The Internal Revenue Service (IRS) has increasingly been targeting non-profits that criticize the government. When such groups or organizations apply for tax-exempt status, they are bombarded with an awful lot of questions and requests. Jonathan Weisman of the New York Times says that the controversy that emerged a couple of months ago is about an ideological question – whether conservative groups were singled out based on their politics or does the IRS equally target liberal groups as well?
IRS’ Lookout List
An in-depth analysis of IRS operations indicates that the issue had little to do with ideology. It was more about the way the process is set up to “be on the lookout” for certain terms that are applied to any group or organization. The New York Times approached several organizations based on whether they had used those specific terms in their application. Groups that had used “open source”, “occupied territories” or other such “lookout list” terms reported similar bureaucratic hassles, intrusive inquiries and long waits.
Stone House Capital Partners returned 4.1% for September, bringing its year-to-date return to 72% net. The S&P 500 is up 14.3% for the first nine months of the year. Q3 2021 hedge fund letters, conferences and more Stone House follows a value-based, long-long term and concentrated investment approach focusing on companies rather than the market Read More
Findings show that there wasn’t any bias, but just a process that was too broad and too rigid. Many a times the “lookout list” did find legitimate issues like commercial businesses trying to position themselves as non-profit organizations, or partisan political campaign groups applying for tax-exempt status. But IRS officials admitted that the “lookout list” warnings were investigated in an overly rigid way.
Congressional Investigations Give Clear Picture
Last month Daniel I. Werfel, the acting IRS commissioner, ordered investigators not to use such lists after he discovered that the “lookout lists” were still being used after the controversy erupted. When such intrusive inquiries were made into liberal groups, most of them shrugged it off. But when the same questions were asked of conservative groups, those inquiries resulted in congressional and criminal investigations, and the dismissal of IRS officials.
Two monthsof investigation by Congress revealed that many groups other than conservatives were singled out, including medical marijuana purveyors, progressive organizations, open source software developers and groups formed to carry out new ‘Obamacare’ health care laws.
If an application contained terms like “ccupy”, “open source”, “Tea Party”, “group rulings”, “social change”, etc. they were red-flagged immediately. The IRS feared these may be money-making enterprises. Applications that were red-flagged for further scrutiny had nothing to do with politics, liberal or conservative.