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Six Facts Lost in the IRS Scandal
Posted By Editor On May 29, 2013 @ 1:23 pm In National & World News | Comments Disabled
By Kim Barker and Justin Elliott ProPublica
In the furious fallout from the revelation that the IRS flagged  applications from conservative nonprofits for extra review because of their political activity, some points about the big picture – and big donors — have fallen through the cracks.
Consider this our Top 6 list of need-to-know facts on social welfare nonprofits , also known as dark money groups because they don’t have to disclose their donors. The groups poured more than $256 million  into the 2012 federal elections.
1. Social welfare nonprofits are supposed to have social welfare, and not politics, as their “primary” purpose.
A century ago, Congress created a tax exemption for social welfare nonprofits. The statute  defining the groups says they are supposed to be “operated exclusively for the promotion of social welfare.” But in 1959 , the regulators interpreted the “exclusively” part of the statute to mean groups had to be “primarily”  engaged in enhancing social welfare. This later  opened the door to political spending.
So what does “primarily” mean? It’s not clear. The IRS has said it uses a “facts and circumstances”  test to say whether a group mostly works to benefit the community or not. In short: If a group walks and talks like a social welfare nonprofit, then it’s a social welfare nonprofit.
This deliberate vagueness has led some groups to say that “primarily” simply means they must spend 51 percent of their money on a social welfare idea — say, on something as vague as “education,” which could also include issue ads criticizing certain politicians. And then, the reasoning goes, a group can spend as much as 49 percent of its expenditures on ads directly advocating the election or defeat of a candidate for office.
Nowhere in tax regulations or rulings does it mention 49 percent, though. Some nonprofit lawyers have argued that the IRS should set hard limits for social welfare nonprofits — setting out, for instance, that they cannot spend more than 20 percent of their money on election ads or even limiting spending to a fixed amount, like no more than $250,000.
So far, the IRS has avoided clarifying any limits.
2. Donors to social welfare nonprofits are anonymous for a reason.
Unlike donors who give directly to politicians or even to super PACs, donors who give to social welfare nonprofits can stay secret. In large part, this is because of an attempt by Alabama to force the NAACP, then a social welfare nonprofit, to disclose its donors in the 1950s. In 1958, the Supreme Court sided with the NAACP , saying that public identification of its members made them at risk of reprisal and threats.
The ACLU, which is itself a social welfare nonprofit, has long made similar  arguments . So has Karl Rove, the GOP strategist and brains behind Crossroads GPS, which has spent more money on elections than any other social welfare nonprofit. In early April 2012 , Rove invoked the NAACP in defending his organization against attempts to reveal donors.
The Federal Election Commission could in theory push for some disclosure from social welfare nonprofits — for their election ads, at least. But the FEC has been paralyzed by a 3-3 partisan split, and its interpretations of older  court decisions  have given nonprofits wiggle room to avoid saying who donated money, as long as a donation wasn’t specifically made for a political ad.
As your kindergarten teacher probably told you, two wrongs do not make a right. But the discrepancy in reactions to wrongs does, indeed, show how Washington so often serves the interests of the political right.
That’s one of the big – if deliberately ignored – takeaways from the reaction to news that the Internal Revenue Service allegedly targeting conservative organizations for extra scrutiny in their larger review of political groups’ tax exempt status. In the last few days, the allegations have generated a wave of national headlines, a congressional investigation ,federal legislation  and ever-louder  calls for impeachment .
Considering the gravity of the allegations against the Obama IRS from the Treasury Department’s inspector general, congressional scrutiny is certainly warranted. However, there’s just one problem: most of the lawmakers and pundits today decrying the use of public resources against a White House’s political opponents had little – if anything – to say about equally troubling revelations about the Bush administration’s deployment of public resources against its opponents. In fact, conservatives said so little back then that Fox News apparently doesn’t even know  (or is pretending not to know) the Bush administration used the IRS in the same way the Obama adminstration allegedly did.
And here’s the even more incredible thing: the Bush cabal didn’t just use the IRS for its political hackery – it mounted a full-scale government-wide assault on its enemies, marshaling disparate agencies in its smear efforts.
Bush’s use of the IRS was but one part of that larger assault. As my Salon colleague Alex Seitz-Wald notes today in greater detail , in 2005, Bush’s IRS began what became an extensive two-year investigation  into a Pasadena church after an orator dared to speak out against President Bush’s Iraq War. Not coincidentally, the Los Angeles Times  reports that the church targeted just so happened to be “one of Southern California’s largest and most liberal congregations.”
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URLs in this post:
 Image: http://www.propublica.org
 IRS flagged: http://www.reuters.com/article/2013/05/10/us-usa-politics-irs-idUSBRE9490S720130510
 social welfare nonprofits: http://www.propublica.org/article/how-nonprofits-spend-millions-on-elections-and-call-it-public-welfare
 $256 million: http://www.opensecrets.org/outsidespending/
 statute: http://www.law.cornell.edu/uscode/text/26/501
 1959: http://www.gpo.gov/fdsys/pkg/CFR-2010-title26-vol7/pdf/CFR-2010-title26-vol7-sec1-501c5-1.pdf
 “primarily”: http://www.irs.gov/pub/irs-tege/eotopicg81.pdf
 later: http://www.irs.gov/pub/irs-tege/rr81-095.pdf
 “facts and circumstances”: http://www.irs.gov/pub/irs-tege/eotopicm95.pdf
 NAACP: http://supreme.justia.com/cases/federal/us/357/449/case.html
 similar: http://www.cnn.com/2013/05/12/opinion/macleod-ball-irs-tea-party
 arguments: http://www.aclu.org/blog/free-speech-technology-and-liberty/common-ground-campaign-finance
 April 2012: http://tpmmuckraker.talkingpointsmemo.com/2012/04/karl_rove_compares_american_crossroads_to_naacp_video.php
 older: http://www.law.cornell.edu/supct/html/historics/USSC_CR_0424_0001_ZO.html
 court decisions: http://www.citizen.org/documents/rise-of-secret-money-disclosure-needed.pdf
 Image: http://www.propublica.org/article/six-facts-lost-in-irs-scandal
 Image: http://www.alternet.org
 Bush Used the IRS, FBI, CIA and Secret Service to Go After Opponents — Where Was the Fox and GOP Outrage?: http://www.alternet.org/bush-used-irs-fbi-cia-and-secret-service-go-after-opponents-where-was-fox-and-gop-outrage?akid=10432.1089674.ya6c7F&rd=1&src=newsletter840231&t=10
 congressional investigation: http://livewire.talkingpointsmemo.com/entry/house-committee-to-probe-alleged-irs-targeting
 federal legislation: http://www.salon.com/2013/05/13/gop_bill_would_criminalize_political_discrimination_at_the_irs/
 ever-louder: http://www.rawstory.com/rs/2013/05/12/george-will-floats-impeachment-after-irs-targets-tea-party-groups/
 calls for impeachment: http://www.theblaze.com/contributions/why-the-irs-scandal-should-lead-to-obamas-impeachment/?utm_source=twitter&utm_medium=story&utm_campaign=Share%20Buttons
 Fox News apparently doesn’t even know: http://video.foxnews.com/v/2378580262001/what-if-irs-under-president-bush-targeted-liberal-groups/
 in greater detail: http://www.salon.com/2013/05/14/when_the_irs_targeted_liberals/
 two-year investigation: http://www.npr.org/templates/story/story.php?storyId=14715290
 Los Angeles Times: http://articles.latimes.com/2007/sep/24/local/me-allsaints24
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