The IRS scandal no one's talking about

The rules covering who gets tax-exempt status are so squishy and vague that just about anyone can work the system.

By Kim Peterson May 15, 2013 5:55PM
Image: Close up of hands filling in tax form © JGI, Blend Images, Getty ImagesA scandal continues to unfold in Washington surrounding Internal Revenue Service employees who inappropriately targeted conservative groups seeking tax-exempt status.

But there's another issue here, one that's getting significantly less attention though it's also important: Why are tax-exempt groups spending tens of millions of dollars on political advertising? And why has the IRS turned a blind eye to this practice for years?

That's the subject of a few pointed articles lately after news emerged that the IRS was overly aggressive in handling the requests of conservative groups that desired the tax-exempt status classified as 501(c)4.

Groups with this status are supposed to be "social welfare" organizations that serve their communities, writes Michael Hiltzik of The Los Angeles Times. You can see on the IRS' own application what groups are intended to receive this status -- educational and health care organizations, homeowners associations, volunteer fire departments and the like. They cannot be primarily engaged in election work.

The IRS clumsily tried to screen applications to find the groups that weren't entirely focused on "social welfare." And as part of the screen, they looked for groups with "tea party" or "patriot" in their names. A dumb move on many levels. In January 2012 the IRS decided instead to look for "political action type organizations involved in limiting/expanding government, educating on the constitution and bill of rights, (and) social economic reform/movement," Hiltzik writes.

But for years, the IRS has let groups on both sides of the aisle skirt the rules. And Congress is to blame here, too, Hiltzik writes. "Thanks to ambiguity about what it means to be 'primarily' concerned with 'social welfare,' political activists have reaped a bonanza for years while the IRS ignored their chicanery," he adds. "And once again, now that the agency has tried to regulate, the regulated parties have blown its efforts up into a 'scandal.'"

The IRS seemed only to investigate the little guys, too, ignoring the larger C4s tied to Karl Rove and former campaign staffers for President Barack Obama. "The big groups are generally well-advised, lawyered up. Their tax forms are artfully drawn," Chris Ashby, a lawyer advising conservative groups, told The New York Times.

Lawmakers upset at the IRS should step back and take a look at what caused these problems in the first place. The rules are unclear, vague and sometimes missing completely. And as a result, there are huge loopholes that some groups can and do exploit.

Until Congress and the IRS figure out how to make clear rules that actually stick, swamped workers at an agency already beset by budget cuts will continue making ill-advised moves like searching for words like "tea party." Or, after this latest drama, they'll just stop trying to enforce the squishy standards completely.

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May 15, 2013 9:34PM
No other institution is more corrupt than the federal government
May 15, 2013 10:29PM
Our tax code is nothing more than a bazaar where tax exemptions are traded for campaign contributions. 
May 15, 2013 7:18PM

I personally saw a lady pay for some oreo cookies with food stamps then walk out to get in her brand new Cadillac, sticker still on the window.   They just laugh at us. 

May 15, 2013 9:04PM
The huge juggernaut of our government is riddled with corruption and will stay that way until it is chopped down to a manageable size. The IRS, many of whom claim is not a legal entity (not to mention the whole idea of taking your pay before you ever see it)  should be disbanded right after the tax code is simplified down to a real basic flat sales, tariff or anything but a huge income tax system riddled with so many deductions, exclusions and complicated laws.
May 15, 2013 9:22PM
So, the IRS is promoting 'social welfare' and targeting people that want a smaller more efficient government, want to educate people on the Constitution and the Bill of Rights and want to get rid of the IRS and implement the Flat Tax. Well, now I know I agree with Speaker Boehner. Somebody needs to go to jail. Who are these POS communists in the IRS? We have got to get rid of this entire administration, or should I say 'communist mafia' running the country right now.
May 15, 2013 6:14PM
So, I guess what you're saying is this was just an IRS goof.  A mistake?  Whoops!  So, I think you're also saying that we should let the Obama Administration slide on this one and worry about the other issue.  Nice deflect, but it still stands that Obama is just a terrible president, he's still the great divider, terrible for the health care system, unemployment, the economy, four dead Americans and many maimed in Benghazi, and now he's been caught lying and cheating....not that the people with any brains didn't already know that.  Kim, you are a brainless wonder.  Too bad.
May 15, 2013 8:55PM
Just WHY should anyone or any group that's making money be EXEMPT from taxes?  They live here, they work here, they make their money here..., so why shouldn't they have to kick in like the rest of us???
May 15, 2013 11:17PM
IRS, why don't you look at MOVEON.ORG by Soros?  It's a nonprofit.  I bet he violates more laws in one day than these Tea Party folks can even thing of doing in 10 years.
May 16, 2013 12:36AM
Hope and change
Hope and change
Hope and change
 - Hopefully there will be a change through impeachment and a Senate trial

May 15, 2013 8:53PM
Because the i.r.s. is as crooked as the rest of the US government pick on ths middle classes and let the rich deduct everything,we should clense the whole enity from existence.
May 15, 2013 9:56PM

Remember the UN  honorable little prick named harry Reid  back before the election and he said he had complete knowledge that mitt romney had cheated  on his taxes???  I wonder if the Senate leader the un-honorable harry reid is the one that is really behind this IRS Hit man tactics.  This government we have in DC is getting as bad as good old Adolf Hitler and his party.  Take away the guns,  do away with your  1st, 2nd, and 4th amend rights change books and disprove history.  One other thing good old UN-HONORABLE HARRY ((THE WUSSIE BOY)) REID also was the one who declared that mitt romney murdered a mans wife when she died from cancer.

       What a pcs of $hit good old harry, baucus, and schumer are because baucus, and schumer sent letters to the IRS requesting that they do this a few years back.

May 15, 2013 10:53PM
Be careful what you say about the IRS, you could be next.
May 15, 2013 9:54PM

I've seen them pay for live lobsters with food stamps...  Times are so good under '57 states' that 47 million are not on food stamps up 70% in under 4 years. 


The 47% that leech of the rest of us are voting for more of your paychecks.  They vote lockstep democrat, so they get more of your check...  The answer is to FIRE them.  Lay off any democrat on your payroll.  Let them leech... 

May 15, 2013 10:52PM
The law allows 501c and other types of political action commitiees a tax exempt status, so the guy writing the article seems to have his facts a little skewed.  The IRS is crooked and just wait until they get into the Obamacare picture.  They are charged with collecting the fees for Obamacare.
May 15, 2013 10:25PM
Get rid of the IRS...think of all money we could save. No more paying salaries for people probing illegally. Just the other day I read an article that said the IRS are reading our emails and looking into our bank accounts without our authorization...Really? Wow we need to stop them they are getting way out of hand.
May 15, 2013 9:27PM
From the article:  "And once again, now that the agency has tried to regulate, the regulated parties have blown its efforts up into a 'scandal.' "  This is not regulating.  Furthermore, this is not even really TRYING to regulate.  This is political, and it's transparently so.
May 15, 2013 10:56PM
While the millionaires in Congress design the laws for loopholes for their friends, the rest of us pay through the noise. From offshore Tax Havens to bogus 501(c)4 and 501(c)3, the fix is in. This story isn't really about the IRS scandal because the far Bigger Story is all the Tax Cheats screaming at the IRS. Everyone at the IRS isn't crooked. You have crooks at every Corporation public or private. You have crooks, all across state, local, and the Federal Government. That somehow comes as a shock to folks. Wake the hell up!

Where was all this noise when the Banks were robbing us blind. Heck, they still are. If you want folks to take this seriously, you can't just pick and choose what's right or wrong based on whose in office and party affiliations. 
May 15, 2013 6:20PM
This is really no different than the Self-Regulation of Big Banks. How did that work out? We will be paying the price for that mistake for generations to come. While the Presidential elections were going on, folks were talking about the Huge Money funneled to these bogus groups. In fact, both Dems and Reps complained about these group types. After the elections, folks seem to forget that these corrupt groups still existed serving their Corporate Masters. Time for that to change.
May 15, 2013 9:05PM

Turn in your Semiautomatic Rifles, Turn in your Hand Guns, Turn in your Long Guns. The POLICE / government will take care of you, "WHEN THE BAD GUYS ARE AT YOUR HOUSE."


May 15, 2013 6:16PM
Bottom line, most of these groups are literally in violation of the Law. Corrupt Corporate dollars in the Billions are funneled to these mostly farce groups to shuck and jive America. How much are Corporations spending on your wages and Benefits the last decade or so?  They spend Billions each year to mislead and misdirect the public. They are an insult to the American Way.
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