THE BLOG

Don't Chastise the IRS for Doing Its Job

05/14/2013 04:30 pm ET | Updated Jul 14, 2013
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Suddenly, hundreds of millions of dollars flow to influence elections and the anonymous donors claim tax exemptions for the organizations they use to launder the money they use to subvert Congress's clearly laid out campaign finance limits. It is of course outrageous.

But you would never guess so from this week's howls of outrage at the Internal Revenue Service for exercising due diligence and investigating the torrent of laundered political donations that flowed after the Supreme Court gave free speech to the dollar.

Almost as outrageous is how politicians once again leave conscientious public servants hanging in the wind for simply doing their job.

Unlike in Britain, where the ancient Charity Commission administers the admittedly arcane rules on what is and isn't a charity, in the U.S. this task falls to the IRS, since, after all, the main point of being a charity (a 501(c)(3)) is not to bask in a warm moral glow of do-gooding but to get the various exemptions from taxes. And technically, they do not get involved in politics.

However 501(c)(4) organizations can be more overtly involved in campaigning, albeit not for particular parties. Following the controversial ruling by the conservatives on the Supreme Court, such straw bodies can spend unlimited amounts in elections, masquerading as socially concerned quasi-educational bodies.

They do not pay taxes themselves, although their donors can't claim tax relief on the money they give but, perhaps beyond price, they can claim anonymity. It would be nice to think they were following the old Talmudic rule that an anonymous mitzvah is worth 10 times one with a name attached. But anyone who thinks that is the motivation should buy the lots I have for sale on the Big Rock Candy Mountain.

That anonymity effectively allows them to run riot through what is left of congressional attempts to ensure that people rather than money decide elections. It allows a few highly politically motivated individuals to infiltrate the political process like rats in the sewers of a city, out of sight.

It follows that the IRS should want to check that bodies claiming such fiscal privileges actually fit the bill. One can imagine the Right's outrage if the IRS let through the Trilateral Commission Fan Club without inquiry.

I have helped set up several 501 C 3 and 501 C 4 organizations, and the bureaucracy can be frustrating. But it is the IRS's job to check the credentials of organizations claiming tax privileges, and one could forgive a hapless civil servant who mistook the electoral circus round "the Tea Party" for political campaigns, since they clearly were. Some of them were actually for-profit organizations owned by individuals who were practicing the entrepreneurship they so fervently preached!

Indeed, after the Supreme Court's Citizens United ruling, the number of applications for such status doubled to over 3,000. Faced with a flood of new applications from organizations which, amazingly, often had Tea Party or Patriot in their titles, assiduous civil servants in the IRS scrutinized them to see if they were what they purported to be -- and whether they met the legal definitions.

As part of the familiar brush fire in the undergrowth of American politics, Senate Republican Leader Mitch McConnell called the IRS tactics "political thuggery."

He follows in the great American tradition of a media lynching for people who do their jobs, whether it is regulators at the SEC or TV people like Dan Rather for exposing the truth of George W. Bush's absentee war record, or Florida electoral officials for trying to count votes properly. And the one thing that is common is the unwillingness of leading Democrats to call out these fine examples of invisible imperial raiment because they are implicated in similar tactics themselves.

The response in Washington should not be going after public servants trying to stop adventurers avoid taxes -- but at the very least to change the law so that donors' names are made public in any organization that involves itself in the political process. In a democracy, people should stand up for their beliefs, not skulk behind anonymity.