501(c)4 abuse and the IRS investigation

[Fern]

IRS higher-ups requested info on conservative groups, letters show

Additional scrutiny of conservative organizations’ activities by the IRS did not solely originate in the agency’s Cincinnati office, with requests for information coming from other offices and often bearing the signatures of higher-ups at the agency, according to attorneys representing some of the targeted groups. At least one letter requesting information about one of the groups bears the signature of Lois Lerner, the suspended director of the IRS Exempt Organizations department in Washington.

Jay Sekulow, an attorney representing 27 conservative political advocacy organizations ... said the groups’ contacts with the IRS prove that the practices went beyond a few “front line” employees in the Cincinnati office, as the IRS has maintained.

“We've dealt with 15 agents, including tax law specialists -- that's lawyers -- from four different offices, including (the) Treasury (Department) in Washington, D.C.,” Sekulow said. “So the idea that this is a couple of rogue agents in Cincinnati is not correct.”

Among the letters were several that bore return IRS addresses other than Cincinnati, including IRS headquarters in Washington, and the signatures of IRS officials higher up the chain. Lerner’s signature, which appeared to be a stamp rather than an actual signature, appeared on a letter requesting additional information from the Ohio Liberty Council Corp.

Cleta Mitchell, another attorney representing conservative groups that allege they were targeted, said an IRS agent in Cincinnati told her a “task force” IRS office in Washington, D.C., was making the decisions about the processing of applications, and that she subsequently dealt with IRS representatives there.

“(The IRS agent in Cincinnati) told me that in fact the case would be transferred to a special task force out of Washington, and that he was told – he was the originally assigned agent – that he wasn't allowed to make decisions, the decisions were all going to be made in Washington,” Mitchell said. “I know that this process was going on in Washington because I've dealt with those people.”

Two IRS Cincinnati employees who have talked to NBC News dispute one part of the IRS’ explanation, saying that application of inappropriate selection criteria and the extra scrutiny for Tea Party and other conservative political advocacy organizations was not the work of a few low-level “rogue” employees.

Bonnie Esrig, a 38-year IRS veteran and a manager in the Cincinnati office until she retired from the IRS in January, also has told NBC News that decisions about how to handle cases came from management, and that all employees were subjected to considerable oversight. She also said that she believes there was no political or partisan motivation for the added scrutiny.

http://openchannel.nbcnews.com/_new...info-on-conservative-groups-letters-show?lite

Somebody's got some 'splaining to do.

Fern

 

[Bowfinger]

Creating a bunch of follow up letters and questionnaires is NOT any sort of "shortcut". It's EXTRA work. And then reading and analyzing the responses to the letters and questionnaires once returned is also extra work.

This whole line about 'shortcuts" and understaffing causing this is utter bullshiz.

Rubber stamping and fast tracking is what you get under those circumstances, and that is the complete opposite of what we have here.

Fern

With all due respect Fern, the "utter bullshiz" is continually trying to spin this 180 degrees. Ideally, ALL of the submitted applications should be subjected to close scrutiny. The IRS didn't have adequate staffing for that, so they (presumably) looked for shortcuts to separate those applications most likely to be routine from those that were more borderline and required full examination. The shortcut was "rubber stamping and fast tracking" those apps that did NOT meet their targeting criteria, leaving a relative few for thorough review. This is really simple to understand.

I'm simply tired of reading that specious comment again and again. The IRS has every right, indeed the responsibility, to subject 100% of submitted applications to thorough reviews. They aren't staffed for that, however, so they had to do the best they could with the resources they had. They took shortcuts, targeting the subset of applications more likely to have issues and fast-tracking the rest. That notwithstanding, there are many other questions that must be answered including whether there was any partisan motivation behind the targeting. Targeting is perfectly reasonable. Partisan targeting is not.

 

[Bowfinger]

http://openchannel.nbcnews.com/_new...info-on-conservative-groups-letters-show?lite

Somebody's got some 'splaining to do.

Fern

That we can agree on. The IRS cannot be used for partisan purposes. We need a thorough, non-partisan investigation to determine what happened and why.

 

[Fern]

With all due respect Fern, the "utter bullshiz" is continually trying to spin this 180 degrees. Ideally, ALL of the submitted applications should be subjected to close scrutiny. The IRS didn't have adequate staffing for that, so they (presumably) looked for shortcuts to separate those applications most likely to be routine from those that were more borderline and required full examination. The shortcut was "rubber stamping and fast tracking" those apps that did NOT meet their targeting criteria, leaving a relative few for thorough review. This is really simple to understand.

I'm simply tired of reading that specious comment again and again. The IRS has every right, indeed the responsibility, to subject 100% of submitted applications to thorough reviews. They aren't staffed for that, however, so they had to do the best they could with the resources they had. They took shortcuts, targeting the subset of applications more likely to have issues and fast-tracking the rest. That notwithstanding, there are many other questions that must be answered including whether there was any partisan motivation behind the targeting. Targeting is perfectly reasonable. Partisan targeting is not.

Nope.

You don't target by name.

They've got everything they need to target on page two (Part II) of Form 1024.

It's a pdf so can't link, but here's a google search showing the pdf so you can look at it. https://www.google.com/#gs_rn=14&gs...14,d.eWU&fp=87677a0f9d6475c5&biw=1024&bih=616

Page two is where your activities are explained. You examine that to determine if you need to follow up.

You target by names and choose only those that are conservative, we all know WTH you're targeting and it ain't questionable activities.

Fern

 

[Craig234]

Bowfinger, well said, but:

Targeting is perfectly reasonable. Partisan targeting is not.

That's the challenge. When dealing with the need to look for excessive political activity, and tea party group applications are greatly increasing, how SHOULD they target?

The whole idea of targetting by name doesn't make a lot of sense if they want a pure as snow, no appearance of impropriety process.

How can they target by name without it seeming to have some partisan bias?

The right answer, I think we agree - well one of them - is 100% review. And the review process seems like crap with all the partisan groups not being denied - in fact only one of the 70,000 apparently denied (and those are only the ones that applied, as groups don't even have to apply and can just declare they have the statis). Groups saying they had zero political activity and then spend tens of millions on canidate ads had no repecussions or accountability for lying.

Barring that 100% review, another solution might be to tighten up the standards and increase enforcement.

And if they ARE going to stick with these definitions and only be able to review a fraction of the applications, why not just use a random selection process?

No one *informed* including the IG is saying the targetting had partisan motives, they say the opposite - Republicans of course, rush to partisan false conclusions.

That's where you have Issa making accusations of criminal behavior and the Republicans Speaker setting the tone by saying resignations won't do, he wants people in jail.

Where's the accountability for their irresponsible behavior?

 

[Fern]

-snip-
I'm simply tired of reading that specious comment again and again. The IRS has every right, indeed the responsibility, to subject 100% of submitted applications to thorough reviews. They aren't staffed for that, however, so they had to do the best they could with the resources they had. They took shortcuts, targeting the subset of applications more likely to have issues and fast-tracking the rest. That notwithstanding, there are many other questions that must be answered including whether there was any partisan motivation behind the targeting. Targeting is perfectly reasonable. Partisan targeting is not.

The normal way to deal with the staffing shortages, in fact the dang IRS standard, is to audit. I.e., you select a random sample for auditing. (Either that or their other method which would be to analyze page 2/part 2.)

They departed from standard procedure.

Fern

 

[Fern]

-snip-
That's the challenge. When dealing with the need to look for excessive political activity, and tea party group applications are greatly increasing, how SHOULD they target?

Simple. Review the info on planned activities on pg2 of the form.

Fern

 

[Fern]

-snip-
The right answer, I think we agree - well one of them - is 100% review.

It should occur to people that if you want to target 100% the answer is pretty damn simple: You make those follow up questionnaires part of the application form.

Since the IRS has complete discretion in designing the forms, it's pretty obvious that by not including that info request as part of the standard form they have no interest in that "100% review'.

The entire point of the form is to gather all the info the IRS needs to make a decision.

Fern

 

[Bowfinger]

The normal way to deal with the staffing shortages, in fact the dang IRS standard, is to audit. I.e., you select a random sample for auditing. (Either that or their other method which would be to analyze page 2/part 2.)

They departed from standard procedure.

Fern

Please cite an authoritative source showing the IRS standard for evaluating applications seeking approval is to rubber-stamp approval and then randomly audit after the fact.

 

[HomerJS]

Creating a bunch of follow up letters and questionnaires is NOT any sort of "shortcut". It's EXTRA work. And then reading and analyzing the responses to the letters and questionnaires once returned is also extra work.

This whole line about 'shortcuts" and understaffing causing this is utter bullshiz.

Rubber stamping and fast tracking is what you get under those circumstances, and that is the complete opposite of what we have here.

Fern

No large organization manually generates those kinds of letters. Its all automated so I can see that happening.

 

[Bowfinger]

Nope.

You don't target by name.

They've got everything they need to target on page two (Part II) of Form 1024.

It's a pdf so can't link, but here's a google search showing the pdf so you can look at it. https://www.google.com/#gs_rn=14&gs...14,d.eWU&fp=87677a0f9d6475c5&biw=1024&bih=616

Page two is where your activities are explained. You examine that to determine if you need to follow up.

You target by names and choose only those that are conservative, we all know WTH you're targeting and it ain't questionable activities.

Fern

One, you completely ignored the primary point of the post refuting your claims about shortcuts. You switched instead to arguing a straw man. I've never suggested that targeting based on names, and specifically on typical conservative names, is acceptable. I've stated from the very beginning that the result was partisan and unacceptable. Indeed, I explicitly stated in the comment to which you replied, "Partisan targeting is not [acceptable]". The open question remains whether there was partisan intent, or merely a poor choice of shortcuts that created a partisan result.

Two, while your opinion of the completeness of the form may be interesting, I don't see how it imposes any constraints on the IRS personnel actually tasked with evaluating applications. No matter how you might redesign the form in an ideal world, the fact remains that the IRS staff were tasked with processing forms as submitted. I'd also note that the form provides only limited space for pertinent information about political activities. That only increases the likelihood that forms were submitted with an inadequate level of detail to accurately assess the "primary" purpose of the organization to determine compliance. Requesting additional information to process forms seems a logical next step in such cases.

But I may well be wrong. Can you cite evidence that the IRS rarely seeks additional information in the course of its various activities?

 

[Craig234]

It seems pretty simple what likely happened. 200 people faced with 70,000 applications couldn't spend much time on them all, so they had to pick a sample. Random would be one approach - but picking ones that seemed to have a higher chance to have the thing they were looking for, primary political activity, would be more effective at catching the ones they were legitimately trying to catch.

Who's more likely to have primary political activity - "Nebraskans for nutrional education" or "Patriots of the Tea Party of Nebraska"?

A minority of the applications pulled were conservative groups reportedly - but they were one category reviewed and one major categoty of the applications.

If it were a partisan motive, it's hard to explain that not one was denied, and it seems quite a few of them should have been.

Leaving a mysterious IRS bias in favor of the groups -except there wasn't any bias, just agents overwhelmed with unclear guidelines not enforcing the rules well it appears.

 

[Charles Kozierok]

Given the huge number of these organizations, and how clearly dubious most of their "charity" work is, my personal preference is to do away with this category altogether. There are enough legitimate charities competing for limited donation dollars without these folks muddying the waters.

Failing that, the solution to the review process is simple: full review with triage. An initial review is done of all the applications. Any that appear dubios based on their initial application are flagged for full review, and that takes however long it takes. The fate of the world does not hinge on whether or not some "sorta charity" gets tax-exempt status or not.

 

[Craig234]

Here is an interview by Lawrence O'Donnell of the former IRS head of the exempt tax division, Marcus Owens, who says in his opinion the IRS did 'nothing inappropriate'.

He explains how this works a bit with the agents dividing up the applications into categories to assign to people.


http://www.nbcnews.com/id/45755883/ns/msnbc-the_last_word/vp/52028197#52028197

 

[Fern]

With all due respect Fern, the "utter bullshiz" is continually trying to spin this 180 degrees. Ideally, ALL of the submitted applications should be subjected to close scrutiny. The IRS didn't have adequate staffing for that, so they (presumably) looked for shortcuts to separate those applications most likely to be routine from those that were more borderline and required full examination. The shortcut was "rubber stamping and fast tracking" those apps that did NOT meet their targeting criteria, leaving a relative few for thorough review. This is really simple to understand.
-snip-

I think I see the problem here. I've been having a difficult time imagining how anyone can sincerely believe this burdensome process was done to handle understaffing and a too high workload.

I think I see what's going on.

LMK if this is your understanding/position:

You believe the additional scrutiny applied to the conservative groups has been a long established and normal part of processing forms/applications. That this scrutiny has been applied to many orgs etc before the current increase in applications and that in response to that increase the IRS has decided to take that additional scrutiny and target it, albeit wrongly, to handle their workload. I.e., the shortcut is to eliminate other orgs from this normal scrutiny.

If so, where you're off here is not realizing or acknowledging that these special measures applied to conservative applicants are unprecedented. I.e., it is new. It has not been done before, it was created for them.

The form as designed by the IRS, as are all forms, is designed to be complete and require all info needed. No one designs a form that purposefully asks for partial information thereby ensuring that wasteful followup is required.

Prior to this matter, the great majority of applications were approved/denied without need for follow up. There are 2 or 3 exceptions where follow up is required:

1. An incomplete form or application. These form are long and include any number of attached schedules. Most schedules only apply to certain type orgs. When completing the form or app it's not difficult to overlook a schedule or part of one that is required for your particular type of group and fail to complete it.

When this happens the IRS returns your app or form with a cover letter drawing your attention to the portion that is incomplete and must filled out being returning it.

2. Incorrect or inconsistent app or form. E.g., someone checks the box saying they are 501 (c)(5) org (by mistake) then proceeds to complete the rest of the form as if they are a (c)(4) org.

The IRS returns the form with a cover letter asking you fix it and return it.

3. Unlike all almost other IRS forms these apps or forms have essay type questions that must be complete. IMO, these are important sections. Some will be completed by hand and be illegible. Some will be incomprehensible due to grammar and/or spelling errors. Some will insufficiently address the question (basically a form of incompleteness).

The IRS must return the form asking you to fix this, whether it be to include more info or whatever. I have never personally seen this, but must consider it a necessity.

Now, when an app or form that has been received is too problematic the result has usually, or often, been to deny it. Once an app has been denied you are eligible to appeal the denial. The appeals process is more rigorous and that's where muddled and questionable apps are better handled.

(Note that this is a big complaint here. The IRS did not deny these conservative apps, they just keep stringing them out. If no denial then no appeal process and you are left in limbo. And when in limbo, you have no process or avenue available to you to resolve it. I.e., if you're trying to create the ultimate tactic to screw over somebody applying for tax exempt status this would be it. In what I believe to be another unprecedented move a large group of applicants are now suing the IRS just to finally get a ruling.)

So no, understaffing and high workloads are NOT an explanation. These lengthy and intrusive steps are new and by all appearances were designed soley for, and targeted soley at conservative groups.

Again, if these questionnaires etc were designed to be completed by ALL (c)(4)'s you merely make it a schedule that is part of the Form 1024 and require the (c)(4)'s to complete it.

This is not a shortcut, this is a 'longcut'; a new time consuming (both for the applicant and the IRS) and burdensome additional process.

Fern

 

[Fern]

Given the huge number of these organizations, and how clearly dubious most of their "charity" work is, my personal preference is to do away with this category altogether. There are enough legitimate charities competing for limited donation dollars without these folks muddying the waters.
-snip-

First, and I see this fallacy repeated often, please understand that tax exempt or nonprofit =/= "charity".

We have approximately 30 types of tax exempt or nonprofit type orgs in tax law, only one of those numerous categories is for "charities". (Some could argue two, but I trust you get my point.)

Let's forget about about (c)(4) orgs and go straight to pure political activities:

If I want to spend my money on a political ad should I pay income tax on that expenditure? (Note that I am spending 'after-tax' money. It has already been taxed once, why would I need to pay tax on it again to merely 'use it'.)

The answer is no tax.

Now, what if you like my ad and want us to pool our money together for a better ad, or more ads etc; should you and I pay income tax on that money? The answer is no for the same reason as above.

Now, what if there are 10 of us who want to run that ad. What if everyone decides that they don't want to deposit their money for the ad in Fern's bank account; maybe they're not comfortable trusting me. Or maybe I don't want it in my bank account because I'll need to give them access to it so that they can verify I spent it as intended. I don't want to give them access to my personal bank account info.

What's the solution? Easy, we start a corporation. That only costs about $150 and let's everyone have access to the bank account information etc. We can also easily make it so that every check requires require 2 or 3 signatures so we can be assured no one can swipe the corporation's money.

Now, should this corporation pay tax on the money received and held in the bank account? The answer is no for the same reasons as the first 2 examples.

There are any number of reasons for a group/corp to be tax exempt that do not include a charitable purpose.

Fern

 

[Charles Kozierok]

Fern, I don't understand your example. Why would anyone pay "income tax" to buy an ad under any circumstance? And if the purpose of the corporation is just to pool funds together to buy something, then its expenditures will equal its revenues and there will be no income to tax anyway, so why is tax-free status required at all?

Unless I'm seriously confused, corporations pay taxes on profits, not revenues. And if it's not a charity and it's making a profit, IMO it should be taxed at the same rate as any other corporation.

 

[Fern]

Fern, I don't understand your example. Why would anyone pay "income tax" to buy an ad under any circumstance? And if the purpose of the corporation is just to pool funds together to buy something, then its expenditures will equal its revenues and there will be no income to tax anyway, so why is tax-free status required at all?

The question is not if it's "required". The question is why money pooled by individuals, for a non-business purpose, is considered "income"?

The answer is it's not considered (taxable) income. And my examples were intended to illustrate why it is not.

If it's not income, but rather pooled after-tax money, why should it be subject to tax merely because we haven't zeroed out the bank account by 12/31?

There are many practical reasons why a bank account wouldn't be emptied by year end:

1. If your bank account drops below a certain balance you become subject to monthly service fees. It's financially stupid to allow that. Leaving the $500 (or whatever amount) essentially pays you a whopping amount of interest income visa vis the waived fees.

2. Overdraft protection. Overdraft fees are high and very few people/orgs are capable of keeping an accurate bank account balance correct down to the last $. So, it's very practical to keep a 'cushion' in the bank account to account for any bookkeeping errors (or timing problems as to exactly when an amount is credited/debited by the bank)

3. If I contract for an ad in Sept or Nov and they don't get around to billing me until January I'm screwed aren't I?

4. Probably the single biggest challenge in financial accounting is accounting for the (artificial) period of 12 months. Few businesses actually have a one yr cycle of business, so there are many rules on how to make it apply anyway. E.g., construction companies have projects that span more than one year. Some projects have been completed, some are still ongoing at yr end. I could type here for an hour and only superficially cover the numerous and complex rules we force on them to fit this into an artificial year ending 12/31. And political elections generally cover a three yr cycle, a 12 month year is entirely artificial for them.

5. Any rule that requires the bank account be zeroed out or pay income taxes on the balance serves no real purpose, is therefor punitive and just makes a bunch of useless work for the group and the IRS who would be charged with auditing/verifying that they did in fact zero it out.

Unless I'm seriously confused, corporations pay taxes on profits, not revenues. And if it's not a charity and it's making a profit, IMO it should be taxed at the same rate as any other corporation.

Please stop with the "charity" stuff. There are many types of entities that are not "charities" but nonetheless are tax exempt.

Maybe you just don't like political groups. So, I'll try another common tax exempt that is not charitable:

Homeowners associations. You live in a private gated community, no way you're a charity. You and your neighbors decide that the neighborhood needs sidewalks. You all pool your money in a HOA to pay for the sidewalks. The sidewalks take 18 months to complete (months with rain and snow slow it down, not to mention the contractors' schedule which is often delayed etc.)

So you guys should pay income taxes on any remaining money in your HOA bank account at year end? Of course not.

There is no practical reason or, even more importantly no academic theory of income taxation, which justifies the taxation of pooled after-tax money for non-business or non-income producing purposes (it's simply not "income"). Political advocacy, among many others, fall squarely under this.

Fern

 

[Charles Kozierok]

I'm not a tax accountant, and I'm honestly unsure why you are so upset with me. I don't have a problem with legitimate organizations that serve communities, but this statute is being abused, and not just by a little bit, either.

Here's how things are supposed to work:

IRC 501(c)(4) provides for exemption of:

Civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare.

Local associations of employees, the membership of which is limited to the employees of a designated person or persons in a particular municipality and the net earnings of which are devoted exclusively to charitable, educational, or recreational purposes.

The statutory terms disclose that IRC 501(c)(4) embraces two general classifications:
a. Social welfare organizations, and
b. Local associations of employees.

But this is what they're really being used for:

Two conservative nonprofits, Crossroads GPS and Americans for Prosperity, have poured almost $60 million into TV ads to influence the presidential race so far, outgunning all super PACs put together, new spending estimates show.

These nonprofits, also known as 501(c)(4)s or c4s for their section of the tax code, don't have to disclose their donors to the public.

The two nonprofits had outspent each of the other types of outside spending groups in this election cycle, including political parties, unions, trade associations and political action committees, a ProPublica analysis of data provided by Kantar Media's Campaign Media Analysis Group, or CMAG, found.

So, while you say "stop with the charity stuff", I guess my response would be along the lines of "stop with the paying for sidewalks stuff". I don't think groups like those should be getting any tax breaks whatsoever (EDIT: "like those" meaning the ones in the news article I just quoted, not the homeowners' groups). If these exemptions are going to continue to be allowed, they need to be cleaned up. The abuse now is rampant, and much as I don't approve of partisan targeting, if there's this many groups using this statute then they all should be reviewed.

 

[Fern]

I'm not a tax accountant, and I'm honestly unsure why you are so upset with me. I don't have a problem with legitimate organizations that serve communities, but this statute is being abused, and not just by a little bit, either.

I'm not upset with you, not at all.

I'm frustrated with peoples' inability to grasp the tax exempt concept.

A charitable purpose is but one of many ways to be legitimately tax exempt.

BTW: I can see you're still not getting it as you're speaking above about "serving the community". I.e., you're stuck on the whole "charitable" concept.

Here's how things are supposed to work:

But this is what they're really being used for:

So, while you say "stop with the charity stuff", I guess my response would be along the lines of "stop with the paying for sidewalks stuff". I don't think groups like those should be getting any tax breaks whatsoever. If these exemptions are going to continue to be allowed, they need to be cleaned up. The abuse now is rampant, and much as I don't approve of partisan targeting, if there's this many groups using this statute then they all should be reviewed.

There is no "tax break" for paying for sidewalks. There is no tax break for paying for political ads.

There IS a tax break for "charitable" organizations. The donors get to deduct contributions to them.

In the former, people are simply pooling their money to spend for personal (as opposed to business or investment) reasons. Again, it is after-tax money, why should it be taxed when used for a personal purpose?

Going back to my previous example. whether you spend your own money for a personal purpose, such as political ads or sidewalks, or pool it with others in an informal unincorporated manner, or do it with a formal corporation there is no difference in substance, only a change in form (alone or in an informal group or in a formal group).

Under tax theory and in tax law, "substance" (almost) always trumps "form".

It is the substance, the nature or true essence of a transaction or thing, that drives the tax treatment.

This is why in some case the receipt of money is taxable income. In some cases it is not "income" (e.g., for most tax exempts). In some cases it is not income but a gift. In some cases an inheritance. In some cases not income but receipt of loan proceeds. In others a loan payback. Etc.

Cliffs: Not all receipts of money or property qualify to meet the definition of "income".

I hope that helps.

Fern

 

[Bowfinger]

I believe I've already addressed this before, so I am largely not going to hash through it again in detail. Select comments follow.

I think I see the problem here. I've been having a difficult time imagining how anyone can sincerely believe this burdensome process was done to handle understaffing and a too high workload.

I think I see what's going on.

LMK if this is your understanding/position:

You believe the additional scrutiny applied to the conservative groups

First issue: it is false to claim additional scrutiny was applied only to conservative groups. You, yourself, have cited anecdotal examples of left-wing groups subject to special scrutiny, including one (or three) that was actually denied. In dramatic contrast, no right-wing groups were denied. Granted we do not yet know if both left and right groups were subjected to the same level of additional scrutiny ("we" means both I don't know and neither do you). All we have so far are unsubstantiated allegations by an advocate for several right-wing groups.

More importantly, however, we have the Inspector General report that looked at several hundred applications selected for this extra review. The IG found that only about a third of those applications were selected by matching those partisan keywords (like "Tea Party). That means the great majority were selected due to other criteria, with no attempt by the IG to assess the relative proportions of left and right wing groups. The IG also found that the majority of the applications selected for additional scrutiny due to potential political campaign activity had been selected correctly, i.e., that they did show substantial indications of campaign activity. While it is not conclusive, it certainly undermines the claims from the right that only right-wing groups were reviewed, and that they were inappropriately reviewed.

has been a long established and normal part of processing forms/applications. That this scrutiny has been applied to many orgs etc before the current increase in applications and that in response to that increase the IRS has decided to take that additional scrutiny and target it, albeit wrongly, to handle their workload. I.e., the shortcut is to eliminate other orgs from this normal scrutiny.

If so, where you're off here is not realizing or acknowledging that these special measures applied to conservative applicants are unprecedented. I.e., it is new. It has not been done before, it was created for them.

I find it highly unlikely that it is unprecedented for the IRS to request additional information when there are questions about the myriad of applications and documents it accepts, and you've cited nothing to support your position. That's not really important, however, because I consider it irrelevant. Even if this is truly unprecedented, that doesn't make it inappropriate. That we've always done it this way, doesn't mean there aren't better ways to do it. It seems to me that requesting additional information is perfectly in accordance with their responsibility to ensure applicants meet the requirements for 501(c)(4) status.

Further, as you yourself acknowledge below, this form and this process is different: "Unlike all almost other IRS forms these apps or forms have essay type questions that must be complete." That difference is in and of itself an obvious difference that might warrant an atypical review process.

The form as designed by the IRS, as are all forms, is designed to be complete and require all info needed. No one designs a form that purposefully asks for partial information thereby ensuring that wasteful followup is required.

Prior to this matter, the great majority of applications were approved/denied without need for follow up. There are 2 or 3 exceptions where follow up is required:

1. An incomplete form or application. These form are long and include any number of attached schedules. Most schedules only apply to certain type orgs. When completing the form or app it's not difficult to overlook a schedule or part of one that is required for your particular type of group and fail to complete it.

When this happens the IRS returns your app or form with a cover letter drawing your attention to the portion that is incomplete and must filled out being returning it.

2. Incorrect or inconsistent app or form. E.g., someone checks the box saying they are 501 (c)(5) org (by mistake) then proceeds to complete the rest of the form as if they are a (c)(4) org.

The IRS returns the form with a cover letter asking you fix it and return it.

3. Unlike all almost other IRS forms these apps or forms have essay type questions that must be complete. IMO, these are important sections. Some will be completed by hand and be illegible. Some will be incomprehensible due to grammar and/or spelling errors. Some will insufficiently address the question (basically a form of incompleteness).

The IRS must return the form asking you to fix this, whether it be to include more info or whatever. I have never personally seen this, but must consider it a necessity.

Now, when an app or form that has been received is too problematic the result has usually, or often, been to deny it. Once an app has been denied you are eligible to appeal the denial. The appeals process is more rigorous and that's where muddled and questionable apps are better handled.

I already addressed this in my original post, and I don't see that you've added anything that alters my comment:

(Bowfinger: ) Two, while your opinion of the completeness of the form may be interesting, I don't see how it imposes any constraints on the IRS personnel actually tasked with evaluating applications. No matter how you might redesign the form in an ideal world, the fact remains that the IRS staff were tasked with processing forms as submitted. I'd also note that the form provides only limited space for pertinent information about political activities. That only increases the likelihood that forms were submitted with an inadequate level of detail to accurately assess the "primary" purpose of the organization to determine compliance. Requesting additional information to process forms seems a logical next step in such cases.

(Back to Fern: )(Note that this is a big complaint here. The IRS did not deny these conservative apps, they just keep stringing them out. If no denial then no appeal process and you are left in limbo. And when in limbo, you have no process or avenue available to you to resolve it. I.e., if you're trying to create the ultimate tactic to screw over somebody applying for tax exempt status this would be it. In what I believe to be another unprecedented move a large group of applicants are now suing the IRS just to finally get a ruling.)

You realize you contradicted yourself, right? You first state there is no appeal process until the application is denied. You then acknowledge that there is such a process, that the IRS can be sued. In fact, one of the pieces I linked earlier specifically mentions this, that if the IRS does not complete the application review within a set amount of time (270 days IIRC), the applicant may sue. That piece then noted that (until now), in spite of all the crying from the right, not one of applicants still waiting chose to take advantage of that lawsuit provision.

So no, understaffing and high workloads are NOT an explanation. These lengthy and intrusive steps are new and by all appearances were designed soley for, and targeted soley at conservative groups.

The first sentence is again backwards, ignoring that the IRS has a responsibility to evaluate all applications completely, yet lacks resources to do so. In such cases, the typical tactic is pursuing the low-hanging fruit, i.e., using a quick and simple triage to segregate the apps least likely to have issues from those that truly need more detailed review. The second sentence is unsubstantiated at best, and is contradicted at least in part by other anecdotes already discussed.

Again, if these questionnaires etc were designed to be completed by ALL (c)(4)'s you merely make it a schedule that is part of the Form 1024 and require the (c)(4)'s to complete it.

Again, you already conceded the issue here: essay questions. Such questions don't give you simple, black and white information. They are subjective, and inherently yield wildly varying amounts of information. Some will produce complete, detailed responses. Others will offer only sparse answers.

Further, the requirements for politically active applicants were themselves not clearly defined by the IRS. What, exactly are the metrics to be used to determine each applicant's "primary" activity? How does one objectively quantify them? What one or two questions can the IRS ask to determine with fair certainty the nature, scope, and relative proportion of an applicant's activities that comply vs. those that do not -- especially when there are so many different sorts of political activities one might engage in? I think it's a pipe dream to suggest that the IRS could define in advance some very small number of questions that are both specific enough and yet broad enough to ensure all applicants will provide adequate information on the first pass.

If you still disagree, I challenge you to show us how you would do it. What questions do you think the IRS should have asked on this rather general form that would have consistently yielded enough information, and sufficiently accurate information, that compliance could be determined with a high level of accuracy and certainty in the vast majority of cases?

This is not a shortcut, this is a 'longcut'; a new time consuming (both for the applicant and the IRS) and burdensome additional process.

Fern

Already addressed

 

[Pulsar]

Bowfinger, well said, but:
That's the challenge. When dealing with the need to look for excessive political activity, and tea party group applications are greatly increasing, how SHOULD they target?

Their targetting should be data driven, or completely random. They instead targetted using partisian terminology.

This was clearly politically motivated. There's simply no arguing it, no matter how many strawmen or hypotheticals you want to throw around.

Curious that people are taking the fifth in testimony about this issue if there is nothing incriminating.

 

[Pulsar]

In dramatic contrast, no right-wing groups were denied. Granted we do not yet know if both left and right groups were subjected to the same level of additional scrutiny ("we" means both I don't know and neither do you). All we have so far are unsubstantiated allegations by an advocate for several right-wing groups.

One versus zero is hardly dramatic contrast. Let's not overstate the case.

The IG found that only about a third of those applications were selected by matching those partisan keywords (like "Tea Party).

The argument is that none of them should have been chosen using partisian langauge, unless there was some data showing that those groups infringed more than any other group.

That means the great majority were selected due to other criteria, with no attempt by the IG to assess the relative proportions of left and right wing groups. The IG also found that the majority of the applications selected for additional scrutiny due to potential political campaign activity had been selected correctly, i.e., that they did show substantial indications of campaign activity.

Again, let's not overstate the case to try to swing opinion. 33% were tea party because they had specific titles in their name. You continue to gloss over the fact that NONE of them should have been selected that way. You can polish a turd, but it's still a turd. This is worse than racial profiling because NO DATA has been given to show why they were targetted.

As Charles said, the fact that they specifically targetted Right Wing groups and absolutely nothing was found suggests very strongly that this was a fishing expedition and nothing more.

While it is not conclusive, it certainly undermines the claims from the right that only right-wing groups were reviewed, and that they were inappropriately reviewed.

Once again. No. Stop polishing the turd. I'm going to keep repeating this. In the absence of data, there should have been no targetting of a particular group.

I find it highly unlikely that it is unprecedented for the IRS to request additional information when there are questions about the myriad of applications and documents it accepts, and you've cited nothing to support your position.

In situations where they are not targetting groups of particular political persuasion, you would be correct.

That's not really important, however, because I consider it irrelevant. Even if this is truly unprecedented, that doesn't make it inappropriate. That we've always done it this way, doesn't mean there aren't better ways to do it. It seems to me that requesting additional information is perfectly in accordance with their responsibility to ensure applicants meet the requirements for 501(c)(4) status.

That is the crux of it, isn't it? It clearly hasn't been done this way in the past. No one can present a logical reason why it was done this way this time (though many have tried to manufacture one). There was absolutely no data-based reason to select right wing groups over left, and yet it happened. The people leading the agency and the managers are now taking the fifth to prevent incriminating themselves.

There are a lot of questions that should be answered. Unfortunately, I think this has already played its course out in the media, and will be dropping off the radar soon without ever having gotten real answers.

IF this had been done for good reason, the 'story' would already be over. The office would have come out and stated we had X% rejected from this particular group so we chose to more closely scrutinize them this year. But they can't. Because it wasn't random, and it wasn't data driven. That presents a HUGE problem.

I wonder how big a fiasco it would be if people challenged 33% more democrat voters for ID when they went to vote.

 

[Bowfinger]

One versus zero is hardly dramatic contrast. Let's not overstate the case.


The argument is that none of them should have been chosen using partisian langauge, unless there was some data showing that those groups infringed more than any other group.


Again, let's not overstate the case to try to swing opinion. 33% were tea party because they had specific titles in their name. You continue to gloss over the fact that NONE of them should have been selected that way. You can polish a turd, but it's still a turd. This is worse than racial profiling because NO DATA has been given to show why they were targetted.

As Charles said, the fact that they specifically targetted Right Wing groups and absolutely nothing was found suggests very strongly that this was a fishing expedition and nothing more.


Once again. No. Stop polishing the turd. I'm going to keep repeating this. In the absence of data, there should have been no targetting of a particular group.


In situations where they are not targetting groups of particular political persuasion, you would be correct.


That is the crux of it, isn't it? It clearly hasn't been done this way in the past. No one can present a logical reason why it was done this way this time (though many have tried to manufacture one). There was absolutely no data-based reason to select right wing groups over left, and yet it happened. The people leading the agency and the managers are now taking the fifth to prevent incriminating themselves.

There are a lot of questions that should be answered. Unfortunately, I think this has already played its course out in the media, and will be dropping off the radar soon without ever having gotten real answers.

IF this had been done for good reason, the 'story' would already be over. The office would have come out and stated we had X% rejected from this particular group so we chose to more closely scrutinize them this year. But they can't. Because it wasn't random, and it wasn't data driven. That presents a HUGE problem.

I wonder how big a fiasco it would be if people challenged 33% more democrat voters for ID when they went to vote.

One of the annoying things about the discussion forum format is one has to keep repeating oneself because people jump in late and ignore all the ground already covered. You might have had a great, responsive post had you simply noted I've stated again and again and again that partisan targeting is unacceptable ... including multiple times in this very thread and on this very page. That largely nullifies your entire post, turning it into a series of straw man attacks because you presumed I was OK with partisan targeting.

I therefore suggest you reread my post with that context in mind. You might note that I make no statements supporting partisan targeting. Instead, my focus is on refuting the repeated cries from the right that this was solely about conservatives, only they were targeted, the IRS cooked up the detailed reviews to "get" conservatives, etc., ad nauseum. The fact remains that these allegations are all speculative innuendo, not factual conclusions drawn from the evidence available so far. Indeed the evidence we do have, e.g., the IG report, factually challenge much of that innuendo.

This issue is bad enough on its own merits. The last thing we need is the usual right wing propaganda machine perverting it into another witch hunt and exploiting it for purely partisan gain. That may keep the gullible faithful properly outraged, but it only serves to impede legitimate investigation, and ultimately makes it less likely the proper measures will be taken to ensure the IRS remains solidly nonpartisan. Let's focus on real facts, not self-serving noise, and let objective professionals like the Inspector General do their work.

 

[Pulsar]

One of the annoying things about the discussion forum format is one has to keep repeating oneself because people jump in late and ignore all the ground already covered. You might have had a great, responsive post had you simply noted I've stated again and again and again that partisan targeting is unacceptable ... including multiple times in this very thread and on this very page. That largely nullifies your entire post, turning it into a series of straw man attacks because you presumed I was OK with partisan targeting.

I therefore suggest you reread my post with that context in mind. You might note that I make no statements supporting partisan targeting. Instead, my focus is on refuting the repeated cries from the right that this was solely about conservatives, only they were targeted, the IRS cooked up the detailed reviews to "get" conservatives, etc., ad nauseum. The fact remains that these allegations are all speculative innuendo, not factual conclusions drawn from the evidence available so far. Indeed the evidence we do have, e.g., the IG report, factually challenge much of that innuendo.

This issue is bad enough on its own merits. The last thing we need is the usual right wing propaganda machine perverting it into another witch hunt and exploiting it for purely partisan gain. That may keep the gullible faithful properly outraged, but it only serves to impede legitimate investigation, and ultimately makes it less likely the proper measures will be taken to ensure the IRS remains solidly nonpartisan. Let's focus on real facts, not self-serving noise, and let objective professionals like the Inspector General do their work.

No, it doesn't turn my post into a bunch of strawmen. I understand why you'd like it to - because both Fern and I are arguing along the same lines. This was clearly targetted. Not necessarily the extra forms. I'm not even touching those. Just the fact that 33% of them directly targetted right wing groups.

The fact that ANY of them directly targeted political groups is unacceptable.

If we can agree on that, then we've got a starting point. That alone signifies wrongdoing. The next point is to agree that it doesn't happen by accident. Someone was directly out to place right wing groups under more scrutiny.

You have far more confidence in the Inspector General than I do. I suspect because it helps your case. The most likely avenue this 'investigation' is going to take is to hit one brick wall after another. Those involved are already pleading the fifth. And if they all, in turn, please the 5th or refuse to testify then all we'll hear in 6 months (when everyone no longer cares) is that no evidence substantiates or disproves the claims that this was politically motivated.

At most, some minor crony might lose their job.

The only time anything like this went ANYWHERE was when phone records or other damning evidence went public, and they're already scuttling around like mad covering up.

I understand your standpoint based on your political affiliation. I don't think it helps though. We already know there was wrongdoing. Just using the specific targetting terms is clear evidence of that, and I'm glad you agree that's wrong.