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From left, Treasury Inspector General for Tax Administration J. Russell George, former IRS Commissioner Douglas Shulman, Lois Lerner, head of the IRS unit that decides whether to grant tax-exempt status to groups, and Deputy Treasury Secretary Neal Wolin, are sworn in on Capitol Hill in Washington, Wednesday, May 22, 2013, prior to testifying before the House Oversight Committee hearing to investigate the extra scrutiny the Internal Revenue Service gave Tea Party and other conservative groups that applied for tax-exempt status. (J. Scott Applewhite/AP)

When we last checked in on the IRS scandal, things looked very bad indeed for the Obama administration. Conservatives were accusing the president of having sicced his ruthless tax goon squad on a bunch of innocent Tea Party patriots. This accusation didn’t make much sense, but it made for great headlines.

Now something fascinating has begun to happen. With actual news organizations looking into the situation — as opposed to blow-dried pundits bloviating about it — the nature of the scandal has started to shift. Rather than focusing on the alleged misdeeds of IRS employees, journalists are looking at the law these bureaucrats were attempting to enforce.

Welcome to the post-Citizens United mindset: It’s only politics if money is being spent.

That law, shaped by the Supreme Court’s Citizens United decision, allowed groups dedicated to “social welfare” to apply for tax-exempt status as 501(c)(4)s, so long as they are “primarily operated to advance the common good and general welfare within the community as a whole and not just the interests of the organization’s members.” Examples would include volunteer fire departments, homeowners’ associations and civic leagues.

Translation: not partisan political organizations.

The reason IRS auditors flagged groups with “Tea Party” or “patriot” in their names was because they suspected these groups were political.

And guess what, folks? Based on an investigation conducted by reporters at The New York Times they are.

The Wetumpka Tea Party, for instance, held a get-out-the-vote event dedicated to the “defeat of President Barack Obama.”

The Ohio Liberty Coalition emailed members info about Mitt Romney events, and organized them to distribute Romney literature. Asked about these activities, the group’s president Tom Zawistowski told the Times, “It’s not political activity.”

I’m not making this up. That’s actually what the guy said.

Why? Because his lawyer told him that the IRS was mostly concerned about expenditures for advertising. Welcome to the post-Citizens United mindset: It’s only politics if money is being spent.

Sadly, and predictably, many of the largest 501(c)(4)s (groups that are supposed to be dedicated to “social welfare”) are spending huge sums on political advertising and organizing. It turns out that lobbyists and political operatives love 501(c)(4), precisely because they can use them as tax-exempt slush funds without having to disclose the names of their corporate donors.

When it comes to expenditures, the unwritten IRS rule is pretty basic: Groups that spend more than half their funds for political purposes are not supposed to receive tax-exempt status.

I like to think of these groups as the corporate equivalent to Ronald Reagan’s mythic “welfare queens.” except that these “social welfare queens” really do exist — and they’re cheating the government out of millions of dollars every year.

A few more heinous examples: The American Action Network spent nearly 70 percent of its budget on political activities, including three quarters of a million dollars to help elect Wisconsin Sen. Ron Johnson, a Republican.

The American Justice Partnership funneled most of its budget to PACs such as the “Michigan Republican Party Admin Account” and ad groups specializing in political attack ads.

The media and political class — always so hungry for scandal — would do well to recognize what the facts are now bearing out: The IRS was, and continues to be, far too lenient.

The Republican operatives who set up the American Future Fund spent $15.3 million (more than 70 percent of its budget) on attack ads targeting President Obama and Democratic congressional candidates.

Of course, there are 501(c)(4)s established by Democratic operatives that are being used in the same way. And here’s the point: They should all be stripped of their tax-exempt status immediately.

Corporate donors and the mega-wealthy (of whatever political persuasion) should no longer be allowed to hide their contributions behind the banner of these social welfare queens.

Until such a time as the Supreme Court grows the conscience necessary to place clear limits on the dark money in our political system, it falls to the IRS to stem the tide.

The media and political class — always so hungry for scandal — would do well to recognize what the facts are now bearing out: The IRS was, and continues to be, far too lenient.


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  • Frank

    Our entire governmental system (and all so-called branches) have been sold to the banking criminals and no one seems to give a _ _ _ t. Is the times really a news paper of a glorified tabloid for the gang of greedy thieves who have destroyed society on a global scale.
    IRS, Police, Sheriff’s, Courts, Judges and prosecutors all act like they are perfect and above the law. Politician’s were once public servants, now however the public serves the politicians on their greedy quest for power and money or is it money and power. Lobbyist control DC, the media and all of us. It is truely fascinating to watch people allow this to happen while they chase their debt tails in circles and watch dancing with the stars.

  • Michael

    Would not it be much easier and more logical if there is no tax except status for anything? If society as a whole decided to tax income (very bad decision on my opinion, but huge majority is for that form of a very expensive form of taxasion), why any excemptions? No excemptions, even a child can calculate taxes for her parents, and no need to investigate…

    • beatboxing

      Not really. There are some behaviors we want to encourage, like donating to the Red Cross (or equivalent) to help out in a disaster. Making them tax exempt is a good way to accomplish that.

      • mikeellis

        I love the liberal media. The Dems use the IRS to to harm conservative groups, and we find away to blame the conservative groups.
        How could anyone claim the media is biased.

        • snarvid

          Hardcore Dems: There’s no political scandal here, no reason a Dem president would use the IRS to suppress Reps.
          Hardcore Reps: There’s no reason the IRS might have used the name of a new partisan political party as a search criterion for new organizations applying for non-partisan political party status.
          Reasonable people: Really tired of the economy, environment, military, healthcare, et al failures being used primarily as an means to score polnts against opponents rather than an opportunity for good governance.

  • road.rep

    I agree completely that ALL of these political PAC’s should loose their tax exempt status. And the threshold should be 20%…..not 50%. They should not be eligible for tax exempt status, period. Cut them off!

    But when you say “Rather than focusing on the alleged misdeeds of IRS employees, journalists are looking at the law these bureaucrats were attempting to enforce”, what you mean is that the journalists in question are really trying to divert attention away from misdeeds of the Obama administration. The IRS may have a real point with the eligibility issue, but to apply it ONLY to Tea Party groups is illegal, and someone still needs to go to jail.