The IRS has recently come under fire for targeting tea-party-affiliated groups when scrutinizing applications for exempted tax status.
Some organizations’ applications were delayed by up to three years, which meant they were unable to prove their tax-exempt status with the IRS for fundraising purposes. Organizations that receive 501(c)(4) status are permitted to collect money on which they do not have to pay taxes (donations are not tax-deductible for contributors). This type of organization may be involved in political activities and promotion without disclosing its contributors.
The IRS claims that its division that handles requests for tax exempt status by political groups was overwhelmed after the Supreme Court’s 2010 Citizens United decision expanded the ability of corporations, unions and other organizations to participate in election spending, such as advertising for political candidates. In fact, the number of organizations applying for this tax-exempt status doubled, from about 1,700 to 3,500 a year, since that ruling.
The Inspector General’s report observed that the IRS did not consult anyone beyond the agency when it came up with its own screening criteria, which was meant to be a shortcut to help with the influx of applications.
According to the report, “front-line career employees who made the decisions acted out of a desire for efficiency and not out of any political and partisan viewpoint.”
One interesting tidbit is that the top IRS official during the majority of the targeted time frame, Commissioner Douglas Schulman, was appointed by Republican President George W. Bush, not President Obama. Steven Miller, the acting IRS commissioner since November, resigned in mid-May over the scandal.
This latest scrutiny serves to remind us that no one – from large corporations to government agencies to the average Joe on the street – is immune from getting caught and having to take responsibility for their actions. More and more, in this age of transparency and electronic access, we seem to learn who’s breaking the rules and great strides are being made to hold them accountable.
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