dotCommonweal

A blog by the magazine's editors and contributors

.

IRS Redux and a few other matters

Everyone, including President Obama, has thrown the towel (as well as a wet rag and dirty bar of soap) at the IRS. Today the New York Times looks up some of those who have complained about the hoops they claim to have had to jump through in order to become a non-tax entity. Guess what? Yes, some of them (and there are examples in the story) gave the IRS folks good reason to examine their applications. A former head of the IRS tax-exempt unit says the inspector general's report is careless in treating language that court decision's have previously found legal in assessing applications. So will he hear the last of this scandale? Story here.

NATURE NOTES: Lillacs, lillies of the valley, and violets--bumper crop. One fire fly sitting by the stove waiting for things to warm up.

Comments

Commenting Guidelines

Everyone, including President Obama, has thrown the towel (as well as a wet rag and dirty bar of soap) at the IRS.

 

For good reasons and far too late, IMHO, what occurred here is like cheating. Slice it, dice it, and spin it a thousands different ways, the results (and the effects) are the same.

 

If it was all done according to policy and assessment of political activity (specifically defined), then progressive registered charitable organizations should have had similar investigations done.

 

The appropriate message from a social justice point of view, it seems to me, is that government ought not ever use its power to bully people as was done here. No matter what side, no matter what the circumstances. Let's play fair!!

 

 

Why should 501(c)4 orgs have tax-exempt status when ANY portion of their activities are not considered to be social welfare?

I don't care if they are right, left or .... shazam! .... religious!

 

NATURE NORES:  The Japanese poet Issa loved fireflies.  Here are a couple of his haiku about them:

 

from the pampas grass
from the pine
fireflies! fireflies!

 

 

my dwelling--
mingling with the mice
pretty fireflies

 

Here are a lot more:

file://localhost/Users/annolivier/Desktop/haikuguy.com:%202.webloc

Tea Party and Patriot organizations began to proliferate in 2009, which coincidentally or not was the year a certain new president took office. It was pretty clear right away that those groups had political motivations that might overshadow any social welfare agenda. They deserve heightened scrutiny, as do any comparable groups on the left applying for the same status. The default position, it seems to me, should be that all such groups need to prove that they are entitled to the exemption they are seeking. Many people who pay taxes without complaint may be quietly contributing more to social welfare than groups that pay nothing.

As far as I can tell, there is no such thing as a 501(c)(4). Ortganizations that apply for that status are either 501(c)(3)s with nervous attorneys and/or scrupulosity or 527 organizations that want to hide it.

 

The 501(c)(4) designation is a unicorn, dreamed up by the IRS, which told agents to watch for them and implied they had better find some on pain of redundancy. As any bureaucrat can tell you, if unicorns are demanded by the brass, unicorns will be found. (But they still won't exist.)

George D: May 27@3:15: The Times story did site one "left" abuse: "Emerge America, which trained women to run for office, was granted 501(c)(4) recognition in 2006, but its status was revoked in 2012. Training people how to run for office is not in itself partisan activity, but the I.R.S. determined that the group trained only Democratic women and was operated to benefit one party."

Of course, we are dealing here with a system that makes no reasonable sense, and we have asked one of the most despised Government agencies to arbitrate it. Nonsense might be the better word.

 

Did they produce a memo asking agents to look for applicants with the words  "Emerge" "Equality" or "Women" and treat those with extra scrutiny? Did they review membership lists, reading materials, ask intrusive irrelevant questions unnrelated to the issue of political activity?

 

 

You are very excited about this for a Canadian. But...would we be surprised that during Bush II, there were word searches on Google (if Google had word searches 2000-08).

Margaret:

Actually, I am excited about it for the following reason. In the province of Ontario, you cannot receive funding for any group to advocate for any anti-poverty initiative that tries to address systemic issues such as welfare rates, rent, etc. If it is political, not funding or grants. You can get funding to do this or that training.

Also charitable status from Canada Revenue is also hard to get for groups that do any kind of political or quasi-political activities.

IMHO, this puts a chill on the ability of groups to contribute to the political life of the country. It cost money to organize and while most groups rely on volunteers, you do require at least one staff person to coordiante, etc.

I have seen how the IRS or Revenuc Canada can grind down dissent through the application of its polices.

In this instance, these tea party groups (and I would likely not join one) wanted to form and educate their members to participate politically. I don't think that they should be frustrated from doing this anymore than the OWS movements or the Idle No More Movements should be frustrated in their activities.

But if the government starts hassling groups from forming and gettng donations to operate, that is a problem. Yes, groups should have to produce an annual audit and provide that to the revenue agency. But most groups, require donations and it is good when these donations (even in kind) can be tax deductible. But the only way that they can be tax deductible is if the group is designated as a charity.

George D: "In this instance, these tea party groups (and I would likely not join one) wanted to form and educate their members to participate politically. I don't think that they should be frustrated from doing this anymore than the OWS movements or the Idle No More Movements should be frustrated in their activities."

Do you see a distinction between educating member politically, and advertising, promoting, and canvassing for a specific candidate? And what does it mean to "educate members politically"?

 

 

 

There is a definite distinction between educating members and canvassing for specific candidates. Let's take the tea party groups as an example. My guess is that they were educating members on the role of the federal government, issues relative to taxation and spending and how that effects their individual lives. I read one humourous story where the IRS asked one of these groups for a list of their reading materials and they sent them the US Constitution.

Now, when it comes to specific elections and candidates, the relevant question for these members would be where a specific candidate, of any party, stands on x, y, or z policy relative to the above. They might distribute questionnaires to those who are running and then publicize the answers of the candidates in the paper. They might ask questions at all candidates debates and so on.

Or they might be teaching members how to talk to decision makers, how to formulate their issues, etc.

So they are not technically affiliated with any party although obviously they would be more closely allied with the Republicans. But there are more "left" leaning examples.

A current example right now in Canada is the idle no more movement which was started by three First Nation women in Manitoba. I linked the website but it is actually a conglomeration of a variety of groups advanced by grass roots people. I won't go in to all the details but it started in response to Bill C 45 which was an omnibus bill passed by the federal government which impacts the Indian Act, has implications for navigable waters, and the third is relative to environmental issues. It is a far reaching bill.

At any rate, currently the groups are self supporting (and there is a link where you can contribute) but I am sure that they may be asking for funding from some kind of grant or something. However, the donations are not tax deductible which would be a benefit and might encourage people to support it more.

 

 

Contributions to 501(c)4 organizations are not tax deductible.

The only defense of the current U.S. system is that it's ours, and we did it to ourselves.

You can start with tax-exempt entities, above all churches, and then you build a system that applies that status to "do-good," i.e., charitable organizations, orphanages, schools, hospices, social service agencies, none of whom pay taxes and are allowed to solicit tax-exempt donations. All to the good, except for those money-grubbing social service agencies run by people who make millions of dollars off them (NYC is full of them, and one of our state legislators has been caught at it). That is partly a state matter in that the state funnels federal dollars (tax payer dollars) to these organizations, which are virtually immune from audits and investigations.

Then you have national do-good organizations, Planned Parenthood, Veterans of Foreign Wars, etc., which are tax-exempt themselves and can receive donations that are tax exempt. Enter politics, these kind of organizations and Labor Unions and Business Associations have a keen interest in policy and legislations, and ultimately, who votes which way. Recent Court decisions have permitted lobbying by these kind of organizations. More recently the Supreme Court has allowed the current system by which everyone can lobby with the pretense that "social welfare" organizations spend on social welfare and only lobby with a small percentage of their funds.

The rush to apply for tax-exempt status is the result of these decisions. And the IRS is in charge of vetting them. What exactly do we expect of a despised agency in Cincinnati directed by lawyers in DC, questioned by Congressal members and staffs? How exactly could they do a reasonable job of assessing some 700-800 applications. I am amazed at their ingenuity in turning to Google.

The system has been gamed and these ridiculous outcroppings of scandale are the result. I am hoping Canada has not sunk to this dishevel!

A political cartoon on the editorial page in the Philadelphia Inquirer, Sunday May26, 2013 says it all.

A rather portly Founding Father states: “THE IRS IS PLAYING PLITICS!!!” and signs a document that has these words:

             We the Tea Partiers of the United States,

             in order to form a more perfect cover,

             insure donor anonymity, provide for the

             Right Wing defense, promote our

             political Agenda and secure the

             blessings of special treatment, do Apply

             under false pretenses for 501(c)(4) status as a “social welfare” outfit.

             (Steve Benson / Arizona Republic)

Let's remember that the IRS is a favorite punching bag for Washington politicians of all stripes.  It's hard to find any defenders of the IRS out there in the voting public.  Even a dedicated liberal like me thinks I pay too much in taxes, and too much to financial advisers and tax accountants to find ways to not pay so many taxes.

It seems to me that the IRS doesn't do enough of these kind of investigations of groups and individuals who are trying to rig the system.

The irony is that Republicans in Congress are forever trying to cut the budget of the IRS in order to limit its proper functioning.  Why cut the budge of the one agency that is responsible for collecting all the money that enables the rest of the government to function?

Restore the IRS to full funding.  Ensure that the IRS is the prime example of a full-service taxpayer-friendly government agency.

Jim Jenkins, is this possibly the first time I agree with you? Let me check!

It seems to me that there is a difference between targetting and red flaging.

Correction:

It seems to me that there is a difference between targetting and red flagging.

Share

About the Author

Margaret O'Brien Steinfels, a former editor of Commonweal, writes frequently in these pages and blogs at dotCommonweal.