A focused House Speaker John Boehner vowed Thursday to “to seek answers ‘till we get to the truth” on the IRS’ targeting of Tea Party groups.
“Today is a new day, which means that we are sure to get a new story from the White House on the IRS scandal,” Boehner said. “The White House was made aware of it last month, yet no one thought that they should tell the president. Fairly inconceivable to me.”
But growing number of lawmakers are picking up on the real IRS scandal, the one that actually started in 1959.
The IRS has been under fire for targeting conservative groups applying for 501(c)4 status, also known as tax-exempt status. msnbc’s Lawrence O’Donnell first pointed out that the problem goes back to the IRS’ interpretation of the words “exclusively” and “primarily” in the statue.
“This was a disaster waiting to happen,” said Rep. Eleanor Holmes Norton said Wednesday on The Last Word. “An administrative agency does have the power to interpret the law and to take words that are vague and to give them meaning. An administrative agency does not have the power to change the plain meaning of the law and make a disaster happen and that’s what’s happened here.”
On May 13, 2013, O’Donnell explained how the “IRS has gotten away with the crime” for 54 years:
Section 501(c)(4) of the Internal Revenue Code which defines social welfare organizations for tax-exempt purposes defines them this way: “Civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare.”
Then, the IRS code does a magic trick and changes the meaning of the word exclusively: “To be operated exclusively to promote social welfare, an organization must operate primarily to further the common good and general welfare of the people of the community.”
Members of the Senate Finance Committee questioned misuse of Section 501(c)(4) of the Internal Revenue Code at a hearing Tuesday.
“What does the term primarily for social welfare mean? The IRS has not made it clear when the statute says exclusively, and that’s really at the root of so many of these problems,” said Democratic Ohio Sen. Sherrod Brown.
Senate Finance Committee Chairman Max Baucus of Montana summed it up this way: “Clearly, a Mack truck is being driven through the 501(c)4 loophole.”
Sen. Bill Nelson of Florida and Sen. Bob Menendez of New Jersey also questioned this decades-long wording switcheroo contributing to some of today’s predicament.
The House Committee on Oversight and Government Reform have also noted the discrepancies at a hearing on Wednesday.
“Requiring organizations to be primarily engaged in social welfare activities is significantly different than requiring them to be exclusively engaged in social welfare activities,” pointed out Rep. Michelle Lujan Grisham of New Mexico.
“The original statute passed by Congress requires 501(c)(4) organizations engaged exclusively in social welfare activities,” said Rep. Elijah Cummings of Maryland. “But in 1959, Treasury Department issued a regulation that requires these entities only to be primarily engaged in social welfare activities. As a result, many groups now believe they can spend up to 49% of their funds on campaign-related activities.”
At the House Ways and Means Committee hearing Friday, Rep. Lloyd Doggett of Texas name-checked O’Donnell and Citizens for Responsibility and Ethics in Washington (CREW) for their attention to this matter.
While senators continue to press the point, “Republicans and political media remained blissfully oblivious to the language of the law,” said O’Donnell.
“The IRS in 1959 without authority from Congress changed Congress’ intent in 501(c)(4) organizations, and they suddenly had to be primarily for social welfare, which meant from that day forward, IRS agents somewhere, Washington or Cincinnati or somewhere were going to have to evaluate how much politics a 501(c)(4) applicant was going to engage in,” said O’Donnell. “And so, the real scandal here is not that the applications were delayed, but that they were ever approved.”