Tag: Internal Revenue Service

The Tea Party, The IRS ‘Scandal’ — And The Actual Facts Of The Case

Rather than the so-called IRS scandal cooked up by Tea Party groups and their partisan supporters, the real criticism of the IRS may be that it has permitted so many of these groups to obtain tax-exempt status despite apparently egregious violations.

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Source: National Memo

Author: Devin Burghart

While it is well known that the so-called IRS scandal has been used by Tea Partiers to bash the IRS, less well known are the actual facts of the case.

Specifically, while the IRS delayed confirming the tax-exempt status of some groups, and some also faced additional scrutiny, not a single Tea Party organization was denied tax-exempt status.

A May 14 draft report by the Treasury Inspector General for Tax Administration found that none of the 296 questionable applicants had been denied: “For the 296 potential political cases we reviewed, as of December 17, 2012, 108 applications had been approved, 28 were withdrawn by the applicant, none had been denied, and 160 cases were open from 206 to 1,138 calendar days (some crossing two election cycles).”

In fact, the only known 501(c)(4) applicant whose request for tax-exempt status was recently denied happens to be a progressive group: the Maine chapter of Emerge America, which trains Democratic women to run for office. Although the group did no electoral work, and didn’t participate in independent expenditure campaign activity either, its partisan nature disqualified it from being categorized as working for the “common good.”

The Inspector General’s report found that in the “majority of cases, we agreed that the applications submitted included indications of significant political campaign intervention.” In fact, only 91 of the 296, or roughly 31 percent of the applications reviewed for the report, did not have “indications of significant political campaign intervention.” In other words, more than two-thirds of groups flagged for processing by a team of specialists had those indications.

That sort of political campaign intervention would normally disqualify a group from 501(c)(4) status, but the deluge of Tea Party applications combined with the politicization of the process has allowed them to slip through. A closer look at the activities of some of the Tea Party groups that are currently under review or have received non-profit status from the IRS reveals a difficult and potentially dangerous situation.

The First Coast Tea Party Inc. of Jacksonville, Florida, for example, which applied for 501(c)(4) status in 2009 — and received it in 2011. Commenting about the recent IRS controversy on Facebook, the group declared “We file a tax return, account for every penny. We do not endorse candidates, that is a no no.” Yet the First Coast group has boasted about directly helping Republican campaigns. In an August 30, 2012 Facebook post, for instance, the group advertised a Jacksonville rally for Republican presidential candidate Mitt Romney and his vice-presidential nominee Paul Ryan, adding, “bring your chairs and your signs, make sure they know that the First Coast Tea Party is and has been helping their campaign.”

Three weeks later, the same group declared a “state of emergency” on Facebook, pleading with supporters to campaign for Romney: “FLORIDA FRIENDS, IF YOU LIVE IN ANY OF THESE 3 COUNTIES GET OFF THE COUCH NOW, GET YOUR FRIENDS OFF THE COUCH. GET TO THE REPUBLICAN HEADQUARTERS AND OFFER AND THEN DO SOME WORK. PHONES, (YOU CAN EVEN DO THESE CALLS FROM HOME) AND WALK AND KNOCK. NOW. WE CANNOT LOSE FLORIDA TO OBAMA.. NOW. THIS IS MOST CRITICAL [emphasis in original].” These weren’t posts from some random supporter on the group’s Facebook page; they were posts from the official account of the organization.

Similarly, the IRS granted 501 (c)(4) tax-exempt status to the Louisville Tea Party in 2009.  The same group published a list of “officially tea party endorsed candidates for the 2011 Kentucky primary.” They also published an article headined “The Rationale for Romney-Ryan,” arguing that Tea Partiers should vote for the Republican candidate.

Then there is the Katy Tea Party Patriots, which filed for 501(c)(4) status in 2009. This group actually ran an “Oust Obama 2012” campaign, organizing block-watching with the Fort Bend GOP and phone-banking against Obama at GOP headquarters in Sugarland and Houston, Texas. Still featured on the front page of the group’s website is an October 4, 2012 article titled “Our Country’s Future,” by Katy Tea Party Patriots president Darcy Kahrhoff, who urged members to vote for Romney. “Please take time to talk with friends and family you may have living out of state, and try to convince them to vote for Governor Romney, especially if you have friends and family in Florida, Colorado, or Ohio. Also, find a Senatorial candidate to support in these states, and go to FreedomWorks to phone bank for these patriots.  Everything you can do to help will matter.  We can, and we must, win this!

Not to be outdone was the Central Valley Tea Party Inc., a regional California Tea Party group that won the much more politically restrictive IRS 501(c)(3) tax status in 2009.  It should be noted that 501 (c)(3) status explicitly prohibits any partisan political activity.  “Under the Internal Revenue Code,” as the IRS explains, ”all section 501(c)(3) organizations are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office. The prohibition applies to all campaigns including campaigns at the federal, state and local level. Violation of this prohibition may result in denial or revocation of tax-exempt status and the imposition of certain excise taxes.”

Despite its 501 (c)(3) designation, the Central Valley Tea Party group appears to have been involved in partisan political activity. Currently, the front page of the group’s website features “upcoming events” instructing members to “Volunteer for Measure G,” and “Volunteer for Vidak for Senate.” In the latter case, the website simply instructs members: “Please volunteer to do phone banking or precinct walking to help win the election.”

Further stretching IRS regulations, the same group’s newsletter endorsed and advertised conservative candidates. In an article in the October, 2012 issue of the Central Valley Tea Party Times – headlined ”Why You Should Be Excited to Vote for Mitt Romney” — Paul Szopa told fellow Tea Partiers to get out and campaign for the Republican presidential candidate. “So it’s time to get excited to vote for the better candidate. It’s time to talk him up to friends and family. It’s time to join with groups like Operation Swing State (www.operationswingstate.org) and make calls in support of his candidacy.” Published on the front page of the newsletter was a “Voter Guide” that seemed even less ambiguous, listing all the candidates that the group recommended as well as their positions on all of the ballot measures.

The newsletter also featured advertisements for conservative candidates. The April-June, 2012 edition of the Central Valley Tea Party Times carried an ad for Whelan for Congress on page 27, another for Frank Bigelow for the 5th District California Assembly seat on page 38, and an ad “Elect Richard J. (Rick) Farinelli, Madera County Supervisor District III” on page 39.  The newsletter’s August-September, 2010 edition featured an ad for Diane Lenning, a write-in candidate for California Superintendent of Public Instruction; so did the October-November, 2010 edition.

Another Tea Party group granted the 501(c)(3) non-profit status by the IRS, is the Tifton, Georgia-based Tiftarea Tea Party Patriots, Inc., which received the designation in 2010. This group too appears to have engaged in openly political activity, including publicly endorsing candidates. On October 9, 2012, in a post on its website — “Are you ready to vote?” — the Tiftarea group strongly endorsed Romney: “The choice is simple. Obama has stated, He will transform America and acted to do such. Everything this Administration stands for, is Government and control of every aspect of life.  This is the pipe dream of a Socialist’s mentality, for in their eyes, you the individual, do not know and cannot do, what is right, so someone else has to make decisions for you, to ensure, you do not make the wrong choices or actions. Or you chose Romney, who does not want to transform America, the greatest nation in history of human kind.  He wants to allow, the individual, to have the right, to succeed and fail on his own regard, while ensuring those freedoms, given by our Creator and to assure those inalienable rights, written about in the Declaration of Independence are retained by their proper owners, ‘We the People.’”

These are but a few of the many examples of political intervention by Tea Party non-profits catalogued by IREHR. There are many, many more and they’re not difficult to find. Rather than the so-called IRS scandal cooked up by Tea Party groups and their partisan supporters, the real criticism of the IRS may be that it has permitted so many of these groups to obtain tax-exempt status despite apparently egregious violations.

After the firing of several high-level IRS employees over this incident, how likely is it that Tea Party groups will be sanctioned for these kinds of violations in the future?

This is adapted from a special report of the Institute for Research and Education on Human Rights. To request a printed version of the report, complete with exhibits, please email the Institute at info@irehr.org.

 

Emphasis Mine

See: http://www.nationalmemo.com/the-tea-party-the-irs-scandal-and-the-actual-facts-of-the-case/

Actually, Tea Party Groups Gave the IRS Lots of Good Reasons to Be Interested

RS profiling was a fiasco. Yet, some tea party groups have left a trail of fiscal problems and possible tax-code abuse.

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Source: Mother Jones

Author: Stephanie Mencimer

“Virtually everyone in Washington agrees on at least one thing about the IRS scandal: The tax agency’s trolling for tea party groups and giving extra scrutiny to their applications for nonprofit status was an egregious violation. Exactly how and why that conduct took place remains under investigation. But as conservatives in particular decry the IRS failure, it’s also worth considering the dubious fiscal history of some tea party groups, including their pursuit of non-profit status. While the IRS had absolutely no business profiling any groups based on political criteria, it is not blaming the victim to observe that scrutiny was warranted in specific cases—and they include some major tea party outfits and their leaders, documents show.

Indeed, despite the tea party’s emphasis on fiscal prudence in government, would-be nonprofit groups launched since the movement’s rise in 2009 have left a trail of tax-code shenanigans, infighting, and fiscal irresponsibility. Money raised by some groups was spent frivolously, and in some cases in ways that appeared to flout the tax rules barring nonprofits from political activity. There have been lawsuits between competing organizations over money, and tea party groups have disintegrated because of financial and other mismanagement.

None of which is particularly surprising, given the deluge of fledgling groups. After the tea party movement took off in 2009, thousands of people around the country rushed to join in, many of them creating small nonprofit groups in their local areas. It didn’t take long for infighting to set in and for claims of financial improprieties to fly—for example, there was the story of Saint Augustine Tea Party vs. Saint Augustine Tea Party Inc. Scuffles arose around the country as aspiring tea party groups saw money disappear or rules violated.

Since 2009, the Tea Party Patriots, a large national umbrella group, has claimed no fewer than 3,500 affiliates. Many applied for nonprofit status with the IRS, a prime reason the agency was so overwhelmed with applications. The people leading these groups were often neophytes politically and organizationally—or, as Dan Backer, a lawyer for TheTeaParty.net, explained in an interview with Mother Jones this week, “they didn’t understand the complexity of what’s involved.”

Other tea partiers were part of a constellation of right-wing groups that seek to make money with fundraising appeals for conservative causes. And finally, some high-profile tea party leaders wrestled with personal tax problems before trying to start new political organizations.

Whether the IRS focused on any specific groups for any of these reasons is not clear. But here are some examples of these groups and why the IRS might have wanted to take a closer look at them:

True The Vote/King Street Patriots: True the Vote was among the active conservative groups that sought to police the polls during the 2010 and 2012 elections to root out alleged voter fraud. The group was created by the King Street Patriots, a Houston-based tea party organization and a 501(c)(4). But True the Vote is a 501(c)(3), a tax-exempt designation that allows a group’s donors to write off their contributions but also has strict rules prohibiting electioneering and partisan political activity. True the Vote and King Street share board members and often co-sponsored events.

True the Vote trained volunteers to go into predominantly minority neighborhoods across the country and keep an eye on potential violations by presumed Democratic voters. Its activities drew accusations of voter intimidation; in Ohio, its volunteers were banned from Franklin County polling places amid allegations that it had forged signatures to secure poll-watcher status. In Texas, True the Vote’s alleged partisan activity included a poll-watching guide instructing trainees to consult the Harris County Republican Party website for advice on voting rules, and the group only invited Republicans to its candidate forums.

Catherine Engelbrecht, True the Vote’s president, is among those now complaining that her group was inappropriately targeted. “The IRS treatment of us lends to the appearance of a politically-motivated abuse of power and an assault on free speech,” she told Breitbart News. (She did not respond to a request for comment.)

Engelbrecht has released a letter from the IRS requesting extensive documentation and information from True the Vote as part of its nonprofit application. But the IRS’ requests point to concerns that critics have long raised about the organization. In 2010, an ethics complaint and lawsuit against King Street Patriots alleged illegal political activity, and last year a Texas judge agreed, ruling that the organization was not a nonprofit but in fact was operating like a political action committee and illegally helping the GOP. In August 2012, True the Vote donated $5,000 to the Republican State Leadership Committee, a 527 group that raised nearly $30 million dollars to elect GOP candidates in state legislatures.

TheTeaParty.net/Stop This Insanity: TheTeaParty.net/STI is a 501(c)(4) group incorporated in Arizona in early 2010 by Todd Cefaratti, who runs a “lead generation” company that provides contact information to reverse-mortgage companies, some of whose operations have been compared to those of the subprime lending industry. The group advertises under a number of variations on the tea party name, and some other tea partiers have complained almost from its inception that the group is nothing more than a data harvesting operation. (Cefaratti defended himself against the criticism in a long post here.) FEC filings show that a “leadership fund” set up by the group raised almost $1.2 million in 2012, and gave only $52,000 to candidates for federal office.

TheTeaParty.net/STI has not yet received non-profit status approval; Dan Backer, the group’s lawyer, says he is now considering suing the IRS for targeting his clients. Yet, Backer also describes the group’s founders as neophytes, and he acknowledges that some tea party groups may have run in to trouble trying to properly manage grassroots organizing around politics. “These are folks who are not lawyers, they’re not part of the political establishment,” he says. “In fact they deeply reject the political establishment, so they’re trying to navigate a system designed by the establishment.”

More than one aspect of TheTeaParty.net/STI’s forays into politics might have triggered a closer look from the IRS. Its founders initially set up the group as both a 501(c)(4) and a political action committee that it registered with the FEC—as a single entity. That was a clear violation of the non-profit rules on political activity, as Backer himself acknowledged to me. (The group eventually shut down the PAC.) In 2012, when the group sought to create a “leadership fund” in hopes of collecting unlimited campaign contributions, it ran afoul of federal campaign finance rules; it ended up suing the FEC, arguing that the agency should be prevented from enforcing those laws against it (and it lost).

Tea Party Patriots: One of the largest tea party umbrella groups that formed as a 501(c)(4), it was co-founded by Mark Meckler, a former high-level distributor for Herbalife, a multilevel marketing company that has repeatedly been accused of operating in a manner similar to a pyramid scheme. (Meckler, who left TPP in February 2012, has long refused to talk to Mother Jones and never responded to requests for comment on his past business enterprise when we first exposed it in 2010.) In 2009, the organization raised $12 million in fiscal 2010. But only about $3 million of that went to its “social welfare” mission, according to an IRS 990 form filed in May 2012. Millions more went to professional telemarketing firms, which in some cases cost more than they raised; extensive travel costs; and legal fees incurred as the group sued competitors over its claim to own the “tea party” franchise.

Some conservative leaders came to the tea party with significant tax or financial problems of their own. Another TPP founder is Jenny Beth Martin, a Georgia-based political activist. When she started TPP in 2009, her husband Lee Martin had a half-million dollars in federal tax liens against him; he went on to serve as the group’s “assistant secretary” in 2010 and 2011 and was intimately involved with the group’s financial management.

Other tea party leaders with tax problems include:

Michael Patrick Leahy, a management consultant who organized the National Tea Party Coalition, had $150,000 worth of IRS tax liens and court judgments to his name.

Judson Phillips, the founder of the (for-profit) Tea Party Nation filed for bankruptcy in 1999, and had $22,000 in federal tax liens in his past. After Tea Party Nation planned a July 2010 tea party convention in Las Vegas and then canceled due to lack of interest, the organization stiffed the Venetian Hotel for more than 1,500 rooms it had reserved. That resulted in ajudge ordering the organization to repay the hotel nearly $750,000.

And then there was tea partier Christine O’Donnell, the Senate candidate from Delaware whose IRS tax lien for nearly $12,000 came to light during her 2010 campaign.

Conservatives now say there was a partisan motive behind the IRS targeting of tea party groups. (An Inspector General’s report released Tuesday did not find any evidence to that effect.) As evidence, they point to a lack of similar scrutiny directed at liberal groups. But it is also true that the tea party movement does not have an equivalent on the left; the Occupy Wall Street movement, perhaps the closest parallel, did not receive financial support on the scale that tea party organizations did, nor did it spawn legions of aspiring tax-exempt groups. When Occupy groups did seek out formal structure, they tended to use the traditional charitable 501(c)(3) status, which bars all political activity.

The tea partiers, on the other hand, went for the c(4) designation for political non-profit organizations, helping make them the focus, as we now know, of IRS staffers.”

Emphasis Mine

See: http://www.motherjones.com/politics/2013/05/irs-tea-party-tax-problems

 

Another scandal crashes and burns…

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Source: Politics USA

Author: Jason Easley

“The latest Republican Obama scandal is starting to fall apart too. The IRS didn’t just target conservative groups. They also questioned the tax exempt status of liberal groups too.

In 2012, The Chicago Tribune reported on the IRS denying tax exempt status to a liberal political group,

The IRS announced in May and June that it took the actions against two groups defined as tax-exempt under the 501(c)(4) section of the tax code. The IRS on Thursday declined comment on its tax-exempt final rulings. Tax-exempt groups raising money for both major political parties ahead of the Nov. 6 election walk a fine line between promoting “social welfare” for tax-exempt purposes and purely political interests.

A 501(c)(4) group denied tax-exempt status by the IRS would run afoul of Federal Election Commission rules and could be
required to disclose its donors. Emerge America, a group which helps Democratic women seeking elected office, said it lost it tax-exempt status last October. The IRS invoked the “private benefit doctrine” barring 501(c)(4) status for any group promoting a candidate or political party. The IRS announced its final decision in May.

In June the IRS said it denied 501(c)(4) tax-exemption for an unnamed political group also under the private benefit doctrine. The IRS is barred by law from disclosing the group’s name and the group has not publicly identified itself. The group had one objective: to serve the political goals of its founder, the IRS said. A 501(c)(4) group can spend some funds on political advocacy, but electioneering cannot be its sole reason for existence or comprise a majority of its spending.

It looks like the IRS was not just targeting conservative groups, but was targeting political action groups who may have been violating the tax exemption guidelines. If the IRS wasn’t targeting conservatives, but trying to deal with the surge of dark money groups applying for tax exempt status, this story takes on an entirely different context.

Reuters has obtained part of a yet to be released report from the Treasury Inspector General for Tax Administration (TIGTA) that confirms that the IRS was targeting groups on the left and right who focused their activities on advocating for expanding or limiting of the size of the government. The report also states that the screening process was not influenced by the Obama administration, and that none of the groups screened were denied tax exempt status.

Without the claims of a partisan witch hunt against conservative groups, this latest Republican fueled Obama scandal is set to lose all of its sizzle.

The real reason why Republicans are desperately trying to drum up a scandal here is because they don’t want the IRS forcing their dark money groups to pay taxes. The IRS is threatening their Citizens United fueled political slush fund, and Republicans want it to stop. Republicans are trying to bully the IRS into backing off.

It turns out that Obama isn’t Richard Nixon after all. He wasn’t using the IRS to attack his enemies. In their own bungling way, the IRS was trying to deal with the problems caused by the Supreme Court’s Citizens United decision. First, Benghazi crashes and burns, and now the IRS scandal could be fading fast.

Republicans will pull from their usual “Obama scandal” playbook and hold lots of hearings, but thing looks to be on the fast track to nowhere. Congressional Republicans will try their best, but the IRS “scandal” could backfire and end up making the case for why we need to get rid of Citizens United ASAP.”

Emphasis Mine

see: http://www.politicususa.com/gop-scandal-falls-irs-targeted-liberals-2012.html

 

Is It Time To Start Taxing Churches?

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From: Care2

By:Robin Marty

“As institutions of faith, churches are not forced to pay taxes like the citizens and (usually) corporations in the rest of the United States.  The original argument was that, like charity, church profits and donations go to doing public good — feeding the poor, caring for the sick and other projects that help to build a better, stronger community, and that those advantages outweigh the tax revenue lost.

Churches have grown to take greater advantage of this exemption.  The surge in “televangelism” allowed many corrupt pastors to house themselves and keep themselves in luxury without paying taxes by declaring them allowable living expenses.  Megachurches began popping up, buying cheap land to build on and using subsidies and avoiding paying property taxes while still taking full advantage of the services other residents pay out for.  Some have businesses on site — coffee shops, book stores, all tax exempt by funneling their “profits” back into the church.  Others have taken their earnings both from their businesses and donations and used them to evangelize and increase their missions, supporting the church and recruiting new members.

All of this is legal.  And despite the growing stretch of the definitions of non-profit, of charity, and living expenses, most Americans would agree that all of this should be allowed.

But the only firewall that was set up is now breaking down.  Churches weren’t supposed to get involved in political issues.  No endorsing, no campaigning.  It’s a rule that many religious organizations have been tiptoeing to the line on for years.  “Family values” religious organizations have sanctioned off 501c4s to allow them the ability to advocate for candidates and issues, with donations kept separately from their main group and taxed accordingly.  Pastors and priests have allowed candidates to come in and give testimony during services while winking that they aren’t endorsing a politician or party.  And a growing number have actively endorsed despite the law against it, daring the government to come down on them.

Within the last few years, the “evangelical vote” has been a major driving force behind elections, and the United States Council of Catholic Bishops has actively become a political force, sending missives to their priests telling them to preach to the congregation about the evils of the Affordable Care Act, or convincing the Komen Race for the Cure Foundation to drop Planned Parenthood as a group they donate to — a move that would free up more funding to go to Catholic charities and hospitals to provide mammograms.

Apparently, even this hasn’t been brazen enough.  So now, one church is collecting donations explicitly to oppose a gay marriage ballot initiative in Maine.  The Associated Press reports, “Scores of Maine churches will pass the collection plate a second time at Sunday services on Father’s Day to kick off a fundraising campaign for the lead opposition group to November’s ballot question asking voters to legalize same-sex marriages. Between 150 and 200 churches are expected to raise money for the Protect Marriage Maine political action committee, said Carroll Conley Jr., executive director of the Christian Civic League of Maine evangelical organization and a member of the PAC. Conley is also trying to drum up support for the Maine campaign from religious leaders from around the country.”

Again, totally legal, as long as they don’t advocate for a specific candidate.  The churches are following the letter of the law, but not the intent.  Religious institutions now get all of the benefits of tax exempt status, but have become one of the most politically active groups in the nation.

Should churches continue to keep their tax exempt status while become key players in elections? Let us know what you think in the comments.”

Read more: , , , , 

Read more: http://www.care2.com/causes/is-it-time-to-start-taxing-churches.html#ixzz1vzKmGK80

Emphasis Mine

see:

Incomes down for most but up for wealthiest

growing income gap between the nation’s rich and poor.

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News Alert?!

By Associated Press Staff

“The government is reporting that 50 percent of U.S. workers earned less than $26,364 last year, reflecting a growing income gap between the nation’s rich and poor.

According to the Social Security administration, there were fewer jobs, and overall pay was trending down — except for the wealthiest Americans. The number of people making $1 million or more soared by over 18 percent from 2009. There were 5.2 million fewer jobs in 2010 than in 2007, when the deepest recession since the 1930s began.

The payroll figures are based on W-2 forms submitted by employers to the IRS. The figures were posted by Social Security on its website as demonstrations raged on Wall Street and across the country protesting high unemployment and a growing income gap.”

Emphasis Mine

see:http://www.cleveland.com/business/index.ssf/2011/10/incomes_down_for_most_but_up_f.html#incart_mce