Congressman Bill Pascrell

Representing the 9th District of NEW JERSEY

Condemn IRS Abuse, But Keep An Eye On The Larger Issues

May 16, 2013

IN A RARE episode of bipartisanship in Washington, the unfolding scandal at the Internal Revenue Service for targeting conservative groups is being rightly condemned by both Democrats and Republicans, from President Obama to Mitch McConnell. We all agree that freedom of speech is one of our most sacred American values. Americans must have confidence that the IRS operates in a fair, neutral and nonpartisan way.

As New Jersey’s only member of the Ways and Means Committee, which oversees the IRS, I will be doing my part to hold the Service accountable when we have our first hearing on the scandal later today. Targeting one group over another because they have a conservative sounding name is simply unacceptable, and harkens back to some of the darkest days of our political past.

Obama took a much needed first step in relieving acting administrator Steven Miller of his duties. More heads must roll for those responsible for initiating the targeting, allowing it to persist, and failing to inform Congress when they knew it was going on.

Despite this clearly inappropriate behavior, we must not lose focus of what I believe is the larger issue here: the serious problem of political advocacy groups masquerading as tax exempt “social welfare organizations” in order to avoid taxes and keep their donors secret.

Fair, tough rules needed

Let me be clear: The IRS should in no way target groups based on their ideology. But I believe that both Democrats and Republicans should have a strong shared interest in making sure the IRS provides clear, neutral and tough rules that prevent political groups from abusing our tax code to spend hundreds of millions of anonymous dollars to influence our elections.

The influx of these groups and their anonymous money is a direct result of the Supreme Court’s misguided Citizens United decision. After that decision was handed down, applications for groups seeking 501(c)(4) status exploded to 3,400 in 2012 from 1,500 in 2010. According to the Sunlight Foundation, these groups spent at least $300 million attempting to influence the 2012 elections.

Shockingly, these groups are not required to register with the Federal Elections Commission, disclose their donors or pay any taxes, because they are organized under this special provision of the tax code, which is normally reserved for “social welfare organizations.” These groups aren’t supposed to be primarily political, but the IRS has never issued clear and unambiguous rules as to what that means. This lack of guidance is a big part of the problem that led to career employees at the service making the boneheaded decision to single out conservative sounding groups for scrutiny.
I challenge anyone to argue with a straight face that the primary purpose of Karl Rove’s 501(c)(4), Crossroads GPS, is not to help Republicans win elections. Yet our tax laws permit this group to dress up as a social welfare organization promoting the public good, like it’s your town’s civic society, community sports league or volunteer fire department.

More, not less, scrutiny

Sadly, I fear that the mistakes the IRS has clearly made targeting specific groups will lead to political pressure on them not to scrutinize any groups whatsoever. This would be the worst case scenario. If anything, more fair and neutral scrutiny of applications should be conducted. Many of these groups are clearly not social welfare organizations, and are simply abusing our tax laws to shield their contributors. Tough rules and stepped up enforcement will help ferret out these bad actors and preserve the integrity of our elections.

The scandal at the IRS was shocking to me and so many other Americans because we trust that the service will always operate with the highest standards of integrity and neutrality. The IRS must now redouble its efforts to rebuild that trust, and it can start by following the president’s directive to swiftly implement all of the recommendations included in the Inspector General’s report released earlier this week. Likewise, Americans must also trust in the integrity of our electoral process. Taking steps to ensure that anonymous money isn’t funneled through phony social welfare organizations can go a long way towards achieving that goal.