The real scandal: IRS gives tax exemptions to political partisans

The revelation that conservative political groups seeking tax-exempt status were singled out for special attention by Internal Revenue Service bureaucrats has given Republicans their best cudgel yet to beat on the Obama administration. But as the outrage revs into high gear, let me offer a contrarian perspective: As inept as the IRS may have been in the way they processed applications for 501(c)(4) status, the bigger scandal is that the IRS grants the tax-exempt designation to so many overtly political organizations, treating them as if they are no more engaged in partisan politics than the Girl Scouts.

The reality is that numerous high-powered political operatives for both Republicans and Democrats have formed 501(c)(4) organizations. The GOP’s most prominent political guru, Karl Rove, has Crossroads GPS, a 501(c)(4) entity that spent $70 million during the 2012 campaign encouraging voters to cast their ballots for Republican candidates. Under the guidance of former Obama campaign manager Jim Messina, the president’s reelection apparatus has been reorganized as a 501(c)(4) group that no doubt will “educate” the public about the need for more Democrats in Congress.

After the Supreme Court’s notorious Citizens United decision in 2010 that opened the way for corporations and unions to spend unlimited amounts of money in political campaigns, all that new funding needed someplace to go where it would not be easily tracked. In response, the number of groups seeking 501(c)(4) status – which, in addition to the tax break, allows donors to remain anonymous – shot up to 3,400 in 2012.

The flood of applications overloaded the IRS processing system. It may be wrong that, in order to deal with the mountain of paperwork, the IRS functionaries began culling the applicants by looking for keywords such as “tea party” and “patriot,” but I suspect it had far less to do with political bias than it did with the fact that the majority of new groups were conservative. If someone were running a bogus political operation and wanted to attract corporate cash, they would probably pretend to be some kind of grass-roots tea party group. It is entirely understandable that an overwhelmed IRS bureaucrat would choose to look for questionable applicants in the most obvious places.

The fact is that none of the right-wing applicants were turned down, even though they are probably as engaged in partisan campaigning as Karl Rove or Jim Messina. A 501(c)(4) group is, by law, supposed to be a social welfare organization whose primary activity is not politics. Can anyone honestly say that about Rove or Messina or any of the many tea party organizations?

Sadly, after this so-called scandal has blown over and enough heads have rolled, the cowed IRS will be even more timid in denying tax-exempt designation to any front organization run by partisan political operatives and funded by corporate moneymen who want to keep their names out of the news.