Was the IRS’s War on Conservatives the Result of Legal Ignorance?

Carl Levin is widely, and I think correctly, credited with inspiring the IRS to go after conservative non-profits. But Levin’s initiative may have been attributable (along with partisan animus, obviously) to his own failure to understand the applicable law. This March 2013 New York Times article is revealing. Written by Joe Nocera, it is a paean to Levin’s supposedly wonderful service in the Senate. But note how the article concludes:

Toward the end of my interview with Levin, he let slip a tantalizing tidbit. Sometime in the next few months, the permanent subcommittee plans to call the Internal Revenue Service to task for allowing the political super PACs to be classified as tax-exempt 501(c)(4)s. “Tax-exempt 501(c)(4)s are not supposed to be engaged in politics,” he said. “It is against the law to do so.” Then he added, with a certain undeniable relish, “We’re going to go after them.”

Oh, boy!

Nocera, a Democrat like Levin, salivates at the thought of attacking conservative non-profits. But note that the entire premise of Levin’s approach to the issue is his belief that “tax-exempt 501(c)(4)s are not supposed to be engaged in politics. It is against the law to do so.” This is completely wrong; in fact, coming from a senator, it is a remarkable display of legal ignorance.

This is what the IRS itself says about participation in politics by 501(c)(4) organizations:

[A]n organization exempt under IRC 501(c)(4) may engage in political campaign activities if those activities are not the organization’s primary activity. In contrast, organizations exempt under IRC 501(c)(3) are absolutely prohibited from engaging in political activities (and may, in addition, be subject to tax under IRC 4955 if they make any “political expenditures”). …

In Rev. Rul. 81-95, 1981-1 C.B. 332, the Service considered the effect of engaging in political campaign activities on an IRC 501(c)(4) organization. The organization was primarily engaged in activities designed to promote social welfare. In addition, it conducted activities involving participation and intervention in political campaigns on behalf of or in opposition to candidates for nomination or election to public office. The ruling concluded that since the organization’s primary activities promoted social welfare, its lawful participation or intervention in political campaigns on behalf of or in opposition to candidates for public office would not adversely affect its exempt status under IRC 501(c)(4).

So Levin had no idea what he was talking about. (Nor, interestingly, did the New York Times reporter.) Nevertheless, beginning long before 2013, Levin repeatedly cajoled the IRS to attack conservative 501(c)(4)s and try to drive them out of business. The IRS knew what the law was, of course. But the message from the Democratic Party (Barack Obama and others, along with Levin) was, who will rid us of these troublesome conservatives? Lois Lerner and others at the IRS reasonably concluded that they could go ahead and act on their own political biases, and the Democratic Party would have their backs.

Which is what has happened. One of the appalling aspects of John Koskinen’s testimony before the House Ways and Means Committee yesterday was the repeated interjections of Democratic members of the committee, who, in lockstep, denounced the investigation into IRS wrongdoing and apologized to Koskinen for being grilled by Republican committee members. The cover-up continues.

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