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Terry Connelly Headshot

All in the Family: Justice Thomas and the IRS/Tea Party Scandal

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Does the term "social welfare" come to mind if you play word association with phrase "Tea Party"? Probably not. What words do: Ted Cruz, perhaps; Richard Mourdock; Sarah Palin; Todd Akin; Rand Paul; Marco Rubio (until lately)? Yes indeed, all once and future candidates for public office, all backed quite openly with money, volunteers and ads sourced to Tea Party organizations in various states.

These Tea Party organizations were generally organized as tax-exempt entities under section 501(c)(4) of the U.S. Internal Revenue Code, which provides such status to entities qualifying as "social welfare" associations. Under that law, 50(c)(4) organizations can -- unlike section 501(c)(3) charities and religious groups -- actively involve themselves in and finance garden variety electioneering activities like ads for or against particular candidates, provided that is not their "primary purpose." So (c)(4) groups we all know like the NRA and the Sierra Club can meet the "facts and circumstances" test that the IRS applies under the law to enforce the "primary purpose" test, because those organizations, while actively involved in politics, also spend a great deal of time and money on more general advocacy. For example, When the NRA volunteers multiple millions to provide firearms training for school teachers, it actually is helping secure its 501(c)(4) tax-exempt status.

The IRS therefore has every right and duty under the law to examine whether Tea Party groups claiming exempt status fit the criteria. And let's also understand something even more basic: groups self-certify their tax-exempt status when they notify the IRS of their existence; they don't have to prove they are not primarily political in advance -- and the fact that the IRS may question them to assess the "facts and circumstances" of their operation is no bar to the continue operation until the IRS makes a determination.

Accordingly, all this talk about Tea Party groups being "disenfranchised" or "held up" in terms of their activities is quite simply false: they are free to do what they do, raise money and spend it (including on ads supporting political candidates) under the assumption that they are tax exempt via section 501(c)(4) until the IRS proves otherwise!

Equally false is the idea that focusing on Tea Party groups to check 501(c)(4) is in and of itself discriminatory: it is no more so than highway patrol officers focusing on fast-moving traffic to catch speeders. What discriminatory was for the IRS to only or predominantly focus on conservative groups including but apparently not limited to the Tea Party in doing its checking. That would be like patrolmen using racial profiling (or even the old practice of just aiming their radar guns at red cars, whose drivers were just presumed to be show-offs).

So where, you ask, do Clarence Thomas (and his wife) come in. Well, the most famous 501(c)(4) association prior to this year was Citizens United. In the 2010 case involving that entity, the Supreme Court (Thomas concurring in part) struck down Congressional bans on independent electioneering expenditures by unions, corporations and other associations directly on behalf of candidates, so long as they did not give directly to the candidates or their political committees. The ban was ruled to violate the freedom of speech guaranteed by the Constitution. But the Court also upheld the disclosure obligations regarding the specific individual sources of such funds, which apply to donors acting through political entities such PACs or Super PACs or other political entities set up as tax exempt under another Section of the Internal Revenue Code (527). Unions or companies or associations -- as well as individuals -- that want to keep their activity "anonymous," therefore, cannot do so through the only political vehicles that enjoy tax-exempt status.

Justice Thomas, however, dissented from this conclusion: in his view, anonymity of speech is also protected by the First Amendment, and he would have struck down the federal contributions disclosure requirements.

So individuals and groups looking to make their political contributions in secret to avoid potential adverse publicity (or "retaliation" risks that Thomas envisioned -- even at the hands of government) quickly realized that the 501(c)(4) structure used by Citizens United could work to accomplish just that. Why? Because the names of donors to such entities don't have to be disclosed, so long as the groups meet the test of being not "primarily" political. One can imagine how elated Mrs. Thomas felt when she recognized that the argument her husband lost in the Supreme Court chambers could be won through the very organization that she was so publicly championing -- the Tea Party!

Quick as a flash, the Tea Party became the Alcoholics Anonymous of political donors, and it still is. That's what this IRS scandal is really all about: keeping political donors' names a secret by using 501(c)(4) entities to make sure that the donations are written in invisible ink. All sides of the political spectrum used this dodge in both 2010 and 2012 -- that's why it is truly a scandalous stupidity for those in the IRS to be so dense and deaf to the reality that singling out the conservative side of the spectrum for intense interrogation could itself never be kept secret or rationally defended. (To be fair, the law they were attempting to enforce itself is only a little less stupid than the IRS!)

Recall how president Obama directly criticized the Citizens United holding in his State of Union address, while Justice Alito vigorously shook his head "no" to the president's assertion that the decision could open the door to secret foreign campaign contributions. The Court had indeed reaffirmed the ban on such political donations; but with total secrecy applying to any funds donated to 501(c)(4) organizations, how will we ever know (unless the IRS asks to see donors names before 501(c)(4) status is confirmed?

Finally, maybe all those nasty questions the IRS kept asking Tea Party groups about the nature of their political activities was not a Team Obama plot after all -- the Tea Party was probably a bigger pain to the Republican establishment than the Democrats (who actually jumped at the chance to paint all Republican candidates with the Todd Akin/Richard Mourdock/Christine O'Donnell brush. MSNBC made a living off the Tea Party!) And let's not forget that the IRS focus on the Tea Party was all done under an IRS chief who was still serving his allotted five-year term as a holdover from the Bush administration. If -- as Congressman Issa now charges -- the orders to strip-search the Tea Party actually came from "Washington," isn't it also true that the GOP establishment had more "motive, means and opportunity" for mischief than any Democrat?