Space Coast Progressive Alliance

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Saturday, 18 May 2013 05:52

The Real Problem at the IRS

Written by  Carolyn J. Fausnaugh PhD, Masters Taxation, CPA, VP SCPA

Problem at the IRS is not telling an accurate story.  Here's the root cause of the IRS actions.  Section 501(c)(4) of the 1954 Internal Revenue Code defines tax exempt social welfare groups as "civic leagues or organizations not organized for profit but operated EXCLUSIVELY for the promotion of social welfare."  The CAPS are my addition.

In 1959 the Internal Revenue Service issued regulations for Section 501(c)(4).  These regulations redefined the word exclusively  to PRIMARILY!  The CAPS are mine.  Primarily was operationalized as more than 50%.  In other words under the regulations but not under the law as written, an organization could obtain and maintain tax exempt status with 49.99% of expenditures being for political purposes.  Employees (bureaucrats) at the IRS, in 1959, changed the meaning of the law as intended by Congress.  

This distinction between the law "exclusively" and the regulations "primarily" leaves examiners at the IRS in a quandary when reviewing applications for tax exempt status  claimed under IRC Sec 501(c)(4).

After the 2010 Supreme Court decision Citizens United, there was a huge increase in the number of applications received by the Internal Revenue Service claiming tax exemption under Sec 501(c)(4) - mostly by conservative groups.

The real scandal is the legal inconsistency.  Let's implement the law as written - no grandfathering!  


Last modified on Thursday, 13 June 2013 10:37

1 comment

  • Comment Link Clyde White Saturday, 08 June 2013 11:08 posted by Clyde White

    Why was none of George Soros groups investigated? C'mon...Use some of that gray mass between the ears.

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