Congress Put Pressure on the IRS to Investigate Conservative Tax-Exempt Groups

Over and over, members of Congress asked the IRS to scrutinize 501(c)4 groups for their political activity—and also to scrutinize the agency's scrutiny of those groups.

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A report in Roll Call in March 2012 revealed that leading members of Congress not only were aware that the Internal Revenue Service had begun investigating the political activity of would-be 501(c)4 Tea Party groups that winter, but showed to what an extent members of Congress had been actively putting pressure on the agency to take a closer look at tax-exempt conservative organizations in the wake of the Supreme Court's Citizens United ruling. Reported Janie Lorber in 2012:

Tea party outrage over a spate of IRS letters to conservative groups has revived a long-standing dispute over the agency's controversial role in policing politically active nonprofits.

In January, the IRS began sending extensive questionnaires to organizations applying for nonprofit status as part of a broader project to understand whether social welfare organizations—which are not required to disclose their donors—are actually acting as political committees.

Campaign finance reform groups and lawmakers in both parties have repeatedly demanded that the IRS examine the activities of tax-exempt advocacy groups, which proliferated during the 2010 cycle and are on pace to play an even larger role in 2012.

Democrats, whose affiliated outside groups have lost the fundraising race to Republican organizations this year, have been particularly vocal, sending repeated letters to the agency requesting an investigation. On Wednesday, Rep. Peter Welch (D-Vt.) asked his colleagues in Congress to sign yet another.

Peter Welch is a Democratic congressman from Vermont and sits on the House Oversight and Government Reform Committee chaired by California Republican Darrell Issa. Welch's March 2, 2012 letter to IRS Commissioner Douglas Shulman explicitly called on the IRS to crack down on 501(c)(4)s:

We write to urge the Internal Revenue Service (IRS) to investigate whether any groups qualifying as social welfare organizations under section 501(c)(4) of the federal tax code are improperly engaged in political campaign activity.

Congress created a tax break for nonprofit social welfare organizations because communities across our country benefit greatly from their important work. It is clearly contrary to the intent of Congress for organizations supporting a candidate for office or running attack ads against a candidate to receive taxpayer support intended for legitimate nonprofit groups...

We strongly urge you to fully enforce the law and related court rulings that clearly reserve 501(c)(4) tax status for legitimate nonprofit organizations. And we urge you to investigate and stop any abuse of the tax code by groups whose true mission is to influence the outcome of federal elections.

In a statement accompanying the letter, Welch's office urged the IRS to "investigate whether nonprofit 501(c)(4) organizations affiliated with Super PACs—such as Crossroads GPS, the Karl Rove-backed group spending millions of dollars in campaigns across the country—are in violation of federal law and IRS regulations."

Issa, for his part, sent a letter on March 27, 2012 in concert with Republican Jim Jordan of Ohio, who sits on House Oversight and chairs its Subcommittee on Regulatory Affairs, asking the agency to look into the Tea Party group complaints about excessive information requests.

"Over the past several weeks the Internal Revenue Service (IRS) sent many organizations, operating under tax exempt status, lengthy and detailed questionnaires," Issa and Jordan wrote to Lois Lerner, the director of the Exempt Organizations Division of the IRS, footnoting the above Roll Call story and a report in CNSNews as their sources. "These questionnaires ask for information well beyond the scope of typical disclosures required under IRS Form 1024....[S]everal experts suggest these recent IRS questionnaires exceed appropriate scrutiny."

Presented by

Garance Franke-Ruta is a former senior editor covering national politics at The Atlantic.

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