TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Monday, February 1, 2016

The IRS Scandal, Day 998

IRS Logo 2Peter J. Reilly (Forbes), NorCal Tea Party Patriots V IRS - Grassroots Or Astroturf?:

The news about a preliminary victory against the IRS in a suit by not-for-profits broke last week making it Day 986 of the TaxProf’s IRS Scandal.  I didn’t make it into my inbox till last weekend, because the ruling required redaction. Judge Susan Dlott of the United States District for the Southern Division of Ohio ruled in NorCal Tea Party Patriots, et al v IRS that the various groups that believe they were targeted by the IRS will be recognized as a class.

Beginning in 2010, Plaintiffs applied to the IRS for exemption from federal taxation pursuant to the Internal Revenue Code, 26 U.S.C. §§ 501(c)(3) and/or 501(c)(4). Plaintiffs allege that the IRS targeted them and other dissenting groups by segregating their tax-exemption applications because their names included terms such as “Tea Party,” “Patriots,” or “9/12 Project” or because their focus included issues such as government spending. Plaintiffs allege that the IRS subjected the applications from these dissenting groups to delays and increased scrutiny. They further allege, with respect to a certain subset of dissenting groups, that the IRS requested and then inspected information not relevant to the tax-exemption application process. ...

The hundreds of Tea Party and the like groups that were harmed by the IRS slow walking their applications and aggravating them with unnecessary questions are not holding bake sales and spaghetti suppers to pay for lawyers to vindicate them.  Rather a group whose exempt status was not challenged is bankrolling the effort.

As noted the litigation is being funded by Citizens For Self-Governance.  The suit gets prominent play on CSG’s website. One of the things that flashes up is that CSG filed the only class action lawsuit against the federal government to defend the law-abiding citizens who were harassed by the IRS. ...

Sourcewatch working in the opposite direction (from disclosures of donors) has identified a few of the larger donors including $2.5 million from the Vanguard Charitable Endowment Program (a donor advised fund) and $691,916.16 from DonorsTrust. DonorsTrust is essentially a donor advised fund dedicated to supporting conservative causes “… to insure the intent of donors who are dedicated to the ideals of limited government, personal responsibility, and free enterprise.”

So CSG is starting to looking like part of the Kochtopus.  Board member, Eric O’Keefe is reputed to have Koch connections. ...

It seems that CSG is embarking on a program of extremely radical change.  The promoters of the IRS scandal narrative have been talking about the Obama administration, somehow through Bush era appointees, weaponizing the IRS.  A counter argument might be that groups like ALEC and CSG are part of an effort to weaponize philanthropy and they will brook no interference.

At least for the upcoming election cycle, they have pretty well defanged the IRS, but it may be that this litigation is meant to be part of stomping on it and grinding it into the dust.

http://taxprof.typepad.com/taxprof_blog/2016/02/the-irs-scandal-day-998.html

IRS News, IRS Scandal, Tax | Permalink

Comments

When a court ruling needs to be sealed and redacted ... "to protect taxpayers" ... you have to wonder WHICH taxpayers ... and what they need to be protected from.
From what we have seen of the Feds before, they redact and seal to protect THEIR interests, not ours.

Posted by: RNR | Feb 1, 2016 8:12:12 AM

Wake me up when any of the people who claim to be concerned by money in politics go after the main troublemakers, http://www.opensecrets.org/orgs/list.php#

Posted by: wodun | Feb 1, 2016 7:42:55 PM

Thanks Wodun. Whenever someone screams and cries about Citizens United, I ask them if they know how much money unions spend and for what party.

Posted by: Dale Spradling | Feb 2, 2016 5:55:41 AM

As usual, Mr. wodun missed the point. It is not unconstitutional or illegal to contribute to political causes. According to the SCOTUS, we (including fictional legal entities called corporations), have a First Amendment right to do so. The problem, and specifically the problem with 501(c)(4)s, is the dark money aspect. Opensecrets.com lets us know who or what is contributing and generally to the reds or blues. The dark money problem concerns the lack of that information--secret money, contributed secretly, to unknown recipients. Try to focus.

Posted by: Publius Novus | Feb 2, 2016 6:00:06 AM