May 17, 2013

IRS controversy: The history of political audits 101

The IRS has a history of political interference, sometimes with the assent of the president.

By TOM RAUM The Associated Press

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Richard Nixon, Richard M. Nixon
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President Richard Nixon was caught on tape boasting about subjecting his political enemies to tax audits. When called on it, Nixon complained to aides, “What’s he trying to do, say that we can’t play politics with the IRS?”

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President Franklin D. Roosevelt’s punitive tax audits were well documented.

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Several days after IRS acknowledged its improper actions, Attorney General Eric Holder announced that his agency would investigate as a Justice Department inspector general's report blamed "ineffective management" at the IRS. And Obama forced the resignation of Acting IRS Commissioner Steven Miller.

"Americans are right to be angry about it and I'm angry about it," the president said of the IRS targeting. "The IRS has to operate with absolute integrity."

To be sure, the IRS must weed out the social-welfare and educational organizations that qualify as fully tax exempt -- designated in the federal tax code as 501(c)(4) groups -- from ones that are primarily political and generally not tax-exempt.

The difference is that the tax-exempt groups cannot advocate on behalf of individual candidates or parties, even though many groups come close to crossing the line. But the workload became even more intensive for the IRS as the number of groups registering for tax-exempt status roughly doubled in the aftermath of a series of campaign finance rulings ahead of the 2012 elections.

Those decisions further obscured the already fuzzy line between political organizations and social welfare organizations and effectively spelled the end to many Watergate-era laws restricting political contributions. The rulings also coincided with a rise in political activism -- most of it occurring on the right.

The Supreme Court's 2010 Citizens United decision in particular helped move the debate over distinguishing between political and social welfare groups "into the realm of regulation and bureaucrats protecting themselves and tax lawyers paid to find loopholes," said presidential historian Stephen Hess. The dispute, along with the controversy over government seizure of AP phone logs and Benghazi, may not torpedo Obama's presidency "but reflects the political level of skill of this administration, which has not been as high as many of us thought it would be based on his skill in winning the election," said Hess.

"There's a difference between campaigning and governance," he added.


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President Clinton
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President Bill Clinton’s administration leaned on the Heritage Foundation and the NRA.

George W. Bush
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During President George W. Bush’s administration, the NAACP found itself targeted by the IRS.


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