Groups seeking tax-exempt status as a non-profit organization must apply to the IRS to obtain this classification. Social welfare organizations, designated by a 501(c)(4) status, are one such classification of tax-exempt, non-profit organizations that are permitted to engage in some political activities so long as the majority of their activities are not political. In May of 2013, reports surfaced and investigations began into the revelation that the IRS had been scrutinizing groups applying for 501(c)(4) status using politically biased criteria beginning in March of 2010. Government agents using personal information to target political views they disapprove of is exactly the sort of extreme threat to First Amendment freedoms that the Center is committed to fighting against. The IRS scandal calls into question the wisdom of requiring (or allowing) non-expert government agencies to police the political speech of individuals and organizations.
Initially, groups with names containing the words “Tea Party” or “patriot” were singled out for greater IRS scrutiny. Later, in an attempt to change from overtly partisan to more general criteria, the IRS turned to organizations with the goal of “teaching about the Constitution.” In addition to using these outrageous criteria, IRS officials were dishonest about their actions, repeatedly testifying before members of Congress that there was no targeting program. After admitting that targeting had occurred, the IRS suggested that it was just the result of a rogue group of agents in their Cincinnati office, a claim that has since been debunked by Congressional investigators.
After submitting applications for non-profit status, conservative-leaning social welfare groups waited years to hear back from the IRS. When they finally did hear back about the status of their application, the responses came in the form of demands for additional information. In many cases, the IRS required that groups send the agency their donor lists, names of board members, copies of minutes from all board meetings, resumes of individuals involved in the organization, and copies of all social media postings. Some organizations were asked to provide reports about the books their members had read as a group. Other groups were asked about their relationship to other groups and to politically involved individuals, and in some cases, organizations were asked about what kinds of activities they would participate in the future. Organizations were even told to provide personal information on seasonal interns and to provide copies of all correspondence with former interns.
Each of the questionnaires contained a letter threatening perjury charges for providing the wrong information, which is especially troubling when considering that, in some instances, the responses were hundreds of pages in length. For many small, grassroots organizations started by concerned citizens, complying with the IRS’s requests taxed organizations’ resources to the point that they had to ultimately shut down.
Although the IRS scandal suggests that bureaucratic control of political associations and political speech is a dangerous idea, “reformers” have used the media attention on the matter to continue their campaign against corporate political expenditures. According to those who wish to further regulate political speech, the “real IRS scandal” is that 501(c)(4) groups took funding from corporate entities and spent it on political ads. In many cases, the “reformers'” suggestions would expand the problems that already exist. House Minority Leader Nancy Pelosi called the scandal “an opportunity” to put “the whole idea of 501(c)(4)s being engaged in politics…in a spotlight.”
Failing to gain support for their efforts in Congress, “reformers” have pursued more burdensome regulatory actions through other bodies – most notably the Internal Revenue Service, Securities and Exchange Commission, and Federal Communications Commission. This movement has left supporters of free political speech on the defensive. The Center will continue to stand strong among those defenders, diligently analyzing and fighting the threats to political freedom that are posed by overly burdensome disclosure requirements and overly powerful bureaucratic agencies like the IRS.
The Center for Competitive Politics created this working timeline of events surrounding the IRS scandal. A PDF version of the working timeline is here, and a full screen version of the interactive timeline is available here. Because the scandal is ongoing, we are continually updating the information below. If you or your organization were targeted by the IRS and would like to add information about your experience to the record, please submit your information below.