It’s Complicated
Both Lawyers, Guns & Money and Charley Pierce offer a different view of what the IRS office in Cincinnati was doing.
I have a view that most people would miss because the Section 501(c)(4) “social welfare tax exemption” takes some getting used to.
If you look at a group like MADD [Mothers Against Drunk Driving] there is no problem. They push for strengthening the laws and increasing the penalties for drunk driving. That’s where they put their effort, on that issue. When you get a single issue group with a defined goal, there is no problem making the status determination.
What happened to the IRS office in Cincinnati was a flood of applications from groups that had very general issues and vague goals. The agents were supposed to determine who met the rather vague definition of a “social welfare” group, as opposed to a political group.
Given the speed with which everyone identified these groups as belonging to one political sphere, that of the Republican Party, I would say that it was obvious that they weren’t valid “social welfare” groups and their applications should be turned down. There is a separate tax exempt section for political groups, and it would appear to be the best choice for them. There are activities of political groups that are tax exempt, but donations are not, and reporting of donors names is required.
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Not to mention the fact that 75% of the non-profits in this category audited by the IRS violated the political activity restrictions. I.e., they had developed a profile of known tax cheats and were executing on it. I thought the right wing liked profiling? Oh right, that’s only for brown people :twisted:.
BTW, for someone who wants to know what a valid “social welfare club” looks like, consider my Jeep club. Our annual budget is under $2K/year entirely from membership dues, our political activity consists of sending emails and letters asking politicians to please keep our Jeep trails open (and takes $0 of our annuel budget), we have a meeting every month to plan our Jeep trips and our annual BBQ, and nobody draws a salary — our money gets spent on the BBQ and other social activities, not on enriching someone or on political activities. Does this describe any of the Teatard organizations that were targetted by the IRS? Really?
I’m beginning to suspect that the groups were using ‘boiler plate’ applications. When you get a lot of forms that are identical in every field except name and address you get suspicious. OTOH, if you lump them together based on those identical forms and check one of the group, you can rubber stamp the rest based on what you find, a standard practice in bureaucracies.
There are definitely management problems at the IRS because the Senate Republicans are blocking the approval of a new commissioner, just like they are blocking approval of a lot of agency heads and board members.
The big things about a 401(c)(4) are that donations are tax deductible and donors don’t have to be publicly identified. Those are the reasons they are so popular.
Yep, your Jeep club stays with a single issue and does something other than politics. It is solidly between the lines and an easy decision. The IRS isn’t supposed to be political, so it shouldn’t be tasked with political decisions, but that’s what the Citizens United decision did. These are decisions that should be made by the Federal Elections Commission, although neither one has the money or staff to do more than a half-assed job in any case.
Update: My bad, the Jeep club may fall under 501(c)(7) Social and recreation clubs, unless you specify working for more trails.