IRS SCANDAL

I have to admit, I can't get excited about the so-called IRS scandal, and I am surprised at some of my conservative friend's genuine outrage over this matter. Here is what the law says about 401-C4 organizations:

(3) Corporations, and any community chest, fund, or foundation, organized and operated exclusively (bolding and underlining added) for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation (except as otherwise provided in subsection (h)), and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.  http://www.law.cornell.edu/uscode/text/26/501

The law goes on to denote other organizations that help people, etc., but ALL use the word exclusively.  Note the law says EXCLUSIVELY, but the IRS in its  wisdom started to accept the word PRIMARILY instead that is causing all the problem.

There was this flood (292 conservative organizations and 20 liberal organizations) of 401-C4 applications after the Supreme Court decision on Citizen's United so the IRS tried to find out how many were phony applications - mostly Republican but some Democrat too who had fewer applications.  However since Republicans are diverted from working by this supposed "scandal," I have looked into the matter some more.  As nearly as I can tell, the only organization whose application was denied was a liberal organization and that their parent had their 401-C3 status revoked as well:

<sup>An affiliate of the liberal group Emerge America had its request for tax-exempt status denied, leading to a review (and the eventual revocation) of the larger Emerge America organization's tax-exempt status.[52]

The report found that words such as "Israel", "progressive" and "Occupy" were also used as red-flags for greater scrutiny, and that screeners were still using such lists up until May 2013.

 The letter further stated that out of the 20 groups applying for tax-exempt status whose names contained "progress" or "progressive", 6 had been chosen for more scrutiny as compared to all of the 292 groups applying for tax-exempt status whose names contained "tea party", "patriot", or "9/12".

http://en.wikipedia.org/wiki/2013_IRS_controversy

 Of course most applications were phony, but in the end most were getting approved.  I feel that the misuse of the 401-C4 authority has been so abused that we should suspend the category.  The funny thing is that so many wealthy people are willing to make huge donations while forgoing their right to a tax deduction.  In a 401-C4 organization, the organization is tax free but the donators do not get a tax deduction as they do with 401-43 organizations.  The key is that the people are so ashamed of their donations that they don't want their names divulged.

 http://www.huffingtonpost.com/2013/05/14/irs-tea-party-targeting_n_3272849.html</sup>