Wednesday, June 05, 2013

Tea Party Groups Allowed To Hide Donors Real IRS Scandal

...what 501(c)(4) law actually says, which is none of those people should have had their applications approved, and in fact none had them denied ~ Lawrence O'Donnell of MSNBC's The Last Word, referring to the IRS "scandal" of Tea Party groups receiving "extra scrutiny" when applying for 501(c)(4) status on the 6/4/2013 edition of his program.

The real scandal concerning the IRS "targeting" of Conservative Tea Party groups that applied for 501(c)(4) status? It isn't that they were "targeted", it is that they were all given exactly what they asked for. I'm not talking about exemption from taxation, but another benefit that comes with the 501c4 status (I'm going to drop the parenthesis for the rest of this commentary). That benefit being complete anonymity for contributors.

Turns out there is another tax exempt status they could have sought, known as 527. Wikipedia notes that "a 527 group is created primarily to influence the selection, nomination, election, appointment or defeat of candidates to federal, state or local public office". However, while 527 organizations must disclose who it's contributors are, 501c4s can keep that information secret.

501c4 status is only supposed to be granted to groups who are exclusively engaged in social welfare. That's what the law says, but the IRS (along with all government agencies) has leeway "to interpret the law and to take words that are vague and to give them meaning". And that is what the IRS did... in 1959 the IRS "interpreted" the law by adding the following sentence to it's code: "To be operated exclusively to promote social welfare, an organization must operate primarily to further the common good and general welfare of the people of the community".

Obviously exclusively and primarily don't mean the same thing at all. On the 5/13/2013 edition of MSNBC's The Last Word with Lawrence O'Donnell, Lawrence refered to this as a "magic trick". His guest Rep. Eleanor Holmes Norton pointed out that what the IRS did not do was interpret the meaning of a vague word; instead they "changed the plain meaning of the law", which is a power no agency has.

Holmes Norton also referred to the IRS "interpretation" as a "disaster waiting to happen". "What was it waiting for?" Citizens United. This is the Supreme Court ruling that declared "the First Amendment prohibits the government from restricting political independent expenditures by corporations, associations, or labor unions".

That is a bunch of bullpucky, of course, as the Bill of Rights protects the rights of individuals and not the rights of groups. The First Amendment DOES NOT APPLY to "corporations, associations, or labor unions". The Citizens United case was wrongly decided by the Conservative partisans on the court who wished to give plutocrats free reign to spend unlimited sums of money to influence our elections (i.e. buy them).

But the plutocrats were worried that spending vast sums of money on ads designed to tilt elections in favor of the politicians in their pockets might reflect poorly on them. Why would they be concerned regarding what the "little people" (those who didn't fall for the propaganda in their ads) thought? Two reasons... first, consumers might take exception and boycott the corporations owned by the plutocrats running the ads, and secondly... some of the plutocrats didn't want to spend their own money, but money belonging to the corporations they ran. That could create a problem if shareholders objected.

The solution to both of these problems? Funnel the money though a 501c4, thus removing their fingerprints from the purchasing of our elections. Also, after being laundered through a 501c4, it could then be re-donated to a SuperPac. This is why Karl Rove had two groups... The SuperPac American Crossroads (a 527 group that was legally required to disclose it's donors), and their money launderer Crossroads GPS (the 501c4 that did not have to disclose).

So the IRS changed the meaning of the law all the way back in 1959, but it wasn't until Citizens United that the plutocrats could REALLY take advantage of this "loophole". Previously there were limits on how much they could donate, but with Citizens United that limitation was removed.

According to a 5/23/2013 article from Politicus USA titled "Republicans Claiming Tax Exempt Status May Have Conspired to Hide Illegal Donations"...

The application for recognition as a social welfare nonprofit, 1024 Form, explicitly asks a group whether it has spent, or plans to spend, "any money attempting to influence the selection, nomination, election, or appointment of any person to any Federal, state, or local public office or to an office in a political organization".

A 5/29/2013 article from AllGov titled "Hiding Political Donors Is Key Reason IRS Applicants Sought Tax-Exempt Status" gives a few examples of Tea Party groups who committed perjury when they applied for 501c4 status and answered "no" when asked if they planned on politicking...

...CVFC, a conservative veterans' group in California [spent] nearly $8,000 on radio ads backing a Republican candidate for Congress. Another group, the Wetumpka Tea Party from Alabama, sponsored training for a get-out-the-vote initiative dedicated to the "defeat of President Barack Obama". Yet another tea party outfit, the Ohio Liberty Coalition, complained about the scrutiny it was getting from the IRS, in spite of the fact that it engaged in a pro-Romney email campaign and organized statewide anti-Obama protests that "demand[ed] the truth about Benghazi". The group's president claimed that his lawyers told him "it’s not political activity".

Still think the IRS was wrong in "targeting" these groups? I say NO and agree with Lawrence O'Donnell who says all the applications should have been denied. But the IRS never should have changed exclusively to primarily to begin with... although that was an action taken by the IRS way back in 1959. Given the fact that this erroneous "interpretation" of law has been in effect for so long the IRS couldn't simply reverse themselves now. No, once something like this becomes accepted practice it takes extraordinary action to reverse course. I think an act of Congress is in order. Congress could simply instruct the IRS to follow the law AS WRITTEN.

Currently there are some Democrats who are advocating for just that course of action. Question is, will they prevail? Given the fact that Republicans desperately want to hide just who is funding these organizations... I very seriously doubt it. And that will be an even bigger scandal, in my book. Because it will show just how corrupt and how much in the pockets of the plutocrats the Republican Party is.

Update, 6/25/2013: A White petition has been created to address this issue. I strongly urge my readers to sign this petition ASAP. 100k signatures are needed by 7/6/2013. The petition reads as follows...

We Petition The Obama Administration To: issue an Executive Order nullifying IRS "regulation" re: 501c4's and mandating the original statute be enforced. Honorable Barack H. Obama, President: The replacement by the IRS of the word "exclusively" in the original and still-extant pre-1959 501c4 statute, with the word "primarily" in the procedural 'regulation' manual,simply put, violates the law. At whatever cost to those who have ridden this loophole to the absolute corruption of our political system by money, the original wording of "exclusively social welfare" needs to be enforced.

SWTD #162


  1. I completely agree, wd, and have commented so elsewhere. The real scandal is that the IRS is not following the law. Their interpretation changes the meaning of the law. There is a very clear difference between "exclusively" and "primarily".

    It the MSM is so liberally biased as the right wingers like to say, why isn't this misinterpretation being splashed all over the media. You don't see it at all.

    Could it be that the MSM is a big beneficiary of political spending?

  2. Learn anything new Jerry, or were you up on all this already? It became apparent to me that the money laundering angle was what I should focus on after I finished writing another commentary (that I ended up discarding)... so I actually wrote this post twice.

    Some more info I found while researching this post, but did not find a place to use...

    From Wikipedia...

    Colbert has made repeated references on the show to Wikipedia, which he refers to as his favorite website, generally in "The Wørd" segment. Colbert's first reference to Wikipedia was on the July 31, 2006, broadcast, when "The Word" was Wikiality, defined as the concept that "together we can create a reality that we all agree on—the reality we just agreed on". The premise of wikiality is that reality is what the wiki says it is. He explained that on Wikipedia "any user can change any entry, and if enough users agree with them, it becomes true".

    From, the Truthiness Encyclopedia! The Trustiness-worthy Encyclopedia!...

    501c4s are better than PACs, according with the FEC they don't have to disclose they are billionaires. They are like campaign finance glory holes: You stick your money in the whole, the other person accepts your donation, and because it's happening anonymously, no one feels dirty! ~ Stephen Colbert.

    A 501(c)(4) is a patriotic tax-exempt status that allows people to donate piles and piles of money anonymously to a shell company which can later donate their secret money to a SuperPAC of their own choosing. A 501(c)(4) organization does not require donor disclosure, perfect for that shy billionaire who would like to give away their vast fortune anonymously. Some donors are just too modest and shy to take credit for their civic duty of giving unlimited free money.

    From a World Net Daily article titled, "It begins: Major demand to impeach Obama"...

    ...there's the big – and getting bigger – scandal involving the federal government’s use of the Internal Revenue Service to harass and attack "conservative groups". ... On the IRS harassment of conservative and Christian organizations? Forty-nine percent [of our poll respondents] said they agree that impeachment is appropriate, including 24.4 percent of the Democrats.

    Repubs are worried (really worried) about losing the ability to launder money though 501c4s, which is why they are pushing the "targeting" angle hard... they are hoping the result will be no scrutiny at all in the future.

  3. Yes, laundering political money is the purpose. Hide the money and hide the influence. The IRS and the wealthy in collusion. Who would have guessed.

    The IRS should be on trial, not Obama.

  4. Obozo is a shithead just like the author of this blog.

  5. Being called a "shithead" by one of the dupes of the plutocrats is something I accept as a badge of honor. I take it you are such a dupe, as this commentary of mine exposing the truth of the IRS scandal being Republican in nature obviously has you riled.


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