Saturday, June 30, 2012

IRS Needs to Step Up Evenhandedly

Reuters is reporting on the efforts of the IRS to increase its scrutiny of not for profit groups engaging in political activities:

The Internal Revenue Service is signaling that it will increase its scrutiny of tax-exempt political organizations, which are becoming a force in elections by raising tens of millions of dollars from undisclosed donors. The IRS has been corresponding with such groups and is preparing questions to ask them as part of effort to determine whether their fundraising or advertising work runs afoul of tax law."

All well and good but this gets back to our complaint that the agency-just like the case we made about the selectivity of NYS AG Schneiderman-needs to be evenhanded in its enforcement efforts and give a very close look at the illegal activities of the Flushing Willets Point Corona LDC: "A Wall Street Journal report on Wednesday indicated that an IRS probe was under way for large conservative tax-exempt groups such as Crossroads and Americans for Prosperity, which is funded in part by the oil and gas tycoons David and Charles Koch."

And Reuters sees the Schneiderman parallels: "The fuzzy lines surrounding political donations were clear on Wednesday, when New York Attorney General Eric Schneiderman said his office is investigating whether the U.S. Chamber of Commerce is complying with rules for tax-exempt groups."

Many on the Republican side feel that this is rank partisanship:

"Earlier this year, some smaller, local advocacy groups, many of them affiliated with the conservative Tea Party movement, received IRS questionnaires asking about their qualifications for tax-exempt status. At the time, some conservatives accused the IRS of playing into liberals' hands by trying to intimidate and silence conservative groups.

Democrats have been increasing pressure on the IRS to step up its oversight."

The IRS denies any partisanship is at work and we believe that it can advance the cause of justice-while at the same time demonstrating its fairness-by investigating and properly chastising the Shulman LDC. And we have an idea what the proper penalty should be: "The IRS has the power to revoke the tax-exempt status of such groups, which could trigger a tax bill for them."

Let's not forget that, unlike a group like Karl Rove's Crossroads, the Shulman entity actually lied on its application for not for profit status by claiming against all evidence that the LDC would not engage in any lobbying. Yet the NY Times report that broke this story told a different tale:

"That was the whole idea,” Ms. Shulman said in an interview. “The idea I had with Dan Doctoroff was that we would help the city do what the mayor wanted, to clear Willets Point and develop it in the best interest of the city, and that’s what we’ve been trying to do.” In other words, Ms. Shulman added, “We lobbied the city for the city.

And in lobbying for the city Shulman violated NYS law at the same time she was violating the claims she had made to the Feds-a wonderful daily double whose payoff should be criminal and civil prosecution for conspiring to organize and implement a scheme to deprive the WPU property owners of their land while at the same time aggrandizing the real estate interests of her member organizations.

In commenting on this IRS effort, Congressman Chris Van Hollen makes a very compelling, if unintended, point-and he deserves the last word: ""(The) IRS has a responsibility to make sure that these groups are not defrauding taxpayers, that they are not abusing the ... charitable organization status pursuing political purposes," U.S. Representative Chris Van Hollen, a Maryland Democrat who is leading an effort to overhaul campaign finance rules, said at the Reuters Washington Summit this week." (emphasis added)