How The IRS Scandal Could Help Drain The Dark Money Out Of Politics

When we last checked in on the IRS scandal, things looked very bad indeed for the Obama administration. Conservatives were accusing the president of having sicced his ruthless tax goon squad on a bunch of innocent Tea Party patriots. This accusation didn’t make much sense, but it made for great headlines.

Now something fascinating has begun to happen. With actual news organizations looking into the situation — as opposed to blow-dried pundits bloviating about it — the nature of the scandal has started to shift. Rather than focusing on the alleged misdeeds of IRS employees, journalists are looking at the law these bureaucrats were attempting to enforce.

Welcome to the post-Citizens United mindset: It’s only politics if money is being spent.

That law, shaped by the Supreme Court’s Citizens United decision, allowed groups dedicated to “social welfare” to apply for tax-exempt status as 501(c)(4)s, so long as they are “primarily operated to advance the common good and general welfare within the community as a whole and not just the interests of the organization’s members.” Examples would include volunteer fire departments, homeowners’ associations and civic leagues.

Translation: not partisan political organizations.

The reason IRS auditors flagged groups with “Tea Party” or “patriot” in their names was because they suspected these groups were political.

And guess what, folks? Based on an investigation conducted by reporters at The New York Times they are.

The Wetumpka Tea Party, for instance, held a get-out-the-vote event dedicated to the “defeat of President Barack Obama.”

The Ohio Liberty Coalition emailed members info about Mitt Romney events, and organized them to distribute Romney literature. Asked about these activities, the group’s president Tom Zawistowski told the Times, “It’s not political activity.”

I’m not making this up. That’s actually what the guy said.

Why? Because his lawyer told him that the IRS was mostly concerned about expenditures for advertising. Welcome to the post-Citizens United mindset: It’s only politics if money is being spent.

Sadly, and predictably, many of the largest 501(c)(4)s (groups that are supposed to be dedicated to “social welfare”) are spending huge sums on political advertising and organizing. It turns out that lobbyists and political operatives love 501(c)(4), precisely because they can use them as tax-exempt slush funds without having to disclose the names of their corporate donors.

When it comes to expenditures, the unwritten IRS rule is pretty basic: Groups that spend more than half their funds for political purposes are not supposed to receive tax-exempt status.

I like to think of these groups as the corporate equivalent to Ronald Reagan’s mythic “welfare queens.” except that these “social welfare queens” really do exist — and they’re cheating the government out of millions of dollars every year.

A few more heinous examples: The American Action Network spent nearly 70 percent of its budget on political activities, including three quarters of a million dollars to help elect Wisconsin Sen. Ron Johnson, a Republican.

The American Justice Partnership funneled most of its budget to PACs such as the “Michigan Republican Party Admin Account” and ad groups specializing in political attack ads.

The media and political class — always so hungry for scandal — would do well to recognize what the facts are now bearing out: The IRS was, and continues to be, far too lenient.

The Republican operatives who set up the American Future Fund spent $15.3 million (more than 70 percent of its budget) on attack ads targeting President Obama and Democratic congressional candidates.

Of course, there are 501(c)(4)s established by Democratic operatives that are being used in the same way. And here’s the point: They should all be stripped of their tax-exempt status immediately.

Corporate donors and the mega-wealthy (of whatever political persuasion) should no longer be allowed to hide their contributions behind the banner of these social welfare queens.

Until such a time as the Supreme Court grows the conscience necessary to place clear limits on the dark money in our political system, it falls to the IRS to stem the tide.

The media and political class — always so hungry for scandal — would do well to recognize what the facts are now bearing out: The IRS was, and continues to be, far too lenient.

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