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May 13, 2013 10:11 AM The IRS and the Ongoing (C)4 Fiasco

By Ed Kilgore

Republicans are going to have a hard time this week deciding whether to spend all their time shrieking about Benghazi! or getting the troops stirred up about the “IRS scandal.” It’s a tough choice: degrading Hillary Clinton’s public standing (not least among the self-identified Republicans and Republican-leaning independents who’ve grown relatively fond of her) is a hugely important mission, and Benghazi! offers many fine months if not years of fishing expeditions and unfocused allegations. But on the other hand, the very idea that “Obama’s IRS” has been targeting conservatives for enforcement action has to be the ultimate, impossible-to-top candy-coated paranoid treat for the GOP. As the New York Times’ Weisman and Wald blandly put it:

[T]he accusations of I.R.S. abuse are sure to fuel an effort that appears to be uniting dispirited Republicans and their conservative political base: investigating Mr. Obama and his administration. Republicans are pushing a portrayal of an administration overreaching its authority and punishing its enemies.

I’d go a little further than that: this subject provides a context in which sober-sounding GOP solons just concerned with reining in “abuses of authority” can make common cause with the completely unhinged conservative fringe groups and personalities who have all along argued the Obama administration was preparing concentration camps for them and getting ready to shut down the churches.

And indeed, to those uninterested in nuances, the headlines about the IRS sound legitimately terrifying to those disposed to think of the current administration as quasi-totalitarian.

I’ve always thought the deliberate use of the IRS against “political enemies” was the one unambiguously impeachable offense committed by Richard Nixon, worst than most of the acts that came to be known as “Watergate” put together. If there was any evidence the Obama White House similarly instructed the taxman to go after conservatives as “enemies,” I’d be outraged, too.

But anyone actually interested in facts has to acknowledge that what seems to have been going on in the Cincinnati field office of the IRS that was giving special scrutiny to “anti-government” applicants for 501(c)(4) tax-exempt organization status is a frantic finger-in-the-dike effort to stem a massive expansion of (c)(4) activity that was threatening to transform American politics.

If this is an unfamiliar topic for you, I strongly recommend Ezra Klein’s lucid piece at Wonkblog today on how (c)(4)’s, which do not have to disclose donors, have almost overnight become the preferred vehicle for electioneering activity (especially, though not exclusively, among conservatives), precisely the activity they are supposed to avoid to retain that status. I have a bit of a personal perspective here, having worked for the Democratic Leadership Council during a long period when it was under semi-constant attack by the IRS as an organization that was “too political” to retain (c)(4) status, mainly because of its name. The DLC never gave a dime to (or endorsed) a candidate for office; never ran a political ad; and devoted most of its resources to activities clearly within the law. The thinly disguised campaign PACs now flooding the (c)(4) ranks are routinely doing things that would have brought down the wrath of the IRS very publicly and emphatically not that long ago. Today, however, there are just too many of them, and too little guidance from Congress and the courts. So IRS field personnel (perhaps with guidance from the higher-ups, perhaps not), as they often do, got selective, and that’s where the stupid “targeting” of conservative groups almost certainly began.

This needs to stop, instantly, and it’s legitimate to question how the practice started and how extensive it became. But let’s remember who the “victims” are here: not regular conservative folk who are suddenly going to see IRS auditors on their doorsteps, but political operatives trying to move large sums of money across a political chessboard to influence elections. If anything, as Ezra says, the “scandal” here is that the IRS didn’t go after the really big targets:

But the particular bias people are angry about is the opposite of the bias they should be angry about. The problem wasn’t that the IRS was skeptical of tea party groups registering as 501(c)4s. It’s that it hasn’t been skeptical of Organizing for America, Crossroads GPS, Priorities USA and Heritage Action Fund registering as 501(c)4s. The IRS should be treating all these groups equally and appropriately — which would mean much more harshly.
Instead, the IRS has permitted 501(c)4s to grow into something monstrous. And if they cower in the aftermath of this embarrassment, it might make matters even worse.

So it would be nice if we could have a serious discussion of the abuse of tax exemptions to make it easier to pour obscene amounts of anonymous money into vicious and stupid campaign ads aimed at boosting the profits of the anonymous sources paying for them. But in part because this is a hopelessly technical subject, we are instead going to have a “debate” (and endless down-in-the-weeds “investigations”) of IRS abuses. And again, it’s the one topic that might distract Republicans from Benghazi!

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

  • jjm on May 13, 2013 10:35 AM:

    No one recalls the IRS under Bush investigating the NAACP and the Episcopal Church in California???!!!

    Was tax exempt status denied to these obviously political groups? No? Well, then where is the scandal??

  • MuddyLee on May 13, 2013 10:37 AM:

    It is not surprising to me that somebody or some people in the IRS thought these C4s needed more scrutiny. It seems crazy to a non-lawyer that so much money can flow into organizations that are obviously trying to influence the outcome of elections but somehow these are "social welfare" organizations. And aren't MOST of these organizations right wing? And aren't most of them connected to Karl Rove and the Koch Brothers and other major rightwingers who are basically "anti government"?

  • c u n d gulag on May 13, 2013 10:43 AM:

    Liberal or Conservative, these are all either PAC's, or Super PAC's.

    And PAC stands for "Political Action Committee."

    So, no. No politicking here.

    Question:
    Maybe one of you smarter commenters can explain to me why it that an individual person who expresses political opinions can, and does, get taxed, then why do we allow these recently-born infant corporate "persons" to get away without being taxed?
    What, you can't tax corporate "persons" until "they" turn 18?
    Hey, I'm sure even "Honey Boo boo" pays taxes.

    Find the people who were responsible, and properly punish them - if they haven't already been.

    Also too - it's important to remember that they guy in charge of the IRS when this happened, was Douglas H. Shulman - a George W. Bush appointee.

    Kind of takes away some of the "drang," even if there is a "sturm" there.

  • Sgt. Gym Bunny on May 13, 2013 11:01 AM:

    I'm sorry, but I don't see anything "stupid" about singling out the The I-Ain't-Payin'-No-Stinkin'-Taxes! Alliance for additional scrutiny (Conservatives are as subtle as brood of cicadas). Yes, the part about not going after the thinly-disguised PACs was super-duper stupid, but I'm willing to bet that had our "low-level" personnel gone after them, someone somewhere higher up the food chain would have put the smack down.

    If the IRS is really tepid about handling the big political groups, why would that be??? Just what, exactly, are they a-feared of??? Heretofore, the IRS have always been portrayed as the uber-bad ass agency who bring celebrities to their knees with multi-million dollar tax liens or by jacking the little man's paycheck.

    Granted, at the lower level, maybe personnel was using the little conservative groups to poke and prod the sleeping beast for future courses of action against bigger fish. But maybe the higher ups should just come out and just say--Yeah, we effed on who we've been giving 501c4 status, too. We're looking into this. Our bad..." (...and then Hell becomes an ice rink...)

  • david1234 on May 13, 2013 11:08 AM:

    The public's reaction might be the opposite of what the Republicans expect. They might think that there should be more scrutiny of political groups seeking tax exempt status that they do not deserve. I do not expect much sympathy for the victims here.

  • Peter C on May 13, 2013 11:14 AM:

    According to the IRS guidance document (http://www.irs.gov/pub/irs-tege/eotopici03.pdf), 401c4 entities are supposed to be 'Social Welfare' organizations or local associations of employees of a particular company. They are not supposed to be political.

    That really doesn't sound like tea party patriot groups.

  • jonh on May 13, 2013 11:18 AM:

    How about this for some bureaucratese:

    "In light of the Citizen's United ruling, corporations and unions can spend large amounts of money -- certainly large enough to give the appearance of impropriety -- to influence elections. In that decision, Justice Kennedy wrote that disclosure is what is left to enable voters to punish de facto bribery.

    "However, organizations known as 501(c)'s, named after that section of the tax code, give a way around disclosure requirements. The IRS has the duty to try to distinguish legitimate 501(c)s from those used simply as front organizations for illegal campaign activities.

    "Given the volume of work, we inappropriately profiled certain organizations for closer scrutiny. This practice has stopped, and procedures put in place to avoid repetition.

    "We continue to do our part to carry out U.S. tax policies and laws. We hope that Congress and the Executive can provide tools to help us maintain all citizens' faith in the integrity of our elections."

    viz: http://www.cjr.org/campaign_desk/this_transparency_enables_elec.php
    -----------

    One historical model I use to guess the near future of the U.S. is the collapse of the Soviet Union. Our health care system can play the role of the Soviet military, draining more and more resources. And problems like CU + 501(c) can help to make it impossible to ignore the plutocratic, kleptocratic nature of our society. From there it's a small step to people to lose the belief in the fairness and usefulness of The System necessary for us to care enough to keep the U.S. out of the swamp where Russia lives.

  • Crissa on May 13, 2013 12:20 PM:

    Once again, it's 'partisan' to point out violations merely because the majority of violations land on one side of the fence.

    This seems alot like the strange whine that most dealerships closed in the GM restructure were Republican-owned. Which shouldn't have been surprising: Most car dealerships (especially domestic) are owned by Republicans!

  • low-tech cyclist on May 13, 2013 12:25 PM:

    I’ve always thought the deliberate use of the IRS against “political enemies” was the one unambiguously impeachable offense committed by Richard Nixon, worst than most of the acts that came to be known as “Watergate” put together.

    The House Judiciary Committee apparently agreed with you back in 1974, Ed. The first article of impeachment, obstruction of justice, passed the committee by a 27-11 vote. The second article, abuse of power, passed by a 28-10 margin. Abuse of the IRS was the first accusation leveled against Nixon in the abuse of power article.

  • Peter C on May 13, 2013 1:01 PM:

    "But when the Cincinnati group explained their test to IRS exempt organizations division chief Lois G. Lerner, she objected to it and it was changed."

    http://www.washingtonpost.com/blogs/wonkblog/wp/2013/05/13/wonkbook-the-good-reasons-for-the-irss-dumb-mistake/

    This is a stupid scandal. It wasn't that those at the top were trying to use the IRS against their political opponents; it was that lower level government officers (usually career employees and NOT political appointees) weren't prepped for all of the ramifications of the rapidly changing campaign-funding landscape post Citizens United.

  • Texas Aggie on May 13, 2013 7:25 PM:

    One thing that needs to be hammered on a lot more is that the person at the head of the IRS during the "scandal" was a holdover from the Bush era. He resigned last fall after the election was over, so it is a bit difficult to blame Obama for his actions.