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May 14, 2013 9:25 AM Brighter Lines and Brighter Lights

By Ed Kilgore

As congressional Republicans (and some Democrats) settle down to the prospect of months or even years of investigating the IRS’ selective scrutiny of political groups applying for 501(c)(4) tax-exempt status, it’s important to maintain some perspective, if that’s possible. The “victims” here didn’t have sinister auditors showing up at their doors and pouring through financial records; didn’t get hit with big bills for back taxes; weren’t in danger of being hauled off to the hoosegow. Best we can tell, they simply were delayed interminably in being granted a tax-exempt designation and forced either to abandon their aspirations to spend money without disclosure of donors, or if they persisted, to jump through an awful lot of hoops and fill out an awful lot of paperwork that other groups didn’t have to deal with.

We will hear that the affected groups’ abilities to exercise their First Amendment rights were thwarted or “chilled,” under the obnoxious but well-established Supreme Court principle that money is speech. But lest we forget, there is no constitutional right to a tax exemption for this kind of “speech,” or to an exemption from campaign finance laws normally requiring disclosure of donors. So aside from affixing responsibility for the selective scrutiny, the real question going forward is what the law ought to provide in this area. And if excessive IRS discretion is the problem, then the solution is legislation to remove it by clarifying grounds for receiving 501(c)(4) status.

As Ezra Klein notes this morning, there are two main issues that point towards a legislative fix:

In which direction does our outrage point? Do we think the tea party groups really are primarily non-political social welfare organizations and they should’ve received 501(c)4 designation more smoothly? Or do we think that they’re clearly political organizations and their applications should’ve been closely scrutinized and maybe even rejected - but so too should the applications from a host of other politicized groups on the left and the right?….
Do we want a personnel outcome, a political outcome, or a policy outcome? Is the right endgame simply that some IRS employees get fired? That the Obama administration gets embarrassed? Or is that Congress tightens the language governing who does and doesn’t qualify for 501(c)4 status so that the IRS doesn’t have so much discretion — and career employees don’t resort to these confused tactics — when reviewing applications? Note that if we go the legislative route, we could either widen the 501(c)4 designation, making it clear that political groups qualify, or we could narrow it, making it clear that they don’t.

If Democrats don’t want to flounder in Scandal-land for the foreseeable future over this highly technical and easy-to-demagogue situation, they should take the lead on crafting and promoting a legislative fix. This would have the effect of drawing brighter lines in the murky laws of tax-exempt political activity, and casting brighter lights on the big fish in this pond, the gigantic groups (mainly on the right, but some on the left) that are able to pour many millions of dollars into campaign activity without disclosing donors or paying taxes.

UPDATE: The New York Times’ Nick Confessore has a useful report on the refusal of the IRS to look closely at the activities of really large 501(c)(4) groups—most famously Karl Rove’s American Crossroads GPS and the Obama-aligned Priorities USA—even as it was stonewalling and questioning the small fry.

Ed Kilgore is a contributing writer to the Washington Monthly. He is managing editor for The Democratic Strategist and a senior fellow at the Progressive Policy Institute. Find him on Twitter: @ed_kilgore.

Comments

  • Mudge on May 14, 2013 9:40 AM:

    It is interesting that sociopathic Republicans would organize a 501c(4) to promote social welfare.

  • c u n d gulag on May 14, 2013 9:45 AM:

    First, Benghazi.
    Then, the IRS.
    Now, the AP.

    The Republicans will get dead-drunk on scandal-gates.

    It's like drinking martini's:
    The first one - is to unwind.
    The second one - is to unravel.
    And the third one - is to unhinge.

    And in trying to ram 3 different "scandals" down the public's throat, they may show people their true madness, as they over-reach, trying to find some poo that sticks to Obama, or Hillary, or, better yet, both!

    If they were smart, they'd pick one, and ride that horsie 'til it's dead meat.
    But, the ain't smart.

    And that's why I predict the public could very well turn on their party.

    They've seen this act before - but this time, the economy ain't going great, and there are a lot of us long-term unemployed, male and female, who have nothing better to do, and are wondering why the only focus of this Congress has been to obstruct things that we thought were decided by the 2012 election?
    Like immigration.
    And all of the Houses time has been spent trying to further limit a woman's right to choose, repealing Obamacare, and scandal-mongering hoping to impeach, instead of FOCUSING ON JOBS AND THE ECONOMY!!!

  • boatboy_srq on May 14, 2013 11:38 AM:

    Maybe the "jobs, jobs, jobs" these wingnuts campaigned on were all supposed to be in the Grand High Inquisitor's -um, Special Prosecutor's Office, once they dug up enough dirt to (in their minds) justify creating said position.

  • bcinaz on May 14, 2013 11:44 AM:

    hmmm...We seem to be missing the key ingredient for a Washington scandal - THE COVERUP.

    We found out about the IRS thing because the IRS admitted it and apologized. In the coming months we will have to endure the dual tracks of Republicans running around with their hair on fire screaming IMPEACH! IMPEACH! IMPEACH! and the MSM echo chamber, while simultaneously cooler heads attempting to push actual legislation past the noise machine to clear up all the confusion in the tax code that Citizens United created.

    As near as I can tell, the AP thing was legal under the Patriot Act and AP found out about it because the Justice Department told them about it. It's creepy and smacks of the security state, but really, did the AP lead the charge against warrantless wiretapping when that insidious law was going to a vote?

    In a sane world these 'scandals' would lead to legislative solutions that clarifies the can of worms the Supreme Court opened with Citizens United and strip some power from the Executive branch in matters of National Security. Unfortunately, we are living a world controlled by people who have no policy skills or philosophical desire to make government function.

  • Rick B on May 14, 2013 1:50 PM:

    Tell me, Ed. Was the IRS "scandal" a case of "...selective scrutiny of political groups applying for 501(c)(4) tax-exempt status" or was it that the Tea Party was starting up and were encouraged to organize as 501(c)(4) tax exempt organizations all at once when no one else was copying the Rove innovation yet?

    I rather suspect that the Tea Party was being encouraged to apply for that form of organization all at once, and the IRS is mandated by law to evaluate whether such organizations have a charitable purpose. That would be a perfectly reasonable explanation for why such organizations appeared to be "targeted."

    If that were the case then the dates of application for all requests for 501(c)(4) status would show that the tea partiers simply submitted a big bunch of applications at the same time. I would also expect a lag before the non-Republican/Tea party organizations began to copy them.

    It would be easy for the IRS personnel to refer to all the similar applications by similar wording in the organization titles. That would be a matter of administrative convenience - and also political tone-deafness, something civil servants are encouraged to practice.

  • Anonymous on May 14, 2013 2:48 PM:

    Yahoo linked to an idiotic commentary by Buck Sexton of The Blaze, Glenn Beck's rag. Wow, did that bring out those afflicted by Obama Derangement Syndrome. If you want to read it:
    http://news.yahoo.com/obama-administration-under-siege-3-huge-scandals-why-130208768.html

  • Hannah on May 14, 2013 2:52 PM:

    Perhaps this "scandal" is a good thing, as it has brought to the fore is an abuse of the tax code whereby clearly political groups (no matter left or right) are afforded the same tax exempt status as groups that promote child welfare, education, and social justice, etc. Why American taxpayers are subsidizing political operations should be the real scandal.

  • Lance on May 14, 2013 3:01 PM:

    Simple fix, make all donors names and amounts immediately available on the web, and end the annoynomous donor capacity of these organizations.

    Free Speech is public speech.