Senate GOP presses IRS on treatment of Tea Party groups seeking tax exemption

Roughly a dozen GOP senators are pressing the IRS about whether Tea Party organizations are receiving closer scrutiny than other groups seeking tax-empt status. 

The letter to the IRS from Senate Minority Leader Mitch McConnell (R-Ky.), Sen. Orrin Hatch (R-Utah), Sen. Rob Portman (R-Ohio) and other Republican senators comes after complaints from Tea Party organizations that the tax-collecting agency has burdened them with broad information requests.

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In their letter, the GOP senators suggest that the groups are receiving a more stringent examination from the IRS than other groups looking to influence the political process, and ask the agency to explain its process for vetting applications from organizations seeking 501(c)(4) tax-exempt status.

“It is critical that the public have confidence that federal tax compliance efforts are pursued in a fair, even-handed, and transparent manner — without regard to politics of any kind,” the senators wrote. “To that end, we write today to seek your assurance that this recent string of inquiries has a sound basis in law and is consistent with the IRS’s treatment of tax-exempt organizations across the spectrum.”

“It is imperative that organizations applying for tax-exempt status are able to rely on a consistent and foreseeable review structure from the IRS,” the letter continued. “Any significant changes to the IRS review process should be implemented only after appropriate notice and opportunity for comment from the public and affected parties.”

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Sens. Chuck Grassley (Iowa), Lamar Alexander (Tenn.), Bob Corker (Tenn.), Pat Roberts (Kan.), John Cornyn (Texas), Kay Bailey Hutchison (Texas), Jon Kyl (Ariz.), John Thune (S.D.) and Rand Paul (Ky.) joined McConnell, Hatch, the ranking Republican on the Senate Finance Committee, and Portman on the letter.

The lawmakers’ message to the IRS marks the latest salvo in what has become a tug-of-war between Democrats and Republicans on Capitol Hill over 501(c)(4) groups and other tax-exempt organizations that are playing a big role in this year’s election.

Earlier this week, a group of Democratic senators called on the IRS to strengthen its oversight of 501(c)(4) groups, saying that some organizations organized under that section of the tax code should exclusively be involved in social welfare work.

The IRS currently says that the primary purpose of 501(c)(4) groups should not be political, which has led some legal analysts to assert that those organizations should use less than 50 percent of their budget on political causes. 

And while Republicans are now saying that the IRS should take its time in making changes to its review process for the 501(c)(4)s, the Democrats say they want tighter controls over the groups' spending and have pressed the agency to immediately implement a “bright line test” laying out how much the groups can engage in political activities.

The GOP senators’ Wednesday letter also came the same day that Citizens for Responsibility and Ethics in Washington (CREW), a good government group, filed an IRS complaint against Americans for Tax Reform, a 501(c)(4) group started by the anti-tax activist Grover Norquist.

The complaint alleges that ATR left millions of dollars spent on politicking off its tax return.

In recent weeks and months, Tea Party groups from states like Kentucky, Ohio, Tennessee, Texas and Virginia have pushed back against the IRS’s review of their application for tax-exempt status, saying the agency has asked the organizations to explain how they use social media and how they reach out to and scrutinize potential members.

“We find that your requests are unreasonable, overly burdensome, intrusive and possibly politically motivated and that they have little to do with determining our organization’s qualifications for non-profit status,” Tom Zawistowski of the Ohio Liberty Council wrote to the IRS in February.

The GOP senators, in their Wednesday letter, also ask the IRS whether they have requested social media activities from other groups seeking 501(c)(4) status, and ask whether the request for additional information stems from previously published IRS rules.

Crossroads GPS, an outfit that tilts Republican, and Priorities USA, a Democratic group, are two prominent 501(c)(4)s looking to influence the 2012 campaign.


This post was updated at 3:05 p.m. and 10:33 p.m.