Similarly, the emergence of 527 organizations derived from another Supreme Court decision, Buckley v Valeo (424 US 1) in January 1976, representing the court's pushback against federal election laws passed by Congress to address some of the recent Watergate abuses. Issued as an anonymous decision "by the court" (with two, opposing dissents), Buckley effectively gave money the same legal standing as speech, complete with First Amendment protection, albeit with some restrictions.
Citizens United effectively removed those restrictions.
Who Wouldn't Seek Tax Shelter Under a 501(c )(4) Cover?
Since 2010, the IRS has faced an unexpected flood of applications for 501(c )(4) status from essentially political organizations of all stripes, but especially from conservative organizations. It's hard to find anyone who argues that the IRS responded properly or effectively to this exigency, but it's even harder to find anything but execrable reporting on it either, although there is some good work (by Chris Hayes, Lawrence O'Donnell, Jeffrey Toobin, among others).
Early reporting by AP (Associated Press) May 11 took for story off the rails in the first sentence by claiming that IRS "agents were targeting tea party groups as early as 2011," attributing the claim to a partial draft of a leaked report, and then repeating the claim in the next sentence. The New York Time story the same day started with a misleading reference to "overzealous audits."
The story got so distorted and detached from reality that even the President in his May 13 remarks didn't have much of a handle on it.
Among the accumulating ironies here is that this is the same AP that so agitated the Obama administration that the Justice Department felt justified in carrying out a wholesale trashing of AP's First Amendment rights. But that was apparently because AP got another leak-based story right.
It's Not As Though the Reality of 501(c )(4) Scams Was A Surprise
The first step toward understanding this IRS story is to realize that the problem of 501(c )(4) organizations carrying out political activity that should be illegal is a real problem and is widely recognized.
Senators Carl Levin, D-Mich, and John McCain, R-Ariz, who co-chair an IRS oversight committee released a statement on May 13, saying in part:
"The Permanent Subcommittee on Investigations has been for several months examining on a bipartisan basis whether the IRS has adequately enforced rules regarding the extent to which tax exempt nonprofit 501(c)(4) groups engage in partisan politics. [emphasis added]
"We had tentatively planned a hearing on that issue for June. After Friday's announcement that the IRS, to the extent it has been enforcing the law, may have done so in ways that singled out some groups for special scrutiny, we have determined that the subcommittee should investigate that additional issue as well. As a result, we have decided to delay our hearing in order to examine this issue carefully". "
In other words, the subcommittee's concern was lax IRS enforcement against a perceived abuse of the tax code, and this concern is reality-based, even though McCain is quoted as talking about "audits" of tea party groups -- which is not part of the reality of this issue.
Reality May Never Catch Up with Political Straw Men
There were no audits. There was an evolving and almost comically ineffectual effort by the IRS to sort out 501(c)(4) applications to reduce the number of political organizations seeking tax shelter as "social welfare" organizations.
By May 14, the basic reality of IRS behavior during 2010-2012, while it was still directed by a Bush appointee, still had not emerged. The director of the tax exempt division of IRS said that about 300 applications for 501(c )(4) status were given special scrutiny, and of those about 75 were for "tea party" or similarly tagged organizations.