Friday, May 17, 2013

The IRS and politics - Why your nonprofit should care

Unless you live on a distant planet, you have probably heard about the Internal Revenue Service's improper targeting of nonprofit applications that implied a conservative political leaning as the core mission.

Without repeating too many of the hackneyed phrases, there is certainly truth in the phrase "The power to tax is the power to destroy" originally attributed to Daniel Webster. This could be revised to read "The power to selectively pick political winners and losers is the power to destroy democracy".

It does not matter what side of the political fence you are on, this selective process of holding 501(c)(x) applications in limbo and requiring a depth and breadth of disclosure not allowed by the law to create interminable delays should scare you.

By selectively holding up the ability of nonprofits to disseminate information and fundraise for a particular political viewpoint, the IRS may have had an effect on at least two elections, in 2010 and 2012. There was constant speculation and commentary on why the Republican party seemed to have a much less effective grassroots fundraising strategy than that of the Democrats. Well, if there are fewer organizations available to influence public thinking and fundraise for that political viewpoint, it could certainly have contributed to that perceived shortcoming.

As a grant writer and nonprofit consultant, I am familiar with the regulatory framework in which the IRS Office of Exempt Organizations is supposed to operate within.  I was even marginally involved in the process, since I reviewed a nonprofit 1023 that had been held up for fourteen  months.  I remember thinking that the requests for information seemed out of place, but ultimately, I felt that the way they were stating their mission and even their name was not really representative of their actual goal.  I had them reapply using different verbiage and the application sailed right through (no, this wasn't the nonprofit that has been on the news). At the time I just chalked it up to getting the presentation language of their mission, which was not political in any way, in line with the actual goal, and forgot about it. Looking back, I certainly wonder if something else was in play there.

There is no other agency in the government that is more viscerally feared than the tax collector. The potential power of that agency to intrude into your private life is virtually limitless. They can and do compel you to reveal things that you hold private and sacred. With great power comes great responsibility to balance and keep separate the necessary goal of fairly enforcing taxation and the collecting of taxes from the political process. It would seem that the IRS totally abrogated that responsibility on some or even all levels. 

If the party in power can, by either overt or covert means, stifle dissent and prevent discussion it can ultimately influence elections. That's a dictatorship, and it isn't what we are about. That's why you should care.

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