Tax Exemption Applicants Deserve Scrutiny
Tax collectors were so unpopular for so long it took the Son of God to demonstrate that it was alright to forgive them, and who knows whether some modern St. Matthew works at the Internal Revenue Service.
However, it’s obvious many politicians are in no forgiving mood when it comes to the prolonged attention to IRS scrutiny of groups applying for charity status.
In west-central Illinois, Congressman Aaron Schock, the Peoria Republican who’s a member of the powerful House Ways and Means Committee, continues to play an active role in the House’s ongoing investigation of the IRS, which he says targeted conservative organizations, including pro-life and religious groups [quote] “based on their beliefs and political persuasions.”
In contrast, Schock noted at the committee’s June hearing that the non-profit Organizing for Action – a group that raised millions of dollars for its mission to support the agenda of President Obama – was approved. Schock has a point. But he also misses some points.
First, no application was denied, according to veteran journalist David Cay Johnston, president of Investigative Reporters & Editors and a longtime New York Times staffer.
Second, as Johnston reported, “Congress requires the IRS to review every application for tax-exempt status to weed out organizations that are partisan, political or that generate private gain – since 1913. [And] a 1963 federal appeals court ruled that to qualify for tax exemption under 501(c)(4), ‘the organization must be a community movement designed to accomplish community ends’.”
Next, such inquiries were not confined to conservatives. Progressive groups and even journalism organizations also report being targeted, with applications taking more than a year and intrusive questions being asked, which took time and resources to answer. Non-profit news outfits also questioned or delayed included the Chicago News Cooperative, although notorious right-wing provocateur James O’Keefe’s Project Veritas was quickly OK’d.
The IRS has been criticized for pursuing conservative applicants for tax-exempt status, and in May it said that agents had improperly targeted Tea Party and other conservative groups for extra examinations when they applied for tax-exempt status during the 2010 and 2012 elections. Acting IRS Commissioner Steven Miller was forced to resign and Joseph Grant, from the agency’s tax-exempt and government-entities division, was forced to retire. J. Russell George, Treasury’s Inspector General for Tax Administration, audited the IRS’ procedures, but his report was incomplete, according to U.S. Rep. Sander Levin (D-Mich.), who said, “There is increasing evidence that the May 14 audit was fundamentally flawed.”
Indeed, IRS agents were instructed to “be on the lookout” for certain revealing words, including “Tea Party,” “9/12 Project” and “Patriots,” but also “Progressive,” “Occupy” and “Medical Marijuana.”
The IRS was screening groups’ applications to determine their level of political activity. IRS regulations say tax-exempt social welfare organizations may not have political activity as their main mission. Doing so abuses the tax-exempt status and cheats taxpayers. Further, all such groups opened themselves up to government examination by applying for the benefits of a 501(c)(4) social welfare organization, a tax status that lets them take unlimited amounts of money, keep contributors secret and pay no taxes – again, on the condition that politics not be the main reason they exist.
Applicants know they aren’t supposed to engage in politics, yet some – whether Organizing for Change or a Tea Party group – did so, or wanted to, anyway.
Others were subject to increased attention because their interests seemed political, if not campaign-oriented. Organizing for Action sure seems to violate that restriction, but so do Republican strategist Karl Rove’s Crossroads GPS, which reportedly spent almost $71 million opposing Democrats during the 2012 campaign, and the conservative American Action Network, which spent $30 million against Democratic candidates in the 2010 and 2012 elections, according to the nonpartisan Center for Public Integrity. They’re both 501(c)(4) social welfare groups, the IRS decided.
Charities are great and should be helped in their social-welfare missions by letting them escape taxes other institutions pay. But tax agents should check out ALL applicants. After all, some are just Political Action Committees masquerading as social welfare organizations. Another choice is to eliminate all such quasi-political groups from such charity status: left, right and center.
Bill Knight’s newspaper columns are archived at billknightcolumn.blogspot.com
The opinions expressed are not necessarily those of Tri States Public Radio or Western Illinois University.