Sunday, June 30, 2013

Another (Scandal) Bites the Dust

So, it appears that the IRS scandal is a big dud.  Besides applying extra scrutiny to applications for tax exempt status containing the words "Tea Party," "Patriot," and "9-12," it also targeted groups with the words "progressive," "progress," "blue" and "occupy," and names containing reference to open source software.  The reason it targeted groups saying they were dedicated to open source software was that some of these groups are really commercial and improperly seeking tax exempt status.  It is quite probable that more conservative than liberal organizations received extra scrutiny, but this was not because of ideological bias, but simply because more conservative than liberal organizations were applying.

Still, it would be false to say that there is no problem at all.  A commenter to Kevin Drum explains:
I worked in the field for several years, and while it'd be pretty easy to convince me that some of these organizations deserve closer scrutiny, the IRS' "screening" has been wildly disproportionate. Groups that are unquestionably above board have been in limbo for years, unable to start fundraising in earnest, because the IRS refuses to finally approve or reject their application for 501(c)3 status.
He goes on to say that the Tea Party is probably experiencing the same problem -- some of its applications for tax exempt status are legitimate; some are not.  The problem is that office in charge of deciding which organizations are legitimate lacks the resources to address the issue properly, so they cast a very broad net and unduly delay many organizations whose applications are legitimate.  In other words, just because the IRS was not being partisan does not mean that all is well.  It means that the problem is structural -- the IRS is poorly equipped to give proper and timely scrutiny to questionable applications.

I would also add, the problem is also with the laws the IRS is enforcing.  A 501(c)(4) organization is a "social welfare" organization.  Although not allowed to endorse candidates or engage in openly partisan activities, it may engage in "civic," "educational," or "issue" activities that look very much like lobbying or grass roots lobbying.  Some of them are simply PAC's (political action committees) under a very thin veneer of civic action.  Nor is this limited to the right -- is a 501(c)(4) organization, as are many others. Drawing the line between "educational" or "issues" advocacy, which is allowed by the tax code, and partisan or candidate activity which is not, is going to mean making hopelessly fine distinctions that make no sense to anyone.  Any attempt to enforce it will necessarily mean relentless and heavy-handed scrutiny.  The other alternative, of course, is to give up and not attempt to enforce the rule.

It would be nice if the initial impression that the IRS was violating the rights of right wingers led to some sort of impetus for reform.  Maybe there should be more resources devoted to enforcement to allow a less heavy-handed approach.  Or some sort of guidance should be offered.  Or maybe (God forbid!) the law should be changed to eliminate the distinction between partisan and issue-oriented.

Oh, well.  I can dream, can't I?

1 comment:

  1. My impression is that it's the anti-tax crowd's own fault. They've been fighting to slash the IRS's budget for years in the hopes it would hinder tax enforcement. Well, it turns out that it's been hindering other aspects of the IRS's operations, too. They don't have enough resources to give the applications the scrutiny they deserve, so they've been trying to use BOLO lists to look selectively at the most likely offenders. Unsurprisingly, that includes a lot of groups who hate the IRS. It's just too bad that innocent third parties were caught up in the mess.