The Real IRS Scandal

Here is the Internal Revenue Service controversy in a nut shell. Rank and file IRS agents used search terms such as "tea party" to triage a mountain of applications for tax-exempt status. What the agents were trying to identify were applications where the purposes of the organizations were primarily political. Under IRS regulations, organizations applying for 501(c)(4) tax-exempt status must primarily be involved in social-welfare activity. All the triaged applications were eventually approved. Virtually everyone agrees the IRS must be politically neutral, so the methods the agents used to organize their workload is not an acceptable practice.

This principle and these core facts are not in dispute by anyone familiar with the details. The partisan contentions understandably arise from the lengthy inaction by senior IRS officials to end this practice. Were senior managers incredibly blind to what agents were doing or did they turn a blind eye? If it was the latter, did they ignore the practice for practical reasons or political reasons? Who up the political chain of command knew of the practice and when did they learn about it?

As happens often in today's politically charged atmosphere, the partisan conflagration set off by the revelations is sucking all the oxygen out of the room, leaving no one to explore why these practices developed in the first place. The "scandal" is a  media-induced distraction from much more serious problems under the surface.  Among the questions we should be asking are these:

Is there an increase in tax-exempt applications and is the increase asymmetrical?

Probably so, although the assessment of this is indirect. According to an analysis of data released by the IRS in response to the criticism, Martin A. Sullivan of TaxAnalysitst.org found that among the tax-exempt applications approved by the IRS about two-thirds were submitted by conservative organizations. The remainder were either liberal-leaning organizations or politically neutral. According to Professor Rob Reich in the April/May Boston Review, there has also been an unprecedented growth in the number of charitable foundation, or 501(c)(3) organizations. He attributes this to the growing wealth of the richest Americans. They are establishing foundations to leave a legacy and project their political influence on society from beyond the grave. So far, according to the IRS and other sources, there does appear to be a sharp increase in 501(c)(3) and (4) applications fo r tax-exempt status. It also appears that this increase in applications is skewed toward conservative organizations and wealthy donors.

Is there a problem with tax-exempt 501(c)(3) and (4) organizations being too overtly political, and if so, is the problem asymmetrical?

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by Mother Jones

According to some sources, ever since the Supreme Court's Citizens United decision there has been a  growing number of wealthy people and corporations creating charitable foundations and social-welfare organizations through which predominantly political messages are being delivered to the public, tax free.  Just as we have increasingly been subsidizing big business through corporate welfare, we may now be subsidizing political-messaging campaigns directed at us.

Here is an experiment readers can replicate for themselves. Type  "left-wing organizations" in a Google search. You will see that two right-wing organizations and one left-wing organization pop up. The first of these is discoverthenetworks.org, a "Guide to the Political Left" put out by David Horowitz' Freedom Center Foundation. This guide is an alphabetical listing of allegedly left-wing organizations, but looking down the list you will see it lumps together such "subversive" left-wing organizations as AARP and Abu Nidal.  Abu Nidal is a Middle-East, "Spinoff of the Palestine Liberation Organization" [that] Has killed or maimed more than 900 people in over 20 countries." 

According to its mission, "The David Horowitz Freedom Center combats the efforts of the radical left and its Islamist allies to destroy American values and disarm this country as it attempts to defend itself in a time of terror."

Painting the American left as affiliates of Islamist terrorists (or other notorious dictatorships as seen on other sites) is a common theme for some conservative websites.  This information is what passes as a public-educational service justifying tax-exempt status.  Additionally, the site contains ads, which may or may not be paid advertising   The site does claim to be 501(c)(3) tax exempt and solicits the visitor's tax-exempt donations.

The next organization on the search list is the Western Center for Journalism.  It bills itself as a 501(c)3 tax-exempt foundation and accepts tax-exempt donations, yet it describes itself as a conservative organization and promotes a book written by the organization's current president, Floyd Brown.  Brown's latest book, "Obama Enemies List: How Barack Obama Intimidated America and Stole the Election", was released in January 2013. Virtually all of the contents on this site are partisan in topics and perspectives.  One article by Steve Baldwin, for instance, starts out this way:

"Very few Americans realize there exists a large network of far left philanthropists and foundations in America dedicated to destroying the American way of life, our Christian-based culture and our free enterprise system. They seek to remove America from its constitutional foundations and move it toward a European-style socialism. Much of this effort is coordinated by a little known group called the Tides Foundation and its related group, the Tides Center."

I didn't know this, so I looked into the Tides Center and found it to be a 501(c)(3) organization dedicated to fund projects related to:

"Art & Film, Civic Engagement, Civil Discourse, Community Development, Disability Rights, Economic Justice, Economic Opportunity, Education/Training, Environmental Sustainability, Faith & Spirituality, Food & Agriculture, Health Services/Healthcare Reform, HIV/AIDS, Housing/Homelessness, Human Rights, Immigration, International Development, LGBT Issues, Media, Native Communities, Nonprofit Spaces, Peace & Conflict Resolution, Professional Development, Racial Justice, Reproductive Justice & Health, Technology, Women & Gender, Youth Development & Organizing"

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