The Independent View: My Take on the 2013 IRS Scandal

First some history. United States federal tax law, specifically Section 501(c)(4) of the Internal Revenue Code 26 U.S.C. § 501(c), exempts certain types of nonprofit organizations from having to pay federal income tax. The statutory language of IRC 501(c)(4) generally requires civic organizations described in that section to be "operated exclusively for the promotion of social welfare". Treasury regulations interpreting this statutory language apply a more relaxed standard, namely, that the organization "is operated primarily for the purpose of bringing about civic betterment and social improvements." As a result, the IRS traditionally has permitted organizations described in IRC 501(c)(4) to engage in lobbying and political campaign activities if those activities are not the organization's primary activity.

Internal Revenue Service rules also protect groups organized under Section 501(c)(4) as nonprofit organizations dedicated to social welfare from having to reveal the names of their donors or the amount of funds the individual donors have contributed. This protection dates back to the United States Supreme Court's 1958 ruling in NAACP v. Alabama, when the Court held that disclosure of names could render private donors vulnerable to retaliation.

Nonprofit organizations dedicated to social welfare are not required to apply for IRS certification in order to operate under Section 501(c)(4) tax exemption rules. However, being certified by the IRS can help organizations attract more donations and provide some protection against further scrutiny.

So using either exclusively or primary, under my interpretation, would require an organization's spending on lobbying or political campaign activities to be no more then 49%.

So how would we find out if this was the case. You would first have to collect all their promotional material, in all the different forms, and determine the political cost. Then make sure it was not greater then 49%. Any request for any other information should be considered illegal.

In today's Wall Street Journal, Peggy Noonan writes, "Richard Nixon attempted to use the agency to target his enemies. But it failed. Johnnie Mac Walters, the head of the IRS during Watergate, said NO. That was the IRS doing its job - attempting to be above politics, refusing to act as the muscle for a political agenda. Man - those were the days."