IRS: Evolution of a real mess

When the IRS scandal broke, I was wondering what the fuss was all about since Section 501(c)(4) is a tax exempt section for Social Welfare groups and the Tea Party is clearly a political group.

So if the intent of the section is to be enforced, any group with political motives should be denied tax exempt status under that section. The beauty of Section 501(c)(4) to some people is that organizations do not have to disclose donors. Any political organization can file under Section 507, but donor disclosure is required.

According to Businessweek magazine, the problem came up because in recent years the IRS relaxed enforcement of 501(c)(4) to allow political groups coverage under that section if they were not “primarily engaged in electioneering activities.” This opened a huge hole for political groups to pass through. The IRS was then confronted with trying to determine if groups were “primarily engaged in electioneering activities.”

This doesn’t explain why Tea Party groups were the primary target of enforcement actions but it does explain how the whole mess started. If the IRS had continued to enforce the intent of the section “Social Welfare,” they would not be in the situation they are in now.

One other thought that comes to mind is why the Tea Party is so concerned about donor anonymity? They could file for tax exempt status with probably less approval scrutiny under Section 507.

Personally, knowing the identity of Social Welfare donors is much less important to me than knowing who political donors are. Maybe that was the intent of Congress in writing the Social Welfare provision in the first place.

BRUCE HANSEN

Coeur d’Alene