Tag Archives: tax exempt status

IRS Mainly Targeted Nonprofits on the Left

irsLittle Rock  According to IRS documents now released to the public, the Republicans and the right have been squealing like stuck pigs about being discriminated against on their applications for a free tax ride without any good reason, because the IRS was an “equal opportunity” discriminator targeting both the left and the right for special attention.  The IRS docs seem to back up their earlier contention that they were using “key words” to root out what they suspected might be political organizations hiding behind a social welfare cover story in order to con the tax man.  They not only pulled out Tea Party but also Occupy and Progressive in their searches.  There are lessons here, but I’m not sure any of them are all that good.

            According to a report in the New York Times, this name sorting attack went on until recent weeks.  Furthermore, the slap at the left was broader and more political than the conservatives have claimed.

One such “be on the lookout” list included medical marijuana groups, organizations that were promoting President Obama’s health care law, and applications that dealt “with disputed territories in the Middle East.”

            The IRS seems to be over the top in his ham-fisted appreciation of both foreign and domestic policy.   It will be interesting to see if Congressman Issa and his investigations committee will be as lathered up now that it is clear that the main targets were liberals and not conservatives.  I’m not holding my breath.

Clearly, they were out of control, but what’s new about that?

The IRS or the Service as it calls itself often believes there are no boundaries to the questions and information that they believe is relevant in an investigation.  Years ago I had a lawyer who referred to government investigators for the IRS and DOL as always looking for “booze, broads, and Cadillac’s,” but that’s way old school now.  They operate more like a Google search with an IRS ID-badge  believing that they have license to delve into anything they might have pulled up in a search, and, god knows, if you’ve ever been on the internet, you know there’s some crazy stuff out there about virtually everything and everyone.

The IRS needs to collect what taxes are due and make sure that there are no wolves in sheep’s clothing out there, but maybe they should go back to the old school and just go through one application at a time and get it right.  In the meantime anyone applying for a tax exemption would be wise to think very carefully about what name they call their outfit.  I would recommend plain vanilla like Institute for Social Welfare or Organization for the Good or something along those lines for a quick “yes” from the IRS.


IRS and the Tea Party

Edinburgh   The Internal Revenue Service apologized for batching up 300 applications for 501c4 tax exempt status when groups had Tea Party or Patriot in their names, claiming they were flooded with 2600 applications and their lower level pencil pushers were just trying to figure out a short cut.  Conservatives and their Congressional allies screamed like stuck pigs demanding assurances that this kind of thing never happens again.  Public Citizen, the old Ralph Nadar campaign finance watchdog, tried to get a word in edgewise demanding more investigations of the abuse of tax exempt status being awarded without any viable claims to benefiting “social welfare” as required by the regulations.  They believe, as do many others, that c4 status is becoming a signpost for creating a tax haven to serve as a political slush fund on the Karl Rove Crossroads model of no holds barred campaign spending in the last US Presidential election.

What should we make of all of this this?  Worth the worry or a tempest in a tea party…I mean tea pot?

Next to the military and the CIA, there are few more inscrutable and opaque government outfits than the IRS, making it pretty easy to believe both Kentucky Senator Mitch O’Connell’s accusations about their “thuggish” practice and the Tea people’s lawyer’s cry about McCarthyism.  The Republicans  don’t much like the IRS or anyone involved in tax collection given their project of dismantling the government dollar by dollar, so it’s not like they are going to budget more money for better supervision of nonprofits or anyone else, so it will be even easier to believe the IRS apologists that they were sorry because they were incompetent and didn’t supervise their agents well in sort of a “guys gone wild in Cincinnati” storyline.

And, of course we all have our own stories on this side of the divide as well.  This year I’ve had to pay for a tax certificate requested by nonprofits in Japan to pay for speaking over there.  Six months, no word, and no way to track it down.  In another incident this year, I had to pay for a new copy of an exemption letter sent to me at the wrong address and lost without me knowing it was sent for several years, and suddenly got a call from an IRS investigator saying my letter and the results of an audit were held up because filing and paying for the letter as instructed by Cincinnati had confused them in Fort Worth into thinking someone else was trying to file for a new exemption under the ACORN International c3 number.  One the other hand I had a great conversation with the IRS several weeks ago about waiving penalties and fines for KABF in Little Rock, and thanks for that guys!  My point is simply that there is no way to figure the IRS out.  And, I don’t want to get into how long it took them to start paying attention to the predatory nature of refund anticipation loans or the way they handle volunteer or VITA sites and their so-called “partnerships” there.  They move at their own chosen speed without explanation or transparency, and it’s luck of the draw every time Joe Citizen ends up dealing with them, so basically the only good strategy is avoiding them completely and hoping they lose your name in the files somewhere.  In short, we should all feel lucky it’s not worse.

As for the Tea people and Public Citizen’s positions, most of the Tea groups will shrivel and die anyway so it hardly matters at some level, and Karl Rove and his lawyers could tie the IRS up for years and might argue that stopping Obama from being elected is their definition of contributing to the public’s “social welfare.”  Both sides are no doubt right even for both right and wrong reasons, all of which adds up to the likelihood that with less staff and less funding and no improvements in supervision or transparency, the only sure bet is that our experiences with the IRS will get a lot worse before they get any better.

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