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Monday, May 20, 2013

How Did The IRS Get The Job Of Vetting Political Activity?

(Dennis Brack/Landov)

(Dennis Brack/Landov)

Republicans continue to ask who in the Obama administration knew what — and when — about the IRS’s scrutiny of conservative political groups seeking tax-exempt status.

Newspapers over the weekend reported that one week before the news broke publicly, White House counsel Kathryn Ruemmler was notified that an inspector general report on the controversial subject was nearing completion.

“By earning the classification of social welfare, they’re avoiding the campaign disclosure that’s required for political organizations.”
– Prof. Donald Tobin

Some political pundits point out that had Ruemmler notified the president’s chief of staff or the president himself, she could have been accused of interfering with the inspector general’s work.

To get some context on why the IRS was scrutinizing social and political action groups in the first place, we turned to Professor Donald Tobin of Ohio State University’s Moritz College of Law. He’s an expert on the intersection of tax and campaign finance laws.

The 501(c)(4) tax classification for “social welfare organizations” is at the center of the issue, he said.

“A social welfare organization needs to formed to promote the social welfare of the country. And that could be engaging in the promotion — in some way — of the common good and general welfare of the people in the community. So it’s a very, very broad standard,” Tobin told Here & Now.

Social welfare organizations are allowed to engage in political advocacy, but “it can’t be the primary purpose of the organization,” he said. That would make it a 527 political organization, which is also tax-exempt, but is required to publicly disclose its donors.

“What groups are trying to do here is avoid having to disclose,” Tobin said. “By earning the classification of social welfare, they’re avoiding the campaign disclosure that’s required for political organizations. So that’s really the underpinning of why we have this mess of the IRS having to get in and investigate and figure out whether an organization is political or not.”


  • Donald Tobin, associate dean at the Moritz College of Law at Ohio State University. He’s also a leading expert on the intersection of tax and campaign finance laws.

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  • Kathy

    None of these organizations, left, right, center or lobbying for the Metal Munching Moon Mice should be tax exempt.

  • BHA_in_Vermont

    The 501 C 4 hole is big enough to drive the moon through. Lawyers will ALWAYS find a way to thwart the intent of laws.

  • Dana R Ziegler

    No, no, no: 501(c)4 organizations are NOT allowed to engage in ANY political campaign.  The actual tax law states that these organizations must be EXCLUSIVELY for “social welfare, not “primarily” for social welfare. http://www.propublica.org/article/how-nonprofits-spend-millions-on-elections-and-call-it-public-welfare

    • hitesh

      Hello Dana, hitesh here, one of the producers.   I’m reading the following from Pro-publica on 501(c)(4) groups:   “The IRS later opened the door to some forms of political activity by interpreting the statute to mean groups had to be ‘primarily’ engaged in enhancing social welfare.”  (Full paragraph below.)

      Our guest, Donald Tobin also had the same view, saying that the key problem is that Congress has essentially left it up to the IRS to make these judgements with very little guidance.  

      Checked in a couple of different places while researching and came up with the same result.  Happy to be pointed to different sources.  Thank you for writing, h.

      Pro-Publica: “Congress created the legal framework for 501(c)(4) nonprofits nearly a century ago. To receive the tax exemption, groups were supposed to be “operated exclusively for the promotion of social welfare.” The IRS later opened the door to some forms of political activity by interpreting the statute to mean groups had to be “primarily” [8] engaged in enhancing social welfare. But neither the tax code nor regulators set out how this would be measured.”

  • J Frog

    For context….NPR is a 501(c)(3).  Under the IRS code 501(c)(3) entities  “may not be an action organization, i.e., it may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates.”

    Oh, I’m sure NPR is not attempting to “influence legislation” or work “for or against political candidates”.  Of course not. Who would think that?

  • Just_Me_Also

    Good discussion, but one important point missing that I wished you could have asked Donald Topin about.  

    My understanding is that the original Statute that created the 501 (c)(4) category of Social Welfare specifically said… that they must engage in social welfare “exclusively”, not “primarily” as is so often quoted and state here by Topin.  

    Big difference in meaning, and if they went back to the original Statute “exclusive” language, problem solved.Apparently, that change in wording was what the IRS made, (not Congress) and probably done under what they consider to be their regulatory discretion, (they do that all the time) but certainly changes the meaning and intent of Congressional will.Therein, might be the bigger scandal, and that would be how the Regulator authorities so often subvert the will of Congress. I would be interested in My. Tobin’s opinion.   My source on this is Lawerence O’Donnell, on MSNBC “The Last Word”…Here is the linkhttp://www.nbcnews.com/id/45755883/ns/msnbc-the_last_word/vp/51910764#51910764Start at minute 3:14 if you want to escape the opening hyperbole.BTW, IMHO, none of these organizations should be tax exempt, end of story. :) 

  • donniethebrasco

    They appointed an FEC employee to the IRS.  She understood the message.  Get the right wing groups.

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Robin Young and Jeremy Hobson host Here & Now, a live two-hour production of NPR and WBUR Boston.

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