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IRS official denies intentional political targeting, lying to Congress
Washington (CNN) -- A huge increase in workload, rather than deliberate targeting, led to "foolish mistakes" and the political discrimination in the Internal Revenue Service cited by an inspector general's report, the agency's outgoing commissioner said Friday.
The testimony by Steven Miller, who was forced to announce his resignation this week as acting IRS commissioner, came at the first congressional hearing on the matter that has put President Barack Obama's administration on the defensive.
Rep. Dave Camp, chairman of the Republican-led panel, and other GOP members sought to depict the controversy as indicative of government gone wild, with the IRS abusing conservative groups and other political foes of the administration.
"This kind of reconfirms that, you know what, they can do anything they want to anybody they want any time they want," GOP Rep. Mike Kelly of Pennsylvania said about the IRS.
The public gallery erupted in cheers and applause when he concluded by saying: "This is absolutely an overreach and this is an outrage for all Americans."
Democrats on the committee also expressed outrage at the targeting of conservative groups seeking tax-exempt status, but they pointed out that the top IRS official at the time was appointed by Republican President George W. Bush, not Obama.
They also noted that the inspector general's report stated there was no evidence of any political motivation for what happened, or influence from outside the IRS.
In his opening remarks, Miller described an IRS division that handles requests for tax exempt status by political groups as overwhelmed by a surge that followed the Supreme Court's 2010 Citizens United decision, which greatly expanded the ability of corporations, unions and other organizations to participate in election spending, though not through direct contributions to candidates or parties.
"I think that what happened here was that foolish mistakes were made by people who were trying to be more efficient in their workload selection," Miller said, calling the practices described in the inspector general's report as "intolerable" and a "mistake," but "not an act of partisanship."
He apologized for what he later called "horrible customer service," but he also stubbornly rejected any accusation that it amounted to politicizing the work of the IRS.
Miller came under aggressive and accusatory questioning from Camp and other Republicans, who claimed he misled Congress by failing to reveal the extent of the problem at previous hearings dating back a year.
"When asked the truth and you know the truth and you have a legal responsibility to inform others of the truth but you don't share that truth, what is that called?" Camp asked.
"I always answer questions truthfully, Mr. Camp," Miller replied.
A tense exchange with Rep. Diane Black, a Tennessee Republican, involved Miller's denial that what he called the "listing" of names or phrases that triggered extra scrutiny of exemption requests amounted to political "targeting," the word used in the inspector general's report.
Miller acknowledged that the list of triggering phrases was conservative-based, causing Black to cut him off by declaring: "Then I'm going to say that's targeting. You can't have that both ways."
GOP Rep. Devin Nunes of California later asked why Miller resigned if he wasn't personally involved in the improper acts. Miller replied: "I resigned because as the acting commissioner, what happens in the IRS, whether I was personally involved or not, stopped at my desk."
"And so, I should be held accountable for what happens," he said. "Whether I was personally involved or not, a very different question, sir."
Another Republican, Rep. Tom Reed of New York, took exception with Miller's characterization of his resignation, noting it meant he would retire with full benefits and "nothing bad is going to happen to you."
With an incredulous grin, Miller responded: "Nothing bad is happening to me, congressman?"
Reed remained stern-faced, noting Miller continued to get his taxpayer-funded salary.
"You're getting paid for being here today, right?" Reed asked, to which Miller, his smile gone, dryly replied: "Right."
After the hearing, Camp described a "disturbing lack of detail and information" during testimony.
"We're going to continue to pursue this, as a committee, to find out who knew what, when, where, and how these decisions were made and how they were carried out," he said.
Earlier he told reporters the panel wanted unspecified records from Miller's tenure at the IRS.
Democrats sought to balance rejection of any perception of political manipulation by the IRS in the case with an effort to portray the situation as a poorly managed increase in demand for tax exempt status by political groups.
Rep. Jim McDermott, D-Washington, said the vast majority of the increased applications for tax exempt status after the Citizens United decision were from "far right groups," while fellow Democratic Rep. Richard Neal of Washington said the conservative organizations wanted to be involved politically without revealing donors -- as allowed for the 501 (c) (4) groups under the federal tax code.
"It all started right after Citizens United," McDermott said, adding that political groups "saw the door open" and thought that "we can get in, we can do political advertising."
He described a difference between "stupid mistakes and deliberate mistakes," adding that the IRS officials handling the requests took a shortcut "they deeply regret."
Democrats repeatedly asked the other witness Friday -- Inspector General J. Russell George, who wrote the report on the controversy -- to reiterate that there was no evidence of political motivation.
Each time, George agreed his review found no such evidence.
Rep. Sander Levin, the panel's ranking Democrat, specifically cited the former IRS commissioner, Douglas Shulman, for what he called misleading Congress on the issue. Shulman was not a witness at Friday's hearing, but is scheduled to appear at other congressional hearings next week.
According to the report by George, the agency developed and followed a faulty policy to determine whether the applicants were engaged in political activities, which would disqualify the groups from receiving tax-exempt status.
The controversial move began in early 2010 and continued for more than 18 months, the report said, declaring that "the IRS used inappropriate criteria that identified for review Tea Party and other organizations applying for tax-exempt status based upon their names or policy positions instead of indications of potential political campaign intervention."
IRS officials, according to the report, did not consult anyone beyond the agency about the development of the additional screening criteria. They believed that the criteria they came up with were a screening shortcut meant to help with the influx of applications, the report said.
(Continued below)
The testimony by Steven Miller, who was forced to announce his resignation this week as acting IRS commissioner, came at the first congressional hearing on the matter that has put President Barack Obama's administration on the defensive.
Rep. Dave Camp, chairman of the Republican-led panel, and other GOP members sought to depict the controversy as indicative of government gone wild, with the IRS abusing conservative groups and other political foes of the administration.
"This kind of reconfirms that, you know what, they can do anything they want to anybody they want any time they want," GOP Rep. Mike Kelly of Pennsylvania said about the IRS.
The public gallery erupted in cheers and applause when he concluded by saying: "This is absolutely an overreach and this is an outrage for all Americans."
Democrats on the committee also expressed outrage at the targeting of conservative groups seeking tax-exempt status, but they pointed out that the top IRS official at the time was appointed by Republican President George W. Bush, not Obama.
They also noted that the inspector general's report stated there was no evidence of any political motivation for what happened, or influence from outside the IRS.
In his opening remarks, Miller described an IRS division that handles requests for tax exempt status by political groups as overwhelmed by a surge that followed the Supreme Court's 2010 Citizens United decision, which greatly expanded the ability of corporations, unions and other organizations to participate in election spending, though not through direct contributions to candidates or parties.
"I think that what happened here was that foolish mistakes were made by people who were trying to be more efficient in their workload selection," Miller said, calling the practices described in the inspector general's report as "intolerable" and a "mistake," but "not an act of partisanship."
He apologized for what he later called "horrible customer service," but he also stubbornly rejected any accusation that it amounted to politicizing the work of the IRS.
Miller came under aggressive and accusatory questioning from Camp and other Republicans, who claimed he misled Congress by failing to reveal the extent of the problem at previous hearings dating back a year.
"When asked the truth and you know the truth and you have a legal responsibility to inform others of the truth but you don't share that truth, what is that called?" Camp asked.
"I always answer questions truthfully, Mr. Camp," Miller replied.
A tense exchange with Rep. Diane Black, a Tennessee Republican, involved Miller's denial that what he called the "listing" of names or phrases that triggered extra scrutiny of exemption requests amounted to political "targeting," the word used in the inspector general's report.
Miller acknowledged that the list of triggering phrases was conservative-based, causing Black to cut him off by declaring: "Then I'm going to say that's targeting. You can't have that both ways."
GOP Rep. Devin Nunes of California later asked why Miller resigned if he wasn't personally involved in the improper acts. Miller replied: "I resigned because as the acting commissioner, what happens in the IRS, whether I was personally involved or not, stopped at my desk."
"And so, I should be held accountable for what happens," he said. "Whether I was personally involved or not, a very different question, sir."
Another Republican, Rep. Tom Reed of New York, took exception with Miller's characterization of his resignation, noting it meant he would retire with full benefits and "nothing bad is going to happen to you."
With an incredulous grin, Miller responded: "Nothing bad is happening to me, congressman?"
Reed remained stern-faced, noting Miller continued to get his taxpayer-funded salary.
"You're getting paid for being here today, right?" Reed asked, to which Miller, his smile gone, dryly replied: "Right."
After the hearing, Camp described a "disturbing lack of detail and information" during testimony.
"We're going to continue to pursue this, as a committee, to find out who knew what, when, where, and how these decisions were made and how they were carried out," he said.
Earlier he told reporters the panel wanted unspecified records from Miller's tenure at the IRS.
Democrats sought to balance rejection of any perception of political manipulation by the IRS in the case with an effort to portray the situation as a poorly managed increase in demand for tax exempt status by political groups.
Rep. Jim McDermott, D-Washington, said the vast majority of the increased applications for tax exempt status after the Citizens United decision were from "far right groups," while fellow Democratic Rep. Richard Neal of Washington said the conservative organizations wanted to be involved politically without revealing donors -- as allowed for the 501 (c) (4) groups under the federal tax code.
"It all started right after Citizens United," McDermott said, adding that political groups "saw the door open" and thought that "we can get in, we can do political advertising."
He described a difference between "stupid mistakes and deliberate mistakes," adding that the IRS officials handling the requests took a shortcut "they deeply regret."
Democrats repeatedly asked the other witness Friday -- Inspector General J. Russell George, who wrote the report on the controversy -- to reiterate that there was no evidence of political motivation.
Each time, George agreed his review found no such evidence.
Rep. Sander Levin, the panel's ranking Democrat, specifically cited the former IRS commissioner, Douglas Shulman, for what he called misleading Congress on the issue. Shulman was not a witness at Friday's hearing, but is scheduled to appear at other congressional hearings next week.
According to the report by George, the agency developed and followed a faulty policy to determine whether the applicants were engaged in political activities, which would disqualify the groups from receiving tax-exempt status.
The controversial move began in early 2010 and continued for more than 18 months, the report said, declaring that "the IRS used inappropriate criteria that identified for review Tea Party and other organizations applying for tax-exempt status based upon their names or policy positions instead of indications of potential political campaign intervention."
IRS officials, according to the report, did not consult anyone beyond the agency about the development of the additional screening criteria. They believed that the criteria they came up with were a screening shortcut meant to help with the influx of applications, the report said.
(Continued below)
Something has to change there.... and now, change is happening.
"As for the tea baggers, you seriously think that joining a group whose guiding philosophy is being whiny and resentful about paying taxes wouldn't bring extra scrutiny? Sounds like the Cincinnati IRS was simply going after the low hanging fruits and nuts. Lazy maybe but not political.
And what was the horrible persecution they were forced to submit to? Having to fill out a 4 page form instead of a 2 pager, Meaning they had to read, think, and intelligently answer twice as many questions as others were required to. And for this people are ready to riot. Makes you wonder what's really happening elsewhere that they're allowing this circus to distract everyone's attention. "
DITTO!...
And what was the horrible persecution they were forced to submit to? Having to fill out a 4 page form instead of a 2 pager, Meaning they had to read, think, and intelligently answer twice as many questions as others were required to. And for this people are ready to riot. Makes you wonder what's really happening elsewhere that they're allowing this circus to distract everyone's attention. "
DITTO!...
Losing your job is always a possibility, even with no doing of your own. Anything can happen... sometimes it does.
So answer my question. Your job should be allowed to be cut for no reason, proof of wrongdoing? Regardless of your work reputation being outstanding for 15 years simply because they want to appease sharks circling? That is fair for her and it must be fair for you as well I guess. Oh wait! All the union busting and the creation of right to work states! YES! I guess we can!
Wait a second... ":money is good or at least the same as it has been" ? It wasn't good... that's why we elected Obama, right?
"And I am so busy, Im turning down work"
Is Fl. Re-Bounding? I know it took a Hard Hit.
Is Fl. Re-Bounding? I know it took a Hard Hit.
And I am so busy, Im turning down work. Needs to be 2 of me. Money is good or at least the same as it has been.
Did anyone really think anyone from the IRS was going to step up and say there was wrong doing? Come on now.... everyone here knows that wouldn't happen....ever.
No argument there. However, inuendo and finger pointing and accusations are not facts. The IG report however, states there is no evidence finds this restricted to the irs and lets remember that Shullman, who said in 2012 that there was no targeting is no longer there? So, why have we not heard from him? I have questions too, just not feeding into the sensationalism and politics being played here.
And as far as the woman in charge of implementing obamacare into the organization and calling for her head. If there is no evidence of wrongdoing on her part, why should she be fired? If your job is at risk, do you not want there to be a reason other than people calling for your job? All reports say that she is a studious and exemplary public servant. I dont think we should go around without evidence of wrongdoing, wanting heads on a stick.
Look what they did to Susan Rice, have you heard one apology? Politics cost her a position she was wanting, is that fair?
No argument there. However, inuendo and finger pointing and accusations are not facts. The IG report however, states there is no evidence finds this restricted to the irs and lets remember that Shullman, who said in 2012 that there was no targeting is no longer there? So, why have we not heard from him? I have questions too, just not feeding into the sensationalism and politics being played here.
And as far as the woman in charge of implementing obamacare into the organization and calling for her head. If there is no evidence of wrongdoing on her part, why should she be fired? If your job is at risk, do you not want there to be a reason other than people calling for your job? All reports say that she is a studious and exemplary public servant. I dont think we should go around without evidence of wrongdoing, wanting heads on a stick.
Look what they did to Susan Rice, have you heard one apology? Politics cost her a position she was wanting, is that fair?
Did anyone really think anyone from the IRS was going to step up and say there was wrong doing? Come on now.... everyone here knows that wouldn't happen....ever.
Did anyone hear that Senator recently say that "paying taxes was voluntary"? Then the guy that just gave up at the IRS concurred..... this is what's wrong with this country. We are electing and appointing people who don't know the difference between $hit and applesauce.
God bless this mess.....
Did anyone hear that Senator recently say that "paying taxes was voluntary"? Then the guy that just gave up at the IRS concurred..... this is what's wrong with this country. We are electing and appointing people who don't know the difference between $hit and applesauce.
God bless this mess.....
“I pray they get their bottoms kicked come 2014”
With the turn of events, you may want to Pray that Obama is still in office come 2014!
With the turn of events, you may want to Pray that Obama is still in office come 2014!
Not political? Whatever you say.....
I have heard that Boehner and his ilk have vowed to keep it going and not agree to any kind of legislation going forward.--------------------------------------
I pray they get their bottoms kicked come 2014.
I pray they get their bottoms kicked come 2014.
Makes you wonder what's really happening elsewhere that they're allowing this circus to distract everyone's attention.
I have heard that Boehner and his ilk have vowed to keep it going and not agree to any kind of legislation going forward.
Whats new I ask.
I have heard that Boehner and his ilk have vowed to keep it going and not agree to any kind of legislation going forward.
Whats new I ask.
LOL! You do have a tendency to rattle me.
"I knew you you'd"
I must have got you a little rattled. LOL
I must have got you a little rattled. LOL
I knew you you'd come up with some smart a$$ retort. :)
Grape or Cherry Flavored Kool-Aid?
Well, even if it is political...if you were in charge and there was a strong political movement against taxes, wouldn't you check them out a little more closely? I know I would(even if they were liberals).
But the point is, they were not harassed and they didn't have their phones tapped. Geesh, 4 pages instead of two...sounds like they are whining again. :D
Not to say it is okay Glass, but it seems like they are making more out of it than they need to. They really want to bring the Pres down. I don't really like his policies, he is far too conservative for me and by that I mean I think he has too much invested in the corrupt banking system and big business, the dirty wars of drones and playing with civil liberties in the name of homeland security.
Nevertheless, he is the best of all the contenders and damn it guys, face it..he won and despite the efforts of ppl who despise him he still stands and he will be here till the end of term.
I think he will go down in history as the most challenged and vilified President for no reason but that he couldn't save this country from itself.
But the point is, they were not harassed and they didn't have their phones tapped. Geesh, 4 pages instead of two...sounds like they are whining again. :D
Not to say it is okay Glass, but it seems like they are making more out of it than they need to. They really want to bring the Pres down. I don't really like his policies, he is far too conservative for me and by that I mean I think he has too much invested in the corrupt banking system and big business, the dirty wars of drones and playing with civil liberties in the name of homeland security.
Nevertheless, he is the best of all the contenders and damn it guys, face it..he won and despite the efforts of ppl who despise him he still stands and he will be here till the end of term.
I think he will go down in history as the most challenged and vilified President for no reason but that he couldn't save this country from itself.
"Lazy maybe but not political. "
Sorry, but it Reeks of Political.
Sorry, but it Reeks of Political.
As for the tea baggers, you seriously think that joining a group whose guiding philosophy is being whiny and resentful about paying taxes wouldn't bring extra scrutiny? Sounds like the Cincinnati IRS was simply going after the low hanging fruits and nuts. Lazy maybe but not political.
-------------------------------------------------------------------------------------------
Thank you, well said.
Kind of a long read but I didn't see anything about "Pro Life, Christian, Pro-Israel, Romney" being targeted.
As for the tea baggers, you seriously think that joining a group whose guiding philosophy is being whiny and resentful about paying taxes wouldn't bring extra scrutiny? Sounds like the Cincinnati IRS was simply going after the low hanging fruits and nuts. Lazy maybe but not political.
And what was the horrible persecution they were forced to submit to? Having to fill out a 4 page form instead of a 2 pager, Meaning they had to read, think, and intelligently answer twice as many questions as others were required to. And for this people are ready to riot. Makes you wonder what's really happening elsewhere that they're allowing this circus to distract everyone's attention.
As for the tea baggers, you seriously think that joining a group whose guiding philosophy is being whiny and resentful about paying taxes wouldn't bring extra scrutiny? Sounds like the Cincinnati IRS was simply going after the low hanging fruits and nuts. Lazy maybe but not political.
And what was the horrible persecution they were forced to submit to? Having to fill out a 4 page form instead of a 2 pager, Meaning they had to read, think, and intelligently answer twice as many questions as others were required to. And for this people are ready to riot. Makes you wonder what's really happening elsewhere that they're allowing this circus to distract everyone's attention.
I found this article and yes, it makes alot of sense as to how and why something like this happened. Remember citizens united? So maybe it should not have happened but one can understand how it might?
One of the biggest revelations in the Treasury Department inspector general report on the unfolding IRS-tea party debacle is this: The IRS staffers vetting hundreds of tea party groups and conservative outfits seeking nonprofit status for potential political activity weren't themselves sure what they were looking for. And who bears the ultimate responsibility for this? The very folks who are getting so worked up about the alleged abuses and the dark-money explosion that made them possible: Congress.
The IRS-tea party scandal revolves around 501(c)(4) nonprofits, also known as "social welfare" groups. They can dabble in politics, but it can't be their "primary activity." In other words, they can't be a political party, campaign committee, or a super-PAC in disguise. Yet as the IG report makes clear, the tax law and IRS regulations are foggy on how much politics is too much politics. Not only are activists, lawyers, and political operatives drawing their own conclusions here; even IRS staffers don't know exactly where the line is drawn. The IRS rules on political nonprofits are like a Jackson Pollock painting: Five people can look at them and arrive at five different conclusions about what they're seeing.
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The regulations for 501(c)(4) nonprofits date back to 1959, but politically active nonprofits did not explode in popularity until recently. For decades, social welfare nonprofits such as the Sierra Club and the National Rifle Association have played significant, yet limited, political roles. They've run ads focusing on their pet issues and rated candidates' positions on those issues, but they shied away from plunging fully into pure politics. But after the Supreme Court's 2010 Citizens United decision—which ruled that corporations and individuals could pour unlimited amounts of money into outside spending groups—501(c)(4)s surged in popularity, and the number of applications for new ones climbed from 1,591 in 2010 to 3,398 in 2012.
Prominent political strategists including Karl Rove, former Sen. Norm Coleman (R-Minn.), and Obama White House aides Bill Burton and Sean Sweeney embraced the use of nonprofits, which they paired with super-PACs. Doing so gave deep-pocketed political donors the option of giving money publicly (to the super-PAC) or anonymously (to the nonprofit). And the growth of the tea party movement after Barack Obama's election in 2008 led to a flood of local groups looking to set themselves up as "social welfare" nonprofits with a focus on politics and policy.
Super-PACs hogged the headlines during the 2010 elections, but nonprofits played a bigger role. According to an analysis by the Center for Public Integrity, nonprofits outspent super-PACs by a 3-to-2 margin during the midterms. Rove's Crossroads GPS spent at least $15 million supporting Republican candidates and Coleman's American Action Network spent at least $19 million. Both groups ran TV, radio, and online ads to help Republicans regain their majority in the House and break the Senate Democrats' filibuster-proof majority. They succeeded. (Social welfare nonprofits spent more than $250 million in 2012; most of it was spent by conservative groups.)
IRS rules on political nonprofits are like a Jackson Pollock: Five people can look at them and arrive at five different conclusions about what they're seeing.
All this dark money—which appeared to violate the spirit of federal campaign laws and IRS regulations—outraged good-government advocates. Congressional Democrats demanded that the Federal Election Commission and IRS crack down on the anonymously funded nonprofits that were flooding the airwaves with election ads. They introduced legislation called the DISCLOSE Act that would have forced 501(c)(4)s to reveal their major donors. The bill "would have removed the incentive for any groups engaged in political campaign activities to seek 501(c)(4) tax exempt status in order to hide their donors from public scrutiny," said Rep. Chris Van Hollen (D-Md.), who cosponsored the bill. Multiple versions of the DISCLOSE Act have been introduced in the last three years. Senate Republicans have blocked the measure, claiming it was a veiled attempt to punish conservative megadonors.
Meanwhile, the IRS never responded to Democrats' demands to investigate big-spending nonprofits for getting overly involved in politics. But Senate Republicans did get a response when they asked the agency in 2012 to look into allegations that its employees were harassing tea partiers applying for tax-exempt status. Those complaints prompted the IG's report that has fueled the current controversy and led to the resignation of IRS Acting Commissioner Steven Miller on Wednesday.
So can anything be done to remedy this mess? Tax experts say the IRS can train its staffers to sniff out overly political groups to prevent future scandals like this most recent one. It could also offer more clarity on what does and doesn't constitute "political" activity. That could help at the margins. But ultimately, Congress has authority over the tax code, and it could rewrite the law to clarify whether 501(c)(4) nonprofit can get involved in politics and to what degree. "They're the ones who could eliminate the truly difficult aspects of this vetting process," says Marcus Owens, a lawyer who worked on tax-exempt issues at the IRS for 25 years.
Lloyd Mayer, a law professor at the University of Notre Dame, agrees. "The law is very unclear and very vague, and Congress could create a clearer definition of what is political activity for these purposes," Mayer told the Christian Science Monitor.
Ellen Aprill, a law professor at Loyola University in Los Angeles, says that Congress is best positioned to resolve these uncertainties. "It would be better for Congress to do it. They're the ones who write the Internal Revenue Code. They're the ones who define exempt organizations are." And Rick Hasen, a law professor at the University of California–Irvine, notes, "The solution is actually pretty straightforward: Congress should set clear rules to require any entity, regardless of its tax status, to disclose donors whose money pays for federal election ads. If a group does not want to disclose all of its donors—perhaps it does a lot of things aside from running such ads—it can simply set up a separate fund for ads, and disclose only the donors to that fund." That way, Hasen says, the IRS could shed its role as political watchdog—which it clearly isn't good at—and focus on the things it does best.
Congress could also get rid of 501(c)(4)s entirely, as John Colombo, a law professor at the University of Illinois, recently suggested in the New York Times. "Let’s make it simple," he wrote. "If you want to be a charity, be a charity and live with the 501(c)(3) limits; if you want primarily to be engaged in the political process through lobbying or otherwise, pay taxes like everyone else or register as a 527 political organization." (They could also start a super PAC.)
But it's not just Karl Rove and the tea partiers who have taken advantage of the slipperiness of the tax code; Democrats have, too. Considering that, Owens says he's skeptical that Congress will want to do anything to clear up this mess. "All ends of the political spectrum are utilizing that ambiguity to their own advantages," he says. "It's hard to find someone above the fray who isn't utilizing it."
One of the biggest revelations in the Treasury Department inspector general report on the unfolding IRS-tea party debacle is this: The IRS staffers vetting hundreds of tea party groups and conservative outfits seeking nonprofit status for potential political activity weren't themselves sure what they were looking for. And who bears the ultimate responsibility for this? The very folks who are getting so worked up about the alleged abuses and the dark-money explosion that made them possible: Congress.
The IRS-tea party scandal revolves around 501(c)(4) nonprofits, also known as "social welfare" groups. They can dabble in politics, but it can't be their "primary activity." In other words, they can't be a political party, campaign committee, or a super-PAC in disguise. Yet as the IG report makes clear, the tax law and IRS regulations are foggy on how much politics is too much politics. Not only are activists, lawyers, and political operatives drawing their own conclusions here; even IRS staffers don't know exactly where the line is drawn. The IRS rules on political nonprofits are like a Jackson Pollock painting: Five people can look at them and arrive at five different conclusions about what they're seeing.
Advertise on MotherJones.com
The regulations for 501(c)(4) nonprofits date back to 1959, but politically active nonprofits did not explode in popularity until recently. For decades, social welfare nonprofits such as the Sierra Club and the National Rifle Association have played significant, yet limited, political roles. They've run ads focusing on their pet issues and rated candidates' positions on those issues, but they shied away from plunging fully into pure politics. But after the Supreme Court's 2010 Citizens United decision—which ruled that corporations and individuals could pour unlimited amounts of money into outside spending groups—501(c)(4)s surged in popularity, and the number of applications for new ones climbed from 1,591 in 2010 to 3,398 in 2012.
Prominent political strategists including Karl Rove, former Sen. Norm Coleman (R-Minn.), and Obama White House aides Bill Burton and Sean Sweeney embraced the use of nonprofits, which they paired with super-PACs. Doing so gave deep-pocketed political donors the option of giving money publicly (to the super-PAC) or anonymously (to the nonprofit). And the growth of the tea party movement after Barack Obama's election in 2008 led to a flood of local groups looking to set themselves up as "social welfare" nonprofits with a focus on politics and policy.
Super-PACs hogged the headlines during the 2010 elections, but nonprofits played a bigger role. According to an analysis by the Center for Public Integrity, nonprofits outspent super-PACs by a 3-to-2 margin during the midterms. Rove's Crossroads GPS spent at least $15 million supporting Republican candidates and Coleman's American Action Network spent at least $19 million. Both groups ran TV, radio, and online ads to help Republicans regain their majority in the House and break the Senate Democrats' filibuster-proof majority. They succeeded. (Social welfare nonprofits spent more than $250 million in 2012; most of it was spent by conservative groups.)
IRS rules on political nonprofits are like a Jackson Pollock: Five people can look at them and arrive at five different conclusions about what they're seeing.
All this dark money—which appeared to violate the spirit of federal campaign laws and IRS regulations—outraged good-government advocates. Congressional Democrats demanded that the Federal Election Commission and IRS crack down on the anonymously funded nonprofits that were flooding the airwaves with election ads. They introduced legislation called the DISCLOSE Act that would have forced 501(c)(4)s to reveal their major donors. The bill "would have removed the incentive for any groups engaged in political campaign activities to seek 501(c)(4) tax exempt status in order to hide their donors from public scrutiny," said Rep. Chris Van Hollen (D-Md.), who cosponsored the bill. Multiple versions of the DISCLOSE Act have been introduced in the last three years. Senate Republicans have blocked the measure, claiming it was a veiled attempt to punish conservative megadonors.
Meanwhile, the IRS never responded to Democrats' demands to investigate big-spending nonprofits for getting overly involved in politics. But Senate Republicans did get a response when they asked the agency in 2012 to look into allegations that its employees were harassing tea partiers applying for tax-exempt status. Those complaints prompted the IG's report that has fueled the current controversy and led to the resignation of IRS Acting Commissioner Steven Miller on Wednesday.
So can anything be done to remedy this mess? Tax experts say the IRS can train its staffers to sniff out overly political groups to prevent future scandals like this most recent one. It could also offer more clarity on what does and doesn't constitute "political" activity. That could help at the margins. But ultimately, Congress has authority over the tax code, and it could rewrite the law to clarify whether 501(c)(4) nonprofit can get involved in politics and to what degree. "They're the ones who could eliminate the truly difficult aspects of this vetting process," says Marcus Owens, a lawyer who worked on tax-exempt issues at the IRS for 25 years.
Lloyd Mayer, a law professor at the University of Notre Dame, agrees. "The law is very unclear and very vague, and Congress could create a clearer definition of what is political activity for these purposes," Mayer told the Christian Science Monitor.
Ellen Aprill, a law professor at Loyola University in Los Angeles, says that Congress is best positioned to resolve these uncertainties. "It would be better for Congress to do it. They're the ones who write the Internal Revenue Code. They're the ones who define exempt organizations are." And Rick Hasen, a law professor at the University of California–Irvine, notes, "The solution is actually pretty straightforward: Congress should set clear rules to require any entity, regardless of its tax status, to disclose donors whose money pays for federal election ads. If a group does not want to disclose all of its donors—perhaps it does a lot of things aside from running such ads—it can simply set up a separate fund for ads, and disclose only the donors to that fund." That way, Hasen says, the IRS could shed its role as political watchdog—which it clearly isn't good at—and focus on the things it does best.
Congress could also get rid of 501(c)(4)s entirely, as John Colombo, a law professor at the University of Illinois, recently suggested in the New York Times. "Let’s make it simple," he wrote. "If you want to be a charity, be a charity and live with the 501(c)(3) limits; if you want primarily to be engaged in the political process through lobbying or otherwise, pay taxes like everyone else or register as a 527 political organization." (They could also start a super PAC.)
But it's not just Karl Rove and the tea partiers who have taken advantage of the slipperiness of the tax code; Democrats have, too. Considering that, Owens says he's skeptical that Congress will want to do anything to clear up this mess. "All ends of the political spectrum are utilizing that ambiguity to their own advantages," he says. "It's hard to find someone above the fray who isn't utilizing it."
Honestly, altho we should all be outraged at this, after listening to all sides, it appears that altho mistakes were made, shortcuts taken that should have not been taken, that it is again, a huge blowup, sensationalized, before the facts were actually known. Now as the facts emerge all players will have to find a way to continue their role they have taken.
I, in no way can even fathom comparing this to a (watergate), as has been claimed.
"I think that what happened here was that foolish mistakes were made by people who were trying to be more efficient in their workload selection," Miller said, calling the practices described in the inspector general's report as "intolerable" and a "mistake," but "not an act of partisanship."
And on this note, managers and overseers should be held accountable and policies put in place to avoid it happening again. But again, based on what has come out so far, as bad as the situation is, there is nothing tying this to anything bigger. I reserve the right to change my mind based on further facts that emerge.
I, in no way can even fathom comparing this to a (watergate), as has been claimed.
"I think that what happened here was that foolish mistakes were made by people who were trying to be more efficient in their workload selection," Miller said, calling the practices described in the inspector general's report as "intolerable" and a "mistake," but "not an act of partisanship."
And on this note, managers and overseers should be held accountable and policies put in place to avoid it happening again. But again, based on what has come out so far, as bad as the situation is, there is nothing tying this to anything bigger. I reserve the right to change my mind based on further facts that emerge.
Does anyone believe this BS?
Tea Party, Pro Life, Christian, Pro-Israel, Romney Donors (all considered right wing) groups were targeted and asked to reveal a troubling amount of data and donors. I have yet to hear of a SINGLE Pro-Choice, Obama Donor, or other liberal type groups receiving the same scrutiny.
And to make matters worse, the woman who has been in charge of this division of the IRS has been promoted to handle the division responsible for the implementation of Obamacare (and fining citizens).
Either she was a poor manager or she was in on it, and seeing as how she's been promoted... I'd say she was in on it!
I wonder if in 2014, only registered Republican citizens will be "Obamacare taxed" while Democrat citizens will not.
That'll be the next big thing: The Obamacare "fine" is racist against minorities, because they can't afford it, so the "fine" will increase for those with higher incomes, to compensate for those that can't pay.
Wait for it...
Tea Party, Pro Life, Christian, Pro-Israel, Romney Donors (all considered right wing) groups were targeted and asked to reveal a troubling amount of data and donors. I have yet to hear of a SINGLE Pro-Choice, Obama Donor, or other liberal type groups receiving the same scrutiny.
And to make matters worse, the woman who has been in charge of this division of the IRS has been promoted to handle the division responsible for the implementation of Obamacare (and fining citizens).
Either she was a poor manager or she was in on it, and seeing as how she's been promoted... I'd say she was in on it!
I wonder if in 2014, only registered Republican citizens will be "Obamacare taxed" while Democrat citizens will not.
That'll be the next big thing: The Obamacare "fine" is racist against minorities, because they can't afford it, so the "fine" will increase for those with higher incomes, to compensate for those that can't pay.
Wait for it...
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