So start as a premise of mine that the basic mechanism here is broken and that this is what we should be discussing.
2. There does not appear to have been a massive conspiracy by the IRS leadership. It bears repeating that the IRS commissioner at the time was a Bush appointee. It also appears that once this stuff came to light for higher management, it was quashed.
3. Recall that the period in which this happened saw a massive upsurge in 501(c)4 applications. This was during the big Tea Party craze, and a majority of the applications coming in were from TP/Patriot-styled groups. Given a directive to be more diligent in reviews of such applications, so as to block inappropriately political groups trying to sneak in, the IRS team in Cincinnati queried within the applications for terms like "Tea Party" in the name to identify applicants that should be further screened.
On the one hand, that makes sense, because that described a lot of the political groups applying (as opposed to more clearly "social welfare" groups). On the other hand it is, at the least, stupidly naive not to have considered the ramifications of what that would sound like.
There's no indication that this was done with any particular partisan animus (the screening was not done strictly on right-wing political applications, for one thing, and there's no sign I've seen that the IRS is infested with rabid liberals), but it definitely doesn't not pass the "beyond reproach" standard we expect from a government agency.
4. As much as the selection criteria for review has come under fire, so, too, have the questions that were asked (see http://goo.gl/o8k8j). Note that these questions were also, it appears, asked of Left-wing groups that were scrutinized (i.e., they were non-partisan in application, though more Right-wing groups were asked them because, well, more Right-wing groups were applying), but they are also, again, inappropriately intrusive.
One might ask what sort of questions one should ask to determine if a group qualifies under 501(c)4 ("Are you going to participate in excessive or inappropriate political activities? No? Okay, approved"). As far as I've seen reported, no groups that applied were actually denied the tax-exempt status (though presumably some groups may have withdrawn their application). These questions might have done the job, maybe, but that questions so intrusive have to be asked points to how goofy the whole 501(c)4 thing is.
5. This whole "scandal" has legs for three reasons I can think of: (a) the whole "IRS is persecuting us!" meme plays directly into the hands of the Tea Party, who were most affected by this simply due to numbers, (b) the whole "Evil Corrupt Democratic Government Scandal" thing plays directly into the hands of the GOP leadership, who are looking desperately for something to talk about that doesn't make them look anti-woman, anti-gay, anti-Hispanic, anti-poor, etc., and (c) people on the Left aren't terribly happy about this behavior, either (having squawked about IRS targeting of liberal groups during the Bush administration), and so are letting (a) and (b) have their way. General dislike of the IRS by the general public doesn't hurt, either.
So what should be done? Confirm that what we know above about the selection criteria and so forth were simply a matter of misjudgment vs. partisanship; if not then significant hand-slaps need to be replaced by something greater.
But, more importantly, we need to reexamine the whole 501(c)4 setup. Indeed, the concept of tax exemption in general needs to be reexamined, if only because the fuzzy lines (as implemented but also philosophically) between "social welfare" and "education" and partisan politics make these kinds of blow-ups a regular result, which probably does more harm to everyone than its worth.
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Some organizations belong in 501c4 status – civic organizations, HOAs, volunteer fire departments, and others.
If, as part of their existence to fight fires, the Volunteer Fire Department’s board decides that they want to go on record as being in favor of a tax that would raise funds to clear brush in open spaces, they should be able to say so. They are still not allowed to support candidates with their money, but their opinion is supposed to be granted to them because of their expertise, you might say.
But those are organizations that would exist outside of politics. This problem has grown up around organizations that want to push that envelope in the wake of Citizens United and other decisions. (Both Left and Right.)
As someone who has spent a few years in the not-for-profit world, I highly resent these organizations. They do a lot to muddy the water for the other 501c organizations, especially the ones that are actually doing what many folks might think is ‘social welfare.’
Yeah, my concern, @Mary, is that that big influx of money and groups that want tax-exempt (and donor-revelation-exempt) platforms to spend it.
The problem is creating a bright line to define what it means that a group would exist outside of politics *and* be able to create some bounds on political expression (the artificial divide of being able to speak on general issues, or ballot proposals, or “political education” but not being able to support a particular candidate is close to mockable in its ease of slipping around).
I wholly agree. I'm not sure that any groups should be tax exempt, especially the ones who are very clearly being political. Let everyone pay in.
The more I read about this the more I think that the only thing that was done wrong was not casting the net wider. Looking at the list of terms and items they used to identify applications that needed more scrutiny it probably should have been expanded so more did not slip through the cracks and gain "Social Welfare" status when they did not deserve it.
Some good information here: http://www.bloomberg.com/news/2013-05-15/irs-sent-same-letter-to-democrats-that-fed-tea-party-row.html