One Straight Out Of The Nixon Playbook

[Andrew D]

The IRS's adoption of a totally different standard for 501(c)(4) entities than for 501(c)(3) entities is not a matter of "legislative design". The definition of "social welfare" which you quote is not one made by the legislature (Congress). It is purely a concoction of the IRS.

And the IRS's definition of "social welfare" is irrelevant anyway. The issue is not whether the exempt purposes pursuant to 501(c)(4) are broader than the exempt purposes pursuant to 501(c)(3). The issue is how much of its activities a 501(c)(3) entity or a 501(c)(4) entity can devote to non-exempt purposes, whatever those non-exempt purposes may be.

The fact that donations to 501(c)(3) organizations are tax-deductible, whereas donations to 501(c)(4) organizations are not, is also immaterial. In Better Business Bureau, the issue was not whether donations to the BBB were tax deductible. The issue was whether the BBB was itself exempt from Social Security taxes. And the Supreme Court held that the BBB itself was not exempt from Social Security taxes, because "an important, if not primary" fraction of the BBB's activities was to further non-exempt purposes.

Congress said that both 501(c)(3) and 501(c)(4) organizations must be "exclusively" engaged in activities in furtherance of exempt purposes. And the Supreme Court has held that "exclusively" does not prohibit such organizations from engaging in activities in furtherance of non-exempt purposes, if those activities are insubstantial.

If Congress meant that 501(c)(4) entities need only be "primarily" engaged in activities in furtherance of exempt purposes -- if Congress wanted to distinguish entities on the basis of whether donations to those entities are or are not tax-deductible -- it could easily have said so. But it did not. Instead, it enacted the same standard -- "exclusively" -- for both kinds of entities.

The IRS should apply to 501(c)(4) entities the standard which Congress, as interpreted by the Supreme Court, has commanded it to apply -- the same standard that it applies to 501(c)(3) entities: In order to retain its tax-exempt status, a 501(c)(4) entity must not "carry on, otherwise than as an insubstantial part of its activities, activities which are not in furtherance of one or more exempt purposes ...."

[Econoline]

In order to be "straight out of the Nixon playbook" this would have to have been a top-down directive from the POTUS

Econo, I think what appears to have happened here is arguably worse....

Hmm...no further comment or argument now that the facts are out there?

[Lord Jim]

Well Econo, since I have seen absolutely nothing that factually negates or contradicts what I said (with the trivial exception of the use of the word "audits"; No these weren't audits; these organizations were being singled out for other forms of harassment by IRS employees, based purely on political criteria) :

In this case, what seems to have happened is that a group of career IRS employees took it upon themselves to act like a bunch of "Little Nixons"...

They decided on their own that they would corrupt the IRS tax audit system in the furtherance of their own political biases...[Yes, that should have read:"They decided on their own that they would corrupt the IRS tax exempt status approval system in the furtherance of their own political biases..." mea culpa...]

And furthermore, it also appears that when this outrageous practice came to attention of those higher up in the food chain at the IRS, little or nothing was done to hold these people to account...

In fact everything that I've seen that has come to light so far, (and I've followed this fairly closely; I've had the Ways and Means Committee hearing with Miller on all morning; it's still on) would seem to completely confirm my initial conclusions.

So I really saw no reason to comment further. Why, have you seen evidence that the instructions for this political targeting went beyond the IRS?

The issue that Long Run has been talking about regarding the regulations governing 501-C4s in general is a completely separate topic from what happened in this case....

It would be utterly irrational to think that the motivation behind this wasn't a reflection of pure political bias....

As Paul Ryan got Miller to admit at the hearing this morning, they weren't auto-flagging organizations for closer scrutiny with words like "progressive" in their names....

[Lord Jim]

In fairness, I guess there has been at least one new fact that has come to light since I last posted about this...

We now know that at least two high-ranking IRS officials; the aforementioned (and now fired) Miller and Lois Lerner, director of the IRS’s exempt-organi­zations division, (I expect she'll soon be looking for new employment as well) not only failed to take any significant disciplinary action against the Little Nixons when they became aware of what had been going on, (Lerner told them to stop the targeting, but according to the IG who testified this morning, they weren't removed and they started up again after a few months) but also failed to properly inform the relevant congressional oversight bodies (even when they were called to testify on this very issue) after they themselves were fully aware of what had happened.

Is that the new "fact" that you wanted me to comment on?

[Econoline]

Well Econo, since I have seen absolutely nothing that factually negates or contradicts what I said (with the trivial exception of the use of the word "audits"; No these weren't audits; these organizations were being singled out for other forms of harassment by IRS employees, based purely on political criteria)

????? How does that jibe with the fact that three-fourths of the organizations whose applications were subjected to additional review were NOT conservative groups? Or the fact that NONE of the groups had their applications for 501c(4) status turned down? Or the fact that the whole thing was brought to light by an IRS internal review , which corrected the situation and reported reported it to the Treasury Department, who informed the White House, who informed the American people?

Despite the Republican cries of "Harassment!" and attempts to make it into the Political Scandal of the Century, it looks to me like the system worked exactly as it was supposed to. No harm, no foul, no secrets, no cover-up, no blow jobs.

[Lord Jim]

Gee Econo, I guess you think that instead of being shit-canned, Miller should have gotten The Medal Of Freedom....

That summary of yours has so many holes, missing pieces and mischaracterizations that not even Jay Carney would try to fob it off on the public....

Take a look at the IG report...

[Crackpot]

I think the point econo is trying to make is that the problem isn't as huge as it has been made out to be

[Lord Jim]

Given the rosy way in which Econo attempts to paint this, (with some really creative out of context cherry picking and timeline ignoring) and the way he poo poos it's significance, he must see this as a gross over reaction:

STATEMENT BY THE PRESIDENT

East Room

6:21 P.M. EDT

THE PRESIDENT: Good afternoon, everybody. I just finished speaking with Secretary Lew and senior officials at the Treasury Department to discuss the investigation into IRS personnel who improperly screened conservative groups applying for tax-exempt status. And I look forward to taking some questions at tomorrow's press conference, but today, I wanted to make sure to get out to all of you some information about what we're doing about this, and where we go from here.

I've reviewed the Treasury Department watchdog's report, and the misconduct that it uncovered is inexcusable. It's inexcusable, and Americans are right to be angry about it, and I am angry about it. I will not tolerate this kind of behavior in any agency, but especially in the IRS, given the power that it has and the reach that it has into all of our lives. And as I said earlier, it should not matter what political stripe you're from -- the fact of the matter is, is that the IRS has to operate with absolute integrity. The government generally has to conduct itself in a way that is true to the public trust. That's especially true for the IRS.

So here's what we're going to do.

First, we're going to hold the responsible parties accountable. Yesterday, I directed Secretary Lew to follow up on the IG audit to see how this happened and who is responsible, and to make sure that we understand all the facts. Today, Secretary Lew took the first step by requesting and accepting the resignation of the acting commissioner of the IRS, because given the controversy surrounding this audit, it's important to institute new leadership that can help restore confidence going forward.

Second, we're going to put in place new safeguards to make sure this kind of behavior cannot happen again. And I've directed Secretary Lew to ensure the IRS begins implementing the IG's recommendations right away.

Third, we will work with Congress as it performs its oversight role. And our administration has to make sure that we are working hand in hand with Congress to get this thing fixed. Congress, Democrats and Republicans, owe it to the American people to treat that authority with the responsibility it deserves and in a way that doesn't smack of politics or partisan agendas. Because I think one thing that you've seen is, across the board, everybody believes what happened in -- as reported in the IG report is an outrage. The good news is it's fixable, and it's in everyone's best interest to work together to fix it.

I'll do everything in my power to make sure nothing like this happens again by holding the responsible parties accountable, by putting in place new checks and new safeguards, and going forward, by making sure that the law is applied as it should be -- in a fair and impartial way. And we're going to have to make sure that the laws are clear so that we can have confidence that they are enforced in a fair and impartial way, and that there's not too much ambiguity surrounding these laws.

So that's what I expect. That's what the American people deserve. And that's what we're going to do.

Thank you very much.

ETA:

It took him a few days, but I'll give Obama some credit...It seems like now at least he finally "gets it"....

Which is more than apparently can be said for Econo....

In fact I haven't seen even the most partisan congressional Democrats or media pundits try to paint a Happy Face on this the way Econo seems to be trying to do....

[Long Run]

I don't think you can conclude that this was not a big issue from the mere fact 75 out of 300 applications that were subject to higher review were "tea party", "patriot" or similarly worded organizations. It is actually 85 out of 298, see below. If every application with the target words were subject to higher scrutiny that would be 100% targeting, but only about 0.4% of other applications are subject to higher scrutiny, then it is still a big issue because of the inherent bias. We don't know the actual percentage of "tea party" or "patriot" reviewed, but clearly a high percentage were selected for higher review, solely based on their name. In contrast, the other 213 cases were presumably selected based on a description of their proposed activities. The IRS received about 70,000 applications in 2012, the vast majority of which are from organizations that have no interest in legislative or political topics, but that just reinforces the skewed IRS selection in this matter.

From CNN (http://www.cnn.com/2013/05/16/politics/btn-irs/)

298 - Cases as reviewed by the IRS inspector general as potential political cases not eligible for tax exempt status as of May 31, 2012.

72 - Case files under review where the organization's name contained "Tea Party."

13 - Cases under review where the name included the word "Patriots."

160 - Cases under review that had been held open for at least 206 to 1,138 days (almost three years).

121 days - The IRS's overall goal for completing each application for tax-exempt status.

66,543 - Number of applications received by the IRS in fiscal year 2012 for 501(c)(3) tax-exempt status.

3,357 - Number of applications received by the IRS in fiscal year 2012 for 501(c)(4) tax-exempt status.

[Lord Jim]

No harm, no foul

The more I think about it, the more it stuns me that anyone who has paid any attention to this at all could possibly come to a conclusion like that...

[oldr_n_wsr]

I wonder how any group with "progressive" or "social.." in it's name faired in the review process?

ETA
And wasn't Obama's 1/2 brother group fast tracked?

[dales]

Careful, there Older....................you're talking about the "most transparent administration" in US history.

[Lord Jim]

I wonder how any group with "progressive" or "social.." in it's name faired in the review process?

Under questioning at the hearing today oldr, Miller admitted that no terms generally associated with left-wing groups were used to automatically flag organization applications for greater scrutiny.

Only those associated with conservative groups.

But of course political bias played no role....this was just sheer coincidence...

[Lord Jim]

Yes sirree, no harm no foul:

Report slams lax IRS management as DOJ opens criminal probe

Internal Revenue Service staff improperly targeted Tea Party groups for extra scrutiny thanks to poor management at the agency, a highly anticipated internal report has found. The report was made available just hours after the U.S. Justice Department announced a criminal investigation into the scandal.

“Ineffective management .. allowed inappropriate criteria to be developed and stay in place for more than 18 months,” and “resulted in substantial delays in processing certain applications,” the report, prepared by the IRS inspector general and obtained by MSNBC and other news outlets Tuesday afternoon, concluded.

In a statement released Tuesday evening in response to the report, President Obama called the IRS’s actions “intolerable and inexcusable,” and “wrong,” and pledged that those responsible would be held accountable.

Treasury Secretary Jacob Lew also released a statement, saying, “While the Inspector General found no evidence that any individual or organization outside the IRS influenced the decision to use these criteria, these actions were inappropriate and did not reflect the high standards which I expect and the public deserves.”

IRS agents are said to have used keyword searches for terms like “Tea Party,” “Patriot,” and “9/12” in order to single out conservative groups for special scrutiny when they applied for nonprofit status.

The report added: “The criteria developed by the Determinations Unit gives the appearance that the IRS is not impartial in conducting its mission.”

The IG also appears to differ with IRS leadership over whether the problems raised by the report have been fully addressed.

“The IRS’s response also states that issues discussed in the report have been resolved,” Michael McKenney, the acting deputy inspector general for audit writes in a memo accompanying the report. “We disagree with this statement as well. Nine recommendations were made to correct concerns we raised in the report, and corrective actions have not been fully implemented. Further, as our report notes, a substantial number of applications have been under review, some for more than three years and through two election cycles, and remain open. Until these cases are closed by the IRS and our recommendations are fully implemented, we do not consider the concerns in this report to be resolved.”

In announcing the Justice Department probe, Attorney General Eric Holder said: ”The FBI is coordinating with the Justice Department to see if any laws were broken in connection with those matters related to the IRS. We are examining the facts to see if there were criminal violations.”

The twin developments came as the focus on the scandal intensified across Washington. The House Ways and Means Committee plans to hold a hearing Friday on the issue, and the committee’s Republican chairman, Rep. Dave Camp, and its ranking Democrat, Rep. Sander Levin, have together asked the IRS for all documents relating to the issue, setting next Tuesday as a deadline. Other committees have also pledged to conduct investigations. An IRS inspector general’s report on the episode is set to be released this week.

White House Press Secretary Jay Carney said at a Tuesday afternoon press briefing that those responsible for the targeting “should be held accountable.”

Questions continue to mount not just about the original targeting effort, but about whether IRS leadership informed Congress about the inappropriate targeting in a timely and candid manner.

In a letter sent Tuesday to Lois Lerner and provided to MSNBC, the director of the IRS’s Exempt Organizations Division, Reps. Darrell Issa and Jim Jordan wrote: “It appears that you provided false or misleading information on four separate occasions last year in response to the Committee’s oversight of IRS’s treatment of conservative groups applying for tax exempt status.”

An agency official told Congress last year that the IRS routinely brings in the office of its top lawyer to help agents avoid bias when considering applications from advocacy organizations, raising the question of whether senior IRS leadership were aware of an inappropriate effort to target conservative groups for special scrutiny earlier than the agency has said.

In an April 2012 letter to Issa provided to MSNBC, Lerner wrote that “tools are available to promote consistent handling” of cases. For example, she continued, “in situations where there are a number of cases involving similar issues (such as…advocacy organizations), the IRS will assign cases to dedicated employees to promote consistency. Additionally, in these cases, EO Technical (an office of specialists in Exempt Organizations) works with the IRS Office of Chief Counsel to develop educational materials to assist the revenue agents in issue spotting and crafting questions to develop cases consistently.”

Issa, the chair of the House Oversight and Government Reform Committee, had written to Lerner requesting information on the IRS’s process of handling applications for nonprofit status, after news reports suggested that the agency had targeted some conservative groups for special scrutiny.

Asked by MSNBC whether the IRS chief counsel’s office was consulted at the start of the process in which the agency’s Cincinnati office singled out Tea Party groups, an IRS spokesman pledged to respond, but has not yet done so.

If the chief counsel’s office was brought in on the front end of the process, it could mean top agency personnel in Washington, D.C., were aware of the targeting much earlier than the IRS has previously said. According to a draft of the inspector general’s report that has been seen by congressional offices, the effort began in March 2010, and the agency’s chief counsel was not briefed on the issue until August 2011. If the chief counsel’s office wasn’t brought in, it would raise questions about whether Lerner provided misleading information in response to a congressional inquiry.


In response to Issa’s March 2012 inquiry, Lerner sent both a 10-page letter quoted above, and a more detailed 45-page followup the following week. Lerner also met with committee staff in March and May 2012. But at no point did she mention that Tea Party groups had been targeted, according to committee staff and a review of the letters. According to the IG’s draft report, Lerner was told of the targeting in June 2011, and quickly ordered a halt to the effort, though a modified version of the targeting later restarted.

Lerner isn’t the only top official who may have withheld information about the targeting from lawmakers. Around the same time that Issa was making inquiries, Rep. Charles Boustany also wrote to the agency asking specifically whether Tea Party groups had been targeted. In a June 15 response, Steven Miller—then the IRS deputy commissioner, now its acting commissioner—wrote that the agency “took steps to coordinate the handling of the case to ensure consistency,” but didn’t say that the groups had indeed been targeted, the AP reported.

The following month, Miller testified before the House Ways and Means Committee and was asked whether the IRS had harassed political organizations, but again did not mention the targeting of Tea Party groups.

It’s a serious problem for agency officials to be less than forthcoming in response to inquiries from Congress, one former IRS commissioner told MSNBC.

“One of the fundamental obligations you have as the head of the service is to communicate with the American people and their representatives about what’s going on at the service,” Mark Everson, who led the IRS from 203 until 2007, said. “So you need to be candid and forthright with the Congress.”

Everson said that’s especially true given the widespread public antipathy toward the nation’s tax collecting agency.

“It’s good sport to criticize the IRS. Nobody sticks up for the IRS,” Everson said. “So the only way you can mitigate that is to at least make sure that you’ve been entirely candid and you can’t be criticized for withholding things.”

http://tv.msnbc.com/2013/05/14/doj-open ... y-scandal/

[oldr_n_wsr]

Didn't I hear that one of those involved in this has been internally "reassigned" to administer Obama-Care?

[Lord Jim]

Oldr, you are referring to Sarah Ingram, The Commissioner of Tax Exempt and Government Entities from 2009-2012, (which covers the period of the political targeting) and the person who Lois Lerner, (the Director of Exempt Organizations) directly reported to.

IRS Official in Charge During Tea Party Targeting Now Runs Health Care Office

The Internal Revenue Service official in charge of the tax-exempt organizations at the time when the unit targeted tea party groups now runs the IRS office responsible for the health care legislation.

Sarah Hall Ingram served as commissioner of the office responsible for tax-exempt organizations between 2009 and 2012. But Ingram has since left that part of the IRS and is now the director of the IRS’ Affordable Care Act office, the IRS confirmed to ABC News today.

Her successor, Joseph Grant, is taking the fall for misdeeds at the scandal-plagued unit between 2010 and 2012. During at least part of that time, Grant served as deputy commissioner of the tax-exempt unit.

Grant announced today that he would retire June 3, despite being appointed as commissioner of the tax-exempt office May 8, a week ago.

http://abcnews.go.com/blogs/politics/20 ... re-office/

She was appointed to her current position by the now fired Miller...

While what Ms. Ingram knew and when she knew it is a little murky at this point... (it would seem awfully strange if Lerner didn't bother to mention anything about it to her, or if she wasn't privy to the same information Miller got; but this will no doubt be established as the various investigations go forward...if she knew anything about it, like all the other relevant high ranking IRS officials involved, she never said anything about it to any Congressional Committee investigating the issue)

However for someone with this background to be heading up the IRS enforcement operation for Obamacare is extremely problematic politically for the Obama Administration, and I strongly suspect that she will soon join Mr. Miller, Mr. Grant, (and shortly Ms. Lerner) in pursuing opportunities in the private sector....

[Lord Jim]

Hmm...no further comment or argument now that the facts are out there?

Now that I think about it Econo, a great many facts about this are now in the public sphere that weren't available when I first posted about it...

I want to thank you for providing me with the encouragement to return to this thread and expound upon them...

[Econoline]

You're welcome. Happy to be of service...

[Andrew D]

Fact: The claim that there was no political motivation behind this targeting strains credulity. (It is remotely possible.)

Fact: There is, at least as yet, no evidence that the White House was involved in the targeting.

Fact: Many of the partisans who are trying to make anti-Obama political hay out of this are the same people who have dismissed Iran-Contra -- when secret and illegal funding for a dirty little war was coming directly from the White House -- was a trivial matter.

[Andrew D]

Am I correct in assuming that if a republican RONALD REAGAN were POTUS, the screeching from the left would be deafening and non-stop.

If Reagan were President, the targeting operation would have been run out of the basement of the White House.