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Who's to blame for murky regulation in IRS scandal: Agency or lawmakers? (+video)

In a Senate hearing, the two most recent IRS chiefs were grilled over why the agency failed for years to fix the law at the root of the political targeting scandal. The same could be asked of Congress, one said.

What did IRS commissioner tell Congress?
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The IRS should move unilaterally to fix the law sitting at the root of the agency’s targeting of conservative groups, according to Senate Democrats who grilled the agency’s two most recent chiefs at a Senate Finance Committee hearing on Tuesday.

Plenty of questions remain unanswered after senators lit into the two men, Steven Miller and Doug Shulman, about the agency’s managerial competence, the thoroughness of its investigation into the matter given that the IRS has yet to identify exactly who is responsible for the targeting, and whether IRS officials were less than forthcoming with members of Congress during 2011 and 2012 when lawmakers were looking into allegations that eventually proved true.

But they were nearly as irate that the IRS claimed it was overwhelmed and confused about how to evaluate applications for tax-exempt status but did nothing to clarify the regulation at the crux of its discomfort.

“Why didn’t you do anything on your watch to correct it?” asked Sen. Ron Wyden (D) of Oregon. “When the lines are blurring on this disclosure issue, as far as I can tell, you all didn’t do anything to correct the problem in a meaningful way. And I find that very regrettable.”

There’s been no legislative fix proffered for what actually occurred – no lawmakers or IRS officials were making excuses for the agency’s decision to give extra scrutiny to scores of conservative groups’ applications for 501(c)(4) tax exempt status.

That tax status, which is offered to so-called social welfare organizations, is sought by many groups on both sides of the political spectrum because it allows organizations to engage in some political activity while not disclosing their donors.

The problem for the IRS arises in attempting to determine whether an organization is primarily involved in political activity or not. The original law as passed by Congress, as several Democratic senators noted on Tuesday, says 501(c)(4) organizations must be “exclusively” devoted to charitable, educational or recreational purposes.

When the IRS began implementing that rule half a century ago, however, they decided that exclusively really meant not “primarily” engaged in political activity, leaving the door open for groups like the Sierra Club or the AARP to claim the status but devote less than half their activities to politics.


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