May 232013
 

When the IRS scandal broke, the first thing I did was to read the statute.  I was most surprised to discover that the regulation people at the IRS violated and the language of the statute itself are completely unrelated.  O’Donnell has continued his campaign to educate Americans, but to date, he seems the only broadcast journalist of note to do so.

23Hearings…After the Supreme Court’s 2010 Citizens United ruling freed corporations — including nonprofits organized under sections 501(c)(4), (c)(5) and (c)(6) — to spend money directly on political campaigns, 501(c)(4) spending on politics soared from an infinitesimal amount in 2006 to $294 million in the 2012 election. Nonprofits, unlike political committees and campaigns, are not required to disclose their donors, and the surge in their spending has raised concerns among lawmakers and campaign-finance watchdogs that groups are improperly claiming tax-exempt status when their primary purpose is electioneering.

This spending is allowed thanks to a difference between the tax law and IRS regulations for these nonprofit groups. The law says that 501(c)(4) organizations must be operated "exclusively" for the purpose of social welfare, while the IRS regulation defines "exclusively" as "primarily." This difference has created a substantial amount of confusion within and outside the agency around what constitutes political activity, and officials say it played a part in the abuses uncovered in the inspector general’s report.

Nearly every Democrat on the panel called for clearer rules governing how the IRS determines political activity and for a better definition of how much political campaign activity is allowable for 501(c)(4) groups.

Sen. Ron Wyden (D-Ore.) said Citizens United had created a situation where "groups that ought to be [political organizations] are applying for 501(c)(4) status to hide their donors."

"The lines blurred between [political organizations] and 501(c)(4), and you all don’t seem to have done anything about it," Wyden said, addressing the panel of former and current IRS and Treasury officials who appeared before the committee…

Inserted from <Huffington Post>

By law, none of the political 501(c)(4) groups should have that status.  Republicans made the regulation illegal in 1959.

Lawrence O’Donnell discussed this with Joy Reid and Rep. Eleanor Holmes Norton (D-DC).

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The statute is crystal clear, and finally, a few Democrats are beginning to get it that the real scandal is that any political activity exists under 501(c)(4). Now, it’s time for the rest of the news media to do their job instead of infotaining sheeple.

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  14 Responses to “Lawmakers Are Beginning to Get It”

  1. What an epiphany! Thank you Thank you TC for putting this one out there, I missed it! I'm still confused, and maybe it's just me, but did I miss how exactly the Republicans made the wording "illegal" in 1959?

    If, as claimed there is a question of the legality of the wording then it is abundantly clear there is a problem that is "judicial" in nature, but if the wording as stated is really: "exclusively", then it would appear all parties would face retroactive measures to exclude them from tax exempt status. No wonder I've been so appalled by this!

    Scandal indeed! The "scandal" seems to be what happened 50 years ago when the Republicans decided to change the wording of this statute!

    • Lee, agencies write regulations to convert laws into action.  In 1959, the Republican controlled IRS rewrote the regulation for the enforcement of the 501(c)(4) statute.  Thde substituted primarily for exclusively..  Retroactive may be hard to pull off, but cedrtainly from now on.

  2. This is just one more reason that the entire Tax Code needs to be rewritten.

  3. "The law says that 501(c)(4) organizations must be operated "exclusively" for the purpose of social welfare, while the IRS regulation defines "exclusively" as "primarily." "  Is it just me – I thought the word 'exclusively' meant 'only' – are the IRS re-writing the dictionary for the benefit of some people?  How very peculiar.

  4. The only SCANDAL here is the waste of taxpayer money on these ridiculous shows!.

    Witch hunting. NOTHING TO SEE HERE..

    Try working on the economy,and creating jobs. !and stop wasting time.

    • Welcome Avril. :-)

      I certainly agree that it is a scandal, but not the only one.  I also consider it a scandal that any political group has 501(c)(4).

  5. I feel all non-profits, should not be allowed to donate to a political cause or canidate. I know I will get nailed to the wall for this statement, but that is my opinion. You have yours!

  6. What a bloody kettle of stinky fish this is!

    Darrell Issa " Let's all be Republicats and Demlicans today." — I didn't know that Issa could be bipartisan.  Is it maybe that he, as a Republican ready to skewer the POTUS over the IRS debacle, is feeling the heat now that the IRS scandal has taken another turn?  After all, in 1959 when the IRS changed the meaning of the law, it was a Republican administration.

    As a compliance manager, I always go to the original document when looking at a situation because there can be nuances of difference in interpretation.  And in 40 years of banking, I have never regretted doing things that way.  It may have identified a problem that required work but that is OK.  Really, this is further proof that the IRS regulations must be checked against the tax laws as written.  Not only that, the IRS must resolved identified issues such as those identified in yesterday's article from The Nation  http://www.thenation.com/blog/174458/five-501c4-groups-might-have-broken-law#

    • RepubliSpeak Dictionary

      Bipartisan: Any agreement in which Republicans get everything and Democrats get nothing.

  7. There are so many things wrong with our tax laws that it will take a millenium to fix them.  My 84 year old mother who lives on Social Security and a small pension pays more taxes than many corporations.