Political Non-Profits Shouldn’t Be Allowed to Hide Behind Tax Laws

Watchdog Group Urges Tough Action Against IRS Abuses

While pursuing investigations of the Internal Revenue Service’s targeted handling of certain groups seeking tax exempt status, Congress, the White House and the IRS must address the larger problem of political groups masquerading as tax-exempt social welfare groups to hide donors’ identities, Common Cause said today.

“We’re as disgusted as anyone with the way the IRS mishandled the tax exemption applications of some conservative groups, but the scandal at the IRS cannot be permitted to serve as cover for those who want the right to funnel secret money into our elections and buy the corruption that goes with it,” said Karen Hobert Flynn, Common Cause’s senior vice president for strategy and programs.

Common Cause submitted testimony today to the House Ways and Means Committee, which held a hearing on “Internal Revenue Service Targeting of Conservative Groups.”

“Americans of all political stripes are outraged – and should be – by reports that the IRS mishandled applications for tax-exempt status by groups affiliated with the Tea Party and other conservative organizations,” Hobert Flynn said. “The criminal inquiry launched by the Justice Department should be pursued aggressively.”

But the worst possible outcome of this scandal would be for the IRS to back off from enforcing tax laws and grant a free hand to groups across the political spectrum that seek to use their tax-exempt status to hide the identity of their donors, Hobert Flynn said. “Instead, we need more enforcement, based on clear and viewpoint-neutral criteria, to prevent evasion of campaign, disclosure, and tax laws,” she said.

Common Cause’s prepared testimony also highlighted the irony of the IRS wasting energy targeting small, grassroots groups while completely ignoring the blatant flouting of tax law by political heavyweights on the right and left.

It’s crazy that IRS went aggressively after small-time Tea Party groups while ignoring the large groups that existed solely to raise and spend millions to influence elections, the testimony said. “We need a bright line test to clearly establish permissible political activity by social welfare organizations,” it said.