A lot of media coverage over the IRS singling out Tea Party organizations looking for tax-exempt status gives you a slanted view (for or against) what the IRS did, but very few offer the actual report on the incident from the IRS Treasury Inspector General. And none, that I know of, reveals the fact that the MAJORITY of Tea Party organizations that were delayed their acceptance are able to SUE the IRS, according to the Inspector General’s report. WHY HAS THE MEDIA NOT REPORTED THIS?
Here are the highlights from the report (referenced, of course, to the page number, referencing ADOBE paging):
- The title of the Report is “Inappropriate Criteria Were Used to Identify Tax-Exempt Applications for Review”, dated 14 May 2013.
- Impact on Taxpayers (Page 2): “Early in…2010…the IRS began using inappropriate criteria to identify organizations applying for tax-exempt status to review for indication of significant political campaign intervention.
- The IRS did not agree with two of the recommendations, which the report states “TIGTA does not agree that the alternative corrective actions will accomplish the intent of the recommendations…” (Page 2)
- On page 3, in a memorandum on the report, the IG states “The IRS’s response also states that issues discussed in the report have been resolved. We disagree with this statement…Nine recommentations were made to correct concerns…and corrective actions have not been fully implemented…further…a substantial number of applications have been under review, some for more than three years and through two elections cycles, and remainopen.”
- On page 7 we learn, “In FY2012, 70% of all closed applications for tax-exempt status were approved during an initial review with little or no additional information from the organizations”
- On page 8, we learn that 501(c)(4) organizations (which most Tea Party organizations filed under), “may engage in limited political campaign intervention, does not have to publicly disclose identity of it’s donors, may engage in lobbying, and may engage in general advocacy not related to legislation or election of candidates” (Remember this as we read on)
- On page 11, we learn that “…criteria used to identify potential political cases for review…inappropriately identified specific groups applying…based on their names or policy positions instead of…based on tax-exempt laws and Treasury Regulations…”
- On page 12, “Soon thereafter, according to the IRS, a specialist was asked to search for applications with Tea Party, Patriots, or 9/12 in the organization’s name as well as other ‘political-sounding’ names. They then developed a “Be on the Look Out” listing” (herafter referred to as the BOLO listing) which included the emerging…Tea Party applications.
- On Page 12, ” By July 2010…management stated that it had requested its specialists to be on the looking for Tea Party Applications“
- Also on page 12, we learn that the first formal BOLO listing was produced, and that the criteria in the BOLO listing “were Tea Party Organizations applying for I.R.C 501(c)3 OR 501(c)(4) status”
- According to the mission statement of the IRS, it is “to provide America’s taxpayers top quality service by helping them understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all“. But the IG then goes on to state “However, the criteria developed…gives the appearance that the IRS is NOT impartial in conducting it’s mission….focused narrowly on on the names and policy positions…instead of tax-exempt laws and Treasury Regulations…” (page 12-13)
- On page 13 we learn that the Director of EO directed the criteria be changed in June 2011 to focus on the correct way to evaluate the organizations. However, the team of specialists “subsequently changed the criteria in January 2012 without executive approval…again focusing on the policy positions of organizations instead of tax-exempt laws and Treasury Regulations”
- On page 14, a breakout of the cases investigated according to Organization name shows the “Tea Party, 9/12 and Patriots” criteria accounted for almost 1 out of every 3, clearly indicating a bias to go after the Tea Party groups.
- On page 17 we learn that the reviewed applications were open an average of 574 days. “…Potential political cases took significantly longer than average to process due to ineffective management oversight…”
- We also see the real impact these delays had on page 17: “…potential donors and grantors could be reluctant to provide donations or grants…organizations withdrew their applications and others may not have begun conducting planned charitable or social welfare work…delays may have also prevented some organizations from receiving certain benefits of the tax-exempt status…“
- On page 20 we learn “…For the 296 potential political cases we reviewed, 33 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 crossing two election cycles)…“
- (page 21) – “…the average time it took the Determinations Unit to complete processing applications requiring additional information from organizations applying for tax-exempt status (also referred to by the EO function as full development cases) was 238 calendar days according to IRS data. [However], In comparison, the average time a potential political case was open as of December 17, 2012, was 574 calendar days (with 158 potential political cases being open longer than the average calendar days it took to close other full development cases)…more than 80 percent of the potential political cases have been open more than one year…
- And finally, one of the MOST IMPORTANT, YET UNREPORTED FINDINGS is on page 22: “…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-day threshold 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.…”
So there you have it, if you know of ANY organization impacted by this, that have been waiting more than 270 calendar days for approval, direct them to the link to the report and make sure they understand they can SUE THE IRS!
- On page 25, we see a sample letter sent to the organizations, asking them for information they were NOT REQUIRED TO REVEAL: “Provide the following information for the income you received and raised for the years from inception to the present. Also, provide the same information for the income you expect to receive and raise for 2012, 2013, and 2014.
a. Donations, contributions, and grant income for each year, which includes the following information:
1. The names of the donors, contributors, and grantors. If the donor, contributor, or
grantor has run or will run for a public office, identify the office. If not, please
confirm by answering this question “No.”
2. The amounts of each of the donations, contributions, and grants and the dates you
3. How did you use these donations, contributions, and grants? Provide the details.
If you did not receive or do not expect to receive any donation, contribution, and grant income,please confirm by answering “None received” and/or “None expected.”