By Carl Hiaasen

IRS Went After Small Fish, But Let The Big Ones Get Away

May 21, 2013 12:00 am Category: Memo Pad, Politics 3 Comments A+ / A-
IRS Went After Small Fish, But Let The Big Ones Get Away

“Please provide copies of all your current web pages, including your blog posts. Please provide copies of all your newsletters, bulletins, flyers or any other media or literature you have disseminated to your members or others. Please provide copies of stories and articles that have been published about you.”

That’s the Internal Revenue Service calling.

Or, more precisely, sending questionnaires. They went out to scores of Tea Party groups that were seeking tax-exempt status as “social welfare” organizations.

The organizations were targeted for special scrutiny because they had the words “Tea Party” or “Patriot” in their titles. Some questionnaires even requested the names of all donors and the amounts of each contribution.

It was a political abuse of power aimed, ironically, at groups who are pretending not to be political just to get a juicy tax break.

IRS supervisors were wrong to single out local Tea Parties when there’s a host of flagrant, big-time violators controlled by supporters of both major political parties.

The gimmick of choice is Section 501(c)(4) of the revenue code. Groups receiving that golden designation are allowed to collect unlimited contributions without paying taxes.

They’re not banned from political involvement, but by law they’re supposed to be “primarily engaged” in activities promoting “social welfare” and “the common good” — not partisan politics.

It’s a total farce.

Karl Rove’s Crossroads GPS spent untold millions of dollars on behalf of Republican candidates while attacking Democrats during the last election cycle. On the other side, Priorities USA spent a fortune helping Democratic candidates while trashing Republicans.

Both rabidly partisan organizations enjoy tax-exempt status under Section 501(c)(4). They claim to run strictly “issue” advertisements that aren’t really political, which is a hoot.

What’s not so hilarious is that the IRS sidestepped these heavyweight scammers to go after small-time outfits such as the Liberty Township Tea Party in Ohio.

Initially, the tax agency suggested that the crackdown was an isolated operation by agents in its Cincinnati office. However, in recent days it was revealed that a few IRS officials in Washington were aware of the targeting campaign in early 2010, and that similar inquiries of conservative groups had been conducted in other states.

A Treasury inspector general’s report issued last week criticized IRS managers who didn’t stop employees from focusing on conservative groups that were seeking 501(c)(4) designations.

President Obama said the actions described in the report “are intolerable and inexcusable.” He didn’t use the word “stupid,” but it applies.

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  • Dominick Vila

    The tax exempt status issue deserves attention and must be changed. I don’t have a problem with organizations that help the poor, especially poor children, the elderly, and the handicapped being tax exempt. I don’t have a problem with organizations focused on helping people affected by natural disasters being tax exempt. But I do have a problem with political and religious organizations enjoying privileges that are not extended to the general public. If the charlatans that profit from organizations focused on influencing political convictions or religious dogma can enjoy tax exempt status because they are voicing their convictions and try to use the ignorance, fears and prejudices of others to achieve their goals, should we assume that contributors to The National Memo should be tax exempt because we are voicing our opinions and challenge those we disagree with? Can somebody explain the boundaries of the fine line that separates opportunists from concerned citizens, besides the fact that they control all levels of government and own 2/3 of our national wealth?

  • docb

    The Big fish had already been given the tax -exempt status. They had floors of lawyers lined up ready for the ‘citizens united’ roberts activist court ruling that had figured out every angle to game the system for political advantage!

    This status is necessary for aid to the children, elderly, and physically or mentally handicapped but not for political purposes to hise their donors!..If groups want to do social welfare and education let them apply for 501c3 status…If it is political advantage let them do 527′s…Strip the 501c4 and 5 and 6 out of this asinine ruling..

  • Ian C Johnson

    It’s important to note that 501(4)(c) designation is used because it doesn’t require disclosure of donors or donation amounts. These organizations can legally still get tax-exempt status if they are incorporated as a PAC.

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