{{show_title_date || "Rewriting Washington on the I.R.S., 5/16/13, 11:06 PM ET"}}

O’Donnell reminds politicians of the real IRS scandal


House Speaker John Boehner wants to know “who’s going to jail” over the recent IRS controversy, in which agents targeted Tea Party-related groups with unequal scrutiny. A far as msnbc’s Lawrence O’Donnell is concerned, “That may be the single stupidest thing ever said by a Speaker of the House.”

As O’Donnell has been saying since Monday, the so-called IRS scandal is only the consequence of an older and more basic problem with the organization’s reading of the tax code–specifically, with its reading of Section 501(c)(4), which exempts social welfare groups from paying taxes.

The law defines such groups as “civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare.” Since 1959, the IRS has been reading “exclusively” as “primarily.”

“By doing that they made IRS agents judges of political activity, investigators of political activity,” O’Donnell explained in the Rewrite Thursday. “IRS agents were then forced to evaluate just how political a given 501(c)(4) organization might be. And it is very clear that if the words “Tea Party” or the name of any political party at all appears in the title of your 501(c)(4) you absolutely do not qualify for 501(c)(4) status under the law.”

Some politicians, however, still don’t seem to understand the interplay between this law and how it’s enforced.

“We must pass a law that makes it much clearer that the so-called social welfare organizations must make their priority promoting social welfare rather than engaging in politics…From my standpoint they should not have any political purpose, and I would hope we could change the law on that,” said House Minority Leader Nancy Pelosi Thursday.

“Now, I don’t expect Nancy Pelosi to be watching this show,” O’Donnell said, “but someone on her large staff should have picked up what I’ve been saying about this by now, and whispered something in her ear about it.”

O’Donnell said he hopes someone at Friday’s Ways and Means Committee hearing on the IRS scandal will bring up the actual law defining 501(c)(4)s. His bet is Rep. Sander Levin (D-Mich.), older brother of Sen. Carl Levin (D-Mich.), who has questioned the IRS about the exclusively/primarily discrepancy in the past.

Updated July 8, 2013 at 9:34pm ET