The Center for Public Integrity is out with a long, comprehensive, and sympathetic study of the IRS's tax-exempt division before and after the scandal that will be forever known as "Tea Party targeting." Political hacks, like me, have largely covered the story from the congressional investigation side, and watched House Republicans lunge for the White House, miss, and turn Lois Lerner into the most hated bureaucrat since Michael Palin's character in Brazil. What's fascinating about the CPI story is how it steps back and describes what the IRS is supposed to do.
Or was, anyway. According to CPI, the division has:
- Scaled back inquiries, as the number of nonprofit group tax returns investigated recently fell by 10 percent, from 11,699 in 2011 to 10,575 last year. Applications for “social welfare” nonprofit status jumped 27 percent from 1,777 to 2,253 during the same time.
- Reduced the number of denials for exempt status for social welfare nonprofits from nearly 4 percent during the early 1980s to less than a quarter-percent in 2013.
It's frozen, basically, because what would have been a normal round of questions for a new, political-looking nonprofit in 2012 is now a hot ticket for scandal and congressional investigation. CPI reports that the conservative campaign to explode the IRS's new proposed rule tightening nonprofit requirements (the current language allows groups to burn through political ad money as long as it's classified as "education") was a complete success, cowing the agency.
This is a good time to bring in a Wednesday op-ed from the Center for Responsive Politics.
When we downloaded the F.E.C. files on May 21, we believed that virtually all reports from 2014 House candidates submitted by April 15 would be included. We were shocked to find, however, that information for 347 of the 703 active House candidates for the first quarter of the year was missing.
We asked the F.E.C. if something unusual — an information technology crisis, perhaps — had occurred. The response was much more disturbing: The agency told us it simply hadn’t finished processing the filings. We’d never heard that one before.
The most meaningful development in the whole IRS story, I'd argue, came when House investigators found emails from Lerner referring to the IRS's "friends at the FEC," and more emails suggesting she had answered questions from the FEC. To the surprise of non-tax-wonks, it would have been illegal for anyone at the IRS to supply tax information to the FEC. The privacy rationale for that is pretty sound, but the result, in the modern campaign finance system, is a paradox in which the agencies assigned to prevent secret money from being laundered in fake nonprofits can't communicate about it. It really doesn't matter what happens to Lerner, because the agencies that could have broken up political 501(c)(4)s (right and left) are too cowed to try. Just a stunning, long-ranging victory for conservatives. (Or, if you prefer, for free speech.)