SCANDAL – PART II

The second Republican made-up scandal has to do with IRS targeting Tea Party groups applying for an exemption under 501(c)(4) of the Internal Revenue Code.  This “scandal” recently came to light when the Associated Press reported that a draft report by a Treasury Department Inspector General found that the IRS subjected certain Tea Party affiliated groups to undue scrutiny in reviewing their application under 501(c)(4).  This section requires such organizations to be “social welfare,” non political operations.  The main advantage for such an exemption is that these groups do not pay taxes and they do not have to disclose their donors.  In return for this benefit, these organizations must refrain from traditional partisan political activity such as endorsing candidates.  The head of the IRS tax-exempt organizations division said that the agency was “apologetic” for what she termed “absolutely inappropriate” actions by lower-level workers. 

The scandal perpetuated by Republicans is that the IRS situation was deliberately planned by the Obama Administration because the Tea Partiers were the most vocal opponent on Obamacare.  Republican Senator Lindsey Graham said that the IRS’s conduct in targeting conservative political groups seeking tax-exempt status, as well as the U.S. Justice Department’s investigations into national security reporters, reveals a “culture of revenge” that he suggested was the hallmark of U.S. President Barack Obama’s years in the White House.  “My belief about the IRS scandal is that this culture of going after Tea Party groups that were on the president’s case about Obamacare did just not accidentally happen,” the South Carolina senator recently said on “Fox News Sunday.”  “I think it comes from the top in terms of tone.”  Of course, Rush Limbaugh had to inject his asinine comment when he recently said on his radio program that Romney lost because of the IRS targeting conservative voters.  

The most shameful comment, however, was made by House Oversight Chairman, Darrell Issa in a recent interview on CNN that according to his “gut” the President’s Press Secretary, Jay Carney was a “paid liar.”  He said Carney was “making things up” when he said the IRS targeting of Tea Party groups was undertaken by “rogue” local employees. Issa said that the IRS review was “coordinated directly from headquarters in Washington.”  I guess Issa substitutes his “gut” for the “facts.” 

The so-called IRS “scandal” has nothing to do with the lower level employees in the Cincinnati IRS office who were responsible for doing the review, but as Fred Wertheimer, the President of Democracy 21, a government-ethics watchdog group, put it, “it is clear that a number of groups have improperly claimed tax-exempt status as section 501(c)(4) ‘social welfare’ organizations in order to hide the donors who financed their campaign activities in the 2010 and 2012 federal elections.”  So IRS employees apparently believed that the Tea Party groups may be maximizing their involvement in political activities which would disqualify them for 501(c)(4) status, and they set their applications aside for closer examination. This appears to have been a pretty reasonable assumption on the part of the I.R.S. employees: having “Tea Party” in your name is at least a slight clue about partisanship.  The Inspector General’s Report found no evidence of a political vendetta by Internal Revenue Service officials or of meddling from the White House, a fact Issa doesn’t want to accept.

One Tea Party favorite, Representative Michele Bachmann, claimed that Americans “most personal, sensitive, intimate, private healthcare information is in the hands of the IRS,” while implying that the IRS will misuse that information against “political opponents of this administration.” However, the Health Care Law (Obamacare) specifically states that the IRS will not have access to personal health records, but Michele needs to keep the scandal alive.

Senator Rand Paul, another Tea Party favorite, speculated that “the person running Obamacare was the one “who wrote the policy” at the center of the IRS scandal.Paul is apparently referring to a reference to a former IRS commissioner of the office responsible for tax-exempt organization who now heads the IRS Affordable Care Act office; however, the Inspector General’s report found that employees in the Cincinnati IRS office, not any administrators in Washington, “developed and implemented” the policy in question.

As taxpayers, we all should expect that the I.R.S. and every other part of government should apply the law without regard to political affiliation or whether a group or entity is liberal or conservative. If liberal organizations were disguising their true purposes to obtain 501(c)(4) status, the I.R.S. should have also designated them for further review.

The so-called I.R.S. scandal has nothing to do with a handful of employees setting aside Tea Party applications for further review (remember none were denied), but the scandal has everything to do with the law. 501(C)(4) clearly provides, among other things, that an organization must operate “exclusively” as a social welfare organization; however, the definition was changed in the Eisenhower Administration in 1959.  At that time, the when the acting IRS Commissioner decided to interpret the word “exclusively,” found in line one of the statute, to be defined as “primarily” which completely changed the meaning of the statute. The Acting Commissioner had absolutely no authority to make this change, and Congress has done absolutely nothing to change it.  If the IRS followed the law instead of its regulation, probably most all of the 501(C)(4) currently approved applications, both conservative and liberal, would not have been approved and there would not have been any made up scandal.

CONTINUED IN PART III