It didn't take long. It was only a little over a month ago when it was disclosed the Internal Revenue Service (IRS) did their job by giving extra scrutiny to groups applying for tax exempt status as 501(c)(4) organizations. And now, conservative "tea party" and "patriot" groups have, as Lyle Denniston over at SCOTUSBlog states, filed suit against the IRS for violating their rights due to this extra scrutiny.
Let's be clear, in order to be tax exempt as a 501(c)(4), you are to engage exclusively as a "social welfare" organization. By law, you are not allowed to be involved in politics, period. Let's also be clear, even though these conservative groups received extra scrutiny, not one of them was denied tax exempt status. Not one. Some did withdraw their applications, but not one was denied.
One would think, by watching and reading the "mainstream media" (MSM), that the IRS only gave extra scrutiny to conservative groups and only groups with "tea party" or "patriot" in their name. You would be sadly mistaken. According to the IRS Inspector General, over 300 organizations were given extra scrutiny. Of those 300, less than 100 of them were conservative groups. Plus, of those 300 groups, only one was denied tax exempt status under 501(c)(4) and it was a liberal organization.
So even though these conservative organizations were clearly political organizations, they knowingly conspired to break tax law and be subsidized by the American tax payer. To add insult to injury, they now file law suits against the IRS for giving them extra scrutiny. To be fair, none of them should have been given tax exempt status and the real scandal is that clearly political organizations are regularly given tax exempt status.
In my view, the federal judges hearing these cases should throw them out as being frivolous, as the "offended" parties clearly broke the law. Short of dismissal, these judges should rule that the law clearly states that to receive tax exempt status and the IRS has for years "misinterpreted" the statute and that these groups lose their tax exempt status.
Sadly, I don't think either will happen.
If they bring a suit and it starts to become obvious that the plaintiff was indeed breaking the law, what is the possibility of the state or the IRS bringing felony charges against them?
ReplyDeleteLittle to none. That is how much of a possibility there is. It will come down to the 30+ years that the IRS has been interpreting "exclusively" as "primarily". Going forward, a judge could order that the IRS interpret "exclusive" as "exclusive" and penalize any organizations who, in the future, violate that law.
DeleteThanks for the reply. I am in AZ and it's good to know that someone is following the antics of our legislature (e.g. Pearce) and MSCO.
DeleteThat was me above as "Captain Subtext" also.
DeletePete,
DeleteI moved from Phoenix in October, but I still try to keep up with the antics of the Arizona Legislature. Random Musings & The Arizona Eagletarian are great bloggers with better reporting, which you can find on the blog roll to the left.