With the Internal Revenue Service (IRS) coming under fire for admitting to targeting specific Tea Party-supporting groups, it seems that they also targeted liberal-leaning groups as well. In fact, one of those groups even had their tax-exempt status changed, whereas none of the Tea Party groups were required to change anything.
According to Bloomberg,a group called Emerge America, whose primary goal is to train Democratic women and encourage them to run for office, also came under investigation and received a letter similar to the one sent to the Tea Party groups. Karen Middleton, Emerge America’s president, said that they are now required to be incorporated under section 527 of the tax code which forces them to list all donors. A 527 group is listed specifically as being used for political purposes.
The angered Tea Party groups are all still listed under section 501(c)(4) of the federal tax code. In fact, in the span of 11 months, from May 2012 to March 2013, the IRS approved 45 Tea Party-supporting groups even after the scrutiny. There are actually 54 organizations with “Tea Party,” “9/12,” or “patriot” in their title which have been granted 501(c)(4) status since 2010 according to the IRS. Under 501(c)(4) status groups are not required to list their donors.
According to Bloomberg:
Progress Texas, another of the organizations, faced the same lines of questioning as the Tea Party groups from the same IRS office that issued letters to the Republican-friendly applicants. A third group, Clean Elections Texas, which supports public funding of campaigns, also received IRS inquiries.
Progress Texas listed the letters (similar to those sent to the Tea Party groups) they received from the IRS regarding their 501(c)(4) status on their website:
- IRS March 2011 Letter – Notification of receipt of our tax-exempt request form
- IRS Request for More Information – Sent Feb. 22, 2012
- IRS Confirmation of Tax-Exempt Status – Received Jun. 15, 2012. This letter also contains notice that the effective date of our exemption was February 22, 2011
Bloomberg also noted that:
Political spending by nonprofits incorporated under Section 501(c)(4) of the tax code has increased since the U.S. Supreme Court (1000L) in 2010 removed limits on independent corporate and union spending and other court rulings paved the way for wealthy individuals to spend unlimited sums in elections.
A statement by the IRS confirmed that, “It is also important to understand that the group of centralized cases included organizations of all political views,” and that only a “minority” were selected by their names.
It is also important to point out that ever since 1913 it has been a requirement from Congress that the IRS review all organizations with tax-exempt status to see if a particular group may be abusing the status for private gain or political purposes. In 2012 there were 2,774 applications for these social welfare, tax-exempt groups as compared to 1,777 in 2011 and 1,741 in 2010. That surge in applications is rather substantial and seems to have been a red flag.
It would also seem that several of these groups using the tax-exempt status are doing so with political purposes in mind. One group still listed with 501(c)(4) status is Karl Rove’s American Crossroads which reportedly spent $105 million in independent expenditures during the 2012 election cycle.
Many groups may, in fact, be abusing their tax-exempt status and should be scrutinized. That does not make light of the fact that specific groups were being targeted, however this may be just the tip of the iceberg into potentially exposing political front groups disguised as social welfare groups with a 501(c)(4) tax exempt status.