501(c)4 abuse and the IRS investigation

Craig234

Lifer
May 1, 2006
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It's widely known in Washington that the tax laws granting tax-exempt status under the '501(c)4' rule to incent groups 'for social welfare', not intended for political campaign groups specifically prohibited from tax-exempt status, are widely abused by campaign groups.

A 'real scandal' is the under-policing of these laws evan as their use has exploded as money increases in political campaigns.

However, the IRS has mishandled this investigation not ony by under-investigatng the abuse - but in a scandal revealed Friday, by targetting right-wing groups for investigation.

The IRS apologized Friday for the fact that is searched for 501(c)4 groups to investigate by searching for a variety of words in the name it felt suggested more likely political activity - which have a right-wing orientation. They looked for words such as 'tea party' and anti-tax themese.

Every political commentator I've seen on the right and left has condemned this. The ACLU has spoken out about the dangers it poses to political speech.

Unfortunately, some of the outrage might be misplaced. Some investigation sounds overly intrusive, big-brother like as the IRS investigates the political activities of these organizations precisely because that's exactly what they SHOULD be investigating when looking to see if political groups are breaking the rules to get tax-exempt status.

The real scandal here is when those investigations have a partisan political filter.

There is a legitimate issue that it's the right that has seen an explosion in these groups that make the focus of the investigations look at them more heavily. But it's a delicate issue when the legitimate investigations of the exploding right-wing groups overlaps closely with what a list of illegal and corrupt focus on right-wing groups for political reasons would look like.

It's a bit like if the police had to investigate an explosion in suspected fraudulent claims against the police department, that would look about the same as if they were targetting people who had legitimate claims against them. This is the sort of political delicacy that comes with the territory when the tax laws make these distinctions.

The motivations of the IRS staff involed are not known and investigation is needed. It appears very likely inappropriate processes were used.

In the best case, I suspect a war of words coming between people making a case for legitiimate investigation of these groups against the right claiming persecution.

It'll be about the reason for selective targetting - legitimate correlated to the numbers being much higher on the right, or partisan witch hunt.

There is no information reported the White House had any knwoeldege of or direction of the activities. But of course, they are responsible for the IRS actions.

Columnist Ezra Klein wrote a column both condemning inappropriate filtering and pointing out that there is a large scandal involving the abuse of this exemption largely ignored.

http://www.washingtonpost.com/blogs...ea-party-they-shouldve-gone-after-all-501c4s/
 

DaveSimmons

Elite Member
Aug 12, 2001
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The real scandal here is when those investigations have a partisan political filter.

Exactly. The IRS should be going after Democratic "charities" as hard as Republican ones. Also churches and any other charities that cross the line on electioneering.

I can see why someone thought tea party groups would be more likely to not deserve exempt status, since there are those on the fringes of the right that believe in "sovereign citizen" and "income taxes are unconstitutional" nonsense. But apparently IRS staff decided to only investigate Republican groups, and used a much wider search than just "tea party".

Edit: Profiling isn't necessarily bad, it's how insurance works. But profiling needs to be based on evidence and analysis, not targeting groups for partisan and selective enforcement.
 
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Yes, I'm sure they were being prioritized because of their political persuasion and not that they were seeking tax exemption as social welfare entities while blatantly referencing a political movement in their very names.
 

Craig234

Lifer
May 1, 2006
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Exactly. The IRS should be going after Democratic "charities" as hard as Republican ones. Also churches and any other charities that cross the line on electioneering.

I can see why someone thought tea party groups would be more likely to not deserve exempt status, since there are those on the fringes of the right that believe in "sovereign citizen" and "income taxes are unconstitutional" nonsense. But apparently IRS staff decided to only investigate Republican groups, and used a much wider search than just "tea party".

Edit: Profiling isn't necessarily bad, it's how insurance works. But profiling needs to be based on evidence and analysis, not targeting groups for partisan and selective enforcement.

We agree. The reasons for them to suspect the right-wing ones are much more than that actually - for example there was reportedly a Karl Rove one that spent $254 million with no disclosue of the donors - it's that I've heard there are thousands of these right-wing ones popping up with a lot more money. But it is tricky to separate the legitimate reasons for targetting them from the corrupt political ones.

It's not impossible - the numbers can make a solid case why to target some groups - but there's little chance for that solid argument to get past all the political spin and screaming.

And we do need protections from the potential abuse of power by the IRS.

We seem to have an inaccurate denial of targetting by the commissioner earlier.
 

Craig234

Lifer
May 1, 2006
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Yes, I'm sure they were being prioritized because of their political persuasion and not that they were seeking tax exemption as social welfare entities while blatantly referencing a political movement in their very names.

Exactly - that's the 'reasonable explanation' for targetting that I haven't heard from about any media reporting so far, as it's all about the exciting scandal.

But the IRS didn't seem to do itself any favors when the commissioner earlier said there is 'abolutely no targetting' going on, instead of justigying the targetting.

That is a problem and creates the appearance of scandal.
 

ivwshane

Lifer
May 15, 2000
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This is a case of profiling and I've heard arguments from both sides of the issue for or against it.
 

Craig234

Lifer
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This is a case of profiling and I've heard arguments from both sides of the issue for or against it.

Curious where you have heard arguments for it? I haven't seen the media touch that really.

It's going to be highly controversial when it's such a 'trust us not to be partisan' issue.

It wasn't that long ago the FBI was infiltrating groups of grandmas talking about why the war in Iraq was bad and other peaceful groups at polical odds with the Bush administration.
 

DaveSimmons

Elite Member
Aug 12, 2001
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The newspaper coverage I've read (Seattle Times) has not reported any claims of using of evidence or analysis to drive the targeting of Republican groups, or any claims that the same approach was applied to non-Republican groups.

In other words, the IRS officials have offered no impartial, fact-based justification for their actions.

If they had said something like "we ran the numbers and saw double the fraud rate for "tea party" groups, so targeted them for extra auditing" that would be evidence that it wasn't politically motivated. If they've offered any such justification it has yet to be reported by the so-called liberal media.

So far this is looking like an abuse of power to target "enemies".
 

ivwshane

Lifer
May 15, 2000
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Curious where you have heard arguments for it? I haven't seen the media touch that really.

It's going to be highly controversial when it's such a 'trust us not to be partisan' issue.

It wasn't that long ago the FBI was infiltrating groups of grandmas talking about why the war in Iraq was bad and other peaceful groups at polical odds with the Bush administration.

I was referring to the argument for racial profiling. The argument being that certain races are more likely to commit certain crimes than others. The same could be said for organizations attempting to abuse their 501c4 status. For one, I suspect there are a lot more right leaning organizations seeking 501c4 status than left leaning, and two; left leaning organizations are typically pushing social issues, that's typically not the case for the right (the tea party for example is about financial policy).




Just so we are clear I'm not advocating the profiling I'm just showing what reasoning would be used. As far as I know no official statement has been made but one could infer from the words used why they were used.
 
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The newspaper coverage I've read (Seattle Times) has not reported any claims of using of evidence or analysis to drive the targeting of Republican groups, or any claims that the same approach was applied to non-Republican groups.

In other words, the IRS officials have offered no impartial, fact-based justification for their actions.

If they had said something like "we ran the numbers and saw double the fraud rate for "tea party" groups, so targeted them for extra auditing" that would be evidence that it wasn't politically motivated. If they've offered any such justification it has yet to be reported by the so-called liberal media.

So far this is looking like an abuse of power to target "enemies".

No, it's really not.
Lerner said the number of groups filing for this tax-exempt status more than doubled from 2010 to 2012, to more than 3,400. To handle the influx, the IRS centralized its review of these applications in an office in Cincinnati.

Lerner said this was done to develop expertise among staffers and consistency in their reviews. As part of the review, staffers look for signs that groups are participating in political activity. If so, IRS agents take a closer look to make sure that politics isn’t the group’s primary activity, Lerner said.

As part of this process, agents in Cincinnati came up with a list of things to look for in an application. As part of the list, they included the words, “tea party” and “patriot,” Lerner said.

“It’s the line people that did it without talking to managers,” Lerner. “They’re IRS workers, they’re revenue agents.”

In all, about 300 groups were singled out for additional review, Lerner said. Of those, about a quarter were singled out because they had “tea party” or “patriot” somewhere in their applications.

Lerner said 150 of the cases have been closed and no group had its tax-exempt status revoked, though some withdrew their applications.
http://talkingpointsmemo.com/news/i...ting-conservative-groups-in-2012-election.php
 

Craig234

Lifer
May 1, 2006
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The newspaper coverage I've read (Seattle Times) has not reported any claims of using of evidence or analysis to drive the targeting of Republican groups, or any claims that the same approach was applied to non-Republican groups.

In other words, the IRS officials have offered no impartial, fact-based justification for their actions.

If they had said something like "we ran the numbers and saw double the fraud rate for "tea party" groups, so targeted them for extra auditing" that would be evidence that it wasn't politically motivated. If they've offered any such justification it has yet to be reported by the so-called liberal media.

So far this is looking like an abuse of power to target "enemies".

It's not looking that way, but it's possible.

Here's some speculation about how this could have happened plausibly.

People in the IRS are supposed to be enforcing the laws not letting political groups sneak in under exemptions not allowed to them. Given that some of those political groups are against the IRS or against the President, if they do everything right it's already a delicate matter where it's easy to cry wolf about abuse.

Now, let's say the people looking for abuse get reports of a huge increase in groups claimining these exemptions, and they notice a big part of that increase are groups affiliated with right-wing causes - at the same time right-wing interests are pouring huge increases into political donation into third party groups.

That's a lot of smoke to totally legitimately get them to look for fire. It doesn't require, as you demand, that they have proof of the highter rates of wrongdoing - you have the order backwards. You have to investigate first to find out whether there is the wrongdoing. A legitimate trigger for that is simply a huge increase in groups and money using the exemptions.

It absolutely should equally include all political sides - if the increases are similar. But if the left doesn't have the same big increases, they shouldn't get equal scrutiny.

Now after the fact it looks very suspicious but it's not clear if it was partisan motivations.

Imagine that street gangs like the crips and bloods renamed themselves to 'citizens police accountability group' - and then claim that when the police monitor and infiltrate them that it's all about the police abusing their power to go after people with 'police watchdog' type names - at the same time those groups explode along with gang activity.

It gets a lot more tricky for the polic e to defend why they targetted groups with those names, but it's actually legitimate.

Republicans and wealthy right-wing donors have a pretty bad record at times with abusing the tax laws just like this, and they love a scandal to attack the IRS and Obama with.

So let's be careful that we investigate responsibly and find out whether the IRS activities were unjustified and then take the appropriate action - not have a witch hunt.

I just watched Newt Gingrich talk about this this morning, and he's pretty everything that's wrong with how Republicans can respond to it.

He's already tried and ready to execute the IRS for simply investigating any group with 'patriot' in its title, milking it for all the demagoguing he can do which is a lot.

Then he goes on to cite this as showing the whole reason conservatives are against big government, and claims it shows Obamacare will be terribly run for people also.

Now if he hadn't made you lose your appetite yet, someone challenged his point that 'champion of small government' Regan had Iran Contra, it's not a 'small goverment' issue. Gingirch didn't miss a beat as he said, and Ronald Reagan's response to that problem of Iran-Contra would be that government needs to be even smaller.

Now, if there were some sort of award for intellectual dishonesty and Gingrich could get another as a lifetime winner, he should sure get it for that.
 
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Craig234

Lifer
May 1, 2006
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I was referring to the argument for racial profiling. The argument being that certain races are more likely to commit certain crimes than others. The same could be said for organizations attempting to abuse their 501c4 status. For one, I suspect there are a lot more right leaning organizations seeking 501c4 status than left leaning, and two; left leaning organizations are typically pushing social issues, that's typically not the case for the right (the tea party for example is about financial policy).




Just so we are clear I'm not advocating the profiling I'm just showing what reasoning would be used. As far as I know no official statement has been made but one could infer from the words used why they were used.

I agree.

The thing on racial profiling is that while a case can be made for some of it as justified, the question is once that door is opened, can the people who would abuse it be stopped?

I think a case can also be made the answer to that is 'no'.

People wanting to do 'bad' racial profiling are very able to scream about 'political correctness' and justify their abuses as being oh so legitimate, that it's a big problem.
 

ivwshane

Lifer
May 15, 2000
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I agree.

The thing on racial profiling is that while a case can be made for some of it as justified, the question is once that door is opened, can the people who would abuse it be stopped?

I think a case can also be made the answer to that is 'no'.

People wanting to do 'bad' racial profiling are very able to scream about 'political correctness' and justify their abuses as being oh so legitimate, that it's a big problem.

I agree and it's precisely for that reason. I'm not worried about what the good guys will do I'm worried about what the bad guys will do and politically speaking, there are bad guys in every facet of the political spectrum.
 

ivwshane

Lifer
May 15, 2000
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I have a feeling this is a non story. The fact is no one was denied and the IRS is required to look into every group that requests 501c4 status and it's also their duty to investigate when they learn of people/groups that might be violating the requirements of a 501c4.

In my opinion 501c4 tax status has been abused (by all parties) anyway and should be abolished.
 
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Craig234

Lifer
May 1, 2006
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I have a feeling this is a non story. The fact is no one was denied and the IRS is required to look into every group that requests 501c4 status and it's also their duty to investigate when they learn of people/groups that might be violating the requirements of a 501c4.

In my opinion 501c4 tax status has been abused (by all parties) anyway and should be abolished.

I think you're right it's mostly a 'non-story'. What actual harm was done to them, if it was some political act?

The IRS needs not to be investigating for reasons of political orientation, but they do need to investigate political groups who are in violation of the rules.

It's not clear at all to me from the evidence that this targetting was for partisan reasons at this point.

They mentioned that a number of groups withdrew their applications when it became clear they had to answer questions.

Seems to me that'slikely the system working - attempted abusers who realized they'd get caught and ran away - but it could be painted as 'good people terrified by the IRS'.

Since they didn't answer the questions and we lack the facts, it's hard to prove either way.

BTW, the IRS commissioner who gave the inaccurate answer about targeting was reportedly a Bush appointee, even less of a partisan issue red flag.

I disagree that this shows we should get rid of the 501(c)4's - but we should get rid of the abusers. If we can't, then let's look at getting rid f the program.

It would be another case of crooks hurting the innocent people who legitimately run some good organizations and it's a good idea to incent with tax benefits.

Funny thing is, if a witch hunt for political reasons were to hurt legitimate groups by getting rid of this, would Republicans care about that harm?
 
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Craig234

Lifer
May 1, 2006
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A news show has taken the position that the 'real scandal' is the abuse of this tax exemption by political organizations.

Lawrence O'Donnell speaks in the linked segment below about how in 1959 the IRS changed the requirement from 'exclusive' to 'primarily' social welfare.

He mentions the examples of organizations that are outrages to get the exemption as Karl Rove's Crossroads GPS, and Obama's 'grassroots' activism' PAC.

He does pretty well with the issue and it's nice to see somewhere in the news not simply assuming that this is political abuse at the IRS before investigation.

http://tv.msnbc.com/2013/05/13/odonnell-the-real-irs-scandal-happened-in-1959/
 

Charles Kozierok

Elite Member
May 14, 2012
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I have a feeling this is a non story. The fact is no one was denied and the IRS is required to look into every group that requests 501c4 status and it's also their duty to investigate when they learn of people/groups that might be violating the requirements of a 501c4.

In my opinion 501c4 tax status has been abused (by all parties) anyway and should be abolished.

It's only a non-story if the IRS was doing this to all political groups, or selecting the ones to investigate at random.

If they were specifically choosing just right-wing groups it is most certanly not a non-story.
 

Craig234

Lifer
May 1, 2006
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It's only a non-story if the IRS was doing this to all political groups, or selecting the ones to investigate at random.

If they were specifically choosing just right-wing groups it is most certanly not a non-story.

Doing it to all political themed names proportionally is fair to ask. Randomly is not required.

When the number of applications for non-political tax exemption skyrockets by groups with right-wing sounding names, and does not for any left-wing sounding names, the IRS not only doesn't have to investigate just as many left-wing, it cannot, unless it refuses to perform its investigate duties for right-wing ones.

You know what would be nice is if it had the resources to investigate every application so there wasn't any question of bias. Ask Republicans for THAT budgeting.

Not every group is equally likely to be fraudulent - some differentiation is reasonable and sometimes that differentiation can be about political themes, if those are growing fast.

They're specifically looking for political groups trying to hide for tax exemptions - why WOULDN'T they look for the fastest growing political-sounding groups applying?

Police only have resources to investigate one of 5 liquor licence applications; one is for a restaurant in the area for years, another is for a nightclub in chain; one is for a business called "Crips' crepes" at the same time there are reports of the Crips gang opening small businesses for money laundering and drug selling fronts. Which should they choose?

Oh no, that's racial profiling! No, it's not, it's reasonable police work.

What's needed is to investigate whether there was any partisan motivation and whether there was equitable treatment of liberal-sounding groups like Obama's.

And my other question, why aren't more of these groups found not to qualify? Not one of 75 investigated was found not to, really?
 

Charles Kozierok

Elite Member
May 14, 2012
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Doing it to all political themed names proportionally is fair to ask. Randomly is not required.

Randomly is fair, and is the most defensible policy. If there are more on one side than the other, then more will be targeted for investigation automatically.

When the number of applications for non-political tax exemption skyrockets by groups with right-wing sounding names, and does not for any left-wing sounding names, the IRS not only doesn't have to investigate just as many left-wing, it cannot, unless it refuses to perform its investigate duties for right-wing ones.

Is there any evidence of a "skyrocketing" of tax-exempt organizations only on the right? I'd be happy to review that but haven't seen it. But even if that's true, it's not a reason to target them specifically.

You know what would be nice is if it had the resources to investigate every application so there wasn't any question of bias. Ask Republicans for THAT budgeting.

Checking 100% of anything is usually impossible, regardless of context. That's the point of random sampling. It's the principle behind polling, quality control and a lot more. It's very easy to avoid bias without 100% coverage.

They're specifically looking for political groups trying to hide for tax exemptions - why WOULDN'T they look for the fastest growing political-sounding groups applying?

Because it's wrong, and because it makes them look really, really bad. Is this really difficult?

Police only have resources to investigate one of 5 liquor licence applications; one is for a restaurant in the area for years, another is for a nightclub in chain; one is for a business called "Crips' crepes" at the same time there are reports of the Crips gang opening small businesses for money laundering and drug selling fronts. Which should they choose?

Nonsensical analogy, unless you can provide statistical evidence that right-wing organizations are involved in criminal racketeering.

What's needed is to investigate whether there was any partisan motivation and whether there was equitable treatment of liberal-sounding groups like Obama's.

Yes, there is. So I don't get why you are downplaying this. Even the IRS is openly admitting that what happened here was wrong.
 

waggy

No Lifer
Dec 14, 2000
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just because none hasn't had the tax status revoked does not make it an abuse of power. Audits and such still cost money and stress.

I don't think this is going to be a huge scandal and not the OBAMA bullshit many are claiming. i don't think you can blame him on this at all.

It does make me wonder if we should give so much power to the IRS. in fact we are set to give even more power to them.
 

EagleKeeper

Discussion Club Moderator<br>Elite Member
Staff member
Oct 30, 2000
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The newspaper coverage I've read (Seattle Times) has not reported any claims of using of evidence or analysis to drive the targeting of Republican groups, or any claims that the same approach was applied to non-Republican groups.

In other words, the IRS officials have offered no impartial, fact-based justification for their actions.

If they had said something like "we ran the numbers and saw double the fraud rate for "tea party" groups, so targeted them for extra auditing" that would be evidence that it wasn't politically motivated. If they've offered any such justification it has yet to be reported by the so-called liberal media.

So far this is looking like an abuse of power to target "enemies".

No, it's really not.
Lerner said the number of groups filing for this tax-exempt status more than doubled from 2010 to 2012, to more than 3,400. To handle the influx, the IRS centralized its review of these applications in an office in Cincinnati.

Lerner said this was done to develop expertise among staffers and consistency in their reviews. As part of the review, staffers look for signs that groups are participating in political activity. If so, IRS agents take a closer look to make sure that politics isn’t the group’s primary activity, Lerner said.

As part of this process, agents in Cincinnati came up with a list of things to look for in an application. As part of the list, they included the words, “tea party” and “patriot,” Lerner said.

“It’s the line people that did it without talking to managers,” Lerner. “They’re IRS workers, they’re revenue agents.”

In all, about 300 groups were singled out for additional review, Lerner said. Of those, about a quarter were singled out because they had “tea party” or “patriot” somewhere in their applications.

Lerner said 150 of the cases have been closed and no group had its tax-exempt status revoked, though some withdrew their applications.
http://talkingpointsmemo.com/news/i...ting-conservative-groups-in-2012-election.php

How high up in Cincinnati office does this go.

A few agents making the decision on their own or did they bump it up the chain.

How high up the chain did it go?

Get the confessors on the spot and shake the tree.

I expect that it cleared Cincinnati and made it into Washington for approval
 

Charles Kozierok

Elite Member
May 14, 2012
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just because none hasn't had the tax status revoked does not make it an abuse of power. Audits and such still cost money and stress.

If none of them had the status revoked, that is actually more suggestive of abuse of process. It certainly undercuts the argument that they were targeting these groups for a valid reason, or to be more efficient.

I expect that it cleared Cincinnati and made it into Washington for approval

Has any information come out indicating this?
 

Craig234

Lifer
May 1, 2006
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Randomly is fair, and is the most defensible policy. If there are more on one side than the other, then more will be targeted for investigation automatically.

Randomly gets a much lower rate of fraud detected. It's a tradeoff, do you want to have less selection at the price of more fraud not getting caught?

For example, taking a home office deduction has long increased the chances for an audit because the IRS knows someone taking that is much more likely to have wrong deductions.

Should they have to stop having any flags to identify returns more likely to have a problem?

Is there any evidence of a "skyrocketing" of tax-exempt organizations only on the right? I'd be happy to review that but haven't seen it. But even if that's true, it's not a reason to target them specifically.

I haven't seen solid information on that. I've seen reports of more than double the applications, and a growth in the tea party groups, but no solid reporting.

And if it is true, it is a reason to target them specifically, for review. That's the IRS' responsibility to enforce the laws and protect tax dollars from fraud.

And they're not good at it, which is the real scandal, which I'll link an article about in the next post.


Checking 100% of anything is usually impossible, regardless of context. That's the point of random sampling. It's the principle behind polling, quality control and a lot more. It's very easy to avoid bias without 100% coverage.

Random is easy - and far less effective at catching fraud ignoring the red flags.

100% is not that hard for some of these things. All tax returns, yes, that's hard (although under Bush, the resources to check the wealthy tax returns were slashed, so the chances for an audit got even closer to zero, at the same time big investments were made to increase automated systems to add checks for 100% of wage-earners' returns, since those are well-suited to automated checking against employer-filed documents).

But how many 501(c)4 applications are filed?

After Citizens United gave 501(c)4's the right to unlimited political spending on ads for federal candidates, applications more than doubled.

In 2012, 2,800 applications were filed; only 8 were rejected.

It is practical to review 2,800 applications, if there's the budget for staff to do it.

http://www.marketplace.org/topics/economy/are-501c4-nonprofit-groups-too-partisan


Because it's wrong, and because it makes them look really, really bad. Is this really difficult?

It's not wrong, and it doesn't make them loko bad. However, like many legitimate govrnment activities, it can be made to look bad to less informed people by demagogues.


Nonsensical analogy, unless you can provide statistical evidence that right-wing organizations are involved in criminal racketeering.

You miss the point of the analogy again.

The point is not and does not require right-wing organizations to be involved in criminal racketeering. The point is that there are 'red flags' that help find groups with higher chances of violating the rule being enforced. If the issue were that alcohol were outlawed and the IRS was looking for groups involved in alcohol, then keywords like 'booze' and 'drinking' and 'beer' would be appropriate red flags to spot more likely violators.

Whether the issue is disallowed political activity or gang activity or alcohol or baking cookies or jogging, the point is the same about red flags, and you are missing the point.


Yes, there is. So I don't get why you are downplaying this. Even the IRS is openly admitting that what happened here was wrong.

I'm downplaying it if it's exaggerated or conclusions are rushed to, I'm upplaying it if it's downplayed too much. You're in the rushing group so it seems like downplaying.

The IRS inspector general reviewing activities found that this approach was used, and felt - reasonably - that it's an inappropriate one given the need not to have partisan targeting.

And this has the suggestion or appearance of possible partisan targeting so it did not meet the standard they'd like for steering way clear and they apologized.

We don't know a lot of things yet to make stronger accusations. What were the motivations, what is the balance.

What we do know is that not one of the applications targeted as being right-wing was denied. Not exactly the resut you expect if this were some partisan silencing act.

That doesn't make it a good idea - there are benefits to the IRS looking for ways to steer very clear of what can look like partisan activitiy.

My preference, as I stated, would be for 100% review of the applications of these groups asking for tax exemptions - no partisan filtering there.
 

Craig234

Lifer
May 1, 2006
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Here's an article from Politico further reporting how bad the IRS is at policing this:

http://www.politico.com/news/stories/1012/82387.html

Excerpt of the first part of the article:

The deep-pocketed conservative group Americans for Prosperity has spent $72 million on ads bashing Democrats so far this year.

It spent $39.4 million on ads and organizing in 2010, when it helped deliver the midterm elections for Republicans.

So when the Koch brothers-backed nonprofit set up shop back in 2004, how much did it tell the Internal Revenue Service it planned to spend on elections?

Zero dollars.

Surely, the IRS is hopping mad and has a team of auditors trying to get to the bottom of this massive discrepancy.

Actually, no.

Since the IRS granted its tax exemption in 2004, Americans for Prosperity has never received so much as a phone call, a letter or an inquiry from the agency about its spending, according to Chairman Art Pope.

AFP has turned in its tax returns every year, just as the law requires, reporting that it did not spend a dime on politics &#8212; an answer that seems implausible from a common-sense perspective, but one that the IRS appears to have accepted as consistent with its vague and ambiguous definition of political activity.

AFP isn&#8217;t alone; at least $134 million in ads, mail, phone calls and other political spending this election have come from tax-exempt groups that said they didn&#8217;t plan to spend money on political campaigns, according to a POLITICO analysis of records filed with the IRS and the Federal Election Commission, as well as news reports and press releases.

If you&#8217;re looking for the cop on the beat for much of the outside spending in 2012 &#8212; when Republican-allied groups alone intend to spend upwards of $1 billion &#8212; stop by the IRS, one of the most feared and hated government agencies around.

Except when it comes to political spending, the IRS is more like a toothless tiger.
 

Craig234

Lifer
May 1, 2006
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Completely separate from the issue of right-wing groups using 501(c)4 groups for political spending, they have a long effort to block the activities of the more legitimate groups from their charitable work, since they often oppose the activities as in conflict with the corporate agendas they support.

Here's an article from a year ago on those efforts from the Philanthropy News Digest.

http://foundationcenter.org/pnd/commentary/co_item.jhtml?id=377800016

Excerpt of the article:

Nonprofit organizations have fewer rights today than they did last year. Thanks to language pushed by Republicans in the Consolidated Appropriations Act of 2012, charities face yet another coordinated campaign by conservatives to quash popular democracy. And unlike past "defund the left" efforts, this legislation wasn't caught in time by charity leaders to prevent its passage.

Those efforts began in 1981 with a proposal from the right-wing Heritage Foundation, were pushed by the Reagan White House throughout the early and mid-'80s, morphed into major Republican congressional legislative activity in the mid-'90s, and have come back around in various forms since then. Some have tried to limit what charities can do with private contributions; others have tried to expand the types of activities that are prohibited by charities that receive federal funding. Most of these prior attempts were stopped by watchdog organizations &#8212; sometimes working as part of a broad-based coalition &#8212; but only at considerable expense.

And yet conservatives continue to try to chip away at the right of nonprofit groups to engage in advocacy. For example, there is now a law on the books that prohibits nonprofit social welfare (503[c][4]) organizations that lobby from receiving federal grants. Similarly, grantees of the Legal Services Corporation face greater restrictions on advocacy than do other federal grantees...

The newly enacted appropriations law expands the long-standing and widely accepted prohibition on using federal grant funds for nonprofit lobbying to include "any activity to advocate or promote" any "proposed, pending or future" tax increase (at any level of government) or any "future requirement or restriction" on a "legal consumer product" (e.g., tobacco and alcohol products, junk foods and beverages) &#8212; even when such efforts reflect the very purpose of public funding. None of these key terms is defined, and the scope is disturbingly vague and broad.

The new law also restricts the use of federal funds for many types of regulatory and administrative actions. This means that many groups that comment on state regulations, for example, will no longer be able to under their federal grant. Combined, these changes significantly restrict the advocacy rights of the nonprofit sector as well as the core functions of the public sector to promote and protect people's and communities' interests...

Posted on May 1, 2012 print e-mail ShareThis


Curtailing Democracy
by Gary Bass, Executive Director, Bauman Foundation ; Mark Rosenman, Director, Caring to Change


Nonprofit organizations have fewer rights today than they did last year. Thanks to language pushed by Republicans in the Consolidated Appropriations Act of 2012, charities face yet another coordinated campaign by conservatives to quash popular democracy. And unlike past "defund the left" efforts, this legislation wasn't caught in time by charity leaders to prevent its passage.

Those efforts began in 1981 with a proposal from the right-wing Heritage Foundation, were pushed by the Reagan White House throughout the early and mid-'80s, morphed into major Republican congressional legislative activity in the mid-'90s, and have come back around in various forms since then. Some have tried to limit what charities can do with private contributions; others have tried to expand the types of activities that are prohibited by charities that receive federal funding. Most of these prior attempts were stopped by watchdog organizations &#8212; sometimes working as part of a broad-based coalition &#8212; but only at considerable expense.

And yet conservatives continue to try to chip away at the right of nonprofit groups to engage in advocacy. For example, there is now a law on the books that prohibits nonprofit social welfare (503[c][4]) organizations that lobby from receiving federal grants. Similarly, grantees of the Legal Services Corporation face greater restrictions on advocacy than do other federal grantees.

Over the years, many grantmaking foundations have been alarmed by these attacks. Like much of society, they recognize that a strong, vibrant nonprofit sector helps to build a strong, vibrant democracy. A key element in that equation is the ability of nonprofits to speak out on public policy issues, to challenge institutional power, and to encourage people to get more involved in democratic decision-making. One legacy of earlier attacks on nonprofit advocacy was that a small number of foundations provided support for nonprofit sector watchdogs to monitor these attacks and to help build nonprofits' capacity to engage in advocacy. Alas, while laudatory, that funding was limited and episodic.

Strikingly, over the past few years even the modest amount of foundation funding available for watchdogs and advocacy capacity-building efforts has been scaled back. Key organizations no longer have staff dedicated to monitoring these issues and some organizations that devoted all their work to this cause no longer can. As these trends continue, we should expect that nonprofits will be even less prepared for future assaults on nonprofit advocacy.

The newly enacted appropriations law expands the long-standing and widely accepted prohibition on using federal grant funds for nonprofit lobbying to include "any activity to advocate or promote" any "proposed, pending or future" tax increase (at any level of government) or any "future requirement or restriction" on a "legal consumer product" (e.g., tobacco and alcohol products, junk foods and beverages) &#8212; even when such efforts reflect the very purpose of public funding. None of these key terms is defined, and the scope is disturbingly vague and broad.

The new law also restricts the use of federal funds for many types of regulatory and administrative actions. This means that many groups that comment on state regulations, for example, will no longer be able to under their federal grant. Combined, these changes significantly restrict the advocacy rights of the nonprofit sector as well as the core functions of the public sector to promote and protect people's and communities' interests.

The law is limited at this point to programs funded through the appropriations bill that covers the Departments of Health and Human Services, Labor, and Education, as well as several independent agencies. But it is easy to see that conservatives will likely want to extend these restrictions to other spending bills that affect the arts, the environment, and many other issues across the nonprofit world.

Consider a few illustrations: a charity might receive federal funding to address the scourge of cancer by reducing tobacco use. To that end, it might launch a public service campaign about the health dangers of cigarettes, especially for minors. Or a charity might get a federal grant to combat the epidemic of obesity in the U.S. They might promote ideas for raising funds for obesity-prevention campaigns or to help reimburse government for the costs of treating obesity-related diseases, including a surcharge on sodas and other sugary foods.

Under the new law, charities would likely no longer be able to undertake these types of activities. Charities are already not permitted to use federal funds to lobby, but they certainly should be able to use federal funds to educate and suggest ideas to the public and policy makers on social issues when consistent with the purposes of a grant. It strengthens our communities when policy makers receive information from independent nonpartisan parties such as government grantees. And their research and policy ideas often are vital to improving the quality of life in our communities. All of this has been made more difficult and in many cases prohibited under the new law.

Let's be clear about this: The new legislation really is a case of the public interest losing out to private ones. Charities tend to advocate on and for issues and in debates where the voices of average people aren't really heard; they work to promote the common good. Additional restrictions on charities' free speech rights are a pointed example of how moneyed interests impose their will on ordinary people and the groups that try to serve them &#8212; and of the need for nonprofit advocacy.

The new law was developed by Rep. Denny Rehberg (R-MT) and is supported by a number of powerful industries, including the American Beverage Association. Why would a trade association want new restrictions on nonprofit advocacy? Maybe it's because it wants to kill federal funding of programs that address anti-obesity and other public health campaigns that could affect the public's attitude and behavior with respect to sweetened drinks. Knowing how hard that is, they go after the speech rights of public health charities that get federal funding &#8212; all part of a continuing conservative attack on nonprofit speech.

Participating in the broader assault on nonprofit advocacy rights is Cause of Action, an organization established a few months before the restrictions were enacted that's directed by a former staffer to Rep. Darrell Issa's (R-CA) Oversight and Government Reform Committee (and before that a legal associate at one of the militantly free-market/limited government Koch Family Foundations).

Cause of Action has written to at least twenty grant recipients of a federal program that funds anti-obesity and -tobacco activities warning that they may have engaged in illegal lobbying activities. It was writing, it said, only "as a convenience" and to let the organizations know that they may be subject to civil penalties and private lawsuits.

Darrell Issa, we recognize that name... the chair of the Benghazi hearings.