responsible for communicating that. Further, if a business is operating without making timely tax payments Agents NEED TO ACT. Kind of rough to operate your business when your competition doesn't have to pay full freight on employees. IRS collection work can be difficult but I've run across SOME good agents. And then there are those individuals who never pay their income taxes UNTIL IRS catches up with them. I keep recalling the Red Foxx thing--he went years without paying a dime but it was in all the Vegas press FOR MONTHS AND YEARS before IRS enforced collection. Mr. Foxx seems to have claimed a manager misused / misappropriated some assets--as if that means he doesn't have to pay his taxes.

    However, I think you're onto something about intrusion. I recall TCMP audits--taxpayer compliance management program or something similar. Absolutely BURDENSOME on anyone selected for that program.

    I also recall one Vegas gentleman who didn't know he was being audited until he received notice of overdue--about half a million $. His prestigious CPA firm (prepared tax returns) wouldn't touch the case--fear of IRS collection? I got him out of the bill but had to kick start his butt a few times--IRS won't wait around if you fail to respond. Anyhow, since the guy had filed several returns since relocating from Texas, the feds had his address. Why they audited him in absentia and disallowed a big IRA/deferred comp liquidation--court ordered in divorce should have been COMMUNICATED WITH THE TAXPAYER.

    If I were more trusting of all the other posters here, I'd tell you how I got an IRS District Manager fired.

  16. Roslenda:

    I.R.S. has too much power and too much power to abuse it. Power corrupts. Absolute power corrupts absolutely.

    Carmine D

  17. Carmine, IRS has the infrastructure and, in SOME jurisdictions, is well run with many good people. By the nature of their job and their authority, they MUST BE on constant alert for Rhambo dude employees. I keep saying cops are social workers--so are IRS agents. Any taxpayer, business of individual, must be treated with the presumption of compliance. When an auditor finds or disallows some sort of exemption or deduction, s/he must keep looking for similar--that's what the agent is there to do. HOWEVER, the taxpayer should be treated with reasonable respect and consideration--to minimize interference with business operations and life. CARMINE, as you say, power corrupts and it is absolutely necessary that CONTINUAL OVERSIGHT be there. And there is. SO WHAT HAPPENED, OBAMA?

  18. Roslenda:

    I was around in 1978 when the IG act went into effect. In fact worked closely with many IG's in the Fed Government, many of whom are retired now. They are top notch. I was around when J. Russell George was appointed into his first Fed IG position in 2004. And have followed his career and those of some who worked/work for him. He's a career civil servant of the first degree. AND his first job [George] as an IG was replacing an IG who failed miserably, and was fired. Sorry to say she was a woman and a flaming tyrant, disposed to lying, who could teach even Obama a few lessons in thug politics. Once an IG loses integrity, as she did, they are done in Fed service.

    Carmine D

  19. Carmine, no argument. So when a sitting President fails miserably to lead the civil service and fails miserably to appoint qualified people (Holder, perhaps the IG) who is to blame? And if the President encourages or allows his Chief of Staff and/or cohorts to communicate to the IRS Acting Commissioner to go after partisan targets....IT IS CRIMINAL.

  20. If ever a Washington DC government scandal called out for an appointment of an Independent Counsel, the current IRS case does.

    Carmine D