Politics

Tea Parties Say IRS 'Intimidating' Them Over Tax-Exempt Status

By: Kenric Ward | Posted: March 12, 2012 3:55 AM
IRS vs. Tea Party

Tea Party Patriots Tax Day Rally, left, IRS logo and First Coast Tea Party Rally, right

Several tea parties have received what they call "intimidating letters" from the Internal Revenue Service demanding detailed lists of contributors, as well as contact information of members and speakers.

The IRS says it's just business as usual.

The IRS letters were triggered by the groups seeking 501(c)4 tax-exempt status, and these tea and patriot organizations complain that the IRS responses smack of a political fishing expedition, if not an outright witch hunt.

"This is clearly an attempt to intimidate tea party groups and intrude in what they're doing," said Brendan Steinhauser of the national tea party group, Freedom Works.

"The Obama administration is attempting to interfere because of the influence these groups are exerting in the political process, and it's out of line."

Pointing to the intensive queries posed in the IRS letters, Steinhauser said the "burden to answering these questions is impossible."

And tea parties aren't the only ones running into trouble. Grassroots conservative groups across the country report that they've been put through the IRS wringer.

When Greg Wrightstone, head of the Pennsylvania Coalition for Responsible Government, applied for "C4" status, he was asked to provide a complete list of contributors, names of every speaker at the group's meetings and contact information for all members.

And the IRS wanted answers within two weeks -- after the agency sat on the application for two years, Wrightstone said.

"There was no way we could have met [the IRS] demands, so we withdrew our application," Wrightstone said.

Other groups are standing and fighting.

"We have no choice. Our lawyers advised us we needed to apply for C4 status due to our political activity," said Tom Zawistowski, of the Ohio Liberty Council

The IRS rigmarole is fraught with historical irony. Evolved out of the civil-rights movement, the 501(c)4 classification was developed ostensibly to protect political activity in a way that political action committees could not.

"Now the IRS is asking for [donor and member] lists," Zawistowski fumed.

"There's something going on here, and it has nothing to do with tax-exempt status -- it's overtly political," he said, adding, "We're still waiting for them to provide the names of unions they've sent these letters to."

While some large tea organizations, such as Tea Party Patriots and Tea Party Express, raise hundreds of thousands, or even millions, of dollars through elaborate marketing campaigns, most are homespun outfits that simply "pass the hat" at local meetings conducted without attendance sheets or membership rolls.

Some tea and patriot groups say they earned the enmity of Sens. Chuck Schumer, D-N.Y., and Al Franken, D-Minn., who have suggested they were illegally funding Republican candidates.

TeaParty.net, a national group that has received inquiries from the IRS, said recent Supreme Court rulings have made the laws surrounding political organizations "very murky." This, says organizer Todd Cefaratti, has made conservative groups "subject to all kinds of political retribution."

"Why else would the IRS ask for this, since who your donors are doesn’t determine if an organization is qualified for tax exemption?" Cefaratti asks.

Zawistowski says individuals have been targeted when applying for nonprofit C3 status as well.

He cited one national speaker who obtained a C4 classification in 2010, but when she started speaking out about immigration control and English-language issues, her application for C3 status elicited IRS demands for her credentials.

"Half the tea parties are run by housewives, and when you get a letter from the IRS it naturally scares the bejesus out of you," Zawistowski said.

"This administration wants us to sit down and shut up," he charged.

Carole McManus, an accountant and a founding officer with the First Coast Tea Party in Jacksonville, confirmed other tea groups' experiences.

She said First Coast applied for C4 status on Aug. 31, 2010, but didn't receive a reply from the IRS until Feb. 6, 2012. At that time, the agency gave the group just two weeks to answer a battery of 11 questions and several related inquiries.

McManus said the grilling reflected "the negative focus" tea party groups have received from the administration.

Still McManus' group complied with the IRS' requests and is awaiting word from the agency. Meanwhile, she noted that other tea groups have been hit with as many as 38 separate questions in IRS correspondence.

"It seems selective. I have to wonder if these rules apply to the Occupy Wall Street crowd?" she said.

Patricia Sullivan, head of The Tea Party Network in Florida, said her group has not applied for a C4 exemption.

"Everyone had to see this coming. If anyone didn't, then they haven't been watching what this administration has been doing the past three years," Sullivan said.

Responding to questions from Sunshine State News, the IRS issued this statement:

"By law, the IRS cannot discuss any specific taxpayer situation or case. Generally however, when determining whether an organization is eligible for tax-exempt status, including 501(c)4 social welfare organizations, all the facts and circumstances of that specific organization must be considered to determine whether it is eligible for tax-exempt status.  

"To be tax-exempt as a social welfare organization described in Internal Revenue Code section 501(c)4, an organization must be primarily engaged in the promotion of social welfare. The promotion of social welfare does not include any unrelated business activities or intervention in political campaigns on behalf of or in opposition to any candidate for public office.

"However, the law allows a section 501(c)4 social welfare organization to engage in some political activities and some business activities, so long as, in the aggregate, these non-exempt activities are not its primary activities."

The statement went on to say:

"Unlike 501(c)3 organizations, 501(c)4 organizations are not required to apply to the IRS for recognition of their tax-exempt status. Organizations may self-declare and if they meet the statutory and regulatory requirements they will be treated as tax-exempt.  

"If they do want reliance on an IRS determination of their status, they can file an application for exemption. While the application is pending, the organization must file a Form 990, like any other tax-exempt organization, and is otherwise able to operate."

As for the complaints about the agency's extensive questions, the IRS said:

"In cases where an application for exemption under 501(c)4 presents issues that require further development before a determination can be made, the IRS engages in a back and forth dialogue with the applicant.  

"For example, if an application appears to indicate that the organization has engaged in political activities or may engage in political activities, the IRS will request additional information about those activities to determine whether they, in fact, constitute political activity.   

"If so, the IRS will look at the rest of the organization’s activities to determine whether the primary activities are social welfare activities or whether they are non-exempt activities. In order to make this determination, the IRS must build an administrative record of the case. That record could include answers to questions, copies of documents, copies of Web pages and any other relevant information."

Overall, the IRS rejected any suggestion that its actions were politically driven.

"Career civil servants make all decisions on exemption applications in a fair, impartial manner and do so without regard to political party affiliation or ideology," the statement concluded.



Contact Kenric Ward at kward@sunshinestatenews.com or at (772) 801-5341.

 

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Comments (9)

Charles Gate
1:01AM MAR 13TH 2012
Think about it: how much of your business’ expense is wasted. You hire highly skilled workers in key areas such as IT, ad writing, telemarketing --- but don’t use them full time. Why not hire them on an as-needed basis, paying for them as you use them? It’s what we are all about. Email us and we’ll tell you more.
Joanne Walczak
10:44AM MAR 12TH 2012
What more information do people need to know that this is BhO at his best?Go get the people who do not buy into your Utopian scenerio and you can be sure IRS will come and get your group.Maybe we will no longer be able to stand as a group and wave American Flags on a street. I am a proud Tea Party member.Semper Fi
Frank
12:05PM MAR 12TH 2012
Hussein, really? Is that the only honest dialogue that Tea Partiers can come up with - - spouting name-calling, demonizing, intentional racism?
Frank
10:25AM MAR 12TH 2012
It's quite simple - can a Tea Party demonstrate that they: (1) Do not intervene in political campaigns on behalf of or in opposition to any candidate for public office; (2) Do not engage in political activities as defined under the law; and (3) Have as their primary activities, social welfare activities. If so, they qualify for the tax exemption; clearly, most Tea Parties are political and shouldn't qualify. This is about tax exemptions, not the First Amendment.
BM
12:33PM MAR 12TH 2012
Frank, you are far off base on this one.
A 501C4 can participate in political activities. However, they cannot endorse. They can only provide information. Media Matters is a 501 C4 and he Swift Boat people were one as well.

A 501C3 is social welfare, a C4 is not but must maintain a certain percentage.

Once again this is in the application process and not in enforcement. It is not like the people are going to get in trouble if they cannot supply the information (which is not required) it is just they will be rejected.

They should just file as a corporation or an LLC and pay taxes which for 99% of them will be zero because they make no money. Oh and then they can endorse all they wish.
Frank
7:39PM MAR 13TH 2012
Read the article - are you saying it's lying?
BM
9:16AM MAR 12TH 2012
Mr. Ward,
This is going on all across the country and thank you for bringing this important issue to light here in Florida.

The problem is that these groups are being asked for this information during the application process. There is no provision for this in Federal Tax Law pertaining to the application of any of these groups, including PACs. This an application only. Now when it comes to reporting things change. Since a 501 C4 is a not for profit and contributions are Not tax deductible there is no reason to ask for this information. After the status has been granted and the organization violates the "information only" rules then the IRS can fine and revoke their status.

Right now this appears to be a witch hunt by a liberal administration.
RepublicanConscience
7:18AM MAR 12TH 2012
This is why we will never have Tax Reform, it is the hammer of the Ruling Class to break the 1st Amendment protection to assemble and to petition our government. This is why Thomas Jefferson said, "The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants."
Pat Galbraith
5:25AM MAR 12TH 2012
Obviously, with a two week short leash after nearly two years in the in box, this is politically based. And soon some will get letters from Eric Holder. Legalized intimidation - but legal. All tax exempt organizations have to go through this. Wanna bet that Media Maters doesn't get that two week leash?

The big problem is our tax system - which is not a system but 75,000 pages of convoluted, Byzantine social engineering specifications. Please people, read up on the FairTax. And please don't consider the Flat Tax. That one keeps the 16th Amendment and that is what gives the government unlimited and unquestionable power.

"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived ---". Think about it!

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