We know now that the IRS used “inappropriate criteria” — names and policy views associated with conservative and Tea Party causes — for selecting applications for tax-exempt status for extra review. The Treasury Inspector General for Tax Administration laid out the charges in a May 14 report, and the IRS has admitted it made errors. But TIGTA’s report doesn’t shed much light on whether other organizations were subject to similar review. As the early furor gives way to more careful investigations, it will be important to get a more complete picture of IRS processing of applications for tax exemption. The IRS has helped somewhat by releasing a list of all the “centralized” groups (that is, organizations whose applications were referred to specialists for closer review) that were granted tax-exempt status as of May 9, 2013. Though the overlap between the subset and the full set of centralized groups isn’t perfect, the list suggests that the majority of groups selected for extra scrutiny probably matched the political criteria the IRS used and backed conservative causes, the Tea Party, or limited government generally. But a substantial minority — almost one-third of the subset — did not fit that description.
In its report, TIGTA reviewed all 298 applications for tax-exempt status that were classified by IRS employees in Cincinnati as “potential political cases” from May 2010 through May 2012. Some of these were flagged for special attention because the words “Tea Party,” “patriots,” or “9-12 project” were referenced in their case file or because their applications espoused policy positions that would be associated with conservative causes. “Potential political cases” is the term used by TIGTA. The IRS uses the term “advocacy cases,” and before July 2011 it used the term “Tea Party cases.” (See footnote 13 of the report.)
Of these 298 applications, TIGTA reported that 96 had “Tea Party,” “patriots,” or “9-12 project” in their names (Figure 4). TIGTA, however, made no determination as to which of the 298 were selected based on the organization’s policy positions (footnote 18). The TIGTA report also found that 89 of these applications were for 501(c)(3) status, and the remaining 209 were for 501(c)(4) status.
On May 15 the IRS released a list of 176 advocacy organizations that were approved for tax-exempt status. This group of applications should have considerable overlap with the 298 that were the subject of the TIGTA report. But there are two differences. First, the TIGTA list covers organizations regardless of whether there was subsequent approval. The later IRS list only includes organizations receiving approval. By law, the IRS may only disclose information from organizations that have received approval.
Second, the TIGTA list does not include applications received after May 2012. The later IRS list could include organizations whose applications were received by the IRS office in Cincinnati after May 2012.
In a separate May 15 release, the IRS said the total number of advocacy cases it has handled since the selection began in May 2010 is approximately 470. This suggests that approximately 172 applications (that is, 470 minus 298) have been filed after the end of the application period examined by TIGTA.
Of the 176 organizations the IRS has approved, Tax Analysts counted 46 that had either “Tea Party,” “patriots,” or “9-12 project” in their name. The table released by the IRS indicated that 136 of all approved organizations were awarded 501(c)(4) status, 39 received 501(c)(3) status, and one was granted 501(c)(6) status.
Full Article: Tax Analysts — News Analysis — Substantial Minority of Scrutinized EOs Were Not Conservative.