While
few are defending the Internal Revenue Service for targeting some 300
conservative groups, there are two critical pieces of context missing
from the conventional wisdom on the “scandal.” First, at least from what
we know so far, the groups were not targeted in a political vendetta —
but rather were executing
a makeshift enforcement test
(an ugly one, mind you) for IRS employees tasked with separating
political groups not allowed to claim tax-exempt status, from bona fide
social welfare organizations. Employees are given almost zero official
guidance on how to do that, so they went after Tea Party groups because
those seemed like they might be political. Keep in mind, the
commissioner of the IRS at the time was a Bush appointee.
The
second is that while this is the first time this kind of thing has
become a national scandal, it’s not the first time such activity has
occurred.
“I wish there was more GOP interest when I raised the
same issue during the Bush administration, where they audited a
progressive church in my district in what look liked a very selective
way,” California Democratic Rep. Adam Schiff said on MSNBC Monday. “I
found only one Republican, [North Carolina Rep. Walter Jones], that
would join me in calling for an investigation during the Bush
administration. I’m glad now that the GOP has found interest in this
issue and it ought to be a bipartisan concern.”
The well-known church, All Saints Episcopal in Pasadena, became a bit of a cause célèbre on the left after the IRS
threatened
to revoke the church’s tax-exempt status over an anti-Iraq War sermon
the Sunday before the 2004 election. “Jesus [would say], ‘Mr. President,
your doctrine of preemptive war is a failed doctrine,’” rector George
Regas said from the dais.
The church, which said progressive
activism was in its “DNA,” hired a powerful Washington lawyer and
enlisted the help of Schiff, who met with the commissioner of the IRS
twice and called for a Government Accountability Office investigation,
saying the IRS audit violated the First Amendment and was unduly
targeting a political opponent of the Bush administration. “My client is
very concerned that the close coordination undertaken by the IRS
allowed partisan political concerns to direct the course of the All
Saints examination,” church attorney Marcus Owens, who is widely
considered one of the country’s leading experts on this area of the law,
said at the time. In 2007, the IRS closed the case, decreeing that
the church violated rules preventing political intervention, but it did not revoke its nonprofit status.
And
while All Saints came under the gun, conservative churches across the
country were helping to mobilize voters for Bush with little oversight.
In 2006, citing the precedent of All Saints, “a group of religious
leaders accused the Internal Revenue Service yesterday of
playing politics
by ignoring its complaint that two large churches in Ohio are engaging
in what it says are political activities, in violation of the tax code,”
the New York Times reported at the time. The churches essentially
campaigned for a Republican gubernatorial candidate, they alleged, and
even flew him on one of their planes.
Meanwhile, Citizens for Ethics in Washington filed
two ethics complaints
against a church in Minnesota. “You know we can’t publicly endorse as a
church and would not for any candidate, but I can tell you personally
that I’m going to
vote for Michele Bachmann,”
pastor Mac Hammond of the Living Word Christian Center in Minnesota
said in 2006 before welcoming her to the church. The IRS opened an audit
into the church, but
it went nowhere after the church appealed the audit on a technicality.
And it wasn’t just churches. In 2004, the
IRS went after the NAACP,
auditing the nation’s oldest civil rights group after its chairman
criticized President Bush for being the first sitting president since
Herbert Hoover not to address the organization. “They are saying if you
criticize the president we are going to take your tax exemption away
from you,” then-chairman Julian Bond said. “It’s pretty obvious that the
complainant was someone who doesn’t believe George Bush should be
criticized, and it’s obvious of their response that the IRS believes
this, too.”
In
a letter
to the IRS, Democratic Reps. Charles Rangel, Pete Stark and John
Conyers wrote: “It is obvious that the timing of this IRS examination is
nothing more than an effort to intimidate the members of the NAACP, and
the communities the organization represents, in their get-out-the-vote
effort nationwide.”
Then, in 2006, the Wall Street Journal
broke the story
of a how a little-known pressure group called Public Interest Watch —
which received 97 percent of its funds from Exxon Mobile one year —
managed to get the IRS to open an investigation into Greenpeace.
Greenpeace had labeled Exxon Mobil the “No. 1 climate criminal.” The IRS
acknowledged its audit was initiated by Public Interest Watch and
threatened to revoke Greenpeace’s tax-exempt status, but closed the
investigation
three months later.
As the Journal reporter, Steve Stecklow, later said in
an interview,
“This comes against a backdrop where a number of conservative groups
have been attacking nonprofits and NGOs over their tax-exempt status.
There have been hearings on Capitol Hill. There have been a number of
conservative groups in Washington who have been quite critical.”
Indeed, the year before that, the Senate
held a hearing
on nonprofits’ political activity. Republican Sen. Charles Grassley,
the then-chairman of the Senate Finance Committee, said the IRS needed
better enforcement, but also “legislative changes” to better define the
lines between politics and social welfare, since they had not been
updated in “a generation.” Unfortunately, neither Congress nor the IRS
has defined 501(c)4′s sufficiently to this day, leaving the door open
for IRS auditors to make up their own, discriminatory rules.
Those
cases mostly involved 501(c)3 organizations, which live in a different
section of the tax code for real charities like hospitals and schools.
The rules are much stronger and better developed for (c)3′s, in part
because they’ve been around longer. But with “social welfare” (c)4
groups, the kind of political activity we saw in 2010 and 2012 is so
unprecedented that you get cases like Emerge America, a progressive
nonprofit that trains Democratic female candidates for public office.
The group has chapters across the country, but in 2011, chapters in
Massachusetts, Maine and Nevada were
denied 501(c)4 tax-exempt status.
Leaders called the situation “bizarre” because in the five years Nevada
had waited for approval, the Kentucky chapter was approved, only for
the other three to be denied.
A former IRS official told the New
York Times that probably meant the applications were sent to different
offices, which use slightly different standards. Different offices
within the same organization that are supposed to impose the exact same
rules in a consistent manner have such uneven conceptions of where to
draw the line at a political group, that they can approve one
organization and then deny its twin in a different state.
All of
these stories suggest that while concern with the IRS posture toward
conservative groups now may be merited, to fully understand the
situation requires a bit of context and history.
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