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Paul L. Caron
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Wednesday, June 10, 2015

The IRS Scandal, Day 762

IRS Logo 2USA Today op-ed:  The IRS Can Still Silence Political Dissent, by Allison R. Hayward:

Two years ago, Lois Lerner of the IRS revealed that it unfairly targeted and delayed Tea Party applications for tax exemption. While the IRS has apologized and promised reform, the agency has not fixed the vague rules that allowed this scandal to happen. As we enter the 2016 election cycle, political activists remain in danger of selective IRS audits, penalties and approvals.

As troubling as this is, we have seen this before. The tax regulation of non-profit advocacy groups has not had a happy history. One pattern repeats: Congress passes a tax law, often to score short-term political points. The IRS then interprets the law aggressively, often against groups with controversial views. Federal courts may soften that blow case by case. Eventually, Congress passes another law and this cycle starts again. ...

We need to learn several lessons from this history. First, the IRS, while effective at collecting taxes, is a poor agency to task with regulating advocacy organizations, especially those, such as the advocacy groups covered under 501(c)(4), that cannot offer donors a tax deduction. At most, only trivial amounts of revenue are at stake from the activity. Whether a certain message, or viewpoint, or advertisement, or tone is proper should not be a concern of the revenuer.

Second, Congress must resist the temptation to even political scores through tax legislation. Not only is it poor governance, it rarely works.

Finally, the courts should remain vigilant in protecting groups from IRS overreach and congressional mischief. Courts should feel free to identify and excise laws, even tax laws, that abridge political freedom.

https://taxprof.typepad.com/taxprof_blog/2015/06/the-irs-scandal.html

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Comments

"Two years ago, Lois Lerner of the IRS revealed that it unfairly targeted and delayed Tea Party applications for tax exemption. "

And targeted far more liberal groups. But you're still not coming clean, are you?

Posted by: Barry | Jun 10, 2015 10:12:35 AM

Except that the IRS has not interpreted either section 527 or section 501(c)(4) aggressively. Aggressive enforcement--in the nature of what was actually intended by congress--would have taken the form of uniform denials of all 501(c)(4) applications for political advocacy groups and recognition of the tax exempt status of such groups solely under section 527. The basis of the problem in this whole "scandal" stems from the IRS' excessively liberal construction of section 501(c)(4), dating back to an unfortunate, liberal revenue ruling in 1959.

Posted by: Publius Novus | Jun 10, 2015 7:40:32 AM