IRS Needs to Do More Enforcement, Not Less

Last night's All In with Chris Hayes had a good segment about the IRS/tea party controversy. One guest was David Cay Johnston, long-time New York Times tax law reporter.

Hayes and Johnston agreed with my initial thoughts on the situation: We don't fault the IRS for scrutinizing groups. That means the agency was doing what it should with applications for tax exemption. Our problem is that they may not have been doing enough of it.

I think any group that applies for tax exempt status should have to prove it deserves it. This isn't about the right to exist -- it's about a special status based on benefiting the public good. I've been part of nonprofit groups since the early 1980s, and the fact that Karl Rove's Crossroads GPS is considered a nonprofit astonishes me every minute.

As we creaky oldsters say, "back in the day" that would have been unthinkable. The closest a group could get to that type of political involvement was a legislative scorecard, or possibly a radio/television ad on an issue that didn't mention candidates' names. (But we didn't have the money for that too often.)

I disagree with selective enforcement, of course, but I'm not persuaded yet that's what was happening here, despite the Fox News hysteria. In the context of the last few years, groups with words like "patriot" and "tea party" in their names were clearly good candidates for violating the rules, as would a group with "progressive" in its name. If it's shown that the progressives or equivalent weren't checked carefully, though, I would have a problem with that.

I suspect what happened was the huge influx of groups meant the agency didn't have the budget to check them all thoroughly, so they tried to apply their resources where they would most likely catch something. It will turn out to be a funding question, not a witch hunt.

(I have to admit I'm confused by Hayes or Johnston's mention of the Citizens United decision in this context, though. Citizens United says corporations have speech rights, it doesn't say they're entitled to tax-exempt status. So I'm not sure what it has to do with this specifically, aside from providing a context.)

Everyone should remember that the head of the IRS branch responsible for this extra scrutiny was appointed by George W. Bush, not Barack Obama. So does it seem likely that Obama would choose this as the way to get at political enemies? Sounds pretty silly to me.

There are two ways this could play out: The IRS can be defanged or it could be given claws to go with the fangs. I vote for the claws.

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Update: As I suspected, the IRS nonprofit division is overloaded and understaffed.