John Boehner is angry. "My question isn't about who's going to resign," the Republican speaker of the House said at a press briefing last Wednesday. "My question is, who is going to jail over this scandal?" The IRS's targeting of tax-exempt applications from (mostly conservative) groups with political sounding names has members of Congress, the media, and the American public asking questions about the chain of command, the enforcement process, and the intentions of those involved. Who knew what, and who ordered what? When and why? Even if and when the answers to these questions emerge, the ethical implications of what transpired will be debated endlessly.
For questions that concern the positive or negative impacts of what happened to specific groups and individuals, however, we don't need a congressional inquiry or a special prosecutor to tell us what is plainly obvious: Whatever the IRS did, its impact on the U.S. political landscape was negligible, because the formal granting of 501(c)4 status by the IRS is of little consequence to most organizations. Unlike 501(c)3 status, 501(c)4 has relatively little impact on an organization's ability to raise money. Seeking IRS recognition of your 501(c)4 status is not essential for legal or practical reasons.
As former Federal Election Committee chairman Trevor Potter points out, "There is no legal requirement that you file with the IRS an application for tax-exemption."
Even if there were a legal requirement to file, it must be noted that 501(c)4 status, or the withholding thereof, is a non-factor when it comes to an organization's ability to raise money. This is one major respect in which 501(c)4 status differs from 501(c)3; while donations to a 501(c)3 are tax-deductible, donations to a 501(c)4 are not. Regardless of where their application stood with the IRS, these organizations would never have been able to offer tax-deductions as an incentive for potential donors.
Even if there were a legal requirement to file with the IRS, 501(c)4s generally do not have much, if any, taxable income — they are non-profit organizations.
The fact of the matter is that nothing the IRS is alleged to have done could have had much, if any, impact on the U.S. political landscape, because — for legal and practical reasons — the formal granting of 501(c)4 status by the IRS is of little consequence to these organizations. What is more, the political activities of these groups are not impeded while a determination on their application is pending with the IRS. This will no doubt be tough to swallow for the administration's most vociferous critics, like conservative radio host Rush Limbaugh, who has used the IRS scandal to claim that "the 2012 election honestly deserves an asterisk next to it." Says Limbaugh:
"A lot of Tea Party money was never raised, and therefore was never spent, on this campaign. A lot of Tea Party enthusiasm was tamped down … They needed to be able to fund-raise, on a tax-exempt way, in order to get started, and they weren't … There was a flat-out effort to suppress the conservative vote in this election … Where [voter suppression] really happened was the government the IRS, another political arm of the Obama regime literally suppressing conservative voting, fund-raising, and turnout."
As was noted earlier, 501(c)4 status is irrelevant to an organization's ability to fund-raise, and even if it were relevant, an organization may behave as a 501(c)4 without filing a formal request with the IRS to be granted status as such. Finally, as a recent report to Congress by the non-partisan American Bar Association makes clear, the much-decried slowness of IRS investigations makes the sort of "suppression" Limbaugh alleges practically impossible:
"… a hypothetical 501(c)(4) organization was formed in July 2010, early enough to be involved in the 2010 midterm elections. By way of several easily obtained IRS filing extensions, the organization's first public disclosure would not be required until May 2012, with its first tax year remaining "open." Once the tax year closed, the IRS would have to undertake an investigation and determine whether the organization failed the primary purpose test. By the time any investigation into the organization's purpose could be undertaken, its effect on the 2010 election would be long over and the organization itself could be dissolved. In fact, it is not unreasonable to imagine a scenario where the organization's involvement in the 2012 election could have been complete before any meaningful action was taken by the IRS."
But the administration's opponents continue to push this line of questioning. "There's a suspicion here that the machinery of government has been used to suppress conservatives,"suggests Stuart Varney on Fox and Friends. "That the election in fact was not a level playing field. There was a tilt, and it was orchestrated by government bureaucrats." Senate Republican Minority Leader Mitch McConnell concurs: "If there was an effort to bring the power of the federal government to bear on those that the administration disagreed with in the middle of a heated national election, it actually could be criminal and we're determined to get the answers,"said McConnell, in remarks made on the Senate floor.
Set aside, for a moment, the fact that nowhere in the inspector general's report does it allege political bias in the targeting of conservative groups — let alone an "orchestrated" effort to suppress Obama's opponents. If those in the IRS or the Obama administration were trying to use "the power of the federal government" "to suppress conservatives," they could hardly have picked any less effectual machinery with which to do so. Perhaps better than anyone else, the IRS knows how slow and utterly ineffective are its enforcement mechanisms when it comes to these tax-exempt applications; it seems quite unlikely that they would expend such a great amount of time and resources in what they knew would be a failing effort at political suppression.