17 May 2013 3:49 pm
The real IRS scandal is the misinterpretation of Section 501-C-4 of the tax code. Section 501-C-4 reads: Civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare. It was inserted in the tax code in 1913, apparently in response to a U.S. Chamber of Commerce request for an exemption for organizations that, while not strictly charitable, worked to promote the general welfare of the community. Later on, in the IRS guidelines as to what constitutes a social welfare organization the regulations say: Reg. 1. 501 C-4-1(a)(2)(i) provides that: [A]n organization is operated exclusively for the promotion of social welfare if it is primarily engaged in promoting in some way the common good and general welfare of the community. The words 'exclusively' and 'primarily' have two distinctively different meanings. The Inspector General for Tax Administration found agency employees were not provided with clear criteria to determine whether applicants are involved in an acceptable level of political activity. It became a full-blown political dodge after the U.S. Supreme Court ruled in 2010 in the Citizens United case that the First Amendment does not allow the government to limit independent political spending by corporations, unions and other organizations. That opened the floodgates for money to flow into the coffers of 501-C-4 groups created to promote candidates while guaranteeing its donors anonymity. What was supposed to be a tax haven for organizations whose primary function is social welfare has been widely abused by political groups of all stripes to keep their donors' identities secret while pouring hundred of millions of dollars into partisan advertising and other political activities. Tax exempt groups should be given a clear choice -- either directly engage in political activity or stick exclusively to social welfare activities. Those that opt to be political should have to disclose the identity of their contributors, as is currently required for groups with a 527 tax-exempt status. Groups that choose to keep their contributors' identities secret should be prohibited from engaging in any political activity. They would fit neatly in the existing 501(3) tax status that includes churches and charitable foundations. Congress should eliminate the squishy 501(4) middle ground, which is where the IRS and Obama are currently mired. http://www.newsday.c...tatus-1.5278185 I'm still waiting for one right winger to tell me that Karl Rove's Crossroads GPS group is operated 'primarily' for promoting in some way the common good and general welfare of the community. According to the law, it should be acting 'exclusively' in that capacity, and we all know that's not happening.