TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Wednesday, December 14, 2016

The IRS Scandal, Day 1315:  Bureaucratic Bumbling Or Targeting Of Conservatives?

IRS Logo 2Forbes: IRS Says Fixing Up Your Own House Is Not Charity, by Peter J. Reilly:

Got a run down old house that needs some spiffing up? Here is an idea. Get it designated an historic landmark. Then you can form a not-for-profit and get grants to do some renovations. Since it is an historic landmark, you'll have to let people see it sometimes. ...

[I]t did not end well for the organization (Let's call it This Really Old House (TROH))) that was the subject of Private Letter Ruling 201648020. ...

[T]he gatekeeper sorting the wheat from the chaff is the IRS Tax Exempt and Government Entities Division, sometimes referred to as EO. There are also state agencies of greater or less ferocity, usually the Attorney General rooting out phony charities, but mainly we seem to rely on IRS EO to prevent the charitable sector from being overrun by the less than charitable. The reliance was probably never that reasonable, but the developments over the last few years have made things much worse.

At its very heart the interminable IRS scandal, now on Day 1312 by TaxProf count was about exempt status applications.  Applications from Tea Party and similar organizations were held up and applicants were asked intrusive question.  Here is the thing. I am the last agnostic on the IRS scandal.  Was it bureaucratic bumbling or targeting of conservatives? I never found the targeting argument persuasive, but both Joe Kristan and George Will did, which gives me pause.

Regardless of whether it was bumbling or targeting, the end result has not been good for the integrity of the charitable sector. The IRS has streamlined the process and now many, possibly most applications are receiving no scrutiny thanks to the new Form 1023-EZ. You can find commentary to the effect that the corrupt IRS is still persecuting the Tea Party. I really think the only way out of the mess is to turn the vetting of exempt status over to a different agency. In the states supervision of not for profits generally falls under the Attorney General, not the revenue department. Maybe they are on to something.

The targeting believers will never accept that the IRS has been punished enough or that enough will be done to protect against future targeting, so taking the job away from the IRS might be the only way out of a downward spiral.

http://taxprof.typepad.com/taxprof_blog/2016/12/the-irs-scandal-day-1315bureaucratic-bumbling-or-targeting-of-conservatives.html

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Comments

I, for one, would like to see what's under a lot of those rocks.

Posted by: JorgXMcKie | Dec 14, 2016 8:29:31 AM

I am a Reilly Agnostic. I too would like to see what's under the rocks. Specifically, I would like to hear testimony from LLerner after an immunity grant. And if the Republicons were honest about pursuing this mess, they would grant immunity. Why not Mr. Chaffetz?

Posted by: Publius Novus | Dec 14, 2016 10:59:59 AM

Serious oversight can only begin once a new DOJ regime is in place. Sad reality, having to wait 4-8 years until a new administration comes in just to conduct a substantive investigation...

Posted by: MM | Dec 15, 2016 8:18:59 PM