Lawrence O’Donnell was ranting on his show that if organizations were applying for 501(c)(4) status, then it’s the IRS’s job to make sure they aren’t political organizations. Under the tax code, those entities with such a tax-exempt status have to be “social welfare organizations,” which the IRS defines as those that are “not organized for profit but operated exclusively for the promotion of social welfare.” [Emphasis mine]
O’Donnell claimed that the real scandal came from the Eisenhower administration in 1959, when the IRS clarified what it meant by “exclusively for the promotion of social welfare.” The IRS changed the word ‘exclusively’ to mean ‘primarily.’
In a response letter to Democratic Senator Carl Levin last year, who had made several inquiries about IRS rules and regulations, the IRS made clear that this clarification has been in place for over 50 years:
“[L]ong standing Treasury Regulations have interpreted ‘exclusively’ as used in section 501(c)(4) to mean primarily. Treasury Regulation §1.501(c)(4)-1(a)(2)(i), promulgated in 1959, provides: ‘An organization is operated exclusively for the promotion of social welfare if it is primarily engaged in promoting the common good and general welfare of the people of the community.’ …’an organization may carry on lawful political activities and remain exempt under section 501(c)(4) as long as it is primarily engaged in activities that promote social welfare.’”
In the same letter, the IRS responded to another of Senator Levin’s questions. He had asked how the IRS could allow 501(c)(4) organizations to engage in political activity when they’re supposed to “exclusively” operate for the promotion of social welfare. The IRS noted that political activity is not prohibited under 501(c)(4):
“We note that the current regulation has been in place for over 50 years. Moreover, unlike Internal Revenue Code section 501(c)(3), which specifically provides that organizations may ‘not participate in, or intervene in…any political campaign on behalf of (or in opposition to) any candidate for public office,’ section 501(c)(4) does not contain a specific rule or limitation on political campaign intervention by social welfare organizations.”
In Lawrence O’Donnell’s rant, he said that it only made sense to go after organizations with “tea party” or other conservative sounding names, because they aren’t supposed to be actively supporting or working against certain political candidates or laws such as Obamacare, and “tea party” is obviously political in nature.
But according to the IRS themselves, they are not prohibited from doing so. And this raises the question of why the IRS were targeting conservative sounding organizations. Of course, the answer is simple. They were going after political opponents, as they have been doing for decades.
Tea party organizations will rightfully claim that they are working to “promote social welfare.” And even if they engaged in political activity, that isn’t a violation of the tax code, according to the IRS.
O’Donnell is mad because the IRS isn’t operating under the original interpretation of the tax code. Why does he even care since he’s probably one of these liberals that thinks the U.S. Constitution, the supposed “law of the land,” is a “living, breathing document” that is subject to any interpretation you want. And all of a sudden he wants to hold a strict, constructionist view of the tax code?