by Randolph T. Holhut
American Reporter Correspondent
June 20, 2013
THE IRS "SCANDAL" IS ALL SMOKE, NO FIRE
DUMMERSTON, Vt. -- One unintended consequence of all the attention focused upon Edward Snowden and his revelations of the extent of how Americans are being spied on by their government is that no one is paying any attention to the frantic attempts by Republicans to create a scandal over the Internal Revenue Service's alleged targeting of conservative political groups.
The problem is not that a few overworked IRS bureaucrats in Cincinnati took some shortcuts in determining the nonprofit, tax-exempt status of 501(c)(4) groups. It's that there are a lot of wealthy political operatives trying to game the system by using this designation to funnel tons of money into GOP campaigns.
By the IRS' rules, a 501(c)(4) "social welfare" group has to do actual social welfare work and cannot be affiliated with any candidate or party, nor can politics be their primary purpose.
However, since the 2010 Supreme Court decision in the Citizens United case, some organizations are using this privileged status to accept unlimited corporate cash without ever revealing to voters the names of the corporations putting up the money.
Most of these organizations support conservative causes and candidates. According to the Federal Election Commission, more than $256 million was spent by social welfare nonprofits on campaign ads in the 2012 elections, and at least 80 percent came from conservative groups. That means the people who are doing most of the complaining illegally spent about $206 million on campaign ads. In contrast, liberal groups spewnt about $50 million on illegal campaign ads. Shouldn't people on both sides go to jail?
Few of those were doing any "social welfare" work. Unfortunately, there is no clear or consistent standard for the IRS to follow regarding 501(c)(4) groups, and the people who are using the status to circumvent what few remaining election funding rules that remain know this.
But here's where the story regarding IRS intimidation and harassment of conservatives by the Obama Administration falls apart. That office in Cincinnati handles applications for nonprofit status for all sorts of organizations, big and small, conservative and progressive. The whole process is lengthy and burdensome, and the office's concern is not about political leanings, but whether a particular organization meets the IRS' rules.
Needless to say, after the Citizens United decision, that understaffed office was swamped with applications for tax-exempt status, hence the shortcuts that were taken. But even with the Cincinnati office allegedly looking for organizations with "Tea Party" or "Patriot" in their titles. it had little effect on the process.
A recent report by the Institute for Research & Education on Human Rights (IREHR) cited a May 14 draft report by the Treasury Inspector General for Tax Administration that found that none of the 296 questionable applicants had been denied.
"Of those 296 potential political cases reviewed as of Dec.17, 2012, 108 applications had been approved, 28 were withdrawn by the applicant, none had been denied, and 160 cases were open from 206 to 1,138 calendar days (some crossing two election cycles)," according to IREHR.
IREHR found only one 501(c)(4) applicant that was refused tax-exempt status: the Maine chapter of Emerge America, which trains Democratic women to run for office.
"Although the group did no electoral work, and didn't = participate in independent expenditure campaign activity either, its partisan nature disqualified it from being categorized as working for the 'common good,'" the IREHR report stated.
Yet, the IRS granted 501(c)(4) status to several Tea Party groups around the country that were clearly engaged in partisan political activity.
Again, sloppiness and inconsistency marked the IRS' treatment of nonprofits. Yet, because of the outrage whipped up by conservatives looking for any whiff of scandal to hang on President Obama, the IRS is now afraid to go after groups that are clearly violating the rules.
That's by design. Conservatives love to play the victim card, and nobody loves the IRS. The longer they can make a issue out of this, the more political hay they can make.
Except after more than a month of hearings and bluster, no direct connection to the Obama Administration has been found and no politically-motivated investigations by the IRS have been uncovered. And the investigation by the House Oversight and Government Reform Committee, led by California Republican Darrell Issa, has made barely a ripple on the national consciousness.
If Congress wants to do a real investigation, perhaps they should start with the whole sham of the 501(c)(4) rule, and how it is being abused as a backdoor method to fund political campaigns.
AR's Chief of Correspondents, Randolph T. Holhut, holds an M.P.A .from the Kennedy School of Government at Harvard University and has been an award-winning journalist in New England for more than 30 years. He edited "The George Seldes Reader" (Barricade Books). He can be reached at firstname.lastname@example.org.