Tax codes are no fun to sift through. There are temporary regulations that are superseded by new regulations and histories of regulations that make me glad for Wikipedia. I hate digging through them, but I felt the need to recently after reading an article from the Washington Post.
The IRS targeting is something that the Washington Post doesn’t seem to want to let down on with an article from their fact checker recently. The Post examined the claim of the IRS only flagging 501(c)4 organizations because the numbers had “doubled” in applications from prior years. They gave the claim “4 Pinocchios” (their rating system for lies) after showing numbers specifically for 2009, 2010, and 2011. I got stuck on their number at 2011 which they claimed was far from “double” the previous year and fairly, their numbers showed around a 50% growth, only half of what was being written by media. I think the Post needs to fact-check their fact checker.
While reading through the numbers, I found that articles from Raw Story, Politics USA, and Think Progress (among many others) had included the 2012 numbers which could only be estimated by the Washington Post’s admission in their article. However, the numbers listed for the previous years were nearly the same if not exact in most cases. However, here is where the spin sets in to try to get the Tea Party back on a list of being victimized by the IRS unfairly.
The claims made by the Washington Post asserted the numbers were being blown out of proportion to make the IRS less scandalous in this matter. However, if you do run by the estimates of 2012 and compare them to 2010, they do appear to double in that time frame which would be on the low end of total growth. When one compares 2011 to 2010 then it only scales towards doubling in 2012. 4 Pinocchios? I think that was more than a little harsh and a bit of a spin on facts. If the Washington Post has integrity, they will compare the data from 501(c)4’s prior to 2009 in order to determine if the scale was something to be flagged.
In the middle of the IRS documents I found a nice word in the description of 501(c)4 groups which caught my attention: Intermediate Sanctions. This wasn’t a familiar term for me, and it seemed to be the main enforcement of how to judge whether or not to flag an application for the tax-free status. What I found was The Taxpayer Bill of Rights (TABOR). TABOR was written by Conservatives and Libertarians in the 90’s and part of the concept also seemed to target possible charity groups which in the 90’s were more left-leaning than not. Following 9-11, we had a surge of Conservative charities become flush with more cash and we got to see Oliver North become insanely wealthy. The Taxpayer Bill of Rights was implemented in 1992 and then replaced by a second revision in 1996 which was finalized in 2001. The regulations built into the TABOR included possible ‘intermediate sanctions‘ for anyone that might be trying to abuse charitable groups. Ten years later and with the onset of the Citizen’s United ruling… we get “IRS targets Conservative Groups!!!”.
Yes, the regulations that Conservatives and Libertarians wrote themselves in the 90’s are the same regulations which led the IRS to believe they could flag new charities. This wasn’t an Obama administration or even Clinton administration creation. This was built by the GOP. Which means that since the Conservatives are yelling the loudest about being flagged… they must have forgotten.
Intermediate sanctions is a term used in regulations enacted by the United States Internal Revenue Service that is applied to non-profit organizations who engage in transactions that inure to the benefit of a disqualified person within the organization. These regulations allow the IRS to penalize the organization and the disqualified person receiving the benefit. Intermediate sanctions may be imposed either in addition to or instead of revocation of the exempt status of the organization.