First, the tax law expressly permits political organizations to be tax exempt. Political parties are tax-exempt, but organizations that engage in various political activities but not to the extent that they would qualify for tax exemption as a political party are also qualified to receive tax exemption. DLC is a tax-exempt (c)4 org. There's been a whole lot of wanton ignorance on DU about this issue. The real issue is whether these groups were closeted party campaign groups that were applying for 501(c)4 status so as to hide the names of campaign donors, as far as I can tell.
What occurred was nakedly political in effect. Under the law a lot of these groups had the right to sue the IRS. Apparently they didn't because they feared additional targeting.
http://www.scribd.com/doc/141499802/Full-text-The-IG-s-54-page-IRS-tax-scandal-report
It's pretty bad. Saying that none of the cases was denied belies the point - in the sample the IG selected, all the Tea Party type apps were held for further processing. However, that processing was not done in anything close to a timely fashion.
Many organizations waited much longer than 13 months for a decision, while others have yet to receive a decision from the IRS. For example, as of December 17, 2012, the IRS had been processing several potential political cases for more than 1,000 calendar days. Some of these organizations received requests for additional information in Calendar Year 2010 and then did not hear from the IRS again for more than a year while the Determinations Unit waited for assistance from the Technical Unit. For the 296 potential political cases we reviewed, as of December 17, 2012, 108 applications had been approved, 28 were withdrawn by the applicant,none had been denied, and 160 cases were open from 206 to 1,138 calendar days (some crossingtwo election cycles).
As a result of this confusion, the EO function Headquarters employees provided a two-day workshop to the team of specialists in May 2012 to train them on what activities are allowable byI.R.C. § 501(c)(4) organizations, including lobbying and political campaign intervention. After this workshop, potential political cases were independently reviewed by two people to determine what, if any, additional work needed to be completed prior to making a decision to approve or deny the applications for tax-exempt status. This review continued on any newly identified potential political cases. Prior to the hands-on training and independent reviews, the team of specialists had only approved six (2 percent) of 298 applications.
The IG found that the IRS delays were so extreme as to give multiple organizations the right to sue the IRS:
The Determinations Unit did not always timely approve or deny the applications for I.R.C. § 501(c)(3) tax-exempt status for potential political cases. However, the tax law provides organizations with the ability to sue the IRS to force a decision on their applications if the IRS does not approve or deny their applications within 270 calendar days. As of May 31, 2012, 32 (36 percent) of 89 I.R.C. § 501(c)(3) potential political cases were open more than 270 calendar days, and the organizations had responded timely to all requests for additional information, as required. As of the end of our fieldwork, none of these organizations had sued the IRS, even though they had the legal right. In another 38 open cases, organizations were timely in their responses to additional information requests, but the 270-calendar-daythreshold had not been reached as of May 31, 2012. These 38 organizations may have the right to sue the IRS in the future if determinations are not made within the 270-calendar-day period.
Your theory that it was just a few people with "consciences" doesn't wash, because the biggest part of the delay was that the Technical Unit just sat on them. Okay, so there were multiple roadblocks.
In April 2010, the Determinations Unit Program Manager requested via e-mail a contact in the Technical Unit to provide assistance with processing the applications. A Technical Unit specialist was assigned this task and began working with the team of specialists. The team of specialists stopped processing cases in October 2010 without closing any of the 40 cases that were begun. However, the Determinations Unit Program Manager thought the cases were being processed. Later, we were informed by the Director, Rulings and Agreements, that there was a miscommunication about processing the cases. The Determinations Unit waited for assistance from the Technical Unit instead of continuing to process the cases. The Determinations Unit Program Manager requested status updates on the request for assistance several times via e-mail. Draft written guidance was not received from the Technical Unit until November 2011, 13 months after the Determinations Units topped processing the cases. As of the end of our audit work in February 2013, the guidance had not been finalized because the EO function decided to provide training instead.
It sounds like there is an attempt to blame a few people unfairly. Management in the Determinations Unit told the individual workers to pull out the "Tea Party" cases. They didn't do it themselves. Then management in the Determinations Unit requested help from the Technical unit in DC, and didn't get it for over a year.
I would hate to see low-level employees blamed for this.
There's a whole lot of other problems detailed in the report, including requests for information that would be made public if the app were granted, but that the law requires not be made public.
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