Very Possible (and Very Benign) Explanation for IRS “Scandal”

After thinking about and debating the IRS “scandal” further, some of the pieces of information we have learned about the situation are coming together to form a reasonable picture explaining what might have happened to bring about this ordeal.  And the grand picture might be rather boring and innocuous as the focus of this ongoing investigation begins to shift to why the delays in approving 501(c)(4) groups occurred.

First, we start with two key pieces of info.  Last Thursday, Inspector General J. Russell George suggested in his testimony the IRS made these bad decisions “because of a lack of resources and manpower”.  We also know there was a drastic increase in election spending by 501(c)(4) groups beginning in 2008, where spending went from just over a measly $1 million in 2006 to over $82 million two years later.  This was followed by a continued increase in 2010.

Two things should be noted about the 2010 election spending.  First, it’s rather odd for spending to increase from a presidential election to a midterm.  Just look at the 501(c)(4) spending from the years given in the link or total election costs over the past eight cycles.  Second, conservative versus liberal group spending was not very lopsided until 2010, when conservative groups spent more than double their ideological counterparts.  This was followed in 2012 with conservative groups spending nearly five times what liberal groups spent.

These points taken together give us an idea of what the IRS was up against when it came to enforcing the law: a sudden and unforeseen increase of more than %6000 in election spending by 501(c)(4)s from ’06 to ’08 with a further increase in the ’10 midterms on top of a dwindling workforce and budget to deal with the new problem.

It would seem when 2010 rolled around, the IRS began to realize there was a lot of new spending and much of it was coming from conservative groups, many of which had similar terms in their names.  It should be noted the spending would have started very early on in 2010 and even in late 2009 as the Tea Party was trying to oust fellow Republicans in those primaries.  The decision to then inappropriately use names to target these groups by the understaffed IRS now seems rationale while still ill-advised.

As time goes on, the decision to target by group names slowly makes its way up the ladder and goes through a series of variations along the way, one of them we know from Thursday’s testimony to be Lois Lerner trying to stop the use of names and focus on political advocacy in July 2011.  The higher-ups in the IRS get wind of this and try to remedy the situation but also realize the groups still need scrutiny and still need to be kept within the bounds of the law considering the dramatic increase in election spending.

They ask for a template from the very experienced Carter Hull based on the two cases he was examining and he points out there can be no template because each group is different in how they spend their money and how they operate (again, from Thursday’s testimony).  They send his work to a younger and less experienced employee looking for different ideas on building a usable template to examine the groups more uniformly.  More delay ensues as the IRS scrambles to both carry out the law and do it in a way that appropriately scrutinizes the groups they must oversee.

I would argue this is not only a very plausible chain of events based on what we know for sure at this point but it would also explain why everyone that has testified has had no doubt the targeting and the actions taken by the IRS were not politically motivated in any way.

The poor choices of the IRS still warrant a thorough investigation and more time will give us more details.  But a clearer picture may be emerging as to why this situation played out the way it did and, in the end, we may be yawning and rolling our eyes at the lackluster outcome.

Death Knell Has Been Sounded: IRS Scandal Just Wasn’t Political

Two things can safely be pointed out about the IRS scandal after more and more information has been released about it:

  • The agency made extremely bad and somewhat amateurish decisions on how they conducted their follow-ups on 501c4s.
  • And more importantly, it wasn’t political.Sorry, conservatives.  Not a political scandal here.

The pundits can try as hard as they want to attempt to trace this up to the Oval Office but they have failed and continue to fail miserably doing that.  And the reason is because there is no trail going there.

We found out from ProPublica two important points a few weeks ago.  First:

Of the more than $256 million spent by social welfare nonprofits on ads in the 2012 elections, at least 80 percent came from conservative groups.

And second:

Some social welfare groups promised in their applications, under penalty of perjury, that they wouldn’t get involved in elections. Then they did just that.

In other words, there should have been a heavier emphasis on conservative groups since they were responsible for the vast majority of the election spending coming from 501c4s and some of them did exactly what they said they would not do, which justifiably opens the door for further scrutiny by the IRS.

Then the NYT did a study of many of the groups and found they were, in fact, violating their tax status and deserved more intensive investigations.  Of particular interest in this article is the bit about Emerge America, a group on the left politically that lost its tax exempt status last year.  Look at why they lost theirs then question why some of the conservative groups are still allowed theirs.  It’s a fair question and should be answered honestly.

And yesterday we find out the IRS manager who made the call to investigate the groups further, John Shafer, describes himself as a conservative Republican and admits the White House was not involved.

Investigators asked Shafer if he believed the decision to centralize the screening of Tea Party applications was intended to target “the president’s political enemies.”

“I do not believe that the screening of these cases had anything to do, other than consistency and identifying issues that needed to have further development,” the manager answered, according to a transcript released by Cummings.

Asked if he believed the White House was involved, the manager replied: “I have no reason to believe that.”

This situation is only a political scandal if the targeting was in any way political.  The facts are clearly showing beyond any doubt that it simply was not political.  The bad behavior should still be investigated so it does not occur again since everyone agrees it should never have happened.  But this scandal was not political and that side of the story is dead.  Time to move on.

IRS Scandal Beginning to Looking Less and Less Scandalous

As more and more info leaks its way out about the IRS targeting certain conservative groups, we must begin to ask: was the organization doing its job as it was asked by law?  The Atlantic has pointed out Congress was pressuring the IRS to do more investigating of these types of groups in the aftermath of the Citizens United decision in early 2010.  It was after this decision was handed down that the creation of these groups exploded compared to previous years.

Scandal or “scandal”?

This article from CNN states “the number of 501(c)(4) applications more than doubled to over 3,400 in 2012, compared to 1,500 in 2010” and of those 300 were targeted for more investigation and of those 75 contained the words “tea party” or “patriot”.  (25 of the 300 have withdrawn their applications.  No word on how many were in the group of 75.)  When the numbers are taken into account along with the fact the head of the IRS at the time of all this was an appointee of the previous administration, it begins to look a little less devious.

But there is more.  One of the realities of 501(c)(4) groups is the fact they cannot spend their time and resources campaigning for or against specific political candidates, as the law states.  And as the number of groups has greatly expanded, so has the money they have spent on elections, as Ezra Klein pointed out:

501(c)4s spent $92 million in the 2010 election. They spent $254 million in the 2012 election.

So if the number of new groups more than doubles and the amount of money spent on the area these groups would be watched most closely more than doubles, wouldn’t the IRS be scrutinizing them more closely?

And it should be pointed out the Tea Party has been impressive in its size and growth over the past four years.  Putting this all together, we should expect them to be a larger portion of closer scrutiny and being %25 of the 300 groups receiving further investigation would probably seem a proper ratio.

In fact, a Washington Post article on the situation from yesterday mentions the Richmond Tea Party as being one of the groups picked for further questioning.  Remember, these groups are strictly prohibited from supporting any candidates in elections.  Yet this is posted on their website reminding people there is “Fifteen days left to help get Jamie Radtke on the ballot”.  From an organization’s perspective that is charged with making sure these groups do not support specific candidates, what does that look like to you?

Plenty of information will be coming out as this “scandal” unfolds but if the early info is any indication, this might not be as big a scandal as it seems when all is said and done.