Tuesday, May 14, 2013

Political oppression or standard procedure?

Update, May 21: With a few more days' information, I find out that the whole story was hogwash from the start. Crooks and Liars has the whole thing laid out with citations, just go there. Bottom line: It was an attempt at triage in an overworked office, involving no unusual inquiries, and directed at groups of all political persuasions equally. The inquiries were not "extra thorough," rather the IRS followed procedure on these and allowed other organizations to sail through. Three organizations were denied status, all of them from the progressive end of the spectrum. It's a big fat pile of steaming BS. What's amazing is that almost all media are bought into the Republican narrative on this and are missing the bones of the story.

Original post: 
When the IRS "admitted" that it profiled Tea-Party groups for special scrutiny last year, it touched off a media brushfire and charges of politically motivated retribution. As always, there's more to the story than the headlines can provide.

For starters, let's say you're a tax inspector and you see, in an election year, a bumper crop of brand-new 501(c)4 organizations popping up with missions specifically related to tax resistance. Then you notice that many, perhaps nearly all, of them are raising and spending money to influence election results. The (c)4 code allows political activity, but it may not legally be the primary activity of the organization. Might you think that there could be widespread violation of the rules in the category?

When even a player as cagey as Karl Rove was unable to prevent conflict with the law in operating his (c)4, I'd expect that more than a few of these groups really didn't know what they were doing legally.

So now, Ms/Mr IRS Inspector, you have to decide whether your job is to enforce the law or to back away from a high potential for violations because enforcement might make things sticky for the administration, leaving an ugly precedent for the future. I'm pretty sure I know where I'd be on that question, regardless of the specific politics.

You may think that the Obama administration is as ethically challenged as Nixon's, but you don't need nefarious intent to see how this action could come about. Occam's Razor says keep it simple.

But there's more, and I haven't seen this noted anywhere in the press. My mom worked as an accountant for decades, and recalls that it was standard IRS practice as early as the '80s to select categories of businesses and organizations for special scrutiny in a given year. This makes sense from the standpoint of efficient management of limited resources. It doesn't mean audits for all, but it did look at common practices in an industry or category.

So for a very long time the IRS has used organizational profiling to look for common violations as standard practice. The Tea Partiers made a big, broad push in 2012 with new organizations, and so hit the IRS radar. Are you surprised?

The thing to look for is how many TP groups were actually audited. From that you can gauge whether there was any real pain involved. My bet is it'll be a very small number, if it comes out at all.

Update, Friday: Since I wrote this more details have come out about what the IRS was doing, particularly that it was being  "extra thorough" about applications for (c)3 and (c)4 status, auditing before the fact, as it were, and substantially delaying the applications with demands for information, a pretty classic bureaucratic tactic. The President has acted quickly to roll a head that appears to have been actually responsible from the outset. It's also come out that in the weeks before the suspect behavior began, the IRS was under extreme rhetorical attack from the newly minted Tea Party groups, including having one nutbar fly his plane into the Austin IRS building one week before.