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Analyzing the IRS 501(c)(4) Scandal


In early May, news reports revealed that the Internal Revenue Service (IRS) engaged in seemingly selective scrutiny of organizations applying for 501(c)(4) nonprofit status. According to a number of sources, IRS employees targeted groups appearing to be affiliated with conservative-leaning causes, including the Tea Party movement.

This scandal raises many questions—about the IRS process for granting tax-exempt status for nonprofit organizations, and about what qualifies certain groups for certain classifications. Nonprofit and tax experts from The Urban Institute and Tax Policy Center weighed in.

Blog posts:

There are a lot of 501(c)(4) nonprofit organizations. Most are not political.

By Jeremy Koulish

In the wake of the IRS scandal, there has been a rush to condemn the entire 501(c)(4) universe, including calls to eliminate it entirely. This is unfair to the vast majority of 501(c)(4)s, which engage in little-to-no political activity.

The IRS Was Wrong to Single Out Tea Parties, But Many Political Groups Should not be Tax Exempt

By Howard Gleckman

The IRS scandal should shed light on the law that gives tax-exempt status to political groups of all ideological stripes.

The Government We Deserve
IRS and the Targeting of the Tea Party and Other Groups

By Gene Steuerle

Steuerle answers seven basic questions to clarify whether the IRS incorrectly, unfairly, or illegally targeted conservative groups.

The IRS and Tea Party: Treasury Report Finds Big Bungling but Small Scandal

By Howard Gleckman

The IRS’s botched processing of requests for tax-exempt status by political groups isn’t the new Watergate.

Rules Governing Nonprofits and Political Activity: A Brief Overview

By Jeremy Koulish

Koulish, a research associate at the Center on Nonprofits and Philanthropy, provides a brief overview of the permissible activities and characteristics of nonprofits engaged in political activities.

Get IRS out of the Business of Regulating Free Speech

By Howard Gleckman

The IRS may have bungled its scrutiny of conservative political groups seeking tax-exemptions, but should it even be deciding which groups should get favored tax treatment?

Major media coverage:

One Nation, Tax Exempt

IN-DEPTH: IRS' line is 'clear as mud' for nonprofits, politics

Investment News
IRS scandal throws wrench into tax reform

Washington Post
An ‘unthinkable’ IRS scandal? More like unavoidable.

Congress Should Get The IRS Out Of The Business Of Regulating Political Speech

McClatchy Newspapers
In IRS scandal, why is any political group exempt from taxes?

The problem of the IRS's dwindling credibility

Christian Science Monitor
IRS and the Tea Party: A small but bungling scandal

The IRS Was Wrong—But Many Political Groups Should Not Be Tax-Exempt

Christian Science Monitor
Did the IRS illegally target the Tea Party? Seven questions answered.

Are 501(c)4 nonprofit groups too partisan?




IRS building in Washington, DC courtesy of Flickr user dctim1 (CC BY-SA 2.0)