Letter to The Honorable Dave Camp, Chair, and The Honorable Sander Levin, Ranking Memeber, Committee on Ways and Means - IRS Targeting Controversy
Letter
Today Maryland Congressman Chris Van Hollen sent a letter to Ways and Means Committee Chairman Camp and Ranking Member Levin about the Treasury Inspector General's finding that some IRS employees gave extra scrutiny to tea party and conservative groups that sought 501(c)(4) tax exempt status.
"As you know, the IG Report found that the IRS used inappropriate criteria to screen conservative groups seeking 501(c)(4) tax exempt treatment. But, it is important to note that the IG Report also faults the IRS for having failed to catch applications from organizations that probably should have been denied 501(c)(4) tax exempt status because their main purpose was to engage in political campaign activities," wrote Congressman Van Hollen. "I am sure that you will agree that no organization, regardless of its political leanings, should be able to misuse one tax exempt status (501(c)(4)) to circumvent the donor disclosure requirements of another (Section 527 of the Tax Code)."
The full text of the letter is below.
May 16, 2013
The Honorable Dave Camp
Chairman
Committee on Ways and Means
U.S. House of Representatives
1102 Longworth House Office Building
Washington, DC 20515
The Honorable Sander Levin
Ranking Member
Committee on Ways and Means
U.S. House of Representatives
1106 Longworth House Office Building
Washington, DC 20515
Dear Chairman Camp and Ranking Member Levin:
I strongly support your decision to investigate the Treasury Inspector General's finding that some IRS employees gave extra scrutiny to tea party and conservative groups that sought 501(c)(4) tax exempt status. That kind of political profiling is absolutely unacceptable and anyone who engaged in such misconduct should be held accountable. The President took an important step in asking for the resignation of the Acting Commissioner of the IRS.
The IRS should be enforcing the law on a uniform basis, regardless of the political leanings of the groups seeking approval of 501(c)(4) status. IRS regulations require that 501(c)(4) tax exempt status be granted only to organizations that engage primarily in "social welfare" activities. The Treasury Inspector General's May 14th report (the "IG Report") shows that the number of organizations seeking this tax status has almost doubled from 2010 to 2012 -- since the Supreme Court opened the door to the creation of Super PACs in Citizens United vs. FEC. This has raised the concern that many organizations have tried to use the 501(c)(4) tax exempt status to engage in significant political campaign activities without having to disclose their donors to the public.
As you know, the IG Report found that the IRS used inappropriate criteria to screen conservative groups seeking 501(c)(4) tax exempt treatment. But, it is important to note that the IG Report also faults the IRS for having failed to catch applications from organizations that probably should have been denied 501(c)(4) tax exempt status because their main purpose was to engage in political campaign activities. I am sure that you will agree that no organization, regardless of its political leanings, should be able to misuse one tax exempt status (501(c)(4)) to circumvent the donor disclosure requirements of another (Section 527 of the Tax Code).
In 2010, the House passed the DISCLOSE Act which would have required 501(c)(4) tax exempt organizations to disclose their donors. That Act would have removed the incentive for any groups engaged in political campaign activities to seek 501(c)(4) tax exempt status in order to hide their donors from public scrutiny. Unfortunately, the Senate version of the bill failed, by one vote, to break a filibuster.
As you consider what has transpired in this case, I urge you to direct the IRS to strictly enforce the letter and spirit of the tax law on those seeking tax exempt treatment and to do so without consideration of the organization's political affiliation or ideological orientation.
In the longer term, I hope we can remove the incentive for any group, regardless of its political orientation, to seek 501(c)(4) tax exempt status to engage in significant political campaign activities while hiding their donors. The IRS should not be in the position of having to determine whether the primary purpose of any organization is to engage in political campaign activity versus the promotion of the social welfare. Requiring full disclosure and transparency would go a long way to getting the IRS out of the business of making these determinations.
Sincerely,
Chris Van Hollen
Member of Congress
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