The debacle recently uncovered at the I.R.S. reinforces Republican disdain for the organization and in general for the collection of government revenue. The targeting of Tea Party and conservative groups that claimed tax exemption because they were primarily “social welfare” organizations appears to be an abuse of power by the I.R.S. It is not yet clear at what level of the I.R.S this decision was initiated or approved. Also not clear is what percentage of groups claiming 501(c)4 status were conservative, as this itself is an important factor.
The overwhelming majority of I.R.S. employees are civil servants who are not in thrall to any political party or following any particular ideology. There is no question, however, that many of the organizations that requested tax exemption were really political wolves trying to wear social sheep’s clothing in order to escape federal taxes. The mistake of the I.R.S. employees was not that they went after these conservative political groups masquerading as social groups but that they were not equally aggressive against deceptive liberal political groups at the same time.
After the Citizens United ruling by the Supreme Court, there was an increase in 501 (c)4 groups filing as social welfare organizations, for which the I.R.S. had to assume campaign finance regulation. The I.R.S.’s Cincinnati office had major responsibility for these applications and conservative organizations were targeted by personnel in this office. Political organizations claiming 501(c)4 status have been abusing this designation from the onset, undoubtedly more by right-wing leaning groups than by liberal groups. But the non-partisan I.R.S. should have been examining claims proportionately by political groups originating from both the left and the right.
It is also important to remember that the I.R.S. is vastly understaffed and will have a major additional burden with the implementation of the Affordable Care Act. Their claim that they were using short cuts to find political organizations asking for tax exemption should not be dismissed completely out of hand. Attempts to increase the number of I.R.S. employees so that they could perform their jobs better have been repeated rebuffed by the Republicans in Congress, even if some of the new employees could be used to go after tax cheats and tax fraud.
With federal budget deficits and the national debt as major problems for the country going forward, why have Republicans been unwilling to fund more I.R.S. agents to pursue tax cheats and increase federal revenue? The 2012 Obama budget asked for an increase in funding for the agency, much of which would have been dedicated to hiring more agents and enforcement initiatives. However, Congress in its infinite wisdom, led by the GOP, instead cut the I.R.S. budget, forcing the agency to offer buyouts to over 5000 of its employees.
A report by the internal monitor of the I.R.S. in January of 2012 noted that the cuts in funding and an increased workload made the agency unable to adequately collect taxes or provide reasonable service to the public. In fact, staff reductions resulted in an inability to obtain billions of dollars annually owed to the government, but not paid. One estimate from I.R.S. data had tax cheating costing the federal government $3 trillion over the last decade. In addition, every tax filer has to pay an extra $2200 to the government to compensate for those taxes that are evaded. The great bulk of the tax avoidance is by wealthy individuals or small businesses. If with more agents I.R.S. audits rose significantly, much of the money now owed could flow into federal coffers, a good deal of it voluntarily through tax dodgers’ fears of being caught.
Any politicization of the I.R.S. that is or has been present must be eliminated and this government agency must remain completely non-partisan. On the other hand, the current Congressional investigations of I.R.S. abuses and the attempts to engender positive publicity for the Republicans and negative publicity for the I.R.S. and the Democrats, is in itself a political exercise. Adequate funding from Congress should be provided to allow the I.R.S. to perform its job effectively and efficiently, including preventing organizations from claiming tax exempt status when they are primarily political in nature, rather than dedicated to social welfare objectives.
Resurrecting Democracy
Political junkie, Vietnam vet, neurologist- three books on aging and dementia. Book on health care reform in 2009- Shock Therapy for the American Health Care System. Book on the need for a centrist third party- Resurrecting Democracy- A Citizen’s Call for a Centrist Third Party published in 2011. Aging Wisely, published in August 2014 by Rowman and Littlefield. Latest book- The Uninformed Voter published May 2020