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May 30, 2013
News Analysis: Substantial Minority of Scrutinized EOs Were Not Conservative
by Martin A. Sullivan

Full Text Published by Tax Analysts®

by Martin A. Sullivan

Summary by Tax Analysts®

In news analysis, Martin A. Sullivan reviews some IRS data on tax exemption applications that were subjected to extra review and finds that a substantial minority were from nonconservative groups.

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.

'Potential Political Cases'

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.

The 176 Who Made It Through

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.

IRS Officials Protest

On several occasions, IRS officials have said that the extra scrutiny of advocacy organizations was not limited to conservative groups:
  • The TIGTA report (p. 8) states: "According to the Director, Rulings and Agreements, the fact that the team of specialists worked applications that did not involve Tea Party, Patriots, or 9/12 groups demonstrated that the IRS was not politically biased in its identification of applications for processing by the team of specialists."
  • In her November 2, 2012, written response to questions posed by TIGTA, Lois Lerner, exempt organizations director in the IRS Tax-Exempt and Government Entities Division (who is now on leave), stated: "In light of the diversity of applications selected under this 'tea party' label (e.g., some had 'tea party' in their name but others did not, some stated that they were affiliated with the 'tea party' movement while others stated they were affiliated with the Democratic or Republican party, etc.), the Acting Director, EO Rulings & Agreements sought clarification as to the criteria being used to identify these cases." [Emphasis added.]
  • In the May 15 IRS release referenced above, the agency stated: "During certain periods (August 2010 to July 2010 and January 2012 to June 2012), specific names, terms, and policies (such as Tea Party and Patriot) were inappropriately used to determine which cases should be centralized. However, case selection during these periods was not limited to these criteria." It also stated: "The TIGTA report reflects that 300 cases were centralized. Approximately 70 of those cases included the name Tea Party. The remaining cases included organizations of all political views." [Emphasis added.]
  • And in his May 17 testimony before the House Ways and Means Committee, outgoing acting IRS Commissioner Steven Miller had the following exchange with Rep. Peter J. Roskam, R-Ill.:

      Roskam: If the targeting wasn't targeting, if the targeting wasn't based on philosophy, how come only conservatives got snagged?

      Miller: They didn't, sir. Organizations from all walks and all persuasions were pulled in. That's shown by the fact that only 70 of the 300 organizations were Tea Party organizations of the ones that were looked at by TIGTA.

Because the IRS is prohibited by law from releasing information on applications either denied or not yet approved, we will probably never know the political persuasions of all of the 298 advocacy cases selected for extra scrutiny and of the additional 170 or so applications selected since then. We can, however, try to assess the political persuasion of the 176 approved organizations that the IRS identified on May 15.

Tax Analysts Review

As noted, 46 organizations on the May 15 IRS list had "Tea Party," "patriots," or "9/12" in their name. Tax Analysts conducted Web searches of the other 130 organizations on the list to determine if the groups were conservative organizations. In 124 cases, we found what we believe is sufficient information to make a good-faith determination whether a group was conservative.

Obviously, subjective judgment must be exercised here, and, of course, there may be disagreement about our determinations. We invite readers to review the following table, and upon request, we will send our notes to assist them in making their own determinations. These notes consist mostly of statements taken from the organizations' websites or from news reports describing the organization. In a few cases, this information could not be located, and we used the views of individuals associated with the organization to identify its political leanings.

With all of these caveats, the results of the Tax Analysts review of these organizations are the following: 46 with Tea Party, Patriots, or 9/12 in their name, 76 other conservative organizations, 48 nonconservative organizations, and six organizations about which we can make no determination. A table with brief descriptions of the 48 nonconservative groups appears below.

Ultimately, to address the question whether the IRS's review of applications for tax-exempt status has had a disparate impact on one side of the political spectrum or the other, we will need to know more about the overall pool of advocacy groups applying for tax exemption. For example, if there were a surge in the creation of potentially political conservative organizations in the last few years (that was disproportionate to the creation of nonconservative organizations), more conservative groups would be targeted than nonconservative groups even if there were no political bias among IRS officials. Looking at the makeup of exemption-approved groups tells us nothing about bias unless we know the makeup of the group from which they were selected.

Table 1. Nonconservative 'Centralized' Tax-Exempt Organizations

   Organization Name     Status              Mission or Description

   1. Across the         501(c)(3)           Educational arm of No
   Aisle Foundation                          Labels, a centrist
                                             policy advocacy group;
                                             bipartisanship on
                                             Capitol Hill.

   2. ALICE (American    501(c)(3)           Provides a Web-based
   Legislative and                           public library of
   Issue Campaign                            progressive law on a
   Exchange)                                 wide range of issues in
                                             state and local policy
                                             ("a very partial
                                             antidote to ALEC
                                             [American Legislative
                                             Exchange Council], the

   3. Chattanooga        501(c)(3)           Helps individuals and
   Organized For                             organizations "to build
   Action                                    the power of everyday
                                             people from
                                             marginalized and
                                             oppressed communities
                                             to take control of the
                                             circumstances of their

   4. Comeback           501(c)(3)           "[Promotes] fiscal
   America Initiative                        responsibility and
   Inc.                                      sustainability by
                                             engaging the public and
                                             assisting key
                                             policymakers on a
                                             nonpartisan basis in
                                             order to achieve
                                             solutions to U.S.
                                             fiscal imbalances."
                                             Former U.S. Comptroller
                                             General David Walker is

   5. Corporate          501(c)(3)           A project of
   Accountability                            Philadelphia-based
   Project                                   ActionPA; "provides
                                             educational organizing
                                             resources for fighting
                                             corporate power."

   6. East Hampton       501(c)(3)           Promotes improved local
   Group for Good                            government in East
   Government Inc.                           Hampton, N.Y.

   7. Engage San         501(c)(3)           San Diego-based
   Diego                                     "regional network of
                                             organizations working
                                             in historically
                                             underrepresented and
                                             socially responsible

   8. Intersections      501(c)(3)           A network of ministries
   Inc.                                      to empower young people
                                             in American Samoa
                                             "through programs that
                                             combine the arts and
                                             technology with the
                                             vocational, and
                                             spiritual disciplines."

   9. Miami-Dade         501(c)(3)           "An independent,
   Taxpayers Alliance                        nonpartisan research
   Inc.                                      institute dedicated to
                                             better stewardship of
                                             Miami-Dade County's tax

   10. National Jobs     501(c)(3)           "Committed to building
   for All Coalition                         a new movement for full
                                             employment at livable
                                             wages." Affiliated with
                                             many liberal

   11. Northeast Ohio    501(c)(3)           "Enables and expands
   Voter Advocacy                            voter education and
   Inc.                                      registration in
                                             underrepresented areas
                                             of the City of
                                             Cleveland, Cuyahoga
                                             County, and other
                                             counties of northeast

   12. Open Sky          501(c)(3)           Nebraska-based fiscal
   Policy Institute                          policy research group;
                                             generally opposes
                                             income tax cuts.

   13. Progress          501(c)(3)           "Multi-issue
   Missouri Education                        progressive advocacy
   Fund                                      organization" focused
                                             on state and local

   14. Public Works:     501(c)(3)           Director previously
   The Center for the                        founded the Texas-based
   Public Sector                             Center for Public
                                             Policy Priorities, a
                                             nonprofit, nonpartisan
                                             organization committed
                                             to building the
                                             economic and social
                                             well-being of
                                             low-income Texans.

   15. Rebellious        501(c)(3)           Seeks to "unveil the
   Truths                                    curtain of dastardly
                                             deeds and the cobweb of
                                             lies entangling

   16. Restoration       501(c)(3)           Grass-roots
   Philadelphia Inc.                         organization made up of
                                             individuals, churches,
                                             and ministries
                                             committed to
                                             "mobilizing the Church
                                             of Philadelphia to
                                             fulfill its destiny and
                                             restoring the City of
                                             Brotherly Love, so that
                                             the vision of William
                                             Penn's Holy Experiment
                                             becomes a reality and
                                             the Glory of God is
                                             revealed all."

   17. Sarasota Tiger    501(c)(3)           Nonpartisan political
   Bay Club Inc.                             organization that hosts
                                             debates, forums, and
                                             speakers in central

   18. Center for        501(c)(3)           San Francisco-based
   Election Science                          group dedicated to

   19. Center for        501(c)(3)           Conducts research and
   Health Care Policy                        analysis necessary for
                                             the creation of a
                                             single-payer healthcare

   20. Alliance for a    501(c)(4)           Multi-issue education
   Better Utah Inc.                          and advocacy
                                             organization promoting
                                             progressive ideas and

   21. Campaign for      501(c)(4)           Advocates for greater
   Vermont Prosperity                        state government
   Inc.                                      transparency and
                                             accountability and a
                                             stronger economy with
                                             more and better-paying
                                             jobs while espousing a
                                             commitment to social
                                             responsibility and

   22. Coffee Party      501(c)(4)           Founded on the
   USA                                       underlying principle
                                             that the government "is
                                             not the enemy of the
                                             people." Seeks to
                                             remove corporate
                                             influence from

   23. Committee for     501(c)(4)           Focuses on the roles
   a Fair Judiciary                          and responsibilities of
                                             senators in the
                                             judicial selection
                                             process and seeks to
                                             educate the public
                                             about how the process
                                             works and how it could
                                             work better.

   24. Freedom Club      501(c)(4)           Aims to guide members
                                             to financial, health,
                                             emotional, and
                                             spiritual freedoms ("to
                                             raise the life energy
                                             of Mother Earth and
                                             Mankind to new heights
                                             and welcome in the new
                                             era of Love, Prosperity
                                             and Cooperation").

   25. Delawareans       501(c)(4)           National coalition of
   for Social and                            community-based
   Economic Justice                          organizations composed
                                             of parents and students
                                             in low-income
                                             communities focused on
                                             unveiling a report on
                                             schools that are
                                             eligible for federal

   26. Grantville        501(c)(4)           Local government group
   Action Group                              in San Diego that
                                             opposes development.

   27. Homeless but      501(c)(4)           Registers voters at
   Not Powerless                             shelters, soup
                                             kitchens, parks, and

   28. League of         501(c)(4)           State chapter of
   Women Voters of                           national organization
   Hawaii                                    to educate policymakers
                                             and the public on

   29. Louisiana         501(c)(4)           Advances progressive
   Progress Action                           state policy solutions.
   Fund Inc.

   30. Middle Class      501(c)(4)           San Diego-based
   Taxpayers                                 organization that
   Association                               serves as a voice for
                                             those "not served by
                                             big business-funded
                                             taxpayer groups."

   31. Missourians       501(c)(4)           Group opposing
   for Fair Taxation                         reductions in income
                                             tax that are paid for
                                             through sales tax

   32. New American      501(c)(4)           Coalition of CEOs,
   Economy Action                            start-up founders, and
   Fund                                      venture capitalists
                                             formed to press
                                             Congress to pass
                                             immigration reform that
                                             would encourage
                                             innovation and create

   33. New York Civic    501(c)(4)           Associated with
   Action Inc.                               left-leaning network
                                             action groups.

   34. Nicolas           501(c)(4)           Dedicated to the design
   Berggruen                                 and implementation of
   Institute                                 new ideas of good
                                             governance that can be
                                             brought to bear on the
                                             common challenges of
                                             globalization in the
                                             21st century.

   35. No on 22 --       501(c)(4)           Opposes California
   Citizens Against                          Proposition 22, which
   Taxpayer Giveaways                        would give money to
                                             redevelopment agencies
                                             at the expense of state
                                             core services such as
                                             public education.
                                             Sponsored by

   36. Progressive       501(c)(4)           Brings diverse and
   Leadership                                potentially competing
   Alliance of Nevada                        organizations together
                                             into one cohesive force
                                             for social and
                                             environmental justice
                                             in Nevada.

   37. Progress          501(c)(4)           Promotes a stronger
   Missouri Inc.                             progressive movement in
                                             Missouri and advances
                                             in progressive public

   38. Progress Texas    501(c)(4)           Organizes rapid
                                             response communications
                                             in opposition to
                                             conservative groups.

   39. Progressive       501(c)(4)           "We advocate for
   USA Inc.                                  sensible policy
                                             solutions, hold our
                                             nation's elected
                                             officials accountable
                                             for their actions and
                                             take head-on the flawed
                                             policies and hypocrisy
                                             of the radical right."

   40. Progressives      501(c)(4)           Opposes corporate
   United Inc.                               influence in the
                                             political system.

   41. Progress Now      501(c)(4)           Progressive campaign.

   42. Rebuild the       501(c)(4)           Supports pro-union
   Dream                                     demonstrations in

   43. RVA Alliance      501(c)(4)           Affiliated with the
   Inc.                                      Alliance for
                                             Progressive Values.

   44. Texas Business    501(c)(4)           Promotes education with
   for Higher                                no apparent political
   Education                                 agenda.

   45. Tie the Knot      501(c)(4)           Sells bow ties to raise
                                             money to promote
                                             legalizing same-sex

   46. TN Fair Tax       501(c)(4)           Promotes the creation
                                             of a progressive
                                             Tennessee state tax
                                             structure that ensures
                                             adequate revenues.

   47. U.S. Common       501(c)(4)           Group's president is
   Action                                    affiliated with
                                             California Common
                                             Sense, a group
                                             dedicated to open

   48. U.S. Health       501(c)(4)           Promotes the right to
   Freedom Coalition                         access alternative
   Inc.                                      medical treatments such
                                             as naturopathy.

Source: Tax Analysts review of IRS data and organizations' websites.

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