The O. Zone

Uproar over alleged IRS bias ignores real problem with social-welfare nonprofits

By David O. Williams
Real AspenMay 15, 2013
All the uproar over an Internal Revenue Service office targeting conservative Tea Party groups seeking nonprofit status would be amusing if it wasn’t so depressing.

This shouldn’t be partisan issue. It should be a voter-outrage issue – no matter your political affiliation – because the system is rigged and well-meaning candidates on both sides of the political aisle are getting screwed, along with an increasingly jaded voting public.

The problem isn’t the IRS overly scrutinizing some groups more than others. The problem is so-called “social-welfare” nonprofits engaging in political activity in the first place. By law that’s not supposed to be their primary purpose, but groups on both the left and the right are ignoring the law. And the federal government is doing nothing to stop the practice.

Under the tax code, 501(c)4 nonprofit social-welfare groups can spend money on “issues” but not directly in support of or opposition to a specific candidate. And those groups can keep their lists of donors secret, no matter how much electioneering they engage in.

So in recent years we’ve seen the airwaves flooded with ads from nebulously-named groups weighing in on clearly partisan political issues and then asking voters to contact a candidate to express their concerns. These are obviously political ads in favor of or opposition to certain candidates. And some of these groups exist purely to weigh in on “issues,” so their purpose is primarily political, not social.

Take, for example, a group called Western Tradition Partnership that I’ve written about extensively since 2008. This group should have been singled out by the IRS during its nonprofit application process. So should any liberal group that behaves as outrageously as WTP (now American Tradition Partnership).

And the corporations that pump money into these groups should be revealed for the sake of both the voters trying to decide elections and shareholders wondering how their money’s being spent. The Securities and Exchange Commission is expected to issue a decision on whether it will draft a rule to require companies to disclose campaign spending. That would be a good first step.

But the Federal Election Commission, gridlocked by indecision in recent years, needs to collectively grow a pair and better police the abuses inherent in the social-welfare nonprofit political spending system, which is rigged against voter and donor transparency.

U.S. Rep. Scott Tipton, a Republican from Cortez who represents Aspen and most of Colorado’s Western Slope, expressed outrage that “civic organizations” are being targeted by the IRS:

“I am appalled by this heavy-handed abuse of power by the IRS attempt to silence the voice of free speech and Democracy,” Tipton said in a prepared statement earlier this week. “It is deplorable whether aimed at conservative groups, liberal groups, or any other group that’s trying to express their point of view fully within the scope of the law.

“While I am encouraged that the truth is finally coming out, there needs to be further investigation into the extent of this practice and who was involved. And once we have a clear picture, those responsible at every level must be held accountable.”

The key phrase there is “within the scope of the law.” Tipton said nothing about the abuse of the system by groups that are illegally engaging in political campaigning as their primary purpose, while secretly soaking up money from companies and individuals eager to flood local and national elections with “dark money.”

If the FEC starts enforcing the law, then it won’t be left up to potentially biased bureaucrats at the IRS to determine the intent of social-welfare groups – including allegedly railroaded conservative front groups in Colorado – and state and local politicians won’t have to worry so much about “outside money” flooding into local races.

Between the IRS, the FEC and the SEC, the feds need to get their act together before even more of us lose faith in what is clearly a totally rigged and badly flawed political system.

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