Posted by AzBlueMeanie:
It turns out that the conservative Tea Party and Patriot organizations who applied for 501(c)(4) tax exempt status did so because they were concerned that their activities violated the tax exempt status. They knew that their political activities skirted the legalities for a tax exempt status, so they sought the IRS "seal of approval" (the real IRS scandal).
You see, you do not have to apply for a 501(c)(4) tax exempt status. Steven Benen explains, How to apply (or not) for tax-exempt status:
Noam Scheiber raised an interesting point I hadn't seen elsewhere.
It turns out that the applications the conservative groups submitted
to the IRS — the ones the agency subsequently combed over, provoking
nonstop howling — were unnecessary. The IRS doesn't require so-called
501c4 organizations to apply for tax-exempt status. If anyone wants to
start a social welfare group, they can just do it, then submit the
corresponding tax return (form 990) at the end of the year. To be sure,
the IRS certainly allows groups to apply for tax-exempt status if
they want to make their status official. But the application is
completely voluntary, making it a strange basis for an alleged witch
So why would so many Tea Party groups subject themselves to a lengthy
and needless application process? Mostly it had to do with anxiety —
the fear that they could run afoul of the law once they started raising
and spending money. "Our business experience was that we had to pay
taxes once there was money coming through here," says Tom Zawistowski,
the recent president of the Ohio Liberty Coalition, which tangled with
the IRS over its tax status. "We felt we were under a microscope. … We
were on pins and needles at all times." In other words, the groups
submitted their applications because they perceived themselves to be persecuted, not because they actually were.
Jamelle Bouie added, "This helps explain why the IRS decided to apply scrutiny at all. Applications are unusual,
and when you receive a large number of them from a particular set of
right-leaning groups, it's bound to raise suspicion. As Scheiber notes,
'The IRS was unexpectedly flooded by dodgy 501(c)4 applications and was
at a loss over how to manage them.'"
I have a little background covering tax law as it relates to
non-profits, and I'll confess this is new to me. But it turns out, it's
true — 501(c)4 don't have to apply to the IRS; they can simply claim
the status and proceed accordingly.
* * *
This seems important rather important. All of these groups sent in
applications, overwhelming confused IRS bureaucrats who struggled, not
only to deal with the paperwork, but with the ambiguities of tax law as
it relates to political groups seeking tax-exempt status.
would appear that the overwhelmed officials, seeing tons of Tea Party
groups filing for (c)4 status, started wondering if perhaps these
political entities didn't really deserve it. As we know, some liberal
groups ran into trouble, too.
angle I don't understand, though, is why these groups would send in
unnecessary applications in the first place. Scheiber's report says the
groups were worried about adverse tax consequences down the road, but
why would that stop them? If they hoped to influence the elections, by
the time they faced after-the-fact scrutiny, the elections would be
* * *
Regardless, these details seem to cast the story in a different light. More from Scheiber:
So the crime here had nothing to do with "targeting" conservatives.
The targeting was effectively done by the conservative groups
themselves, when they filed their gratuitous applications. The crime,
such as it is, was twofold. First, in the course of legitimately vetting
questionable applications, the IRS appears to have been more intrusive
than justified, asking for information about donors whose privacy it
should have respected. This is unfortunate and intolerable, but not
quite a threat to democracy.
Second, the IRS was tone deaf to how its scrutiny would look to the
people being scrutinized, given that they all subscribed to the same
worldview, and that they were already nursing a healthy persecution
complex. Which is to say, the IRS didn't go about its otherwise
legitimate vetting in a very politically-correct way.
Just to clarify, I'm not endorsing a "nothing to see
here" argument, and I'd like to see more information about all of this.
But these additional details do cast the story in a different light, and
raise questions about just how "scandalous" the actions were.
It was the desire of these conservative groups to get the IRS "seal of approval" for their tax evasion, er, tax exempt status that led them to submit an unnecessary application, an unusual event, that the IRS was required by law to review. So the IRS "scandal" was self-inflicted by these conservative groups seeking to evade taxes 'legally."
BY THE WAY: Since an application is not needed and one can operate as a tax exempt non-profit during the application process, any delays in application processing that these organizations are complaining about did not result in any actual harm — they were still operating as a tax exempt non-profit.
The most you can say is that extra scrutiny from the IRS in trying to do its job thoroughly may have constituted "harassment," but then that would be a matter of perspective. Of course a paranoid anti-government, anti-tax organization is going to perceive that it was harassed by the big bad "guvmint." That's its whole purpose for existence.