So you may have heard that the IRS has been caught targeting overreaching audits at TEA Party groups.
I’ll admit that when I first heard these groups complaining that they were being targeted for their politics, I thought they were probably just being paranoid and histrionic. Turns out they were right.
There’s somewhat less to the story than the headlines might lead you to believe. There isn’t much solid evidence that anyone in the White House, or in the IRS, was on a “let’s nail the TEA Party” kick, exactly.
The IRS did target groups for their politics, but they did so in the course of trying to find groups who were illegally politicking while organized as 501(c)(4) organizations. In other words, they were looking for political groups because they had a reason to be looking for political groups.
501(c)(4) is a variety of tax-exempt non-profit organization. You cannot be a 501(c)(4) if your purpose is to do electioneering and other such political advocacy. But you can if your main purpose is to promote “social welfare,” even if this occasionally includes political work. Naturally, this fuzziness has led to a bunch of political groups trying to redefine themselves as social welfare groups so they can qualify for the exemption. So the IRS has wanted to give extra scrutiny to applications from groups that are attempting to organize under this section to make sure they’re not campaign funds in disguise.
But the IRS, as I’ve been gleefully noting hereabouts, has been struggling with a shrinking budget and workforce in recent years. During the run-up to the last election, the agency got a bunch of applications for new 501(c)(4) groups, more than it could handle, and so it tried to come up with a way of scrutinizing those that seemed more likely than not to be improperly political groups.
One way they selected groups to scrutinize more closely — and the IRS claims that this decision was made by a rank-and-file employee of the agency — was to see if they had words like “patriot” or “TEA Party” in their names. This had the effect of skewing IRS harassment toward right-wing critics of the status quo.
501(c)(4) groups also have the advantage (particularly when they are being used as cover for electioneering) that they do not have to report who donates money to them, the way political campaigns do. But during the IRS inquiries into these right-wing protest groups, the agency asked the groups to provide a list of their donors, which it was not authorized to do. I haven’t yet seen a good explanation for how that turn of events came about (a TIGTA report on the scandal will be released soon, and may have some details).
When these groups initially raised the alarm and said they suspected they were being targeted, asked inappropriately delving questions, and having their applications delayed for partisan reasons, the IRS flatly denied it was doing anything of the sort. The recent revelations are an embarrassing walk-back for the agency.