Shortly after President Obama was elected, 501(c) (4) applications started to pour into the IRS by the thousands from anti-government Tea Party groups. Those of you with a short memory might not remember the negative reaction to the economic stimulus and those big business bail outs that saved the auto industry. By 2010, as healthcare reform legislation became law, and the U.S. Supreme Court deemed corporations are people too, the number of 501(c) (4) applications increased.
According to Michael Scherer of Time.com, “many of these so-called social-welfare groups have multiplied–annual applications for the designation have nearly doubled since 2009–with many spending nearly 50% of their money on campaign advertising, almost daring the IRS to challenge their activities. Of the more than $1.2 billion spent by outside groups in the 2012 federal election cycle, at least $254 million came from “social welfare” nonprofits.”
To me, this is a red flag!
“All this outrage threatens to obscure an important point: the IRS does need to crack down on political groups masquerading as social-welfare organizations. Many of the nonprofit groups who claim 501(c)(4) status either flout tax law or flirt with the murky line between electioneering and issue advocacy, all while using their tax-exempt status to conceal their donors.” – Alex Altman “The Real IRS Scandal” time.com
The IRS may have been overzealous, but there’s certainly no scandal here.