IRS Mess: Just What Lines Did the Tax Body Cross?

uncle_samDepending on who you ask, the Internal Revenue Service did not just cross the line. To the affected groups — chiefly conservative and tea party coalitions — the biased solicitation for additional information on members of 501c(4) groups and additional reviews of tax-exempt claims constitutes a full-fledged face plant into the mud for America’s tax authority.

Last week, Lois Lerner, who leads oversight of tax-exempt groups, issued an apology admitting that the IRS had unfairly targeted conservative political groups during the 2012 election. According to Lerner, lower-level IRS employees pursued additional review of of groups containing keywords like “tea party” or “patriot” that were suspected of violating their tax-exempt statuses.

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The case had been developing for some time beforehand, but the admission thrust the situation straight to the forefront of the national political conversation. Attorney General Eric Holder has ordered an investigation into whether or not criminal activity took place at the IRS, and White House officials — including President Barack Obama himself — have said that they will wait to pass judgement until the results of the investigation come in.

“If, in fact, IRS personnel engaged in the kind of practices that have been reported on and were intentionally targeting conservative groups, then that is outrageous, and there is no place for it, and they have to be held fully accountable,” Obama in a statement on Monday.

A USA Today review of IRS data shows that applications for non-profit status from certain conservative groups sat in a limbo for as long as 27 months while applications from similar liberal groups were approved in as few as nine months.

The ordeal took shape between 2010 and 2012. In the wake of the 2010 Citizens United V. Federal Election Commission Supreme Court Decision, the number of applications for 501c(4) organizations increased 183 percent, which undoubtedly raised a few eyebrows at the IRS. In this case, it looks like the IRS was challenging whether or not these groups were actually “primarily engaged in the promotion of social welfare,” as the verbiage of the Internal Revenue Code dictates they must be in order to quality for tax-exempt status.

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In an audit released on Tuesday, the IRS inspector general said that the agency used “inappropriate criteria that identified Tea Party and other organizations applying for tax-exempt status based upon their names or policy positions” to try and determine the validity of their “social welfare” claims.

Obama announced on Wednesday night that the acting commissioner of the IRS, Steve Miller, would be removed from his position. The President said Treasury Secretary Jacob J. Lew had asked for and accepted the resignation of Miller. “Americans have a right to be angry about it, and I’m angry about it,” Obama said. “It should not matter what political stripe you’re from. The fact of the matter is the IRS has to operate with absolute integrity.”

To be clear, conservative groups weren’t the only organizations targeted by the IRS for increased scrutiny in the wake of Citizens United. After the ruling and during the 2012 presidential campaign, the media was ripe with reports about how people were abusing 501c(4) organizations to anonymously fund political activity. News organizations from all walks called on the IRS to increase its scrutiny of these groups.

IRS officials told lawmakers on Tuesday that 471 groups received additional scrutiny, and that while none of the Republican groups have said their applications were denied, at least one Democratic-leaning group was denied tax-exempt status.

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According to The Center for Responsive Politics, outside groups including non-profit social welfare groups spent $1 billion in the 2012 elections, three times as much as they did in the 2008 elections.

A hearing has been scheduled for Friday, according to a press release from the Ways and Means Committee. Miller is still scheduled to testify on Friday in the first of a series of hearings.

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