Anatomy of a Bogus Scandal: GOP Knew of IRS Scrutiny But Stayed Quiet for a Year

Distraction (1)

There is little doubt Republicans do very little in an honest and forthright manner, and whether it is claiming tax cuts for their rich supporters create jobs and a vibrant middle class, or that denying women contraception coverage protects their constitutionally guaranteed religious freedom, there is always an ulterior motive unrelated to their stated agenda. There has always been something out of sorts with the phony I.R.S. scandal conservative political activists and Republican organizations screamed about over the past few weeks claiming they were harassed with unsuitable questionnaires and persecuted for months as the I.R.S. delayed making a decision on their applications for social welfare organizations. The question of whether or not various conservative campaign activists were unfairly targeted because of their political affiliation may be a valid issue in some quarters, but whether the I.R.S. was out of line in closely examining the groups’ applications for tax exemption cannot possibly be questioned as extreme or illegal by any semi-intelligent human being outside conservative circles.  As it turns out, there is much more to the so-called scandal than a few ambitious I.R.S. employees picking on besieged teabaggers, and it is not primarily that the groups filed for 501(c)(4) statuses as social welfare organizations that is the issue although it is closely related.

It has been reasonably postulated that the overriding reason conservative groups applied for tax exemption with the I.R.S. was because under the 501(c)(4) designation they do not have to reveal their donors allowing them to spend hundreds-of-millions of dollars on elections using undisclosed dark money. What has been a nagging question is why Republicans and their “social welfare” donors knew of the increased scrutiny for well over a year and were silent until a month ago when the I.R.S. revealed they targeted conservative groups seeking the special tax exempt status. It is prescient that during a hotly contested presidential election, Republicans kept their faux outrage in check until a month ago, and it is apparent that something besides the I.R.S. apology lit up the right and drove their phony scandal outrage.

First, it is important to acknowledge that, according to Marcus S. Owens who headed the I.R.S.’s exempt organizations division until 2000, “I.R.S. agents are obligated to determine if a 501(c)(4) group is primarily promoting social welfare.” While such groups are allowed limited election involvement, it cannot be their primary activity and basing a judgment does not hinge on the proportion of funds the groups spend on campaigns, but on a mix of facts and circumstances. According to Owens, the I.R.S. was not out of line in asking “questions that have been found to be germane in court decisions,” and that it was appropriate to ask groups about their donors, or whether their leaders planned to run for public office, and he noted that such questions are not prohibited if relevant to an application under consideration. After two years of asking relevant questions and determining that a majority of approved and pending applications were worthy of extensive scrutiny, it appears the I.R.S. was on the verge of calling for serious reviews the groups could not withstand.

The I.R.S. was separately reviewing (auditing) around 300 allegedly tax-exempt groups that likely engaged in improper campaign activity in past years according to I.R.S. planning documents, and it is obvious that the wave of lawsuits and intense congressional criticism of the way the I.R.S. handled applications are for the sole purpose of derailing those audits to give conservative nonprofits a free hand to inject unlimited anonymous dark money into the 2014 midterm elections. Obviously, few of the conservative groups could withstand audits of their organizations’ political activity without losing their social welfare status and being forced to reveal their secret donors’ and their connections to purely political campaign activity. The outraged conservatives are crying foul as a public distraction and to ramp up pressure on the I.R.S. from congressional Republicans who have intimated they should defund the agency thus neutering the section charged with monitoring tax-exemption requests.

It is relatively common  knowledge at this juncture that many of the conservative groups complaining the loudest that they were unfairly treated by the I.R.S. were clearly involved in election activities on behalf of Republicans or against Democrats. For example, one veterans’ group, CVFC, first applied for I.R.S. recognition in early 2010 and stated it did not plan to spend any money on politics. However, it listed an address with a political organization called Combat Veterans for Congress PAC that told the I.R.S. it only planned to e-mail veterans about ways to “engage in government” and provide “social welfare programs to assist combat veterans involvement in government.” But later in 2010, while awaiting an I.R.S. ruling, the organization spent $8,000 on radio ads backing a Republican for a House seat in San Diego according to Federal Election Commission records. The group failed to account for the campaign expense on its tax return, and checked the box marked “No” when asked if it had engaged in direct or indirect political activities on behalf of a candidate for political office. After two rounds of I.R.S. inquiries about the group’s donors and relationship with the CVFC PAC, the group still failed to report its campaign contributions and then complained loudly that the I.R.S. questions were inappropriate and “sweepingly overbroad,”  and claimed they answered them truthfully. A thorough review and audit would expose the group’s perjury and illegal practices, and by claiming intense partisan scrutiny, the agency is itself facing investigations for doing its due diligence and a comprehensive review of the CVFC will never reach fruition.

Considering the I.R.S. was reviewing 300  conservative organizations for discrepancies in their tax returns, FEC filings, and social welfare applications, it makes sense why Republicans kept quiet and waited until the reviews were impending and are now in jeopardy of being scuttled as the agency faces congressional and FBI investigations for simply doing its job. Republicans have used the so-called I.R.S. scandal to call for investigations into the I.R.S. practices, and their outrage is another form of obstructionism and is far more serious than their filibusters of every Democratic proposal in the Senate or the President’s nominees. A thorough, independent investigation will likely reveal that not only was the I.R.S. doing its job, it was on the verge of really doing its job and bringing an end to groups like the Koch brothers’ Americans for Prosperity illegally spending tens-of-millions of secret donors’ dollars to influence elections in a clear violation of FEC  and I.R.S. statutes. However, Americans will likely never know the depth of secret dark campaign money because while Congress and the FBI investigate a few overly-zealous I.R.S. agents going about their due diligence, the real I.R.S. reviews and audits will be quashed and another midterm election will be bought and paid for by the very groups obstructing investigations that had the potential of ensuring a free and fair election that no Republican can comport or allow.


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