Thursday, May 16, 2013
Political Mayhem Thursday: What's with that, IRS?
The second most interesting political story this week has been the still-unfolding drama at the IRS, where it appears that "extra scrutiny" was given to conservative groups seeking tax-exempt status. In reaction, President Obama has already sacked the acting commissioner. There is still a lot we don't know about this, so I'm not going to opine broadly. Obviously, political groups should not be favored or disfavored by ideology in how their tax exempt status is evaluated.
I've always been a little stumped as to how any of these groups, liberal or conservative, get tax exempt status, anyways. Michael Hiltzik writing in the LA Times made this point well:
I've always been a little stumped as to how any of these groups, liberal or conservative, get tax exempt status, anyways. Michael Hiltzik writing in the LA Times made this point well:
The bottom line first: The IRS hasn't done nearly enough over the years to rein in the subversion of the tax law by political groups claiming a tax exemption that is not legally permitted for campaign activity. Nor has it enforced rules requiring that donors to those groups pay gift tax on their donations.
The organizations at issue are known as 501(c)4 groups (call them C4s for short) after the section of the tax code that applies to them. They're nonprofit "social welfare" organizations that by law must be devoted primarily to programs broadly serving their communities, not private groups. IRS forms reveal what the agency considers to be mainstream C4s: religious groups; cultural, educational and veterans organizations, homeowners associations, volunteer fire departments. In recent years, however, overtly political groups have been claiming C4 status, which allows them to keep their donor lists secret and to avoid paying taxes on certain income.
What do others think of these revelations?
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YAWN
THE IG REPORT SAYS IT ALL: C4S NEEDED OVERSIGHT, THE SELECTION CRITERIA WERE BIASED AND IMPROPER, THOSE RESPONSIBLE HAVE PAID FOR IT, AND WE SHOULD MOVE ON. SERIOUSLY THE AP THING IS A BIGGER "SCANDAL" AND IT'S NOT SO MUCH A SCANDALS AS JOURNALISTS STILL THINKING THEY ARE RELEVANT IN THE DIGITAL AGE
THE IG REPORT SAYS IT ALL: C4S NEEDED OVERSIGHT, THE SELECTION CRITERIA WERE BIASED AND IMPROPER, THOSE RESPONSIBLE HAVE PAID FOR IT, AND WE SHOULD MOVE ON. SERIOUSLY THE AP THING IS A BIGGER "SCANDAL" AND IT'S NOT SO MUCH A SCANDALS AS JOURNALISTS STILL THINKING THEY ARE RELEVANT IN THE DIGITAL AGE
# posted by 
: 12:28 AM
: 12:28 AM
Here is what I know about the difference between a C3 and a C4. This is based on my limited experience having been a year round volunteer with a large charity for 14 years.
C3's are your traditional charity and focus on the mission of the charity, be it diabetes, cancer, stroke, Miracle Networks, Feed the World,,,,, (focus of research, treatment, assistance and education). When you donate to most of these charities types, your donation is usually 100% deductible. If you make a donation to attend a charity function, some portion of your cost to attend is deductible and the charity should provide you with the deductible amount on your receipt. There are rules about this.
Most traditional charities also have advocacy as part of their organizations. They set up C4's about 10+ years ago and moved their advocacy out of the C3 due to tax rules. The advocacy wing can have a negligible amount of education but has a primary focus of speaking on behalf of the charity in a local, state or federal capacity. They lobby on behalf of the charity. If you donate money to a C4 only a small portion of your donation is tax deductible.
With both types there are rules about reporting of donors although I don't know what those rules are.
Listening to Diane Rhem yesterday she had a segment on this. I missed part of the show but apparently the Citizens United decision spawned the influx of C4 applications.
My guess is that if you are a long existing C3 that applies to set up a C4 the process is probably pretty smooth because you have 'history'. If you have no history and apply to set up a C4 then there is much more scrutiny.
C3's are your traditional charity and focus on the mission of the charity, be it diabetes, cancer, stroke, Miracle Networks, Feed the World,,,,, (focus of research, treatment, assistance and education). When you donate to most of these charities types, your donation is usually 100% deductible. If you make a donation to attend a charity function, some portion of your cost to attend is deductible and the charity should provide you with the deductible amount on your receipt. There are rules about this.
Most traditional charities also have advocacy as part of their organizations. They set up C4's about 10+ years ago and moved their advocacy out of the C3 due to tax rules. The advocacy wing can have a negligible amount of education but has a primary focus of speaking on behalf of the charity in a local, state or federal capacity. They lobby on behalf of the charity. If you donate money to a C4 only a small portion of your donation is tax deductible.
With both types there are rules about reporting of donors although I don't know what those rules are.
Listening to Diane Rhem yesterday she had a segment on this. I missed part of the show but apparently the Citizens United decision spawned the influx of C4 applications.
My guess is that if you are a long existing C3 that applies to set up a C4 the process is probably pretty smooth because you have 'history'. If you have no history and apply to set up a C4 then there is much more scrutiny.
This link provides a fairly straightforward explanation of the differences in a C3 and a C4.
http://www.nj.com/helpinghands/nonprofitknowhow/index.ssf/2008/07/the_difference_between_501c3_a.html
http://www.nj.com/helpinghands/nonprofitknowhow/index.ssf/2008/07/the_difference_between_501c3_a.html
.
Something worth stating I think:
A lot of the reporting on this very technical issue seems to approach the topic as if these guys (donors) are trying to cheat the IRS on their taxes. In truth, the driving force behind the 501(c)(4) status is/was NOT as a tax dodge but, rather, a vehicle by which individuals can contribute to civic orgs (with a partly political purpose). So, this is much more of a campaign finance issue than a standard tax issue.
These are rich guys not really looking for a tax advantage; rather. they are people who are looking to put more of their money into the public square (and the tax deduction is really beside the point).
Lots of lawyers out there. Please correct me if I am wrong on that.
But in our current toxic political atmosphere, I really don't blame people who are looking for anonymity and a little bit of insulation from pressure groups (or whoever) looking to penalize them for political speech.
Something worth stating I think:
A lot of the reporting on this very technical issue seems to approach the topic as if these guys (donors) are trying to cheat the IRS on their taxes. In truth, the driving force behind the 501(c)(4) status is/was NOT as a tax dodge but, rather, a vehicle by which individuals can contribute to civic orgs (with a partly political purpose). So, this is much more of a campaign finance issue than a standard tax issue.
These are rich guys not really looking for a tax advantage; rather. they are people who are looking to put more of their money into the public square (and the tax deduction is really beside the point).
Lots of lawyers out there. Please correct me if I am wrong on that.
But in our current toxic political atmosphere, I really don't blame people who are looking for anonymity and a little bit of insulation from pressure groups (or whoever) looking to penalize them for political speech.
I think any time the government is using its power to punish or discourage dissent it is scary.
This IRS story combined with the AP story makes me wonder where the ACLU is screaming about an assault on the fundamental guarantees of the 1st Amendment.
This IRS story combined with the AP story makes me wonder where the ACLU is screaming about an assault on the fundamental guarantees of the 1st Amendment.
# posted by : 9:57 AM
: 9:57 AM
I am disgusted by all the spineless actors in this tragedy. It is a story of greed and fear, badly written. A story of money in politics.
The IRS
Never took action to curtail the large donor groups, as they had batteries of lawyers. Picked only on small players. They are minor characters but should be the most trustworthy. The IRS are guilty of overacting.
Corporate and wealthy donors;
With self serving agendas, they hide in the wings unseen and unnamed. They, however, have enormous power and influence. They have used this power to corrupt and control the system. They are very, very successful. We have given them free passes to the play. We used to have braver ticket takers. They threatened the ticket takers. We need a new play that brings sunshine on these characters.
Politicians:
They are props made of bluster,strings and gobs of outrage. They are covered in finery and equipped with a large sound system. Their spines are missing and they have to be brought on stage by their monied backers. Hopefully, in the last act, these props will come to life, get a backbone, and get money out of politics. The crowd would love it.
The citizens:
These actors work hard but can't get ahead because the play isn't going well. They are given scripts with shallow plots written by a media that loves political themes. These, often made up, stories have put the actors and the audience to sleep. The actors dutifully take their instructions from the prepared statements given them. They see the blame casting and finger gesturing around them and think it is bold action.
Fascinated, they do the same thing. The bored audience loses interest.
The AP story is serious and should be carefully discussed. Our security relies on an unfettered free press. We are in danger of losing unbiased news coverage on two fronts: ownership, with an agenda, and government with its threat to limit speech for security reasons.
The IRS
Never took action to curtail the large donor groups, as they had batteries of lawyers. Picked only on small players. They are minor characters but should be the most trustworthy. The IRS are guilty of overacting.
Corporate and wealthy donors;
With self serving agendas, they hide in the wings unseen and unnamed. They, however, have enormous power and influence. They have used this power to corrupt and control the system. They are very, very successful. We have given them free passes to the play. We used to have braver ticket takers. They threatened the ticket takers. We need a new play that brings sunshine on these characters.
Politicians:
They are props made of bluster,strings and gobs of outrage. They are covered in finery and equipped with a large sound system. Their spines are missing and they have to be brought on stage by their monied backers. Hopefully, in the last act, these props will come to life, get a backbone, and get money out of politics. The crowd would love it.
The citizens:
These actors work hard but can't get ahead because the play isn't going well. They are given scripts with shallow plots written by a media that loves political themes. These, often made up, stories have put the actors and the audience to sleep. The actors dutifully take their instructions from the prepared statements given them. They see the blame casting and finger gesturing around them and think it is bold action.
Fascinated, they do the same thing. The bored audience loses interest.
The AP story is serious and should be carefully discussed. Our security relies on an unfettered free press. We are in danger of losing unbiased news coverage on two fronts: ownership, with an agenda, and government with its threat to limit speech for security reasons.
I agree with what your Dad said.
And everyone else.
It makes no sense to me that any of these groups get tax exempt status under 3 or 4. They're political. However, rules are rules and should be enforced the same across the board. Here they weren't.
The weirdest part of the AP story is Holder's recusal, which apparently was not in writing. No one seems to be in charge of this mess at DOJ.
And everyone else.
It makes no sense to me that any of these groups get tax exempt status under 3 or 4. They're political. However, rules are rules and should be enforced the same across the board. Here they weren't.
The weirdest part of the AP story is Holder's recusal, which apparently was not in writing. No one seems to be in charge of this mess at DOJ.
In re the #trifecta of scandals (#Benghazi, #IRS, and #AP):
I make no predictions, but there are lots of disturbing elements and plenty of contradictory statements--and, at the very least, seriously damning examples of executive negligence. Looks to me that there is enough fodder for investigation for all this to go on for a long time.
I make no predictions, but there are lots of disturbing elements and plenty of contradictory statements--and, at the very least, seriously damning examples of executive negligence. Looks to me that there is enough fodder for investigation for all this to go on for a long time.
If money is speech, then donors should disclose. I have to sign my name when I send in a letter to the editor; it should be the same when I send money to an organization, whatever its C-status is.
http://www.thedailybeast.com/articles/2013/05/16/how-to-stop-a-scandal.html
Damage control/cover up is always worse than the scandal itself.
The Iran Contra mess was a disaster and Oliver North probably should have gone to jail, but as soon as it came to light, Reagan and his people tried to get out in front of it, set up a commission, submitted to Congress, etc. I'm not excusing the conduct -- V.P. Bush, if not Pres. Reagan himself probably knew more than they let on. But that team knew how to deal with a crisis.
That's the model Administrations should follow. Unfortunately, Obama's defensiveness is almost Clintonian. We're not at a Nixonian level of deceit yet, but the best way to avoid a crippling set of of ongoing investigations and endless hearings is to deal with these problems decisively, completely and immediately.
It ALL comes out in the end. So don't try to delay the end. Death by a thousand cuts is far worse.
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Damage control/cover up is always worse than the scandal itself.
The Iran Contra mess was a disaster and Oliver North probably should have gone to jail, but as soon as it came to light, Reagan and his people tried to get out in front of it, set up a commission, submitted to Congress, etc. I'm not excusing the conduct -- V.P. Bush, if not Pres. Reagan himself probably knew more than they let on. But that team knew how to deal with a crisis.
That's the model Administrations should follow. Unfortunately, Obama's defensiveness is almost Clintonian. We're not at a Nixonian level of deceit yet, but the best way to avoid a crippling set of of ongoing investigations and endless hearings is to deal with these problems decisively, completely and immediately.
It ALL comes out in the end. So don't try to delay the end. Death by a thousand cuts is far worse.
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