We have heard a lot in the past few days about the San Antonio Tea Party and other conservative groups being asked ‘inappropriate’ questions as they attempted to gain tax exempt status from the Internal Revenue Service.
But what are ‘appropriate’ questions? What should the standard non profit ‘social welfare’ organization be expected to be asked as they attempt to get non profit status from the IRS?
“The IRS has the authority to inquire as reasonably necessary to determine whether an organization’s proposed activities fit in the Internal Revenue Code,” says Katy David, senior counsel at the San Antonio office of the statewide law firm of Strasburger Price, where she focuses on tax exempt organizations. David was at the American Bar Association conference last week where IRS official Lois Lerner revealed that the agency had been seeking contributor lists and other unusual material from conservative groups, and said those actions were ‘not appropriate.’
She says the IRS should examine the organization ‘from 10,000 feet’ instead of getting involved in some of the bizarre questions which were asked of Tea Party organizations, including the names of their donors, the Facebook pages of officers, e-mails sent by organization leaders, and even lists of the people the group’s officials met with.
“In my experience, I have never seen the Internal Revenue Service as for this detailed level of information,” David said.
She says it is appropriate for the IRS to determine that groups seeking the ‘social welfare’ exemption are in fact mainly Political Action Committees, which are not tax exempt.
“The organization has to be engaged in social welfare activity,” she said. “They are allowed to intervene in political campaigns in favor of or in opposition to any candidates, but that political activity cannot be their primary purpose, it can only be a secondary purpose.”
She says the inquiries she has seen ‘went way beyond that’ and the excessive zeal in seeking out information appears to have been ‘exclusively pointed at conservative organizations.’
While not offering a political opinion, David said it is ‘scary’ to be ‘on the radar’ of the IRS, and, because of the agency’s unique enforcement powers, most political parties and President have shied away from using the agency for political ends.
“People are always concerned about being in the cross hairs of the Internal Revenue Service,” she said. “They might feel that if they are listed as an officer or a director of this organization, they are not on the radar screen. As citizens, that is the specter that we are afraid of.”
David said that’s why the IRS has generally been allowed to remain non partisan.
“I think Americans should be concerned whenever any part of the Executive Branch of government is using its position to affect the law rather than to enforce the law,” David said. “Whether that happened here, the jury is still out, but as Americans, we should be concerned any time the rule of law is not applied even handedly.”