Sen. Max Baucus, the top Democrat on the Senate’s tax-writing committee, has called for IRS investigations of GOP-leaning groups in a broader agency “study” of political nonprofits meant to “ensure” that the organizations are not abusing their tax status.
In late September, Baucus sent a letter to the IRS commissioner requesting an investigation of 501(c)(4) groups, which can spend money on politics while protecting the identity of its donors as long as its primary purpose consists of activities other than political advocacy, such as lobbying. The only groups singled out in the letter were Americans for Job Security and Crossroads Grassroots Policy Strategies, both conservative nonprofits.
The investigation is widely viewed as an attempt to send a message, not to seriously examine nonprofits’ tax status. A prominent campaign finance attorney, Harmon, Curran, Speilberg & Eisenberg Partner Beth Kingsley, said on an American Bar Association conference call that the tax year for many of these political groups has not ended, making any IRS investigation premature.
Crossroads GPS, for example, has only existed for four months. “They haven’t even had to file a Form 990 [annual tax return],” Kingsley said, according to a campaign finance trade publication.
Furthermore, Crossroads GPS announced plans to spend a significant amount of resources on non-political activities such as lobbying Congress during the lame duck session and the next legislative session, and it recently ran a policy-focused ad (on S. 3773, the Tax Hike Prevention Act) in Capitol Hill newspapers.
Considering this evidence, the Baucus allegations seem rather rash at best and a naked attempt at political intimidation at worst. Despite cherry-picked media accounts by Baucus, there’s no evidence any of these groups are violating the law.
In response, Republican Sens. Orrin Hatch and Jon Kyl sent their own letter to the IRS: “We are worried that the sole purpose of any such effort is to chill the legitimate exercise of First Amendment rights and intimidate Americans who wish to be part of petitioning the government for redress of their grievances,” the letter read.
Meanwhile, the Treasury Department inspector general said recently that the office opened an investigation into allegations that Obama Administration official Austan Goolsbee improperly disclosed confidential tax information about Koch Industries in a conference call with journalists. Charles and David Koch, who own the company, have played a prominent role in supporting organizations opposed to Obama’s agenda.
Baucus and the Obama administration seem to be just the latest examples of politicians throughout American history who have used the IRS against their opponents.
Chief Justice John Marshall observed in McCulloch v. Maryland that “the power to tax is the power to destroy .” Baucus et al have taken that admonition as instructive rather than cautionary.
Perhaps Baucus is angling for the mantle of the “Master of the Senate.”
President Lyndon Johnson’s administration attacked the tax exempt status of the Sierra Club after it ran national advertisements critical of efforts to dam the Grand Canyon. The Sierra Club at that time was a charity, and tax law restricted the amount of lobbying it could do—even grassroots lobbying. The Johnson administration probably hoped the move would pull the plug on the Club, since if it had to operate without charitable status, it would not be able to offer donors a tax deduction. But such tactics have a way of backfiring, and the Sierra Club gained national attention (and members) as a result and found success as a 501(c)(4) lobbying force that could still protect its members and donors from public identification (and political harassment).
President Richard Nixon’s administration has gone down in history as one of the most notorious abusers of the IRS. Nixon staff compiled a list of specific individuals and groups believe to be “enemies” of the administration and directed the IRS to employ a secret group of investigators to review the tax filing from such “enemies.” Ironically, when Nixon’s own taxes came up for audit (again and again, as this account details ), he was eventually found to owe over $400,000 in back taxes and penalties.
Nixon’s efforts faced opposition from inside the IRS—not so for President Franklin Roosevelt, who used the IRS against Huey Long , William Randolph Hearst , and Father Charles Coughlin . Long was vulnerable as a machine politician with some illegal income in bribes and kickbacks. Not so Hearst and Coughlin. Roosevelt also intervened with the IRS to protect his friends, among then a young Texas congressman named Lyndon Johnson.
Johnson’s predecessor, President John F. Kennedy, maintained an “Ideological Organizations Project” tasked with monitoring and auditing “extreme” political organizations and individuals who opposed Kennedy’s administration.
Campaign finance legislation is the pursuit of politics by other means. Unfortunately, too often the same can be said of federal tax enforcement. To be fair, this abuse comes at the hands of political operatives—there doesn’t seem to be any evidence that career tax professionals in the government are interested in abusing the power of the IRS for political gain.
No one today is willing to defend the abusive tactics of Nixon, Johnson or Roosevelt in investigating their political opponents through IRS manipulation. Perhaps we can we agree, then, to unite in outrage against their modern-day cohorts?
Allison Hayward is the vice president of policy at the Center for Competitive Politics, a nonpartisan, nonprofit group dedicated to protecting First Amendment political rights.
