Roskam's false IRS attack tears at politial fabric
The latest email to constituents from my Illinois Sixth District Congressman Peter Roskam, is so blatantly false, misleading and destructive of good governance that it deserves a reply. First here is what Congressman Roskam frightened his 700,000 constituents about:
"Don't Be Silenced, Fight the IRS Regs
...For too long the IRS has had the American people on their heels, coming after individuals based on their political beliefs and bringing the full weight of the federal bureaucracy to bear on people whose only crime was wanting to participate in the debate of ideas we cherish as central to our democratic process.
And now, the IRS has proposed new regulations that would place much more stringent restrictions on 501(c)(4) nonprofit groups’ activities, forcing many conservative groups out of the public debate."
That would be extraordinarily alarming if true, but it is a figment of Congressman Roskam's vivid Tea Party imagination.
First a little history. The Fat Cats with their millions and billions have always been allowed unlimited use of their wealth in the political arena via 527 organizations. The problem was 527's were required to identify who contributed and how much, a huge inconvenience to folks wanting to hide from the public which politicians they were buying. Enter the 2010 Citizens United Supreme Court decision which, in one fell swoop, redefined cash as free speech. This opened the floodgates for political organizations to set up 501(c)(4) organizations to skirt the disclosure requirement. Note Roskam calls them "nonprofit groups". That is a Whooper the size of which you'll never see at Burger King. Here's how US Code defines a 501(c)(4):
26 U.S.C., Title 26 Ch. 1, Part 1, sec. 501(c)(4)…. [Internal Revenue Code]
(4)(A) Civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare, or local associations of employees, the membership of which is limited to the employees of a designated person or persons in a particular municipality, and the net earnings of which are devoted exclusively to charitable, educational, or recreational purposes. [emphasis added]
(4)(B) Subparagraph (A) shall not apply to an entity unless no part of the net earnings of such entity inures to the benefit of any private shareholder or individual.
You see nothing about political activity there because its not to promote or allow political activity. It's designed for provide tax relief to non-profit groups "operated exclusively for the promotion of social welfare...the net earnings of which are devoted exclusively to charitable, educational, or recreational purposes".
So how do 501(c)(4)'s get to use hundreds of millions of dollars to promote primarily conservative political causes? An obscure 1959 IRS regulation redefined "operated exclusively" as "An organization is operated exclusively for the promotion of social welfare if it is primarily engaged in promoting in some way the common good and general welfare of the people of the community." That's a loophole you could fly a 747 through. It may be utterly illogical and contradictory but there was no problem for half a century till, with Citizens United, itself a 501(c)(4), leading the way, thousands of new 501(4)(c)'s sprung up to funnel anonymous dark political money to candidates and causes under the guise they were "primarily" engaged in legitimate non-profit activities (with a little bit of politicking on the side). By 2012, the IRS had been swamped with over 5,000 new requests which required IRS scrutiny to ensure they were complying with the watered down version of "primarily, (exclusively) non-profit work. Only 298, less than 6%, even identified themselves as "Tea Party" applicants. Total Tea Party and other applicants who tax exempt status was denied? Zero, nada, zilch! So much for putting Americans "back on their heels" or "forcing conservative groups out of the public debate" as Congressman Roskam falsely, and outrageously charges. What the Congressman won't tell his constituents is that 501(c)(4) spending went from $1 million in the 2006 election cycle to $250 million in 2012, because Citizens United and an IRS unwilling to challenge fake non-profits that have gamed the system for the wealthy to buy the electoral process. Not only can they hide their donations, they get tax exemption to boot.
The proposed new regulations Roskam is hysterical about are simply a feeble attempt to bring a semblance of fairness and balance to the outrageous abuse of the 501(c)(4) non-profit concept. They are feeble and insufficient because they don't define what "primarily" means, so there's no guideline for how much political activity is too much. In addition, the IRS is so shell shocked by budget cuts, layoffs and vicious, relentless attacks by Congressman Roskam and every Republican leader, that it dares not do the critical job of non-profit scrutiny the law and good governance require.
Speaking of good governance, Congressman Peter J. Roskam's false and politically motivated attack on the IRS is any thing but. It is disgraceful sophistry which tears at our fragile political fabric. It should stop.
"Don't Be Silenced, Fight the IRS Regs
...For too long the IRS has had the American people on their heels, coming after individuals based on their political beliefs and bringing the full weight of the federal bureaucracy to bear on people whose only crime was wanting to participate in the debate of ideas we cherish as central to our democratic process.
And now, the IRS has proposed new regulations that would place much more stringent restrictions on 501(c)(4) nonprofit groups’ activities, forcing many conservative groups out of the public debate."
That would be extraordinarily alarming if true, but it is a figment of Congressman Roskam's vivid Tea Party imagination.
First a little history. The Fat Cats with their millions and billions have always been allowed unlimited use of their wealth in the political arena via 527 organizations. The problem was 527's were required to identify who contributed and how much, a huge inconvenience to folks wanting to hide from the public which politicians they were buying. Enter the 2010 Citizens United Supreme Court decision which, in one fell swoop, redefined cash as free speech. This opened the floodgates for political organizations to set up 501(c)(4) organizations to skirt the disclosure requirement. Note Roskam calls them "nonprofit groups". That is a Whooper the size of which you'll never see at Burger King. Here's how US Code defines a 501(c)(4):
26 U.S.C., Title 26 Ch. 1, Part 1, sec. 501(c)(4)…. [Internal Revenue Code]
(4)(A) Civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare, or local associations of employees, the membership of which is limited to the employees of a designated person or persons in a particular municipality, and the net earnings of which are devoted exclusively to charitable, educational, or recreational purposes. [emphasis added]
(4)(B) Subparagraph (A) shall not apply to an entity unless no part of the net earnings of such entity inures to the benefit of any private shareholder or individual.
You see nothing about political activity there because its not to promote or allow political activity. It's designed for provide tax relief to non-profit groups "operated exclusively for the promotion of social welfare...the net earnings of which are devoted exclusively to charitable, educational, or recreational purposes".
So how do 501(c)(4)'s get to use hundreds of millions of dollars to promote primarily conservative political causes? An obscure 1959 IRS regulation redefined "operated exclusively" as "An organization is operated exclusively for the promotion of social welfare if it is primarily engaged in promoting in some way the common good and general welfare of the people of the community." That's a loophole you could fly a 747 through. It may be utterly illogical and contradictory but there was no problem for half a century till, with Citizens United, itself a 501(c)(4), leading the way, thousands of new 501(4)(c)'s sprung up to funnel anonymous dark political money to candidates and causes under the guise they were "primarily" engaged in legitimate non-profit activities (with a little bit of politicking on the side). By 2012, the IRS had been swamped with over 5,000 new requests which required IRS scrutiny to ensure they were complying with the watered down version of "primarily, (exclusively) non-profit work. Only 298, less than 6%, even identified themselves as "Tea Party" applicants. Total Tea Party and other applicants who tax exempt status was denied? Zero, nada, zilch! So much for putting Americans "back on their heels" or "forcing conservative groups out of the public debate" as Congressman Roskam falsely, and outrageously charges. What the Congressman won't tell his constituents is that 501(c)(4) spending went from $1 million in the 2006 election cycle to $250 million in 2012, because Citizens United and an IRS unwilling to challenge fake non-profits that have gamed the system for the wealthy to buy the electoral process. Not only can they hide their donations, they get tax exemption to boot.
The proposed new regulations Roskam is hysterical about are simply a feeble attempt to bring a semblance of fairness and balance to the outrageous abuse of the 501(c)(4) non-profit concept. They are feeble and insufficient because they don't define what "primarily" means, so there's no guideline for how much political activity is too much. In addition, the IRS is so shell shocked by budget cuts, layoffs and vicious, relentless attacks by Congressman Roskam and every Republican leader, that it dares not do the critical job of non-profit scrutiny the law and good governance require.
Speaking of good governance, Congressman Peter J. Roskam's false and politically motivated attack on the IRS is any thing but. It is disgraceful sophistry which tears at our fragile political fabric. It should stop.
posted by Walt Zlotow at 7:57 AM
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