Cotton to IRS: It's time to revoke SPLC's tax-exempt status

The Southern Poverty Law Center has traditionally operated in controversial environments, but not usually of its own making. Now that the center finds itself embroiled in workplace issues and the forced departure of its co-founder, it might also find itself in hot water with the IRS. “Engaging in systematic defamation is not a tax-exempt purpose,” Sen. Tom Cotton told IRS commissioner Charles Rettig in a letter sent yesterday challenging the SPLC’s 501(c)(3) status:

Sen. Tom Cotton (R., Ark.) is seeking an investigation into the tax-exempt status of the left-wing Southern Poverty Law Center (SPLC), according to a letter provided to the Washington Free Beacon.

Cotton sent the letter to the IRS April 2 and urges an investigation into whether the SPLC “should retain its classification as a 501(c)(3) nonprofit organization” amid news reports that have verified the “long-established fact that the SPLC regularly engages in defamation of its political opponents.” …

Cotton also references a CNN report that states the organization “suffers from a pervasive racism culture.” Its co-founder, Morris Dees, was recently fired over inner turmoil among its treatment of its workers. Richard Cohen, the group’s president, has also stepped down.

“Based on these reports, and in the interest of protecting taxpayer dollars from a racist and sexist slush fund devoted to defamation, I believe that the SPLC’s conduct warrants a serious and thorough investigation.”

Cotton also questions the money accrued through the SPLC’s tax-exempt status, and points to the compensation paid to its executives as offensive:

My friend John Hinderaker at Power Line notes that this may have consequences down the line, although he thinks the SPLC has it coming:

As the president of a 501(c)(3) organization, I am naturally slow to question the tax-exempt status of another such organization, no matter how foul its conduct may be. But the Southern Poverty Law Center operates so far outside of any legal norms that the time has come for the IRS to pull the plug.

Are we so sure of that? It was just a few years ago that the IRS applied extraordinary scrutiny to tax-exempt applications from Tea Party and other conservative organizations on the basis of political speech and point of view. Accruing nearly a half-billion dollars in assets might be questionable for a tax-exempt group with the word “Poverty” in its title, but plenty of tax-exempt organizations have endowments and assets of that value and more — churches, universities, charitable foundations, and more. Some of those pay large executive salaries, too.

Tax-exempt status should not depend on political point of view, nor on the political value of the work being done. It shouldn’t depend on the personal behavior of executives in the organization, either. The IRS should dispense with those considerations and focus on whether the purpose of the business is the acquisition of wealth or rather community service as proposed in its IRS application. One can ask that question legitimately about some tax-exempt organizations (the Church of Scientology comes to mind) without partisan politics being injected into the inquiry.

There’s little doubt that the SPLC acts in bad faith and is far overrated for its work by mainstream media outlets. Criticism of their actions and the stewardship of their assets is certainly fair game. Siccing the IRS on them over those issues seems more likely to reinforce a precedent started in the Obama administration to turn the tax agency into a partisan weapon, and that’s a weapon that’s far more likely to get used against conservatives in the long run. Cotton’s anger is understandable, but this is not the best way to vent it.

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John Sexton 10:00 PM on June 02, 2023