There is no IRS scandal

31 May

I was beginning to think I was the only person who was upset by the so-called IRS scandal that they supposedly discriminated against “conservative” groups seeking tax-exempt status. Why are all these people resigning for doing their jobs? Glad to read Robert Reich’s post on his Facebook page on May 28 in which he says that “The more I understand what actually occurred at the IRS, the more it appears IRS agents were doing their jobs. A close examination of the conservative groups allegedly targeted by the IRS — reported in yesterday’s New York Times — revealed a wide set of election activities that tax experts and former I.R.S. officials say provided a legitimate basis for flagging them for closer review.” He wrote a similar post on his blog,, on May 17. There is also an excellent article in The New York Times detailing what kind of organizations were targeted and the rationale behind this.

Several IRS officials have been driven to resignation because it came out they were directed to pay special scrutiny to the applications from Tea Party organizations and for tax-exempt status by virtue of the 501(c)(4) exemption for – and this is the actual statute –
(A) Civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare, or 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.
(B) Subparagraph (A) shall not apply to an entity unless no part of the net earnings of such entity inures to the benefit of any private shareholder or individual.

I’m not a lawyer, but I’ve worked in nonprofits all my adult life. The way I interpret this, in ordinary English, is that these organizations must meet certain criteria:
– They must be organizations operating for social welfare (or be employees in one municipality)
– All their net earnings must go “exclusively to charitable, educational, or recreational purposes”
– No part of the net earnings should benefit any private individual.

How does any organization devoted to electoral politics, whether it’s the Tea Party or any offshoot of the Democratic Party or any other party, fit this definition? Apparently the legal loophole is that any activity devoted to telling the public about issues or candidates is now deemed to be “educational.” So, by this logic, we would say that any kind of advertising is now “educational” about the products being sold.

These organizations have become so powerful, and in some cases rich, that when their classification was challenged by the IRS, they went on the offensive, howling that they were somehow victims of partisan discrimination. But the onus is on them to show how their earnings are going to “charitable, educational, or recreational purposes.” In doing so, they have so cowed the Obama Administration that the IRS is backing down without a fight. Isn’t anybody in Congress going to say, as is their oversight responsibility, “Wait a minute, how are these organizations charitable or educational?”

In my most charitable moments, I might concede that information about any candidate – whether or not it leads to their election – is “educational” (especially if it is true), but even so, any policy or candidate whose work results in either economic redistribution from the poor to the rich, or the prevention of vulnerable populations to achieve their rights or overcome the ways they are socially disadvantaged (which is to say oppressed), is by definition working in a way that is the antithesis of “charitable.” An organization that lobbies to cut taxes resulting in the underfunding of schools, cuts to education and nutrition, health care, prenatal or neonatal care, women’s health, job training, and the arts, is acting in a way that is categorically the opposite of “charitable.” That’s the real scandal.

But then I read articles like this one in The Washington Post in which the Tea Party is actively involved in opposing educational standards. This should give the IRS pause. Not only is the Tea Party’s work not going to education, as required to maintain their non-profit status, but they are using the status to oppose stronger educational programs on a national level. So, “charitable” now means taking from the poor and giving to the rich, and “educational” now means blocking stronger school standards nationally. The IRS not only should have questioned these groups’ missions, they should have gone further and stripped them of non-profit status, for they are in violation of the code. They can still operate as NGOs (non-governmental organizations) but our tax law is quite explicit, and these NGOs are not entitled to tax exemption under the law.

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