Barack Obama, Politics, Tax Law

Does Claiming 501(c)(4) Status Now Put You Above The Law?

If tax lawyers aren't supposed to distinguish between 501(c)(4) orgs and 527 orgs, than who is?

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Dear Republicans who are multi-orgasmic over this IRS scandal, just skip this article. Skip the comments. We get it: “OBAMA… had the GOVERNMENT… like, DO STUFF… which PROVES that taxes are bad!!!” Click over to Red State and bathe in the echo chamber. Here, the adults need to have a talk.

My question for the lawyers is this: how are we supposed to check the validity of groups asking for 501(c)(4) tax-exempt status? I mean, let’s look at this “scandal” in the way the justice system will look at it, without all the partisan accusations:

  • Group asks for 501(c)(4) status.
  • Group has anti-government message in its very name.
  • Group doesn’t apply for 527 status as a political organization because???
  • IRS asks questions to figure out if these groups are really “social welfare” organizations.
  • ???
  • CONSERVATIVE OUTRAGE!!!!!

I’m open to the possibility that the IRS did something wrong. I’d just like somebody to tell me what the hell they were supposed to do? Just rubber stamp it? Because if that’s true, I certainly think this website is concerned about the “social welfare” and would like to be tax-exempt.

Maybe we should ask the woman in charge of the IRS Exempt Organization Division if we can get tax-exempt status? She’s actually getting an honorary tribute at a law school this weekend…

Let’s cut the artifice for one second. Many of these Tea Party groups, these “Patriot” groups, were primarily engaged in political activity. All right? We’re not talking about groups that were bringing hot freaking tea to loyal patriots.

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Now, I’m not wild about the IRS singling out groups for questioning based on their names. Today, it’s the Tea Party, but I’m sure yesterday it was “something something African something freedom something.” Tomorrow it’ll be “Muslim, Islam yada yada.” It’s always dangerous when some people are more questioned than others.

But what is the IRS supposed to do? DealBook explains the problem really well:

These social welfare organizations may engage in issue advocacy, and may do some lobbying, but are not supposed to engage in political campaigning. How much political activity is too much? No one really knows.

The I.R.S. is supposed to enforce the tax code, not administer a byzantine campaign finance system. It is good at gathering and processing enormous amounts of data that help the nation raise revenue. Under current law, however, it has little choice but to exercise discretion in the constitutionally dangerous waters of campaign finance.

As Lloyd Mayer, a law professor at the University of Notre Dame, explained, “because Congress and the Treasury have left both the definition of political activity and, for [social welfare organizations], the amount of permitted political activity uncertain, the I.R.S. is required to make broad inquiries and to use politically sensitive criteria to decide if a given organization qualifies for tax-exempt status.”

It’s obviously wrong to single out one group of pseudo-political organizations for enhanced questioning. Let me say that again for any Republicans who kept reading over my objection: singling out just one group of political actors is wrong and there should be accountability.

The woman at the center of the scandal, Lois Lerner, director for the IRS Exempt Organization Division, is about to give the commencement address at Western New England University School of Law. She’s getting a tribute from the school. No, I’m not making that up.

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Maybe up on the dais at WNEC, Lerner can explain how the IRS shouldn’t be tasked with this responsibility. Republicans are great in telling us how government doesn’t work, but they’re crap when you ask them how to fix it.

Once you get through all of the breathless scandal talk that makes cable news go, there are some difficult legal questions here about the scope of permitted political activity. Questions that Congress has ignored. And there are enforcement questions that are basic “good government” issues.

But none of those questions involve wondering if President Obama is a communist, socialist, imperialist leader who created an enemies list to prevent white people in middle America from voicing political dissent. And I guess “IRS Given Impossible Task; Fails” isn’t a useful attack ad for the midterms.

Congress’s Role in the I.R.S. Focus on Conservative Groups [DealBook / New York Times]
University to Bestow ‘Face of IRS Scandal’ with Honorary Tribute [The College Fix]

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