Much Ado About Something Or Other

(Editorial cartoon by Lee Judge / The Kansas City Star (May 23, 2013) and featured at McClatchy DC.  Click on image to enlarge and then return.)

Michael Hiltzig took a very sensible look at the brouhaha over the IRS's "targeting" of conservative 501(c)(4) groups in his latest column.  He notes the amazing job this agency does overall, even with diminishing numbers of employees, and he correctly assesses what's actually going on here.

Ordinary taxpayers should be skeptical of this sort of theater. The last time the IRS was hauled over the coals for its supposed wrongdoing — in 1998, when the ostensible issue was the mistreatment of innocent individual taxpayers by revenue agents — Congress' true underlying motive was to hamstring its enforcement program against corporations and wealthy taxpayers. And that's precisely how things turned out.

What's the underlying motive today? Most likely to hobble the agency's scrutiny of political organizations claiming legal advantages as "social welfare" groups under section 501(c)4 of the tax code, which allows them to keep their donors secret. Indeed, during last week's hearing, Issa almost gave the game away by observing that the (c)4 designation covers "organizations that perhaps all of us have grown to like." Sure, because they funnel campaign cash to politicians on both sides of the aisle, anonymously. ...

...although the law says a 501(c)4 group must be "exclusively" devoted to social welfare purposes — that is, no politicking — IRS regulations say an applicant is still all right if it's "primarily" devoted to social welfare — that is, only a minority of its work amounts to intervening in campaigns. It was left to the Cincinnati staff to parse terms such as "campaign intervention" and "primarily."

If Congress desires there to be a bright line distinguishing (c)4 eligibility, it will have to draw the line itself. But plainly it prefers that these politically fraught decisions be made by civil servants who can then be hauled to the gibbet and hanged for their "incompetence" if things get hot.

When the issue of Congress' accepting this responsibility came up in last week's hearing, Issa ran for the hills: It's not his committee's job to write tax law, he said, but the Ways and Means Committee's. "The one thing we don't do is we don't pass tax law," he said, with a hint of relief.   [Emphasis added]

Mr. Issa (Wackaloon, CA) doesn't pass any kind of law.  All he and his Tea Party compatriots are interested in doing is (as the Judge cartoon suggests) raising scandals, imaginary ones.  Governing would be too hard and it would take an honest effort by all parties.  That's sad, because there is something that could be done about this particular issue, according to Open Secrets.  In a handy Frequently Asked Questions about 501(c)(4)s, here is a pretty solid summary of what could be done:

A number of suggestions have been made to try to fix the problem of political organizations gaming the system and using the (c)(4) loophole to shield the identities of their donors. The most straightforward is to ban 501(c)(4) groups from being involved in politics at all. That is in fact what the law says, but the language was, in effect, weakened when the IRS began applying the "primary purpose" test; that put the IRS in the business of making judgments about what activity is political.

Alternatively, social welfare organizations could be required to disclose the identity of their donors if they participated in political activity. Others have suggested that IRS officials draw a "bright line" delineating exactly how much political activity is acceptable, and then enforce it. The current understanding that groups may spend up to 49.9 percent of their resources on political activity was drawn from rules barring groups from having politics as their primary purpose, but exists nowhere in law or regulations.

Both suggestions would require Congress and the White House to act.  I don't see that happening this time around. Neither does Michael Hiltzig.