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G_j

(40,367 posts) Thu May 16, 2013, 11:14 AM May 2013

It's strange how "scandal" gets defined these days in Washington

Last edited Thu May 16, 2013, 12:27 PM - Edit history (1)

http://www.latimes.com/business/la-fi-hiltzik-20130514,0,1622097.column

The real IRS scandal

Allowing so many 'social welfare' groups to enjoy tax-exempt status while participating in politics must stop. The IRS is obligated to scrutinize applicants, 'tea party' or no.

By Michael Hiltzik
May 14, 2013

It's strange how "scandal" gets defined these days in Washington. At the moment, everyone is screaming about the "scandal" of the Internal Revenue Service scrutinizing conservative nonprofits before granting them tax-exempt status.

Here are the genuine scandals in this affair: Political organizations are being allowed to masquerade as charities to avoid taxes and keep their donors secret, and the IRS has allowed them to do this for years.

The bottom line first: The IRS hasn't done nearly enough over the years to rein in the subversion of the tax law by political groups claiming a tax exemption that is not legally permitted for campaign activity. Nor has it enforced rules requiring that donors to those groups pay gift tax on their donations.

The organizations at issue are known as 501(c)4 groups (call them C4s for short) after the section of the tax code that applies to them. They're nonprofit "social welfare" organizations that by law must be devoted primarily to programs broadly serving their communities, not private groups. IRS forms reveal what the agency considers to be mainstream C4s: religious groups; cultural, educational and veterans organizations, homeowners associations, volunteer fire departments. In recent years, however, overtly political groups have been claiming C4 status, which allows them to keep their donor lists secret and to avoid paying taxes on certain income.

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