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Wednesday, 12 June 2013 10:31

A Silver Lining in the IRS Hulabaloo?

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IRS SILVER LININGNew York State Attorney General Eric Schneiderman. (Photo: Azi Paybarah)BILL BERKOWITZ FOR BUZZFLASH AT TRUTHOUT

In the movie Silver Linings Playbook, Bradley Cooper's character, suffering from bipolar disorder, strives to find silver linings in his daily life. When it comes to the still-developing IRS scandal, looking for a silver lining may be a colossal stretch. In recent days, however, a sliver of a silver lining is peeking over the horizon.

At this point, it is difficult to predict the long-term consequences of the uproar over the IRS paying extra special attention to Tea Party and Patriot groups seeking tax-exempt 501(c)(4) status. There are many things we know for certain about the IRS scandal's recent trajectory: Congressman Darrel Issa (R-Ca.) will continue to receive more than his fair share of face time as he holds more hearings and makes more provocative statements to the media; Christian right legal firms will file lawsuits galore; a significant amount of money will be raised by conservative organizations; some on the right will push to "Abolish The IRS," while others will call for the impeachment of President Obama; and, in all likelihood, Tea Party and Patriot groups will attempt to launch a spring and summer offensive, based full of outrage and indignation, aimed at stirring up the base.

So where's the silver lining?

Now that the initial shock over the IRS revelations is wearing off, some attention is being paid – albeit only a tad at this time – to the lack of financial disclosure and to the overt political activities of many of the conservative groups that have received 501(c)(4) status from the IRS, and who are nevertheless complaining about the agency's scrutiny.

Recently, New York State Attorney General Eric Schneiderman, "moved to force all nonprofits - also called 501(c)4s - participating in politics in New York to disclose their donors - just like PACs, super PACs and candidates for office," Politico reported.

"It seems to be that the only reason in the post-Citizens United world to use a 501(c)(4) instead of a super PAC — which enables you to spend all the money you want in support of or opposition to a candidates — is to conceal your identity," Schneiderman told Politico in an interview.

According to Politico, "It's the first major push anywhere in the country to crackdown on political nonprofits — even if it only applies to groups operating in New York State. "I don't have jurisdiction over federal elections," Schneiderman said. "But I do have jurisdiction over nonprofit activity in New York."

Receiving 501(c)(4) status is supposed to mean that a group's primary activities promote "social welfare," and that they are not involved directly in political activities. Even as the IRS is being excoriated for supposedly singling out Tea Party and Patriot groups for special scrutiny, the agency never actually brought the hammer down on political spending by those groups.

Equally important, as Politico pointed out: "Nonprofit status exempts a group from taxes, allows them to file financial reports very infrequently — and, most importantly, gives them the ability to conceal their donors. Super PACs allow unlimited the same kind of independent spending, but require full disclosure of all donations and expenditures to the Federal Election Commission."

"We just realized that there were all of these groups that were applying for c4 status. Some of them would spend all their money and go out of business before the IRS even got to them," Schneiderman said. "It was clear that the regulatory apparatus was not working."

Chris Jankowski, the executive director of the State Government Leadership Foundation, a conservative 501(c)(4) group affiliated with the Republican Party, was incensed by Schneiderman's efforts. He told Politico that "Schneiderman is silencing the voices of the people he does not agree with and illegally targeting organizations that are engaging in constitutionally protected conduct as determined by our nation's highest court, This is yet another example of nonprofits being targeted by some of our government's most powerful arms. These actions by the attorney general stifle the First Amendment rights of those who dare to disagree with him."

Schneiderman's initiative followed statements by some in Congress including Rep. Jim McDermott (D-WA) who, at a recent IRS congressional hearing, wondered why right wing groups deeply involved in political issues, was seeking a government tax break: "... as I listen to this discussion, I'd like to remind everyone what we are talking about here," McDermott said. "None of your organizations were kept from organizing or silenced. We are talking about whether or not the American taxpayers would subsidize your work. We are talking about a tax break."

"Each of your groups is highly political," the congressman said. "From opposing the President's healthcare reform, to abortion restrictions, to gay marriage, you're all entrenched in some of the most controversial political issues in this country – and with your applications you are asking the American public to pay for that work. Many of you host and endorse candidates. The line between permitted political activity and non-permitted political activity can be very fine, and it's important that tax payers know which side you fall on."

In mid-May, the Institute for Research & Education on Human Rights (IREHR) basically got the ball rolling on the issue of overt political involvement of Tea Party groups that have 501(c)(4) status in pieces titled "The Tea parties and the IRS 'Scandal:' The Actual Facts of the Case," and "Tea Party Group Protesting IRS Has History of Questionable Political Involvement." The stories, written by the IREHR's vice president Devin Burghart, "showed that a half-dozen Tea Party organizations with non-profit corporate status engaged in apparently off-limits electioneering activities."

New York State Attorney General Eric Schneiderman is moving to require more financial transparency from 501(c)(4) groups, and several Democratic Party congressmen are getting bolder in their questioning of Tea Party witnesses at congressional hearings. These developments are a mere sliver of silver lining for sure, but a silver lining nevertheless.