IRS has few friends to help with scandal
Raise your hand if you DON’T hate the Internal Revenue Service. Hmm, I don’t see any hands. Yes, the IRS strikes fear in the hearts of men. For too long, it has had too much autonomy and too much power with very little oversight. When we le our federal income tax return, we say a silent prayer that we will not receive that dreaded audit notice.
It is not surprising, therefore, that when it was revealed that some IRS employees were targeting conservative groups with names like “tea party” or “patriot” over their tax-exempt status, politicians — mostly Republicans in this case — jumped on the popular bandwagon to crucify the IRS and even advocate its abolishment. Who would argue with that? The problem is, of course, that the federal government needs tax revenues to operate. So, if you are going to push to abolish the IRS, you should have an alternate plan in hand to collect taxes. Make no mistake about it. What those IRS employees did was, indeed, stupid and atrocious, and their actions will erode what little credibility and trust the IRS may have had. To be sure, it is suspicious that these unsavory actions were done during a presidential campaign, and it seems only conservative groups were targeted. How far up the Democratic food chain the targeting decision goes remains to be seen.
I tend to agree with those political analysts who believe it was some rogue IRS agents who concocted this plan. It would be hard to believe that anyone high up in the political machinery to re-elect President Barack Obama would choose to do anything that stupid. But then, we can look back at Watergate, when President Richard Nixon was assured of a landslide re-election, yet some rogue henchmen broke into the headquarters of the National Democratic Party — and Nixon was stupid in trying to cover up that episode. Those members of Congress who are rushing to throw the IRS under the political bus might want to do a little research into the laws they have passed, which have caused a proliferation in tax-exempt organizations — more than 3,000 in 2012 alone. One law gives tax-exempt status to political groups of all political philosophies under what the code describes as a 501(c)(4).
The law is relatively clear about what a (c)(4) can do. The IRS de nes these groups as “civic leagues, social welfare organizations and local associations of employees.” Their net earnings are supposed to be used for charitable, educational or recreational purposes. They may lobby and participate in political activities, but they are prohibited from campaigning — a gray area.
Contributions to (c)(4)s are not taxdeductible, unlike those to charities organized as 501(c)(3)s. But the attraction to becoming a (c)(4) is that such organizations can hide the names of their donors. One way to weed out some of these groups is to amend the law to require that donor names be made public. And, we all know that many of these groups are involved in political activities. They are not civic leagues, social welfare organizations and/or local associations of employees. They exist solely for political purposes, and many are openly partisan, supporting only conservative or liberal candidates and issues. That’s where white turns to gray for the IRS in trying to police these groups which are abusing their (c) (4) status. So the bottom line is this: If you get approved as a (c)(4) group, you don’t pay taxes, and you don’t have to disclose your donors, unlike traditional political organizations, such as political action committees. However, the IRS notes that in return for the tax advantage and the secrecy, (c)(4) organizations must refrain from partisan political activity, such as endorsing candidates. But as we know — and so does the IRS — many of these (c)(4) organizations are formed strictly for political purposes by both Democrats and Republicans.
And it is no secret they have engaged openly and continuously in political activity. Fred Wertheimer, president of Democracy 21, a nonpartisan government-ethics watchdog group, put it this way: “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 nanced their campaign activities in the 2010 and 2012 elections.” Members of Congress can yell and stomp their feet all they want to in trying to make political hay out of this scandal, but they are responsible for the murky waters, which have washed up on the shores of the IRS. I know it, you know it, the IRS knows it, and members of Congress know that most of these (c)(4) groups are purely political. Nevertheless, Congress was quite content to leave the IRS a oat on those murky legislative waters to enforce the law on a case-by-case basis rather than providing clear guidelines to reign in the abusers of the tax-exempt privilege.
When all is said and done, this IRS escapade not only calls into question the honesty and impartiality of the IRS, but affects the con dence the American people have in all phases of our federal government. And there was not a whole lot of it to begin with.
Lou Gehrig Burnett, an award-winning journalist, has been involved with politics for 44 years and was a congressional aide in Washington, D.C., for 27 years. He also served as executive assistant to former Shreveport Mayor Bo Williams. Burnett is the publisher of the weekly “FaxNet Update” and can be reached at 861-0552 or louburnett@comcast.net.
