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IRS selected the wrong tests to spot abuses

Apparently, overreach not a Nixonian abuse of power

Published: Wednesday, May 15, 2013 1:15 a.m. CDT

The Internal Revenue Service’s targeting of conservative groups for extra scrutiny so far appears to be a case of bureaucrats run amok and leadership failing to rein them in.

If that holds true, the overreach is not a redux of the 1970s, when President Richard Nixon’s administration ordered the IRS to target his perceived enemies.

The furor among conservative groups notwithstanding, nothing yet indicates that President Barack Obama or anyone in the White House knew what was going on in the Cincinnati IRS offices, where applications from politically oriented groups seeking tax-exempt status had been sent for review.

Employees there struggled to devise a test to flag blatantly political organizations. Unfortunately, their methods were spectacularly wrong.

The employees should have known better, and IRS leaders should have handled the rogue practices much more firmly.

Lois Lerner, director of the IRS division that oversees tax-exempt groups, acknowledged Friday in advance of news exposés and an inspector general’s report that workers had improperly singled out groups with “tea party” or “patriot” in their names. They also targeted groups that defined their purpose in boilerplate summaries such as “to educate the public on the Constitution” and “make America a better place to live.”

For the IRS to single out groups of any political stripe is disastrous for public trust. The IRS must be independent of politics. Employees at any level who don’t understand that should be fired.

It is vital to come up with an acceptable protocol for evaluating groups seeking 501(c)(4) status, meaning they may participate in politics as long as social welfare remains their primary focus. These groups have proliferated since the U.S. Supreme Court’s regrettable 2010 Citizens United ruling, which allows corporations, labor unions and others to raise unlimited sums from anonymous donors and still be considered tax-exempt.

Applications for the 501(c)(4) tax status nearly doubled from 2010 to 2012, to more than 2,400, Lerner said. Much of the activity does involve conservative groups. The Center for Responsive Politics, which tracks money in elections, found that conservative nonprofits spent more than $263 million during the 2012 campaign cycle. Liberal groups spent less than $35 million.

Suspicions that some of those groups are purely political operations are legitimate. But that could apply to liberal organizations as well as conservative. The IRS needs a test to identify questionable applications. Using conservative keywords isn’t it.

The targeted groups were required to fill out extensive questionnaires. But none was denied tax-exempt status.

So far, the greatest damage sustained has been to public confidence in the IRS.

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