Yet another judge has ruled against the IRS over its unconstitutional targeting of conservative and tea party groups based on their political views. As USA Today noted, a federal judge found this month that there was “strong” evidence that the IRS “had discriminated against conservative groups because of their political stances.” Judge Michael R. Barrett wrote in his decision that the Texas Patriots tea party group had “made a strong showing of a likelihood of success” on its claim that its free speech rights were violated by the IRS lengthy delay in processing its application. “The evidence strongly suggests that the IRS initiated the delay” because the Texas group was affiliated with the tea party, the judge wrote.
As USA Today reported, “IRS officials in 2013 acknowledged they had singled out conservative-leaning ‘public interest’ groups for extra attention while reviewing their applications for nonprofit status … That led to a major scandal and several investigations by Congress … It also caused the resignations or firings of several top IRS officials, including then-Commissioner Steven Miller as well as other administrators tied to the targeting.”
But since then, the Obama administration has falsely claimed there was no discrimination against conservative or Tea Party groups. Treasury Secretary Jacob Lew has said it was a “phony scandal.” He claimed the IRS did not target conservative groups, and that any delay in their applications involved “equal opportunity bad judgment” that affected not just “conservative groups” but also “progressive groups.” After initially suggesting that the IRS’s targeting of conservatives was “outrageous,” Obama later denied that any targeting had taken place. As the New York Post notes, Obama initially stated “that the harassment was ‘inexcusable’ and made him ‘angry’ on May 15, 2013.” But “less than a year later, when the heat was off, he said there was ‘not even a smidgen of corruption.’” Similarly, Congressional Democrats claimed that the IRS’s delay in processing conservative applications for non-profit status merely reflected “mismanagement” and that the IRS treated all applicants for nonprofit status in the same poor manner regardless of ideology.
But these denials were untrue. Even according to liberal NPR, the list of targeted groups was “top-heavy with conservative groups”: “282 conservative groups were on the IRS list, about two-thirds of the total number of groups that got additional scrutiny.” (NPR’s analysis understated the IRS’s bias, since NPR classified liberal groups like the League of Women Voters as ideologically neutral.)
Moreover, in documents recently unearthed by Judicial Watch, a top Obama IRS official admitted it targeted groups based on “guilt by association.” Tom Fitton of Judicial Watch, which is counsel to the Texas Patriots, says “We’re getting document after document showing the IRS both in Washington and Cincinnati knew that [IRS employees] were doing things outside the rules … they were asking inappropriate questions based on guilt by association or party affiliations.”
This recent ruling follows earlier court decisions against the IRS. Two federal appeals courts have also ruled against the IRS in unanimous decisions. The Sixth Circuit Court of Appeals pointed out that:
“Among the most serious allegations a federal court can address are that an executive agency has targeted citizens for mistreatment based on their political views. No citizen—Republican or Democrat, socialist or libertarian —should be targeted or even have to fear being targeted on those grounds. Yet those are the grounds on which the plaintiffs allege they were mistreated by the IRS here. The allegations are substantial: most are drawn from findings made by the Treasury Department’s own Inspector General for Tax Administration. Those findings include that the IRS used political criteria to round up applications for tax-exempt status filed by so called tea-party groups; that the IRS often took four times as long to process tea-party applications as other applications; and that the IRS served tea-party applicants with crushing demands for what the Inspector General called ‘unnecessary information.’”
“Instead of processing these applications in the normal course of IRS business, as would have been the case with other taxpayers, the IRS selected out these applicants [True the Vote, Inc. and Linchpins of Liberty] for more rigorous review on the basis of their names, which were in each instance indicative of a conservative or anti-Administration orientation[. … This] was admitted by the Department of Treasury in the 2013 report of the Treasury Inspector General for Tax Administration (TIGTA).”
Moreover, the IRS has still not stopped targeting Tea Party groups, even after they sued it for viewpoint discrimination. As the D.C. Circuit judges noted, a “cessation” of the challenged practices “has never occurred … applications for exemption by some of [the tea party groups] have never to this day been processed.”
Many liberal commentators have mistakenly defended the IRS’s targeting of conservative groups by erroneously claiming that nonprofits are not allowed to be “political.” It is true that tax-exempt 501(c)(3) groups cannot endorse or oppose political candidates, but that does not mean they cannot take “political” positions. Liberal non-profits engage in political activity all the time, and no one at the IRS gives them a hassle for doing so. The IRS’s targeting of conservatives was unconstitutional viewpoint discrimination.
More importantly, many of the targeted Tea Party and conservative groups were allowed to be more political than tax-exempt 501(c)(3) groups, since they were seeking only the less favorable 501(c)(4) status. Unlike 501(c)(3) groups, 501(c)(4) groups are permitted by law to endorse or oppose political candidates, although election campaigns cannot be their primary function. Precisely because 501(c)(4) groups can engage in such campaign activity, they are not eligible for the primary tax benefit received by most non-profit groups: their donors’ eligibility for a tax-deduction. A 501(c)(4) group itself is not taxed (for example, it does not pay sales taxes when it makes purchases), but donations to it are not tax-deductible, as Supreme Court justices observed in Regan v. Taxation with Representation (1983).
As the Sixth Circuit Court of Appeals noted in ruling against the IRS, “501(c)(4) groups may not collect tax-deductible donations, but they may engage in relatively unfettered political advocacy, including election advocacy. 501(c)(4) groups range from national organizations—including the American Civil Liberties Union, the National Rifle Association, and the Sierra Club—to local neighborhood associations.”
Hans Bader practices law in Washington, D.C. After studying economics and history at the University of Virginia and law at Harvard, he practiced civil-rights, international-trade, and constitutional law.