The apparent targeting of "tea party" and other right-leaning organizations for extra attention by the Internal Revenue Service is by now a familiar Washington scandal. It is also the impetus for hearings by a Senate Judiciary subcommittee chaired by Sen. Ted Cruz, R-Texas.
When it's over, it's possible that the most significant testimony will have come from an attorney for the government watchdog organization Common Cause. In the midst of all the made-for-C-Span drama, Common Cause policy counsel Stephen Spaulding might have cut to the heart of the problem in a way Cruz and his peers, both Democrat and Republican, would just as soon not talk about.
Was the IRS justified in singling out tea party-type groups? Absolutely not. But the fact that the IRS scrutinized those organizations isn't the problem. The problem is that it doesn't scrutinize all of them.
At issue is the proliferation of so-called "social welfare" 501(c)(4) nonprofits that are in effect tax-exempt fronts for anonymous, accountability-free political fundraising and advocacy.
Just in the 2012 and 2014 elections, Spaulding told the committee, roughly a third of the "outside money" in federal elections alone -- more than $480 million -- came from undisclosed sources, $375 million of it from "social welfare" organizations.
"It continues to be wrong," Spaulding said, "for the IRS to look the other way as partisan political operatives on the right and the left establish phony social welfare organizations that collectively pump hundreds of millions of dollars from secret sources into our elections."
He cited Karl Rove's Crossroads GPS, which has spent countless millions on political advocacy. "Who funded all of its attack ads?" Spaulding asked rhetorically. "Only Crossroads GPS officials, the IRS, the funders themselves, and perhaps the politicians who benefitted from the spending can answer that." (The nonprofit's IRS filings for 2012 show three separate anonymous donations for $22.5 million, $18 million and $10 million, respectively, and "many other seven-figure contributions.") The New York Times has reported that supporters of Hillary Rodham Clinton are looking to set up just such a "social welfare" organization to help fund her presidential campaign.
"Ultimately, it is the secrecy that social welfare nonprofits provide to donors that makes them attractive vehicles for political spending," Spaulding told the committee, "and all the more reason why Americans expect the IRS to do its job and enforce the law."
There's the rub. Though tax exemption is predicated on these nonprofits doing what they say they're supposed to do, "no bright line IRS standard exists as to how much and by what measure the IRS should evaluate a social welfare organization's furtherance of its primary purpose."
If these hearings are to serve any function beyond political posturing (no irony there), Congress should make drawing that "bright line" a top priority.