Tuesday, May 21, 2013

Putting the IRS Scandal in Perspective – No One’s Freedom Was Compromised – No One’s Taxes Were Compromised

A Scandal Only of Management and Political Insensitivity

The Republican hysteria over the targeting of Conservatives groups by the IRS in their pursuit of verification of granting tax exempt status of political advocacy groups grows every minute.  One wonders if the city of Washington or the state of Texas are big enough to contain the phony outrage.

Louisiana Governor and Presidential wannabe Bobby Jindal has shrieked that people should go to jail for taking away the freedom of others.  And professional Obama haters like Charles Krauthamer and Peggy Noonan can barely contain their spew.  So it’s time to put the whole issue in perspective and do what the mainstream media has not done and will not do, examine the issues.

A section of the tax code, section 501(c)4 provides that groups that are formed to promote public welfare are exempt from paying income taxes.  Unlike 501(c)3 organizations, donor may not deduct their contributions from their income taxes.  Two very important points in the story are (1) the 501 (c) 4 groups do not need to disclose their donors and they are not allowed to engage in partisan political activity.

The IRS office in Cincinnati is charged with investigation and approving application for tax exempt status.  For reasons known only to the idiots in that office, they set up a criteria for special attention and investigation for conservative groups.  As a result approval of tax exempt status was delayed for many of these organizations.  And that’s it.

No organization was denied tax exempt status.  No organization had to pay taxes.  No organization was forced to reveal its donors.  No one in the organization and no donors were singled out for examination of their personal taxes.  No one was denied the right to campaign or support candidates of their choice.  Nothing much happened.

The reason this is not Nixonian is that Nixonian abuses were aimed at individuals.  Individuals were persecuted and the direction to persecute individuals came from the White House which saw the IRS as a way to attack its political enemies.

So this scandal simply exposes the managerial incompetence of the Obama administration, and the administration’s total lack of understanding the politics of the issue.  In the end Conservatives and corruption of money in politics has won.  Even if conservative political groups blatantly violate the law they now have immunity.  That, not the political hysteria of the right is the lasting legacy of this idiocy.

1 comment:

  1. I can't agree with you about all of this. The IRS asked some group for donor lists. It might not have "forced" any group to reveal its donors, but a request from the IRS carries implicit force and should not be made if the requested information is protected from disclosure. This is especially true when answers must be provided under penalty of perjury, as I believe the IRS requested.

    The IRS also asked questions about the groups' views and requested documentation of their activities. Now here things get murkier for me, as I don't know what sort of showing must be made to achieve 501(c)(4) status. It might be that these kinds of requests are acceptable, even proper, in a 501(c)(4) inquiry - after all, tax-exempt status is quite a benefit and should not be afforded to groups not meeting the criteria.

    So putting aside the donor list and disparate treatment issues, the dispute I don't understand is whether it was ok for the IRS to request extensive non-donor list information from the groups.

    What concerns me, among the problems you describe, is that the IRS already seemed to be a pushover in granting tax-exempt status. It is incredible that all of the applying Tea Party groups really merited 501(c)(4) status and none of them was primarily a political organization. While the Republicans portray the IRS as a monster that needs to be defunded and depowered, it seems that the IRS was already out of its league, as further evidenced by the clown show that is going on now.

    The fallout will extend beyond giving conservative groups a free pass to tax exempt status. This scandal will give Republicans serious ammunition to use in their war against taxes on the wealthy. They will use it to reduce the IRS's enforcement power and reduce government revenue in general.