The Other Side of the IRS ‘Scandal’
By William Boardman
Almost everything you hear and read in the media about the current IRS “scandal” is based on deliberate falsification of basic facts. Some might call it lying.
Here’s a reasonably typical media-framing of the IRS lie, from the usually careful and accurate Economist, posted May 23: “Even before this month’s revelation that conservative political groups applying for 501(c)(4) status were being singled out for special scrutiny….”
You see this false framing of the IRS story across the media spectrum, from Infowars to ABC News and NBC News to the Economist to DemocracyNOW (the latter on May 24: “the scandal over the targeted vetting of right-wing groups…”). Even the usually reliable Wonkblog at the Washington Post doesn’t get the story right, apparently because it hasn’t read the relevant law.
An exception to this remarkable mental stampede in the wrong direction was Jeffrey Toobin (New Yorker, May 14) who wondered, “Did the I.R.S. actually do anything wrong?” His answer started to put the story in reasonable perspective, with a focus on tax law and political money: “the scandal isn’t what’s illegal — it’s what’s legal. It’s what society chooses not to punish that tells us most about the prevailing ethical standards of the time.”
Anatomy of a False Narrative
How is it that the conventional framing is dishonest? Here are some of the ways:
–It wasn’t a revelation. All kinds of people were aware of the underlying problem, that 501(c )(4) tax status abuse had been going on since 1959, and that it took a quantum leap after 2010, when the Supreme Court’s Citizens United decision opened the democratic process to money flooding that would be facilitated by the secrecy offered by the 501(c )(4) status.
–There were bipartisan public hearings on the problem of political organization abusing the tax-exempt designation scheduled by the Senate well before the “scandal” broke. Anyone could look it up.
–As soon as the story broke, Lawrence O’Donnell (MSNBC’s The Last Word) was reporting accurately on the issue, rooted in the difference between a law that says 501(c )(4) organizations should be “exclusively” for social welfare and a 1959 IRS regulation that says, with Orwellian authority, that “exclusively” is to be interpreted to mean “primarily.” Too many reporters and others still do not get this, even though responsible research begins with these primary sources.
–No one was singled out. That’s right, no one was singled out. The problem with 501(c )(4) applications is that the IRS must review every one to see if the applicant qualifies for tax-exempt status. Given the flood of applications from political groups of all sorts post-Citizens United, the IRS needed some way to make sure those applications were “primarily” for social welfare, even though political insiders knew that had been a joke for years. (Karl Rove’s Crossroads GPS and MoveOn.org are both IRS-approved 501(c)(4) organizations, of which there are thousands – reportedly 97,382 in 2011).
–There is no reason within the law that any political organization should get a tax subsidy from American taxpayers. That is allowable only under the IRS regulations put in place in 1959 under the Eisenhower administration. And the Congress could fix this virtually overnight by restoring “primarily” to its original meaning in the law, “exclusively.” Perhaps the real scandal, and a bipartisan one at that, is that that’s not happening.
The IRS at some level (that eventually included Lois Lerner) made a remarkably stupid, tone deaf, inept effort to identify applications that were more likely than others to be primarily political. Looking for applications tagged “tea party” may have reflected the reality of an inordinate number of such applications, but it was really dumb. Using the tag “party” not only would have done the job, but would have been wholly defensible, since no political party is eligible for public tax subsidy and secrecy for its donors.
The IRS net for possibly political organizations caught some 300 applications. Of these, no more than a third were “conservative” or “tea party” or “right-wing.” The rest were something else, including “liberal” and “left-wing.” None of the so-called conservative group applications were denied. Some were delayed, deservedly so, but a group can function as a 501(c)(4) with an application pending, so it’s hard to see how much damage a delay would do, if any.
–At least some of the groups on the Right were clearly partisan and perhaps broke the law. The New York Times of May 26 reports in a story wrongly headlined “Groups Targeted by I.R.S. Tested Rules on Politics” describes several tax-exempt groups that spent money on partisan activities.
One of the groups, Emerge America, was granted 501(c)(4) status in 2006 in order to train women to run for elected office. In 2012, when an IRS review showed that Emerge America was training only Democratic candidates, the IRS revoked the group’s tax exempt status.
Another group calling itself “CVFC 501(c)(4)” on its application in 2010 gave its address as the same as “Combat Veterans for Congress PAC” (or political action committee). Perhaps PAC triggered a closer look. While awaiting an IRS decision, CVFC spent almost $8,000 on radio ads for a Republican candidate. CVFC omitted this expenditure from its 2010 tax return. On a questionnaire asking if it had engaged directly or indirectly in political activity on behalf of a candidate, CVFC checked “NO.”
Incompetent NBC News Reporting
In a report on May 29, “Open Channel Investigative reporting from NBC News” (bylined Lisa Myers, Rich Gardella, Talesha Reynolds) starts with a flat-out false headline: “IRS higher-ups requested info on conservative groups, letters show.”
The story begins: “Additional scrutiny of conservative organizations’ activities by the IRS did not solely originate in the agency’s Cincinnati office, with requests for information coming from other offices and often bearing the signatures of higher-ups at the agency….”
The letters don’t show that. NBC provides two letters, and both come from and direct responses to the IRS Cincinnati office, although one letter also has an apparently hand-stamp signature for “Lois Lerner, Director, Exempt Organizations” and no address other than Cincinnati. The letters comprise nine pages, of which five pages are form letters. Each of the applicants also received a personal, two-page request for additional information to justify tax-exempt status.
The IRS asked Ohio Liberty Council Group in March 2012 to update a two-year-old filing, and to describe its planned activities, public events, membership recruitment, political activity and lobbying – if any.
The IRS asked Linchpins of Liberty if they had adopted bylaws or chosen a board of directors. The IRS also wanted to know, among other things, about the organizations income and expenses, its loan agreements and other contracts, and whether its activities wound go beyond selling a book (“Linchpins of Liberty”) written by its president.
NBC fails to note that this isn’t a response to a relevant 501(c)(4) application, but the IRS answer on May 6 to an application for the more stringent 501(c)(3) tax-exempt status.
Nothing in these two letters suggests anything more than due diligence by the IRS in protecting public policy and assets. The information in the story came to NBC mostly from attorneys representing the complaining groups. NBC provides no reliable, independent support for the opinions of its biased sources, even though it reports those opinions as more or less fact.
The IRS story went off the tracks of facts the moment Lois Lerner planted a question with a reporter at an American Bar Association conference on May 10. In answer to the reporter’s posing of Lerner’s question, Lerner answered this way, as reported by Associated Press (no transcript appears to be available):
“The Internal Revenue Service apologized Friday for what it acknowledged was ‘inappropriate’ targeting of conservative political groups during the 2012 election to see if they were violating their tax-exempt status.
“IRS agents singled out dozens of organizations for additional reviews because they included the words ‘tea party’ or ‘patriot’ in their exemption applications, said Lois Lerner, who heads the IRS division that oversees tax-exempt groups. In some cases, groups were asked for lists of donors, which violates IRS policy in most cases, she said.”
For whatever reason, the AP makes the IRS apology institutional even though it comes from a mid-level IRS manager ratting out people she was supposed to be managing. The news catches her superiors in the IRS, as well as the White House, completely off-guard. It also sets off a right-wing feeding frenzy, which the AP reports at length in the same story
Only near the end of the story, in a clumsily written paragraph, does the AP reporter touch on the factual context for the news Lerner was breaking and in which she had been a central player: “In all, about 300 groups were singled out for additional review, Lerner said. Of those, about a quarter were singled out because they had ‘tea party’ or ‘patriot’ somewhere in their applications.”
In other words, about 225 applications were not “political conservative groups,” as AP had reported at the top of the story. Given her unusual behavior over the past few years, it also doesn’t seem all that strange that Lois Lerner has refused to answer questions in Congress, pleading the Fifth Amendment protection against self-incrimination, while refusing to resign from her $180,000-a-year job (she’s now on administrative leave).
What seems much stranger, but not as surprising as it should, is that so much of the media goes on reporting as fact the partisan spin placed on a “scandal” that was not really a “scandal” at all.
William Boardman lives in Vermont, where he has produced political satire for public radio and served as a lay judge. [A version of this story originally was published by Reader Supported News.]
(Originally posted at Consortium News)