Close to a third of the advocacy groups named by the Internal Revenue Service as recipients of special scrutiny during tax-exempt application reviews were liberal or neutral in political outlook, a leading nonpartisan tax newsletter reported after conducting an independent analysis of data released by the agency.
All told, around 470 groups were flagged as "potential political cases" between 2010 and 2012, including 298 whose experiences were analyzed in a Treasury Department inspector general's report. Because the IRS by law must not name groups that have not yet been approved or which were rejected, only a subset of their names was made public in May by the agency -- 176 cases.
Of these, "the majority of the groups selected for extra scrutiny probably matched the political criteria the IRS used and backed conservative causes, the Tea Party, or limited government generally," wrote Martin A. Sullivan in a June 3 piece in Tax Notes, a newsletter published by the Tax Analysts group. "But a substantial minority -- almost one third of the subset -- did not fit that description."
Non-conservative advocacy groups given special scrutiny by the IRS in or after 2010 included the Coffee Party USA, the alternative to the Tea Party movement that got a bunch of press in 2010, as well as such explicitly progressive groups as the Progressive Leadership Alliance of Nevada; Rebuild the Dream, founded by former Obama administration official Van Jones; and Progressives United Inc., which was founded by former Wisconsin senator Russ Feingold.
Also included in the special scrutiny were Progress Texas and Progress Missouri Inc.; Tie the Knot, which sells bow ties to raise money to promote same-sex marriage; and ProgressNow, which describes itself as "a year-round never-ending progressive campaign."
The targeting also rolled up centrist groups, such as the Across the Aisle Foundation -- the educational and cultural arm of No Labels, which worked to build momentum for an independent ticket for the presidency -- and politically neutral ones, such as The East Hampton Group for Good Government Inc., formed to encourage better leadership and management of the New York vacation town, and the League of Women Voters of Hawaii.
All of these groups were flagged by the IRS along with the Tea Party class of groups as "potential political cases" and were part of the 31 percent of groups given special scrutiny that were not clearly conservative.
Sullivan's Tax Notes piece lays out what we know about the cases that are public so far:
Because the IRS is prohibited by law from releasing information on applications either denied or not yet approved, we will probably never know the political persuasions of all 298 advocacy cases selected for extra scrutiny and of the additional 170 or so applications selected since then. We can, however, try to assess the political persuasion of the 176 approved organizations that the IRS identified on May 15....
As noted, 46 organizations on the May 15 IRS list had "Tea Party," "patriots," or "9/12" project in their name. Tax Analysts conducted Web searches of the other 130 organizations on the list to determine if the groups were conservative organizations. In 124 cases, we found what we believe is sufficient information to make a good faith determination whether a group was conservative....
[T]the results of the Tax Analysts review of these organizations are the following: 46 with "Tea Party," "patriots," or "9/12 project" in their name, 76 other conservative organizations, 48 nonconservative organizations, and six organizations about which we can make no determination....
Ultimately, to address the question whether the IRS's review of applicants for tax exempt status had a disparate impact on one side of the political spectrum or the other, we will need to know more about the overall pool of advocacy groups applying for tax exemption. For example, if there were a surge in the creation of potentially political conservative organizations in the last few years (that was disproportionate to the creation of nonconservative organizations), more conservative groups would be targeted than nonconservative groups even if there were no political bias among IRS officials. Looking at the makeup of exemption-approved groups tells us nothing about bias unless we know the makeup of the group from which they were selected.
A spokesman for the Treasury inspector general for tax administration (TIGTA), David Barnes, said he'd not heard anything about a list of progressive groups targeted by the IRS and referred me to page 8 of the inspector general's report for his office's understanding of the matter.
It stated: "approximately one-third of the applications identified for processing by the team of specialists included Tea Party, Patriots, or 9/12 in their names, while the remainder did not. According to the Director, Rulings and Agreements, the fact that the team of specialists worked applications that did not involve the Tea Party, Patriots, or 9/12 groups demonstrated that the IRS was not politically biased in its identification of applications for processing by the team of specialists."
The TIGTA decided that there was bias because "we determined during our reviews of statistical samples of I.R.C. § 501(c)(4) tax-exempt applications that all cases with Tea Party, Patriots, or 9/12 in their names were forwarded to the team of specialists" between May 2010 and May 2012 (emphasis added).
Though the Treasury inspectors found that one third of the groups given special scrutiny probably should not have been, they declined to say in their May report what the political leanings of theses improperly selected groups were: "We reviewed all 298 applications that had been identified as potential political cases as of May 31, 2012. In the majority of cases, we agreed that the applications submitted included indications of significant political campaign intervention. However, we did not identify any indications of significant political campaign intervention for 91 (31 percent) of the 296 applications that had complete documentation."
Most likely, these improperly selected cases were -- like the selected cases that the IRS has released data on so far -- a mixture of liberal, conservative, and neutral (civic pride, good government, etc.) in outlook.
More flawed than the selection process -- which flagged groups that should not have been given extra scrutiny as well many that appropriately received it but which were selected using improper criteria, according to the TIGTA report -- were the lengthy delays in processing applications and the excessive and intrusive questions asked of the selected groups. According to the report, 58 percent of inquiries asked of those groups were later deemed unnecessary.
Below, the list of 48 nonconservative groups identified by Tax Analysts in their inquiry.