WASHINGTON – A House committee report maintains that the rhetoric used by President Obama in disparaging the nation’s campaign finance system impelled the Internal Revenue Service to undertake an extensive review of the tax status of conservative groups.
The report compiled by the staff of the House Oversight & Government Reform Committee, “How Politics Led the IRS to Target Conservative Tax-Exempt Applicants for their Political Beliefs,” claims the president’s use of the “bully pulpit” led the IRS to target conservative groups seeking tax-exempt status, leading to often lengthy delays in the process.
According to the report, Obama’s public blistering of the U.S. Supreme Court’s decision in the Citizens United case, which prohibits the government from restricting political independent expenditures by corporations, associations or labor unions, launched the probes of groups, drawing extensive congressional scrutiny.
“For as much as some argue that the IRS’s targeting was not political, it (sic) abundantly clear that the targeting initiated and progressed in the context of a fierce rhetorical campaign by the president to delegitimize Citizens United and nonprofit political speech,” the report said.
Obama and congressional Democrats “have an absolute right to express legitimate policy concerns and advocate for policy changes,” the report acknowledged, but “the causal relationship between this rhetoric and the IRS targeting should not be ignored.”
“Using his bully pulpit, the President spoke,” the committee staff concluded. “He declared repeatedly that these conservative groups ‘posing’ as nonprofits with ‘benign-sounding’ names were ‘a threat to our democracy.’ The IRS listened and, in turn, it subjected these groups to systematic scrutiny and delay.”
The House Oversight & Government Reform Committee began investigating allegations that the IRS inappropriately scrutinized certain applicants seeking tax-exempt status in February 2012. Under Section 501(c)(4) of the Internal Revenue Code, organizations that meet certain criteria and focus on advancing “social welfare” goals are exempted from federal income taxes, although donations to these organizations are not tax deductible.
Organizations popularly referred to as 501(c)(4)s are allowed to participate in campaign-related activities provided that these activities do not comprise a majority of the organizations’ efforts.
On May 12, 2013, the Treasury Department inspector general issued a report that found that the IRS Division of Exempt Organizations inappropriately targeted Tea Party and other conservative applicants for tax-exempt status and subjected them to heightened scrutiny, resulting in extended delays that sidelined some applicants during the 2012 election cycle.
“The committee’s investigation shows that as the president generated attention to the issue of nonprofit political speech in 2010, IRS employees followed his public messaging,” the report said. “With jurisdiction over nonprofits and tax law, IRS employees read and acted upon the news reports. In this way, the IRS targeting is – and always has been – rooted in political machinations.”
“Put simply, as the president’s political rhetoric drove the national dialogue and shaped public opinion, the IRS received and responded to the political stimuli.”
The process, according to the report, had its genesis with Obama’s State of the Union address in January 2010 when he criticized the Supreme Court’s ruling in the Citizens United case, asserting that, “With all due deference to separation of powers, last week the Supreme Court reversed a century of law that I believe will open the floodgates for special interests – including foreign corporations – to spend without limit in our elections.”