Baucus to IRS: Start probing political groups

posted at 2:55 pm on September 29, 2010 by Ed Morrissey

In one sense, this isn’t as outrageous as it first sounds.  After all, political groups use IRS regulations to receive exemptions on donations, allowing donors to deduct those donations and to get more money than they otherwise would.  On the other hand, though, when the US requires IRS approval to conduct political speech, this is the kind of power that one hands government:

Senate Finance Committee Chairman Max Baucus sent a serious shot across the bows of the growing ranks of groups, most of them on the right, playing aggressively in elections under non-profit 501(c)4 and (c)6 status, with a letter asking that the IRS commissioner examine them for violations of tax law.

A central, and endlessly complicated, legal question is whether an organization’s “primary purpose” is politics, and many find ways to spend 51% of their money, for instance, on policy campaigns. Different lawyers have offered different advice to groups on where, exactly, the line is — but many, like Crossroads GPS and Americans for Job Security, are operating under different versions of the non-profit status to both advertise in elections and keep their donors secret.

The IRS should examine whether the groups’ “political activities reach a primary purpose level” and “whether they are acting as conduits for major donors advancing their own private interests regarding legislation or political campaigns, or are providing major donors with excess benefits.”

The main practical problem is regulatory ambiguity.  No one really knows where the lines are drawn, and so it becomes impossible to have any certainty on compliance.  That may keep lawyers employed, but the lack of certainty means that the overall effect is to curtail speech and assembly for the purpose of political action.

In fact, that’s the entire purpose of creating these regulations, and everyone knows it.  It’s an explicit feature of such regulation.  Politicians talk about keeping the rich from running and buying elections, whether it’s the unions, the corporations, or the “special interests” boogeymen used by elected officials in passing these restrictions.  What they really do is protect incumbents by making outside challenges more difficult through speech restrictions and legal intimidation.  Even in this midterm cycle, where voter anger and engagement has almost reached a decades-long zenith, most people project a mere 60-80 seats in the House to change hands at best — which is less than 20%.  More than 80% of incumbents will return to their jobs even with voters rating Congress lower than the media.

Certainly the IRS should enforce the law as it exists (as should the entire government in areas like immigration, for example).  However, Baucus’ timing in demanding investigations speaks volumes about his motives.  It’s yet another reason that campaign finance reform should get shelved in place of systems that require and deliver full disclosure for political speech, and voters can provide the market for both the speech and the candidates.


Related Posts:

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

Republicans to Baucus – “You better start with the NAACP and other such ‘non-profit’ groups”

teke184 on September 29, 2010 at 2:59 PM

most of them on the right, playing aggressively in elections under non-profit 501(c)4 and (c)6 status, with a letter asking that the IRS commissioner examine them for violations of tax law.

Start with those churches Obama was encouraging to support and politic for his version of the Cuban Health Care System.

Skandia Recluse on September 29, 2010 at 3:00 PM

Baucus is an absolute idiot and a danger to the Republic. The fascist like behavior among these leftist is frightening.

rplat on September 29, 2010 at 3:00 PM

He’s absolutely right. The Obama Campaign of 2008 SHOULD be investigated. Where DID that BILLION Dollar$ come from?!

ornery_independent on September 29, 2010 at 3:01 PM

Different lawyers have offered different advice to groups on where, exactly, the line is — but many, like Crossroads GPS and Americans for Job Security, are operating under different versions of the non-profit status to both advertise in elections and keep their donors secret

Point of Order: If the ratification of the US Constitution and the Bill of Rights can be promoted by people using assumed names (yes, Virginia, Publius wasn’t a real person), then this modern nation can take the idea of donors keeping their identities from a hectoring, bullying Obama. And if you think there’s no modern reason to keep your name from being published, ask the plaintiffs in Doe v Reed how their names were on a “harass me” list.

BradSchwartze on September 29, 2010 at 3:02 PM

What a joke.

This coming from the party who gave Landrieu $300 million for one vote on one bill. Where was the investigation for that crime of the century?

fogw on September 29, 2010 at 3:04 PM

Odd that Baucus wasn’t this interested in illegal funding when Barry was running for president.

GarandFan on September 29, 2010 at 3:09 PM

CAMPAIGN CONTRIBUTION SEARCH
=============================

http://www.newsmeat.com/

canopfor on September 29, 2010 at 3:10 PM

Well, I might have an antiquated view of it, but I personally wish they would create a fund for each race. And the money is divided equally among the candidates in that race. No more donating to a particular candidate, just a donation to a particular race.

ButterflyDragon on September 29, 2010 at 3:11 PM

Why the he!! wasn’t Baucus screaming from the rafters when Obuttheads political donations, and website came into question?

I’m all for honesty, and integrity….but on this issue, Baucus reeks of neither. Just more b.s. to favor his party.

capejasmine on September 29, 2010 at 3:11 PM

Wait… just wait one minute.

Does anyone here know that the IRS already HAS a area where political groups already are checked … and in most cases they are concidered NEWS MEDIA? Aka Blogs.

Good grief.. research.

upinak on September 29, 2010 at 3:13 PM

crime of the century?

fogw on September 29, 2010 at 3:04 PM

fogw:)
=================================================

Supertramp – Live ’88 – 13/13 – Crime Of The Century (HD)

http://www.youtube.com/watch?v=yGlPFv0VUDM

canopfor on September 29, 2010 at 3:14 PM

Sure, great idea! As long as you start with NAACP, SEIU, Moveon.org, DNC, ACORN, VoteAmerica. Let’s see what you dig up there and then revisit the issue…

(Do I even need a sarc tag?)

Ace ODale on September 29, 2010 at 3:14 PM

Great Idea Max – how about you start with Penny Pritzker‘s group.

batterup on September 29, 2010 at 3:14 PM

No comment from Heepy Beepy, Sam Francisco, Harley D. Avidson, and others who donated to PBHO’s campaign in 2008.

Bishop on September 29, 2010 at 3:16 PM

Baucus needs to look back at 2008 when the Obama campaign took money from non-traceable pre-paid credit and “gift” cards. Remember this?

When Newsmax pored over the campaign finance records, more than 65,000 Obama donations appeared to be conversions of foreign currency. According to our analysis of the Obama campaign data, foreign currency donations could range anywhere from $12.8 million to a stunning $63 million.

Fallon on September 29, 2010 at 3:20 PM

This kind of post is what deflates me about your site.

Why so many qualifiers and predicates?

Cut to the chase. “…Baucus’ timing in demanding investigations speaks volumes about his motives.” Ya think? Sorry to sound snarky, but come on! A democrat senator sics the IRS on “political groups”!?

rrpjr on September 29, 2010 at 3:21 PM

Can’t wait until Soros is called to testify before congress in January.

Akzed on September 29, 2010 at 3:22 PM

http://www.newsmeat.com/

canopfor on September 29, 2010 at 3:10 PM

“Our database is temporarily unavailable.”

VibrioCocci on September 29, 2010 at 3:23 PM

DANG! They had all four of those crooks together long enough for a photo-op, but there wasn’t a single policeman to handcuff them???

AubieJon on September 29, 2010 at 3:24 PM

I was working in DC when Clinton first came into office, and there was a massive wave of IRS audits and investigations into Conservative think-tanks and organizations….and…Leftists groups were untouched. The Democrats seem to have no scruples about using their power to harass political opposition.

EasyEight on September 29, 2010 at 3:24 PM

“political activities reach a primary purpose level” and “whether they are acting as conduits for major donors advancing their own private interests regarding legislation or political campaigns, or are providing major donors with excess benefits.”

Let’s ask Democrat Zoe Loftgrun why she’s not yet scheduled the Ethics panel on Charlie Rangel & Maxine Waters.

TN Mom on September 29, 2010 at 3:25 PM

The Democrats seem to have no scruples about using their power to harass political opposition. EasyEight on September 29, 2010 at 3:24 PM

Winner, Understatement of the Year, 2010.

Akzed on September 29, 2010 at 3:26 PM

Math isn’t a strong point but 80 seats out of 259 is a one third changeover not twenty percent. If the public were mad at both parties than the twenty percent figure might be relevant, but where one party is going to decimation, it is unfair to lump the bad party with the non-statist one for purposes of analysis. Also, it should not be missed that there were around 19 republicans running for reelection, but around seven of those running got primaried out. That is also a one third non election anti incumbent rate. The fact that democraps will stick to their criminal candidates and ethically challenged members no matter what, also should not tar the more responsive republicans and conservatives in Congress.

eaglewingz08 on September 29, 2010 at 3:28 PM

“Special Interests” is a code word for “people I don’t like having a voice in the process.”

Seriously, do Democrats ever refer to Unions or George Soros as “special interests” or “fatcat lobbyists?”

One rule, enforced impartially. Or, you know, we could try chaos, no one’s ever done that before.

Merovign on September 29, 2010 at 3:28 PM

http://www.newsmeat.com/

canopfor on September 29, 2010 at 3:10 PM
===========================================

“Our database is temporarily unavailable.”

VibrioCocci on September 29, 2010 at 3:23 PM

VibrioCocci: Your right,systems glitch!:)
==========================================

Our database is temporarily unavailable. Please try your search again shortly.

canopfor on September 29, 2010 at 3:31 PM

Let’s ask Democrat Zoe Loftgrun why she’s not yet scheduled the Ethics panel on Charlie Rangel & Maxine Waters.

TN Mom on September 29, 2010 at 3:25 PM

I hope that the Republicans on the ethics panel get back at her by finding ways to delay the trials for each of them until January, meaning that the new Congress gets to discipline them instead of the current one.

teke184 on September 29, 2010 at 3:32 PM

Meanwhile,speaking of the IRS……….

41 Obama White House aides owe the IRS $831,000 in back taxes — and they’re not alone
===============================

http://latimesblogs.latimes.com/washington/2010/09/congress-taxes-irs.html

canopfor on September 29, 2010 at 3:35 PM

canopfor on September 29, 2010 at 3:14

In case you didn’t see my response to the information you provided yesterday, many thanks for your time and trouble. I was getting ready to go for a surgical procedure and was coming and going here as I could while I got ready. Thanks again – I knew one of the astute political minds on here would probably know.

silvernana on September 29, 2010 at 3:35 PM

Start with Soros and all his little organizations.

marinetbryant on September 29, 2010 at 3:35 PM

Tax regulations such as these are not a hamper to First Amendment speech per se. I know a lot of people will be angry with that comment, and I’m as much against over regulation as the next person, but allowing an organization to be tax exempt if it follows certain guidelines does not hamper Free Speech. If someone wanted to start his own company and convince others to give him money to do nothing but campaign and lobby, he could do certainly do so, he just would have to pay taxes on that money that came into him. In fact, K Street is currently overrun by those businesses.

The reason that these regulations are in place is so that groups can form and not have to lose 20% to 40% of the money that the group takes in so that they can use it on their group’s core missions. Ironically, that money that they “save” in taxes, could end up paying for most of the lobbying/campaigning that is done by the group, assuming that the group is permitted to do 40-49 per cent of its work as lobbying/campaigning. I’m not an expert on non-profit tax law, so I can’t tell you the exact formula.

Having said that, do I agree that Senators should be throwing around their weight in an effort to hold onto their seats? Absolutely not. Trying to scare groups that have formed for certain purposes merely to quiet their group’s mission is an affront on First Amendment rights. That is the problem in this story–not that the IRS may go after non-legitimate groups, but that Baucus is trying to scare groups by urging action by the enforcement arm of the Federal Government.

Also, for a comparison b/n two nonprofit statuses–501c3 charities and c4 nonprofits–follow the link.

http://www.suite101.com/content/what-is-a-501c4-organization-a14959

Conservative in NOVA on September 29, 2010 at 3:41 PM

After all, political groups use IRS regulations to receive exemptions on donations, allowing donors to deduct those donations and to get more money than they otherwise would.

Who is “allowing donors to deduct those donations”?

Unless the organization is a 501(c)(3) public charity, a donor is not entitled to deduct his or her donation. The 501(c)(4) and (c)(6) may be entitled to tax-exempt statuts, but that’s not the same thing as saying that donations made to them are tax deductible. Of course, donors can run these donations through Schedule A of their tax returns, but if audited, don’t expect the deduction to stand.

BuckeyeSam on September 29, 2010 at 3:43 PM

Well golly gee, it sure does look like all the aged hippies and radicals are in their hearts fascists. We now have a fascist government. And Hussein Obama is that historical anomaly, an incompetent fascist, but he is causing and will cause extensive damage and destruction in America.

All we have left is our vote. For now.

Dhuka on September 29, 2010 at 3:43 PM

Baucus to IRS: Start probing political groups

Because nothing will turn this election around faster than telling the IRS to go Alien vs. Lonely Rancher on the people.

Lily on September 29, 2010 at 3:49 PM

Term Limits would solve so many problems.

Asher on September 29, 2010 at 4:02 PM

I like these 2 tasty morsels from the hypocritical Kleptocrat from Montana’s Wikipedia page.

Connections to Jack Abramoff

In December 2005, following the public corruption probe of lobbyist [6][7] Jack Abramoff—who was later convicted of fraud and corruption—Baucus returned $18,892 in contributions that his office found to be connected to Abramoff. Included in the returned donations was an estimated $1,892 that was never reported for Baucus’s use of Abramoff’s sky box at a professional sports stadium and concert venue in downtown Washington in 2001.[8]
Recommendation of U.S. Attorney

In March 2009, Baucus recommended his live-in girlfriend and recent state director, Melodee Hanes, for the vacant position of U.S. Attorney for Montana. Baucus’s romantic relationship with Hanes was discovered in December 2009, after Hanes had withdrawn her name from consideration and Michael Cotter, another of Baucus’s recommendations, was selected.[9]

Baucus withdrew the Hanes recommendation the day after he was told that a newspaper was “poised to publish a story about Hanes’s relationship with the senator and the fact that he had nominated her for the U.S. attorney job.” [10]

I also enjoyed his drunken speechifying in the senate this past year.

I’m relieved that he’s there looking out for us….NOT!

ontherocks on September 29, 2010 at 4:03 PM

I hope that the Republicans on the ethics panel get back at her by finding ways to delay the trials for each of them until January, meaning that the new Congress gets to discipline them instead of the current one.

teke184 on September 29, 2010 at 3:32 PM

I hadn’t thought of that. Sweet Swamp justice!

TN Mom on September 29, 2010 at 4:06 PM

I note there is no call to investigate 527 groups. Could it be that most of those swing from the left?

steveegg on September 29, 2010 at 4:07 PM

The IRS should examine whether the groups’ “political activities reach a primary purpose level” and “whether they are acting as conduits for major donors advancing their own private interests regarding legislation or political campaigns, or are providing major donors with excess benefits.”

OK you POS-then why don’t you investigate where these ‘non-profits’ like the Sierra Club, HSUS, & hundred of others are getting their profits from.
How ’bout looking at the rampant ABUSE of the EAJA-Equal Access to Justice Act-that these entities engage in for their lawyers to do nothing to protect the environment,snail darter, & what else-but to make MONEY off of the govt.
The govt is PAYING these groups to SUE them.
It’s INSANE.
You cannot believe the amount of $$ being paid to these groups on a yearly basis.
And not even the govt knows how much it’s paying out in lawyer fees bcs of this thanks to Clinton/Gore’s signoff on the paper reduction (act?) in like ’96 or so.
No one is being held accountable for MILLIONS & TENS of MILLIONS of OUR TAX dollars!
But no.
Let’s just investigate political groups.
OMG Up is down, left is right, good is evil, & evil is now the new good.
I’m living in Opposite Land.

Badger40 on September 29, 2010 at 4:12 PM

or are providing major donors with excess benefits

Gee. The UAW sure got a sweet deal when Team Obama took over GM.

Golly, does Max know how George Soros group bagged a $2 BILLION Federal loan to drill in Brazil while the Gulf has a 6 month ban on drilling?

TN Mom on September 29, 2010 at 4:13 PM

OT-But did you read the Forbes Article on BO?
I find it very revealing.

Badger40 on September 29, 2010 at 4:23 PM

TN Mom on September 29, 2010 at 4:13 PM

That Forbes article I linked to kind of mentions the Brazil thing.

Badger40 on September 29, 2010 at 4:24 PM

Full disclosure and let the public decide? You do know you’re talking about Democrats, right?

Extrafishy on September 29, 2010 at 4:25 PM

Badger40 on September 29, 2010 at 4:24 PM

The link isn’t working but I remember the article. I also want to point out that GM spent $1 BILLION of bailout (taxpayer) money on an auto plant in Brazil, while they shuttered GM factories in America. $3 BILLION of taxpayer money sent to Brazil is odd…

TN Mom on September 29, 2010 at 4:43 PM

Maybe the IRS should investigate who wrote the healthcare bill since it obviously wasn’t anyone in Congress.

JavelinaBomb on September 29, 2010 at 4:55 PM

JavelinaBomb on September 29, 2010 at 4:55 PM

Heh. Rumor has it the Apollo Group wrote the Stimulus. Who are these masked men??

TN Mom on September 29, 2010 at 5:06 PM

It would be far more productive to examine the staff of the Obama Admin and Congress. I bet they’d meet their tax cheat quota in the first week.

TheBigOldDog on September 29, 2010 at 5:17 PM

Baucus needs a telephone poll sized probe straight up his worthless ass.

NoDonkey on September 29, 2010 at 5:18 PM

$3 BILLION of taxpayer money sent to Brazil is odd…

TN Mom on September 29, 2010 at 4:43 PM

I think this link will work.
From the author’s point of view, BO’s shift of taxpayer $$ overseas is to reduce our power as a nation-punish America for being great bcs he actually sees this country as nothing but a colonial, imperialistic power grubbing tyrant that needs to be put in its place.
The article only helped confirmed & further cemented what I knew to be true.
Disgusting that this man is POTUS.
What a disgrace.

Badger40 on September 29, 2010 at 5:18 PM

Math isn’t a strong point but 80 seats out of 259

Uh. There are 435 seats in the House. Evidently American Political Science isn’t one of your strong points either.

There is always remedial education.

MSimon on September 29, 2010 at 6:17 PM

Was Max sober this time or was it another drunken tirade.

PatMac on September 29, 2010 at 8:20 PM

GM? Since the tax payer owns 61% and they doled out $90,000 to politician campaigns, do I get a personal tax deduction under a 501, 527 or TimmyTurbo?

Help me Obama, take my car keys before I drive and kill the planet or spend to assist the US economy. Hurry with the free meds and pot so I wont care!

FeFe on September 30, 2010 at 9:59 AM

Guilt by association is bad. But, what is it when ones name conjures up fear. In the case of Senate Finance Committee Chairman Max Baucus (D) – Baucus sounds so close to Barack U.S., when pronounced slowly and phonetically strikes fear.

Therefore, the Congressman may want to consider a name change, especially when facing re-election.

MSGTAS on September 30, 2010 at 10:26 AM