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6 Key Takeaways From the Stupidity and Reality of IRS 'Scandal'

The maddening episode reveals how Washington works.

US President Barack Obama said May 16, 2013, he had not known about abuses by tax officials who targeted conservative groups until a report into the affair was leaked to the press last week.


There’s so much that’s upside-down and ill-informed about the "IRS scandal" unfolding in Washington, starting with the fact that no one has pointed a finger at the people who created these abuses in the first place: senior political consultants and lawyers. And doesn’t anyone see the hypocrisy of the GOP for calling out the IRS for targeting groups (that lied about being charities) when that party has been targeting black and brown voters for years via every imaginable "voter-fraud" law?

It would be stunning if the current "scandal" led to an informed discussion about the lies and loopholes and campaign law-evading tactics used by both parties in the post- Citizens United era, where lawyers exploited legal ambiguities to run campaigns with little or no accountability. However, that’s not going to happen when too many of the politicians screaming scandal were elected using these dark money deceits.

Let’s go through some of the most maddening aspects of this evolving episode, with an eye to identifying the real scandal and the real culprits.

1. The IRS made mistakes with both parties. The scandal mongers have said that the IRS went too far in pressing Tea Party groups for information when applying for federal non-profit tax status. Lost in this fine print is a critical fact. As reported, IRS staffers sent the same questionaire to Democratic groups suspected of not being charities but political as well. So it’s not just an "attack" on Republicans. 

2. The real issue is the IRS isn’t doing its job. On Wednesday, Rhode Island Democratic Sen. Sheldon Whitehouse gave a speech in the Senate where he laid out the fictions used by political groups to masquarade as charities. He pointed out that industry groups—like PhRMA, the drug company lobby—file reports to IRS and Federal Election Commission filled with contradictory information about their political activities. “Making a material false statement to a federal agency is not just bad behavior, it’s a crime,” he said. But “the Department of Justice won’t prosecute false statements… unless the case has been referred by the IRS… [and] the IRS never makes a referral.”  

“So it is very wrong that the IRS required additional information from a number of organizations based on a screen incorporating their Tea Party orientation,” Whitehouse said. “Picking on the little guy is a pretty lousy thing to do; rolling over for the powerful and letting them file false statements is pretty lousy too.”

3. Team Obama’s hysterical overreactions. The adminstration’s reactions, from the president to Attorney General Eric Holder, have fed the hysteria and given the GOP a green light to turn the Tea Party into victims. Not only did the firing of the IRS acting director come prematurely, but Obama’s overreaction cements the notion that many local Tea Party groups—frequently funded by the Koch brothers—were entitled to be treated the same under tax law as the March of Dimes. Moreover, Holder’s statement that he was recusing himself while announcing the FBI investigation just picks another fight between the administration and congressional Republicans. What Obama could have done was take the risk of explaining how the system really works—what’s broken—and the solutions, even though he has been a beneficiary of it.

4. Charities are not political front groups. The question of who turned charities into political front groups has barely been discussed. The answer, of course, is the same as it always has been: election lawyers and campaign consultants who look for loopholes in the law so clients can run for office using any tactic with little or no accountability.