Outraged? You should be.
The Internal Revenue Service revealed last week that agents in its Cincinnati field office had been flagging applications for tax exempt status from groups with the words “tea party” and “patriot” in their names for extra scrutiny.
The agents also looked for groups that “criticize how the country is being run” and were involved in educating Americans on the Constitution and the Bill of Rights.
This story has all the makings of a scandal, including a superior villain. The IRS is probably less popular than a root canal, and don’t expect anyone to jump to the agency’s defense.
Far be it from me to take the wind out of a good scandal, but this one may be more complicated than it looks. The scandal here might not be that the IRS went too far, but that it didn’t go far enough.
While it would be outrageous for the IRS to use its power to interfere with one side of the political debate and not the other, it’s not outrageous for the government to be on the lookout for “social welfare groups” that are really fronts for unlimited private political donations.
If the IRS went wrong, it was looking at primarily one set of applications, not the fact the agents were looking in the first place. The real damage done here would be if these hard looks ended, and groups were given more freedom to distort our politics with money from unnamed sources.
The IRS situation is part of the ugly legacy of Citizens United v. Federal Election Commission, the 2010 Supreme Court decision that famously said that corporations have constitutionally protected free speech rights, which they can exercise by spending on politics.
This decision opened the floodgates of corporations and wealthy individuals making unlimited contributions to a new kind of political action committee called a super PAC.
A super PAC can’t run an ad that says, “Vote for Joe,” but it can run one that says, “If you knew what we know about Joe’s opponent Jim you would be appalled.”
The other big change was the license the decision gave to social welfare groups, identified in Section 501(c)(4) of the tax code, to make expenditures that affect public opinion around elections without having to meet the disclosure requirements of PACs.
As long as the 501(c)(4) group wasn’t primarily political, it could pay for “electioneering communications” that strongly suggest which way a thinking person should vote.
They have to tell the IRS where they get their money, but not the public, making them an attractive way for corporations and wealthy individuals to anonymously influence elections. This is called “dark money.”
So after the decision in Citizens United — named for a 501(c)(4) group that had made a documentary critical of Hillary Clinton — there was a flood of applications for tax-exempt status by a number of new organizations. And with the birth of the tea party movement just a year earlier, that’s where most of the applications were coming from.
Determining which ones are really educational organizations and which are essentially political takes some digging.
If an organization “criticizes how the country is being run” (as one ham-handed IRS search queried), it could be engaged in legitimate analysis and critique, or it could be campaigning for someone else to run the country.
A group that says it educates Americans about the Constitution (another stupid red flag) could be providing a valuable public service, or it could be telling people that Obama is a Kenyan and is constitutionally ineligible to hold the presidency.
Looking for politically charged terms was a mistake, but trying to weed out the political organizations in disguise was not.
Not all of the groups were affiliated with the tea party movement. Last year, the IRS stripped 501(c)(4) status from a group called Emerge America, which worked to elect Democratic women to office.
The biggest spenders among the social welfare groups look like fronts for political parites.
According to a 2012 analysis by Mother Jones magazine, the biggest-spending 501(c)(4)s in the last election cycle were run by people whose last jobs had been with the leading Democratic and Republican party fundraising organizations.
So while the IRS was wrong, wrong, wrong to take steps that enforced the law unequally, it was on the right track.
The IRS shouldn’t stop investigating these groups, it should just do a better job.
Greg Kesich is the editorial page editor. He can be contacted at 791-6481 or at [email protected]