Poll: Should Tea Party Groups—and Foes—Get Automatic Nonprofit Status?

The Cincinnati office of the IRS that reviews requests for tax-exempt status has some splainin’ to do.  If it turns out that officials targeted groups with “tea party” or “patriot” in their name for special scrutiny, heads will roll. Even President Obama said: “If in fact IRS personnel engaged in the kind of practices that have been reported on and were intentionally targeting conservative groups, then that’s outrageous.”

But the elephant in the room could be the tax code itself. PTAs, civic leagues and charities are being lumped together with politically partisan groups as “social welfare organizations” under the 501(c)(4) section.

The Supreme Court’s 2010 decision that recognized corporations as people fueled the explosion of 501(c)(4) applications.

“In the wake of Citizens United,” said one essay, “nonprofit 501(c)(4) organizations have become increasingly popular. This is due to the fact that these tax-exempt corporations and associations are not required to disclose the names of their donors—and only a portion of what is spent is ever reported. Because of this, wealthy donors can privately endorse a political advocate that has their interests in mind—without ever having to answer to shareholders or the public for their affiliation.”

Republican and Democratic groups alike hide behind the tax code to achieve political ends, so this cuts both ways.

Should the IRS crack down on nonprofits that cross the political line, or just let any group seek tax-exempt status—and cost the Treasury billions in revenues?

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