Over the weekend, the IRS scandal got even more bizarre.
Various news organizations got a look at a still-unreleased report by the inspector general (IG) for tax administration at the Treasury Department. According to the report, IRS official Lois Lerner knew about the problem by June 2011; yet in March 2012, IRS commissioner Douglas Shulman told Congress “that the agency was not targeting conservative groups that applied for tax-exempt status as ‘social welfare’ groups.”
But, according to the IG report, the IRS was not only targeting tea party organizations; it was going after “groups focused on government spending, government debt, taxes, and education on ways to ‘make America a better place to live.’” It also started targeting groups criticizing the government or educating Americans about the Constitution and the Bill of Rights.
Just as outrageous are the revelations that the IRS may have gone after some Jewish groups for political reasons. The Jewish Press is reporting that a pro-Israel organization was told by an agent that it was being subjected to additional scrutiny because it was “connected with Israel.” Its application (along with other Jewish groups) was assigned to “a special unit in the D.C. office to determine whether the organization’s activities contradict the Administration’s public policies.” One Jewish religious organization was required to state whether it “supports the existence of the land of Israel” and to describe its “religious belief system toward the land of Israel.”
It is probably needless to point out that none of these issues has anything to do with whether a nonprofit should be granted tax-exempt status under Section 501(c)(4) of the Internal Revenue Code. As the IRS itself explains, this section covers social welfare organizations that “operate primarily to further the common good and general welfare of the people of the community.” While they can’t participate or intervene in political campaigns, they can “engage in some political activities, so long as that is not [their] primary activity.”
And seeking (or opposing) legislation—for instance, fighting against Obamacare, which was the germinating factor for many tea party organizations—“is a permissible means of attaining social welfare purposes,” according to the IRS.
Whether or not you agree with the Administration’s policies or whether you criticize the expansion of government or its excessive debt are not a consideration under the Revenue Code to qualify for tax-exempt status. Apparently, the IRS finally realized that, because according to The Washington Post, it changed its tactics in May 2012 to focus on “organizations with indicators of significant amounts of political campaign intervention.” Despite that change, dozens of conservative organizations are still waiting to receive their tax exemptions.
We will know more when the Treasury Department’s IG report is finally released. But it should be kept in mind that the use of the IRS to target political opponents of an Administration is one of the greatest dangers of the tremendous power of this federal agency. That is why federal law (26 U.S.C. § 7217) prohibits any employee of the executive office of the President and Vice President, as well as Cabinet secretaries, from requesting “directly or indirectly” that the IRS investigate “any particular taxpayer with respect to the tax liability of such taxpayer.”
It’s unclear who in the IRS or elsewhere supported or condoned the wrongful conduct at issue, but it is important for the rule of law and the interests of justice that Congress aggressively pursue its oversight function to get to the bottom of this scandal and, most importantly, who instigated and authorized it.