"IRS Should Bar Dark Money Groups From Funding Political Ads, Lawsuit Says by Kim Barker ProPublica, Feb. 20, 2013, 12 p.m. A former Illinois congressional candidate and a government watchdog organization have teamed up to sue the Internal Revenue Service, claiming the agency should bar dark money groups from funding political ads. The lawsuit, filed on Tuesday by David Gill, his campaign committee and Citizens for Responsibility and Ethics in Washington, or CREW, is the first to challenge how the IRS regulates political spending by social welfare nonprofits, campaign-finance experts say. As ProPublica has reported, these nonprofits, often called dark money groups because they don't have to identify their donors, have increasingly become major players in politics since the Supreme Court's Citizens United ruling in early 2010. Gill, an emergency room doctor who has advocated for health-care reform, including a single-payer plan, was the Democratic candidate for the 13th district in Illinois last year. After a tight race, Gill ended up losing to the Republican candidate by 1,002 votes â a loss the lawsuit blames "largely, if not exclusively," on spending by the American Action Network, a social welfare nonprofit. It's impossible to say for certain why Gill lost. He had lost three earlier races for a congressional seat. But the American Action Network, launched in 2010 by former Minnesota Republican Sen. Norm Coleman, played a role. It reported spending almost $1.5 million on three TV commercials and Internet ads opposing Gill, mainly in the weeks right before the election. That was more than any other outside group spent on the race, and more than Gill's principal campaign committee spent on the entire election, according to Federal Election Commission records. Though Gill had never held public office, the American Action Network ads described him as "a mad scientist" who supported sending jobs to China, channeling money to the failed green-energy company Solyndra, and making a mess out of health care and Medicare. Gill said he ran into people every day who said they weren't voting for him because of claims he would destroy Medicare. "I think that certainly the money put forward â they saw that they could have an impact here," Gill said of the American Action Network. "They wanted to put their money where it could make a difference between victory and defeat." Dan Conston, spokesman for the American Action Network, described CREW as a "left-wing front group" in an email. He said Gill was a "failed candidate with an extreme ideology, looking to blame anyone but himself for losing his fourth-straight congressional election." Nonprofits like the American Action Network have poured hundreds of millions of dollars into political ads in the last two election cycles. Like super PACs, these groups can accept unlimited donations. But super PACs must identify their donors, allowing voters to see who is behind their messages. The Gill lawsuit, filed in U.S. District Court in the District of Columbia, alleges the IRS failed to properly regulate the American Action Network, citing seemingly contradictory definitions the agency has applied to such groups for years. The statute governing social welfare nonprofits says they should be operated "exclusively" for promoting social welfare. But the IRS paved the way for political spending by these groups by interpreting "exclusively" as meaning the groups had to only be "primarily" engaged in promoting the public good. Some groups have taken this to mean they can spend up to 49 percent of their money on election ads. The lawsuit claims the IRS' interpretation of the law "is arbitrary, capricious, and contrary to law," and asks for an injunction prohibiting the agency from using it. Melanie Sloan, CREW's executive director, blamed the IRS for sitting on its hands as social welfare nonprofits have been formed specifically to run negative ads paid for by anonymous donors. "Now the IRS can explain its deplorable inaction in federal court," she said. The IRS didn't respond to requests for comment Tuesday. It typically doesn't comment on issues related to individual taxpayers. The American Action Network has been one of the more controversial dark money groups active in politics. Conston said the American Action Network's primary focus was on non-electoral activities and called the dispute over the group's election spending a "tired long-since settled argument." In filings to the IRS, the group said it spent $25.7 million in its 2010 tax year. In separate filings to the Federal Election Commission, it reported spending about $19.4 million over the same period on political ads, or about 76 percent of the total expenditures reported to the IRS. If the group stays on its current schedule, American Action Network won't file its taxes covering the 2012 election until May 2014." The above is from a FEB 2013 ProPublica.org article. http://www.propublica.org/article/i...roups-from-funding-political-ads-lawsuit-says As those who have followed this issue know, I have sad repeatedly that none of the 527 groups qualify for 501c(4) regardless of political persuasion. The only main thing, among other mistakes, the IRS did wrong was not to summarily turn them all down pending receipt of their tax returns. Note well the paragraph in italics above!
It looks like this should be an issue the dems and reps could get behind to fix. EXCEPT that both sides are beholden to the private money givers.
Sorry for the bad English in my post above. Nevertheless the article I posted makes it quite clear that had the IRS simply followed the Statute, which is supposed to be the basis behind IRS rules, all would have been fine. But they opened Pandora's box when they let the first obviously political organization squeak by under 501c(4). It's illogical to automatically assume there is something sinister about this screw-up, or even about the applications eventually, once matters got out of control, being handed up to the chief counsel for advice on how to handle them. That's what they should have done, at that point anyway, after the Cincinatti office made a mess by attempting to pre-certify these organizations using guessed at numbers. (Or was the mess thrust upon them?) Under the circumstances, the long delay in the review process is completely understandable. Why, oh why, did the IRS not simply follow the Statute and direct any organization with a hint of political involvement to Section 527? I suppose they are now asking themselves that same question. In spite of all this bad handling of 501c applications, I can't help thinking we should expect screw-ups to be a part of the process when you're given the charge of administering 70,000 pages of convoluted tax code for a nation of 300,000 million.
really, you think this explains the targeting of tea party groups? this is a separate and distinct issue. Using the IRS to selectively target groups is what a fascist govt does. Defending that with misdirection is unacceptable.
================= Good points. ACLJ has sued the IRS in a massive lawsuit on behalfo of 41 conservative/ Christian.Tea Party groups.They were already offered a settlement of $25,000. ACLJ turned it down .Looks like ACLJ is going to put the fear of God into the IRS Even Progressive Farmer Magazine has a CPA August article ''IRS Gone Wild''
Yes, i've learned of no hard evidence for anything sinister so far. The popular media interviews start with the assumption that the IRS intentionally did something they knew they should not be doing. I have seen zero evidence for this however. There is plenty of evidence that they acted unwisely in regard to 501c(4) applications, but zero evidence of any political bias or improper outside influence. Just bad decision making at the IRS. The IRS is being sued. I don't want to see these cases get settled out of court. Only in a courtroom can the true facts come to light, and not even then are we assured of it. It is a virtual certainty that truth will not be forthcoming out of the political arena. If the David Gill suit succeeds, and I believe there is a reasonable chance that it will, than we can put this entire episode behind us, and going forward, the IRS will no longer be expected to act as the conduit for political dark money. Some think that Gill v. IRS will run afoul of Citizens United. I don't think so. The Gill suit is an attempt to force the IRS to follow the Statute, and the Statute does not run afoul of Citizens.
From the May 25th "Los Angeles Times," by Michael Hiltzik: "Showing the IRS some love after witch hunt The probe into the supposed 'targeting' of conservative groups overlooks the fact that the tax agency does a good job despite its meager resources. You may not have discerned this through the fog and mist of recent weeks, but the Internal Revenue Service is pretty durn good at its job. Some experts would go further. "I think they do an extraordinary job, considering that they're historically underfunded and under-resourced," says Dennis Ventry, a tax expert at UC Davis law school. Last year, he observes, the agency processed 144 million returns for the personal income tax, 2 million for the corporate income tax, and 3 million for the estate and gift tax, with a speed he calls "miraculous." Over the last few years it has successfully focused its enforcement efforts on the wealthiest taxpayers â those with the best opportunities for skirting the tax law; in 2012, 18% of returns reporting $5 million to $10 million in income, and 27% of those reporting more than $10 million, were audited, while only 1% of those with income less than $25,000 were examined. Not many years ago, people at both ends of the income scale had roughly an equal chance of facing an audit. No one is talking about this record just now. Not while Washington remains wrapped up in its witch-hunting cabaret about whether rank-and-file employees in the agency's Cincinnati outpost selected â excuse me, "targeted" â conservative organizations for special scrutiny of their eligibility for preferential tax treatment simply because of their political leanings. Thus far, there's no evidence that's what happened. Indeed, the IRS inspector general has found that groups whose names featured "tea party," patriot," or other terms favored by conservatives were a minority of the organizations selected for scrutiny. The IG also reported that most of the groups given special attention were, in fact, suspiciously political and therefore possibly ineligible for the donor anonymity that C4 (c)4 designation confers. But the lack of evidence doesn't matter in Washington, because members of Congress are fixated full time on the opportunity to berate the IRS for the TV cameras. There's a purpose behind this show. For one thing, members of Congress are well aware that for the public, the IRS is "the easiest agency to hate," as Ventry observes. So why not pile on? Indeed, the IRS show trial staged last week by Rep. Darrell Issa (R-Vista) and his Committee on Oversight and Government Reform reminded me of the old "Far Side" cartoon by Gary Larson contrasting "What we say to dogs" ("Okay, Ginger! You stay out of the garbage! Understand, Ginger?") with "What they hear" ("Blah, Ginger, blah blah blah blah, Ginger..."). In this case the lawmakers are assuming that the public will hear only "Blah blah IRS blah blah blah IRS...." Ordinary taxpayers should be skeptical of this sort of theater. The last time the IRS was hauled over the coals for its supposed wrongdoing â in 1998, when the ostensible issue was the mistreatment of innocent individual taxpayers by revenue agents â Congress' true underlying motive was to hamstring its enforcement program against corporations and wealthy taxpayers. And that's precisely how things turned out. What's the underlying motive today? Most likely to hobble the agency's scrutiny of political organizations claiming legal advantages as "social welfare" groups under section 501(c)4 of the tax code, which allows them to keep their donors secret. Indeed, during last week's hearing, Issa almost gave the game away by observing that the (c)4 designation covers "organizations that perhaps all of us have grown to like." Sure, because they funnel campaign cash to politicians on both sides of the aisle, anonymously. It's worth revisiting that earlier attack on the IRS to see how it played out, and how things have barely changed in 15 years. The 1998 hearings staged by the Senate Finance Committee under Sen. William V. Roth Jr. (R-Del.) featured a parade of taxpayers who allegedly had been mistreated or manhandled by zealous revenuers. There was scant evidence that the anecdotes they offered were representative or even factual. Indeed, the most eye-catching yarns turned out to be exaggerated at best. The image of the IRS as a hive of Gestapo-style thugs endured, however. The harvest was the 1998 IRS Restructuring and Reform Act, which passed 97 to 0 in the Senate and 426 to 4 in the House. The measure resulted in a wholesale shift of agency resources from enforcement and toward customer service. To no one's surprise, collection efforts collapsed. Audits of individual taxpayers fell from nearly 2 million in 1996 to 618,000 in 2000. Abusive tax shelters enjoyed a heyday. 'The IRS started to suffer from a brain drain,' says Tanina Rostain, a tax expert at Georgetown University Law Center and co-author of a forthcoming book on the rise of tax shelters at the time. 'When it became a target and looked like an incompetent agency, people no longer wanted to go there as a career step.' "
"The last time the IRS was hauled over the coals for its supposed wrongdoing â in 1998, when the ostensible issue was the mistreatment of innocent individual taxpayers by revenue agents â Congress' true underlying motive was to hamstring its enforcement program against corporations and wealthy taxpayers. And that's precisely how things turned out." Interesting.
Indeed, it is beyond interesting. I've noted all along, as I'm sure you have, that these so-called IRS "hearings" have been blatantly political with seemingly no real interest in getting to the facts, as every time the IRS witnesses begin to speak they are cut off before they can finish their sentences and subjected to more browbeating. Political grandstanding at its worst and most obvious! There were a few members not participating in this disgraceful show; mostly on the Democrat side, but one or two Republicans have behaved like adults as well. The rest, I would hope, would be soundly defeated at the next election for this sad performance. We deserve much better from our congressmen. The goal of these badly behaving populists is clear, they want to see that the IRS is browbeaten into approving these Dark Money Groups, since the ones applying, some fraudulently, for 501c(4) are nearly all from radical, right wing groups. These groups need 501c(4) status to remain "Dark". In the process, these despicable politicians that have little interest in either democracy or the law, hope to curry favor with their right-wing constituents who hate the IRS as much as they do the thought that perhaps males are not made out of a woman's rib. The only congressmen I have respect for in this business are those few who recognize the undesirability of dark money in politics, regardless of which side they are on, and are trying to get the IRS to follow the Statute with regard to 501c(4).
At least one private person with dark money, and lots of it, admitted it was wrong to try and buy elections (but he was going to do it anyway).