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IRS May Make Political Groups Pay Dearly for Keeping Donors Secret

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Get What You Deserve
Get What You Deserve

Wow! That would be great news. Not Thelonious Monk dancing (YouTube) great, but close…

For years, the IRS has done little or nothing to check the rise of overtly political groups that claim a special tax-exempt status in order to funnel secret money into election-related advertising.

But in a sign that the agency may be waking from its slumber, the IRS has sent detailed questionnaires to several Tea Party organizations — and possibly other political groups — to determine if they truly qualify for the 501(c)(4) designation intended for groups whose exclusive purpose is to promote social welfare.

Should any group currently calling itself a 501(c)(4) have its designation denied or revoked, tax experts said the consequences could be severe, including fines of 35 percent or more of the money they raised in secret.

And the groups might have to make donors’ names public.

The tax code requires 501(c)(4) groups to be operated “exclusively” for social welfare purposes — which does not include intervention in political campaigns. The IRS has allowed the groups to engage in political activity as long as it was not their primary purpose. But for many of these groups, it’s hard to see what other purpose they could possibly have. It’s also hard to see why a political group would file under section 501(c)(4) instead of under Section 527 — the part of the tax code explicitly designed for political groups including PACs and super PACs — other than to hide its donors. Like the C4s, the 527 groups are allowed to raise unlimited funds and pay no taxes. They just have to disclose who donates money.

Reform groups have been pressuring the IRS to enforce its rules for months. In February, a group of Democratic senators sent a letter to the IRS, which stated: “It is contrary to the letter and spirit of the statute for political organizations formed primarily to advocate for a political candidate or to run attack ads against other candidates to take advantage of section 501(c)(4).”

(click here to continue reading IRS May Make Political Groups Pay Dearly for Keeping Donors Secret — And Out Them.)

That is exactly why – hiding their donors from public scrutiny. The IRS shouldn’t drag their feet, but do this now, before the 2012 election…

 

Written by Seth Anderson

March 9th, 2012 at 7:44 am

Posted in politics

Tagged with , ,

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