Posts Tagged ‘Tax exemption’

Politics in the Church and the IRS

July 29, 2014

I was reading a post at Political Outcast on the possibility that the IRS might begin to monitor sermons for political content thanks to a settlement with the Freedom from Religion Foundation. I might be tempted to regard this as exaggerated or alarmist but it happens that I had already read the FfRF’s statement on the lawsuit. While I do not think the IRS is likely to start sending agents into churches to monitor sermons, this ruling clearly allows groups like the FfRF to harass religious groups that dare to make any public statement on any political issue. Since the left politicizes everything, this means that any preacher that preaches on any subject in a politically correct way, abortion, say or homosexuality, could find have his church’s tax exemption revoked.

Here is the FfRF’s statement.

The Freedom From Religion Foundation and the Internal Revenue Service reached an agreement today (July 17) that resolves for the time being an ongoing federal lawsuit over non-enforcement of restrictions on political activity by tax-exempt religious organizations and churches.

“This is a victory, and we’re pleased with this development in which the IRS has proved to our satisfaction that it now has in place a protocol to enforce its own anti-electioneering provisions,” said FFRF Co-President Annie Laurie Gaylor.

“Of course, we have the complication of a moratorium currently in place on any IRS investigations of any tax-exempt entities, church or otherwise, due to the congressional probe of the IRS. FFRF could refile the suit if anti-electioneering provisions are not enforced in the future against rogue political churches.”

FFRF filed suit against the IRS shortly after the presidential election in 2012, based on the agency’s reported enforcement moratorium, as evidenced by open and notorious politicking by churches. Pulpit Freedom Sunday, in fact, has become an annual occasion for churches to violate the law with impunity. The IRS, meanwhile, admittedly was not enforcing the restrictions against churches. A prior lawsuit in 2009 required the IRS to designate an appropriate high-ranking official to initiate church tax examinations, but it had apparently failed to do so.

The IRS has now resolved the signature authority issue necessary to initiate church examinations. The IRS also has adopted procedures for reviewing, evaluating and determining whether to initiate church investigations. While the IRS retains “prosecutorial” discretion with regard to any individual case, the IRS no longer has a blanket policy or practice of non-enforcement of political activity restrictions as to churches.

In addition to FFRF’s lawsuit, IRS enforcement procedures with respect to political activity by tax-exempt organizations have been the subject of intense scrutiny by Congress. As a result, the IRS is reviewing and implementing safeguards to ensure evenhanded enforcement across the board with respect to all tax exempt organizations.

Until that process is completed, the IRS has suspended all examinations of tax-exempt organizations for alleged political activities. The current suspension, however, is not limited to church tax inquiries.

Until the IRS has satisfied congressional overseers that objective procedures are firmly in place with regard to political activities by all tax-exempt organizations, the judge in FFRF’s pending suit would not currently be able to order any immediate or effective relief.

As a result, FFRF has reached a point where no further immediate changes realistically can be accomplished through continued litigation. The dismissal of the pending action, however, is expected to be without prejudice, which means that further legal action by FFRF to enforce anti-electioneering provisions is not precluded in the future if necessary.

Why shouldn’t churches be involved in politics? The IRS explains it.

The ban on political campaign activity by charities and churches was created by Congress more than a half century ago. The Internal Revenue Service administers the tax laws written by Congress and has enforcement authority over tax-exempt organizations. Here is some background information on the political campaign activity ban and the latest IRS enforcement statistics regarding its administration of this congressional ban.

In 1954, Congress approved an amendment by Sen. Lyndon Johnson to prohibit 501(c)(3) organizations, which includes charities and churches, from engaging in any political campaign activity. To the extent Congress has revisited the ban over the years, it has in fact strengthened the ban. The most recent change came in 1987 when Congress amended the language to clarify that the prohibition also applies to statements opposing candidates.

Currently, the law prohibits political campaign activity by charities and churches by defining a 501(c)(3) organization as one “which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.”

I really do not see how this is constitutional, nor do I understand why churches must remain silent in order to qualify for tax exemptions. Frankly, I would prefer that churches not be exempt from taxes because I am not comfortable with the IRS deciding what is and isn’t a legitimate religion.

The reason for the FfRF”s concern is the movement called “Pulpit Freedom Sunday” headed by a pastor named Jim Garlow. Mr. Garlow believes that preachers should not be restricted in their choice of subject matter for their sermons but must be free to speak out on any issue that concerns their audience, including who should be elected to office. As a result of this belief he has begun a movement of more than a thousand pastors to deliberately challenge the IRS’s ban on politicking.

Again, I don’t understand why the restriction isn’t unconstitutional. Preachers ought to have the freedom to preach whatever they want to preach. Whether they should preach on political subjects is another matter. In general, I do not believe they should. The mission of the church is to get souls to Heaven and not to try to make Earth into Heaven. When the church gets involved with politics, it does not improve the political scene. Politics tends to corrupt the church.

This is no reason for the government to demand that churches stay out of politics. The idea behind the Johnson amendment seems to be that if a tax exempt church interferes in politics that is equivalent to the government establishing a church by funding it. But why? If the government reduces taxes, it is not giving people money, contrary to what progressives believe. It is allowing them to keep more of their own money. If the government chooses not to tax religious institutions,  it is not funding the institutions, it is refraining from taking their money. It seems to me that the demand that churches stay out of politics is a violation of their freedom of expression as well as their free exercise of religion. Perhaps it is time this law is changed in favor of freedom.

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Trumped Up Scandal

May 15, 2013

Well, I must say I feel like a fool. I actually thought that the IRS targeting Tea Party and conservative organizations was an example of the improper use of a government agency to intimidate and harass people with dissenting viewpoints. Lucky for me, I read Noam Scheiber‘s piece in the New Republic. Mr. Scheiber has explained everything and straightened me out.

Democrats can’t say it; Barack Obama can’t say it; and the IRS certainly can’t say it, so here goes: The only real sin the IRS committed in its ostensible targeting of conservatives is the sin of political incorrectness—that is, of not pretending it needed to vet all the new groups that wanted tax-exempt status, even though it mostly just needed to vet right-wing groups.

How do we know this? Because, for one thing, the people submitting the questionable applications were overwhelmingly right-wingers. As others have pointed out, the early Obama era was a boom time for conservative activists, who were forming groups faster than NBC burns through “Today Show” hosts. This coincided with a series of court rulings that made it possible for these groups to claim tax-exempt status without disclosing their donors under section 501c4 of the tax code.1 As a result, there were suddenly way more non-disclosing political groups trying to claim tax-exempt status than there ever had been, and the vast majority were right-leaning. No surprise, then, that the IRS would focus on whether these groups actually qualified for that status—something that was questionable since the law said their primary activity needed to be “social welfare,” not politicking.

But, in fact, the IRS’s great conservative crackdown is even more innocent than that. It turns out that the applications the conservative groups submitted to the IRS—the ones the agency subsequently combed over, provoking nonstop howling—were unnecessary. The IRS doesn’t require so-called 501c4 organizations to apply for tax-exempt status. If anyone wants to start a social welfare group, they can just do it, then submit the corresponding tax return (form 990) at the end of the year. To be sure, the IRS certainly allows groups to apply for tax-exempt status if they want to make their status official. But the application is completely voluntary, making it a strange basis for an alleged witch hunt.

So why would so many Tea Party groups subject themselves to a lengthy and needless application process? Mostly it had to do with anxiety—the fear that they could run afoul of the law once they started raising and spending money. “Our business experience was that we had to pay taxes once there was money coming through here,” says Tom Zawistowski, the recent president of the Ohio Liberty Coalition, which tangled with the IRS over its tax status. “We felt we were under a microscope. … We were on pins and needles at all times.” In other words, the groups submitted their applications because they perceived themselves to be persecuted, not because they actually were.

So you see. There were just so many shady Tea Party groups forming that of course the IRS had to be very careful vetting all the applications. Oh but wait. According to USA Today, liberal groups had very little trouble getting tax exempt status.

In the 27 months that the Internal Revenue Service put a hold on all Tea Party applications for non-profit status, it approved applications from similar liberal groups, a USA TODAY review of IRS data shows.

As applications from conservative groups sat in limbo, groups with obviously liberal names were approved in as little as nine months. With names including words like “Progress” or “Progressive,” these groups applied for the same tax status and were engaged in the same kinds of activities as the conservative groups.

The controversial, 3-year-old strategy to manage the increasing number of political groups seeking tax-exempt status came under fire Tuesday. The agency’s own inspector general blamed IRS leadership for “ineffective management.”

The Justice Department wants to know if that was more than just mismanagement. Calling the IRS’ actions “outrageous and unacceptable,” Attorney General Eric Holder said Tuesday that he has asked the FBI to investigate. “We’re examining the facts to see if there were any criminal violations,” he said.

A federal official who has been briefed on the matter said the investigation could focus on potential violations of civil rights law, including targeting groups based on political affiliation and infringing free speech. The official, who is not authorized to comment publicly, said authorities could consider possible violations of the Hatch Act, which restricts political activities of government workers.

There goes that narrative.

Mr. Scheiber wonders why the Tea Party organizations might be anxious to make sure all their paperwork was in order. For many organizers of the Tea Party, this was their first actual experience with political activism. Despite the liberal talking point that the Tea Party is Astroturf, most Tea Partiers are not the sort of professional protesters found in Soros funded Left wing political pressure groups. Quite a few of these people owned their own businesses and most were used to the idea of obeying the laws and regulations they were subject to. Also, Tea Party activists knew full well that liberal politicians from the President on down and the mainstream media hated them. The Tea Party has been called racist, bigoted, fascist, Nazis, and worse by tolerant, compassionate liberals.No slander was too outrageous to fabricate about the Tea Party. They had good reason to want to make sure everything was in order.

Fine—there’s no law against neurosis. But, to borrow a thought experiment from my colleague Alec MacGillis, consider all this from the perspective of the IRS’s Cincinnati office, which handles tax-exempt groups. You’re minding your own business in 2009 when you start to receive dozens of applications from right-leaning groups, applications you didn’t solicit and don’t require. You peruse a few of the applications and it looks like many of the groups, while claiming to be “social welfare” organizations, have an overtly political purpose, like backing candidates with specific ideological agendas. Suffice it to say, you don’t need an inquisitorial mind to decide the applications deserve careful vetting. One Tea Party activist from Waco, Texas, has complained that an IRS official told her he was “sitting on a stack of tea party applications and they were awaiting word from higher-ups as to how to process them.” The quote is intended to sound nefarious—an outtake from some vast left-wing conspiracy—but it’s actually perfectly straight-forward: The IRS was unexpectedly flooded by dodgy 501c4 applications and was at a loss over how to manage them.

Why did they have to wait for word from higher up? Did they not have a standardized procedure for processing 501c (4) applications? Why are conservative applicants somehow more dodgy than liberal ones. According to USA Today, the vetting only applied to groups with names like “Tea Party”.

Let’s try a thought experiment of our own. Suppose a Republican administration were caught giving extra attention to liberal groups that were active in protesting against the President’s policies. Would Noam Scheiber have such a blase attitude about the matter? I think it is more likely that every liberal columnist and pundit in the country would be screaming bloody murder.

So the crime here had nothing to do with “targeting” conservatives. The targeting was effectively done by the conservative groups themselves, when they filed their gratuitous applications. The crime, such as it is, was twofold. First, in the course of legitimately vetting questionable applications, the IRS appears to have been more intrusive than justified, asking for information about donors whose privacy it should have respected. This is unfortunate and intolerable, but not quite a threat to democracy.

Second, the IRS was tone deaf to how its scrutiny would look to the people being scrutinized, given that they all subscribed to the same worldview, and that they were already nursing a healthy persecution complex. Which is to say, the IRS didn’t go about its otherwise legitimate vetting in a very politically-correct way. “It’s part of their job to look for organizations that may be more likely to have too much campaign intervention,” a law professor named Ellen Aprill told The Washington Post. “But it is important to try to make these criteria as politically neutral as possible.”

Again, according to USA Today, the crime had everything to do with targeting conservatives. The people who work for the IRS must have a good idea of the anxiety even a routine inquiry produces in most Americans. Getting official letters demanding to know details about donors, books read, personal lives of board members and their families must be a terrifying experience, even for people who do not have an anti-government world view. The people behind all this were counting on that.

The article goes on about profiling and implies that conservatives are hypocrites for supporting profiling Muslims as potential terrorists while opposing the idea of conservative groups being profiled as engaging in fraud for requesting tax exempt status. There are some interesting reader comments, though. I will omit the names of the people who made the comments.

Considering how right-wing conservatives beginning with Newt Gingrich have targeted the IRS for crippling budget cuts and rigamarole that prevent it from effectively auditing tax returns (“… the average person [has] a one-in-200 chance of an audit, which is down from one-in-112 in 1999, and one-in-60 in 1996, according to new data from the IRS”) I would say this sounds like a case of turnabout-is-fair-play.

I am down on democracy these days because the right wing has abandoned its responsibility to govern. Very well then: if they will not govern, they will damn well be ruled.

Don’t you think an organization named after a famous tax refusal protest MIGHT deserve a little extra scrutiny, especially if they are claiming to be a “social welfare” organization? As far as I know, the members of the Boston Tea Party didn’t claim they were the Boston United Way.

So, these people believe that a proper function of government is to punish people who are against high taxes. Interesting. Also, why do we right wingers have to choose between being rulers or being ruled. Personally, I don’t want to rule anyone. I want to be left alone.

 

 

Auditing the Tea Party

May 14, 2013

It’s not paranoia if they really are out to get you. During the last election cycle some Tea Party and conservative groups noticed that the IRS was unusually curious about their tax exempt status. This might be dismissed as anti-government paranoia, except that last Friday an official from the IRS admitted to doing just that.

An IRS official apologized on Friday to tea party organizations and other conservative groups for inappropriately targeting them during the 2012 election, the Associated Press reports.

The groups, which enjoyed tax-exempt status under the internal revenue code, were singled out for additional scrutiny of their tax exemption if their names included the words “tea party” or “patriot.” In several cases, the groups were asked to provide a list of donors for review, usually a violation of IRS policy.

“That was wrong. That was absolutely incorrect, it was insensitive, and it was inappropriate. That’s not how we go about selecting cases,” said Lois Lerner, the head of the IRS division that oversees tax-exempt groups. “The IRS would like to apologize for that.”

Lerner said the additional scrutiny was initiated by lower-level employees working out of Cincinnati, and that the practice was not a product of political bias. She told the Associated Press that high-level officials were not informed of the practice. On a conference call on Friday, IRS officials said they did not know whether any administration officials at the White House or Treasury Department were aware of the practice.

During the election, several conservative groups cried foul over what they saw as undue pressure justify their tax-exempt status, accusing the IRS of sending arduous questionnaires seeking information about their members’ political activities.

The story that it was just a few low level employees didn’t last long.

Higher-level Internal Revenue Service officials took part in discussions as far back as August 2011 about targeting by lower-level tax agents of “Tea Party” and other conservative groups, according to documents reviewed by Reuters on Monday.

The documents show the offices of the IRS’s chief counsel and deputy commissioner for services and enforcement communicated about the targeting with lower-level officials on August 4, 2011, and March 8, 2012, respectively.

The two communications occurred weeks and months before Doug Shulman, then the commissioner of the IRS, told congressional panels in late March 2012 that no groups were being targeted for extra scrutiny by the tax agency.

The IRS has maintained that its senior leadership did not know for some time that lower-level agents were applying extra scrutiny to applications for tax-exempt status from groups with key words in their names, such as “Tea Party” and “Patriot.

The agency said in a statement on Monday that Steven Miller, who is now acting IRS commissioner, was first informed in early May 2012 that some groups seeking tax-exempt status had been “improperly identified by name” and subjected to extra scrutiny.

Late on Monday, Senate Finance Committee Republicans said Shulman was briefed on the targeting in May 2012, a date not previously disclosed. An aide said committee staff learned this on Monday from the Treasury Inspector General for Tax Administration (TIGTA), an independent IRS watchdog.

It keeps getting worse and worse. The Tea Party weren’t the only ones selected for special attention by the IRS.

The Internal Revenue Service’s scrutiny of conservative groups went beyond those with “tea party” or “patriot” in their names—as the agency admitted Friday—to also include ones worried about government spending, debt or taxes, and even ones that lobbied to “make America a better place to live,” according to new details of a government probe.

The investigation also revealed that a high-ranking IRS official knew as early as mid-2011 that conservative groups were being inappropriately targeted—nearly a year before then-IRS Commissioner Douglas Shulman told a congressional committee the agency wasn’t targeting conservative groups.

The new disclosures are likely to inflame a widening controversy over IRS handling of dozens of applications by tea-party, patriot and other conservative groups for tax-exempt status.

The details emerged from disclosures to congressional investigators by the Treasury Inspector General for Tax Administration. The findings, which were reviewed by The Wall Street Journal, don’t make clear who came up with the idea to give extra scrutiny to the conservative groups.

The inspector general’s office has been conducting an audit of the IRS’s handling of the applications process and is expected to release a report this week. The audit follows complaints last year by numerous tea-party and other conservative groups that they had been singled out and subjected to excessive and inappropriate questioning. Many groups say they were asked for lists of their donors and other sensitive information.

On Sunday, a government official said the report will note that IRS officials told investigators that no one outside the IRS was involved in developing the criteria the agency now acknowledges were flawed.

In my opinion this is worse than the scandal regarding the Benghazi attacks last September 11. It is regrettable and unfortunate that four Americans lost their lives and an investigation is in order to determine what went wrong, but the worst that the Obama administration can be charged with there, is gross incompetence and negligence, and a coverup to ensure that the narrative that al-Qaeda was in retreat not be challenged. The issue with the IRS is the deliberate use of the federal government’s power to harass people and organizations opposed to the administration.

Is President Obama responsible for the questionable activities of the IRS? Probably not directly. Richard Nixon almost certainly neither knew of or authorized the break in at Watergate. He was still responsible for the scandal because the President sets the tone for his administration. The Nixon administration became one in which the suggestion that someone break into the Democratic National Committee headquarters and install listening devices was not instantly dismissed as illegal and insane, but was approved and acted upon. President Obama probably never suggested that the IRS should investigate Tea Party organizations, but the employees at the IRS must have suspected that such activity would be condoned by President, “If they bring a knife to the fight, we bring a gun” and “punish our enemies in the voting booth“. Barack Obama has never seemed to be especially interested in getting along with his opponents. Perhaps it is a legacy of his days as a community organizer, but Obama seems to be more interested in destroying those who oppose his policies, which makes this whole affair all the more chilling.

 

 


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