TaxProf Blog

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

Wednesday, April 24, 2019

ProPublica: How The IRS Gave Up Fighting Political Dark Money Groups

Pro PublicaProPublica, How the IRS Gave Up Fighting Political Dark Money Groups:

Six years after it was excoriated for allegedly targeting conservative organizations, the agency has largely given up on regulating an entire category of nonprofits. The result: More dark money gushes into the political system.

In the past decade, people, companies and unions have dispensed more than $1 billion in dark money, according to the Center for Responsive Politics. The very definition of that phrase, to many critics, epitomizes the problem of shadowy political influence: Shielded by the cloak of anonymity, typically wealthy interests are permitted to pass limitless pools of cash through nonprofits to benefit candidates or political initiatives without contributing directly to campaigns.

Such spending is legal because of a massive loophole. Section 501(c)(4) of the U.S. tax code allows organizations to make independent expenditures on politics while concealing their donors’ names — as long as politics isn’t the organization’s “primary activity.” The Internal Revenue Service has the daunting task of trying to determine when nonprofits in that category, known colloquially as C4s, violate that vague standard.

But the IRS’ attempts to police this class of nonprofits have almost completely broken down, a ProPublica investigation reveals. Since 2015, thousands of complaints have streamed in — from citizens, public interest groups, IRS agents, government officials and more — that C4s are abusing the rules. But the agency has not stripped a single organization of its tax-exempt status for breaking spending rules during that period. (A handful of groups have had their status revoked for failing to file financial statements for three consecutive years.)

https://taxprof.typepad.com/taxprof_blog/2019/04/propublica-how-the-irs-gave-up-fighting-political-dark-money-groups.html

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Comments

Obama's IRS did not "allegedly" target conservative organizations. It had to pay a settlement (with taxpayer money) to the groups that it actually did target.

Posted by: Woody | Apr 24, 2019 11:19:57 AM

ProPublica: How The IRS Gave Up Fighting Political Dark Money Groups (Just The Conservative Ones!!)

Posted by: Anon | Apr 25, 2019 8:14:08 PM