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Who Headed the IRS while this So-Called “Scandal” Was Taking Place?


Bush-appointed IRS chief Donald Shulman surveying his charges

Dave Emory’s entire life­time of work is avail­able on a flash drive that can be obtained here. [2] (The flash drive includes the anti-fascist books avail­able on this site.)

Updated on 5/28/2013

COMMENT: Dating to his election in 2008, we’ve forecast the impending de-stabilization of President Barack Obama or “Lee Harvey Obama,” as we call him.

With his second term barely underway, we are seeing “scandals” (note the quotation marks) derailing Obama’s political agenda.

In addition to seizing on the Benghazi incident [3] as an “October Surprise,” as we predicted in the follow-up to the long For The Record series on the Arab Spring [4], the GOP is harping on the IRS targeting of Tea Party groups.

In addition to the fact that GOP administrations have a proven track record [5] of using the IRS to bludgeon political opponents (rendering their caterwauling over this business spectacularly hypocritical), the IRS was headed by a Bush appointee during the time period in which the scrutiny of the Tea Party was taking place!

The Bush administration targeted groups that simply opposed his policies (see below.) [6]

Note that Donald Shulman left his position in early November of 2012, right after the election!

In other words, a GOP fox was watching the IRS hen house.

The crack-whores of the working press have managed to ignore the central element in the Tea Party/IRS dynamic–the systematic abuse of tax exempt status by Ole 666 himself–Karl Rove (see below). [7]

Many of the Tea Party groups were, indeed, engaged in questionable activities that warranted IRS scrutiny. (See the story excerpted [8]  below.)

“Acting IRS Commissioner Steven Miller Resigns” by Nancy Marshall-Genzer; Marketplace.org; 5/15/2013. [9]

EXCERPT: Acting IRS commissioner Steven Miller has resigned, President Barack Obama announced Wednesday.

“It’s inexcusable, and Americans are right to be angry about it, and I am angry about it. Obama said. “I will not tolerate this kind of behavior in any agency, but especially in the IRS.”

Given the controversy surrounding this audit, it’s important to institute good leadership, Obama said. . . .

. . . . Miller became acting commissioner in early November, after Commissioner Douglas Shulman completed his five-year term. Shulman had been appointed by President George W. Bush. . . .

“Inconsistent Enforcement: IRS Findings in NAACP and All Saints Church Cases”; Center for Effective Government; 2/14/2008. [6]

EXCERPT: A comparison of two high profile IRS investigations into allegations of election intervention – the All Saints Church and NAACP cases -highlights the vagueness of the regulation and the inconsistency of IRS enforcement. According to OMB Watch’s analysis, the facts and circumstances of the All Saints Church and NAACP cases are very similar, but the IRS findings were very different. According to IRS Revenue Ruling 2007-41, the IRS decides whether a charity has violated the ban on election intervention using “all of the facts and circumstances of each case.” The IRS provides little information on how it evaluates these facts and circumstances, however, leaving the charitable community to wonder: Which facts and circumstances are most important? If one fact suggests a violation and another fact indicates compliance, how does the IRS reach a conclusion? How does the IRS ensure consistency in its enforcement of the ban across different and complex situations?

The IRS concluded that All Saints Church violated the ban, while the NAACP did not. In a warning letter to the church, the IRS wrote that All Saints had committed political intervention, but that no further action would be taken. Both organizations retain their nonprofit tax exempt status.

Similarities Between NAACP and All Saints:

The NAACP and All Saints Church cases have several characteristics in common. . . .

Criticism of the Bush administration. In both situations, speakers condemned the policies of the Bush administration during the lead up to the 2004 elections. . . . .

“Miss­ing the Big­ger IRS ‘Scan­dal’ ” by William Boardman; Consortium News; 5/16/2013. [7]

EXCERPT: Karl Rove is the real poster boy for the so-called Inter­nal Rev­enue Ser­vice “scan­dal” of mid-level func­tionar­ies tak­ing a closer look at appli­ca­tions by polit­i­cal orga­ni­za­tions seek­ing a 501©(4) tax sta­tus that makes them not only tax-exempt but pro­tects their donors with anonymity.

That 501(c )(4) is one sweet deal: not only do these orga­ni­za­tions get untrace­able, tax-free money laun­der­ing for their polit­i­cal activ­i­ties, they get a tax­payer sub­sidy to do it. It was not always such: some of these activ­i­ties used to be illegal.

Peo­ple work­ing for the Com­mit­tee to Re-Elect the Pres­i­dent (CREEP) – Richard Nixon’s cam­paign orga­ni­za­tion in 1972 – were con­victed of law-breaking, as were some cor­po­rate donors. CREEP was “ille­gally haul­ing in many mil­lions of dol­lars from cor­po­ra­tions, many of which felt pres­sured into mak­ing con­tri­bu­tions,” wrote Jill Abram­son of the New York Times in a 2010 arti­cle about the rapidly chang­ing rules on polit­i­cal contributions.

“The fund-raising prac­tices that earned peo­ple con­vic­tions in Water­gate — giv­ing direct cor­po­rate money to a cam­paign and doing so secretly — are back in a dif­fer­ent form in 2010. This time around, the cor­po­ra­tions are still giv­ing secretly, but legally,” Abram­son wrote.

“This elec­tion year is the first since the Supreme Court’s Cit­i­zens United deci­sion, which allows cor­po­ra­tions for the first time to finance ads that directly sup­port or oppose polit­i­cal can­di­dates. And tax laws and loop­holes have per­mit­ted a shadow cam­paign net­work of Republican-leaning non­profit groups to col­lect a flood of anony­mous dona­tions and spend it widely.”

Indeed, Abram­son noted, “Some play­ers shak­ing the cor­po­rate money trees for non­profit groups this year cut their teeth in the Nixon re-election cam­paign. … There is Fred Malek, a founder of the Amer­i­can Action Net­work, [who] was the White House per­son­nel chief in 1972 and helped dis­pense patron­age for major Nixon donors as well as serv­ing as deputy direc­tor of Creep. … The Amer­i­can Action Net­work shares office space with Amer­i­can Cross­roads, led by Mr. Rove, who also was an active par­tic­i­pant in Nixon’s re-election as exec­u­tive direc­tor of the Col­lege Repub­li­can National Committee.”

Early in 2010, Rove founded Amer­i­can Cross­roads, a per­fectly legal, openly polit­i­cal, tax-exempt 527 orga­ni­za­tion, with no lim­its on the amount or source of their con­tri­bu­tions, and no spend­ing lim­its. Despite these free­doms, 527s were still pro­hib­ited from openly sup­port­ing par­tic­u­lar can­di­dates, and they had to reg­is­ter with the IRS, dis­close donors, and file reports.

The Prob­lem: Some Transparency

These 527 orga­ni­za­tions (a broad cat­e­gory that includes Super PACs) have been an open cha­rade in the demo­c­ra­tic process for years, avoid­ing direct sup­port of can­di­dates while pro­duc­ing mate­r­ial that could only sup­port their cho­sen can­di­dates. For exam­ple, the 527 orga­ni­za­tion Swift Boat Vet­er­ans for Truth attacked pres­i­den­tial can­di­date John Kerry dur­ing the 2004 elec­tion, with­out express­ing direct sup­port for Pres­i­dent George W. Bush.

In June 2010, Karl Rove and Amer­i­can Cross­roads founded Cross­roads GPS (Grass­roots Pol­icy Strate­gies) that, as a 501©(4), had even fewer con­straints. Amer­i­can Cross­roads was one of 1,500 appli­cants for 501©(4) sta­tus in 2010. In 2012 there were some 3,400 applications.

Accord­ing to the Inter­nal Rev­enue Code passed by Con­gress, 501©(4) sta­tus is reserved for “civic leagues or orga­ni­za­tions not orga­nized for profit but oper­ated exclu­sively for the pro­mo­tion of social wel­fare” [empha­sis added]. In 1959, dur­ing the Eisen­hower admin­is­tra­tion, the IRS decided to ignore the let­ter of the law, and wrote rules for 501©(4) orga­ni­za­tions requir­ing only that they be pri­mar­ily for the pro­mo­tion of social welfare.

The dif­fer­ence between “exclu­sively” and “pri­mar­ily” cre­ated a loop­hole even a non-lawyer could exploit, but it became most use­ful to $100 mil­lion out­fits like Amer­i­can Cross­roads only after the Supreme Court, with its Jan­u­ary 2010, 5–4 deci­sion in Cit­i­zens United (558 US 310), opened the Amer­i­can polit­i­cal process to vir­tu­ally any money from any source, with almost no duty to dis­close anything. . . .

“Groups Targeted by I.R.S. Tested Rules on Politics” by Nicholas Confessore and Michael Luo; The New York Times; 5/26/2013. [8]

EXCERPT: When CVFC, a conservative veterans’ group in California, applied for tax-exempt status with the Internal Revenue Service, its biggest expenditure that year was several thousand dollars in radio ads backing a Republican candidate for Congress.

The Wetumpka Tea Party, from Alabama, sponsored training for a get-out-the-vote initiative dedicated to the “defeat of President Barack Obama” while the I.R.S. was weighing its application.

And the head of the Ohio Liberty Coalition, whose application languished with the I.R.S. for more than two years, sent out e-mails to members about Mitt Romney campaign events and organized members to distribute Mr. Romney’s presidential campaign literature.

Representatives of these organizations have cried foul in recent weeks about their treatment by the I.R.S., saying they were among dozens of conservative groups unfairly targeted by the agency, harassed with inappropriate questionnaires and put off for months or years as the agency delayed decisions on their applications.

But a close examination of these groups and others reveals an array of election activities that tax experts and former I.R.S. officials said would provide a legitimate basis for flagging them for closer review.

“Money is not the only thing that matters,” said Donald B. Tobin, a former lawyer with the Justice Department’s tax division who is a law professor at Ohio State University. “While some of the I.R.S. questions may have been overbroad, you can look at some of these groups and understand why these questions were being asked.” . . .