Monday, May 13, 2013

The IRS Tempest In A Teapot

501(c)(4) organizations enjoy a number of benefits under our tax code. First, much of their operations are exempt from federal taxation, a huge boon to the operation of such groups. Second, 501(c)(4) groups can run ads during political campaigns so long as their advocacy is directed at “the promotion of social welfare,” a loose definition that encompasses almost all issue advocacy one can think of. Third, these organizations do not have to publicly disclose who donates money to them, a great way for very wealthy individuals to influence the political process without anyone knowing about it.

Given these enormous benefits, I for one am not troubled by the fact the Internal Revenue Service scrutinized a huge number (roughly 100) of these groups who had affiliations with various right wing causes. If we are going to provide such generous tax benefits to organizations and allow them to collect donations in secret, why wouldn’t we want the IRS to ensure they are complying with the strictures of federal law?

So what is this “scandal?” Some career types at the IRS made “tea party” (and the like) affiliated groups fill out a longer questionnaire so the agency could confirm that the groups were eligible for all of the benefits accruing to a 501(c)(4) organization. NONE of the groups who applied for the tax exempt designation were denied it by the IRS.[1] In short, some groups that were formed in the wake of a controversial Supreme Court decision that allows a small group of really rich people to influence the political process without the rest of us knowing about it had to fill out a long form, the result of which did not result in their being denied the legal protections being sought.

Teapot, meet tempest, or, in other words, a faux scandal tailor made for the lazy journalists who populate our nation’s capital and the offended mass of Republicans who want nothing more than to try and drive a stake into the heart of the second Obama Administration. Color me unimpressed.

[1]  There are plenty of articles online about this faux scandal, but to take just one that notes no group was denied the tax exempt benefit:

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