"The IRS Real Scandal: Targeting by Class"

[applegrove]

The IRS Real Scandal: Targeting by Class

By David Dayen at Salon

http://www.salon.com/2013/05/16/the_real_irs_scandal_targeting_by_class/

"SNIP.......................


Why would this be the case? First of all, a 501(c)(4) group need not apply with the IRS to prove its tax-exempt status; it can simply self-declare, avoiding an initial review process. The IRS encourages groups to file applications, but those with the resources to hire a smart tax lawyer know they aren’t required to go through the trouble. Needless to say, most local Tea Party groups didn’t have that kind of professional expertise. So generally speaking, the small fish revealed themselves to the IRS initially, and since Congress requires reviews of every application for tax-exempt status, these groups become the low-hanging fruit, prone to investigation.

Furthermore, Tea Party groups did themselves no favors by filling out the applications in an amateurish manner, according to Pulitzer Prize-winning former reporter for the New York Times and columnist at TaxAnalysts.com David Cay Johnston. “It’s like applying for a mortgage,” Johnston told Salon. “If you write it out wrong, you’re going to get flagged. And there are examples of these groups saying they’re not political and then saying their goal is to influence legislation.”

Crossroads GPS apparently did file an application for tax-exempt status, but it had very smart tax form preparers who knew how to exploit the ambiguites in the 501(c)(4) statute. The tax code says these groups must “exclusively” engage in the vague-sounding “social welfare activity,” which suggests a ban on political spending. But the IRS subsequently interpreted this to mean that groups fall within the rule as long as they don’t “primarily engage” in political activities. Since the Citizens United ruling, which heralded the growth of the 501(c)(4) sector because corporations could donate to these tax-exempt groups without disclosing their donations, savvier groups have simply worked to stay a hair under 50 percent with their campaign spending, putting them in the clear. David Cay Johnston cited this as a major problem with how the IRS defines social welfare organizations. He said, “Is there any married person in America who doesn’t understand exclusivity? 49.9 percent is not exclusive.”

It’s pretty simple, then, to figure out what took place. The IRS, faced with the enormous task of dealing with a surge of 501(c)(4) groups taking advantage of an often contradictory law, performed triage by taking the path of least resistance – going after the most obvious targets, who didn’t have the resources to artfully stay within the tax laws, or to fight back against invasive reviews. They shied away from the heavily lawyered-up big-money groups, and instead focused on battles they thought they could win.


......................SNIP"

[siligut]

1. Correct, Tea Party members have none

This is a good article, but the title doesn't match the content. This was particularly interesting and explains why the Tea Parties are raising such a fuss.

And just as the Justice Department tends to avoid suspects with more clever lawyers, the IRS could shy away from more fearsome individuals and groups as well.

Of course, just the opposite should be true.