For all with eyes to see (except maybe some folks at The New Yorker) the IRS scandal has been hiding in plain sight for more than a year, I argue in a new Cato post. For example, this site briefly covered the Service’s ridiculously broad documentary demands on Tea Party groups — for things like transcripts of speeches and radio shows and the contents of Facebook and Twitter postings– in March and May of last year.
The Treasury Inspector General’s report on the affair, released yesterday, is here. (Coverage roundup: Paul Caron, TaxProf.) It makes clear that many groups were singled out because of their controversial political stances and then subjected to both objectively unreasonable document demands (e.g., for thousands of pages of documentation) and objectively unreasonable delays (e.g., for two years) in resolving their applications. (The Service seldom if ever actually denied applications from the singled-out groups, perhaps because its actions would then have come under more rigorous court review). Meanwhile, other groups with controversial views of a different political valence were waved through. It is not a question of whether applications for tax exemption should somehow be “approved without question,” as some have contended, but whether they should come under review that is even-handed and with no more delay and regulatory burden than is inherent to the process. At Time, Michael Scherer collects past examples that suggest IRS retaliation against political adversaries is something of a tradition in America. (Similarly: Cato video podcast).
P.S. Defending itself against the Inspector General’s report, the IRS says the applicants flagged for special scrutiny “included organizations of all political views.” It points to three such left-leaning groups — out of 471 in all singled out for extra screening. [Bloomberg via Newser] Much more: Gregory Korte, USA Today (“As applications from conservative groups sat in limbo, groups with liberal-sounding names had their applications approved … the liberal groups applied for the same tax status and were engaged in the same kinds of activities as the conservative groups.”) Meanwhile, L.A. Times columnist Michael Hiltzik is unafraid of going way out on a limb to defend what the Service did: if you don’t want to be harassed for your dissidence, it seems, you shouldn’t have sought (c)(4) status in the first place.
Yet more: Reuters has illuminating coverage of how the Service tried to break one of the year’s biggest stories on a Friday afternoon via a friendly question before a room full of tax lawyers. (“They made a bet that this would be the quietest way to roll it out,” [Eric Dezenhall] said of the IRS strategy. “It didn’t work.”) “Did Citizens United Critics Push the Agency To Misbehave?” asks my Cato colleague John Samples, while Tim Lynch adduces “Some Empirical Evidence of IRS Political Manipulation”. The BBC has a lexicon of political scandal euphemisms (“tired and emotional,” “hiking the Appalachian Trail,” etc.)
…such as harass our political enemies [Michael Cannon, Cato, more; Washington Post on revelations that the Internal Revenue Service applied extra tax scrutiny to groups that "criticize how the country is being run".]
Update: that “just a rogue field office in Cincinnati” story didn’t last long. AP is reporting that the agency’s acting head knew nearly a year ago that tea party groups were being targeted, a fact that might have been of interest to lawmakers pursuing constituent reports of overly onerous document demands from the IRS (see our earlier coverage of that here and here). Meanwhile, ProPublica, the generally liberal-leaning journalistic outfit, has disclosed that the IRS shared with it confidential data from nine conservative-leaning nonprofits.
“Young New Yorkers would not be able to buy cigarettes until they were 21, up from the current 18, under a proposal advanced [last month] by Dr. Thomas A. Farley, the city’s health commissioner, and Christine C. Quinn, the City Council speaker.” [New York Times via J.D. Tuccille] Or at least would not be able to buy them legally: according to estimates from the Mackinac Institute, New York state already has the nation’s highest rate of smuggled cigarette consumption, at more than 60 percent of its total market. [Catherine Rampell, NYT; Mackinac; Tax Foundation; Christopher Snowdon, "The Wages of Sin Taxes" (CEI, PDF)]
More: As the legal drinking age has been pushed upward in recent years, the average age of first use of alcohol has fallen markedly [Tuccille]
Back to the gravel walk? A new environmental program pressures populous Maryland counties to levy assessments on property owners based on their square footage of impervious surfaces such as roofs, patios or driveways that prevent rainwater from sinking into the soil [Blair Lee, Gazette; Maryland Reporter; Frederick News-Post; Anne Arundel County]
P.S. While some of the Maryland commentary has treated the idea as new and experimental, thanks to commenters for pointing out that it’s already a familiar part of the scene elsewhere.
Mark Graber at Concurring Opinions, reviewing James Fleming and Linda McClain, Ordered Liberty, a book which lays out a constitutional analysis consistent with the viewpoint Graber calls “Solid Liberalism”:
Another point where Ordered Liberty threatens but pulls back from challenging core Solid Liberal beliefs occurs during the discussion of Bob Jones v. United States. Ordered Liberty suggests that the Supreme Court in that case correctly ruled that religious organizations can be denied tax exemptions if they teach racism and other abhorrent doctrines. I confess to be troubled by the analysis. I suspect that most Jewish schools at the very least encourage students to date and marry other Jews, that these schools teach the doctrine that Jews are a chosen people, and that a great many other religions engage in similarly illiberal teaching. Given the importance of the welfare state in the lives of most citizens, a point Fleming and McClain make elsewhere in the book, I confess to some discomfort with the constitutional rule they eventually endorse that forbids religious coercion but permits religious groups to be denied state benefits that go to other religious groups with more liberally accepted beliefs. I think based on what the authors suggest elsewhere in the book, a case can be made that Bob Jones ought to be rethought.
The teacher’s union in Oregon is trying to get the legislature to repeal a voter-approved measure that warns electors in the state when a property tax hike is on the ballot. I’ve got more at Cato at Liberty (& Brian Doherty, Reason).
I’m in this morning’s New York Post with an opinion piece about the thoroughgoing debacle the American Society for the Prevention of Cruelty to Animals (ASPCA) got itself into with a decade-long lawsuit charging mistreatment of elephants at the Ringling Bros.-Barnum & Bailey Circuses (earlier). Last month ASPCA agreed to pay Ringling’s owner $9.3 million to settle charges of litigation abuse. Other defendants in the countersuit, including the Humane Society of the U.S., have declined to settle and remain in the litigation.
Later in the piece I draw a parallel to the recently dismissed Hudson Farm litigation in Maryland, in which a judge lambasted Waterkeeper Alliance for shoddy litigation conduct in a Clean Water Act suit. Is it worth rethinking the whole policy, which dates back to 1970, of broad tax deductibility for suing people in “cause litigation”? Related from Ted Frank at Point of Law.
P.S. The comments section on the Post piece is more substantive than most, and includes a statement from HSUS. (& response from ASPCA head)
According to the retailers group [Illinois Retail Merchants Association], Mr. [Stephen] Diamond’s Chicago law firm, Schad Diamond & Shedden P.C., has filed no fewer than 238 lawsuits in recent years against retailers small and large, which in its view failed to collect said shipping-and-handling sales taxes. Since the suits have been filed under a “whistle-blower” section of law, the firm is entitled to as much as 30 percent of any recovered taxes as well as attorneys’ fees for its trouble. And because it’s often easier and cheaper for defendants to settle rather than continue to fight, Schad Diamond reportedly has pocketed millions of dollars.
The office of Illinois Attorney General Lisa Madigan says the whistleblower provisions were intended for use by insiders disclosing misconduct rather than by outsiders, while “Illinois Revenue Director Brian Hamer says [the wave of suits] ‘has given Illinois a black eye’ and victimizes those who have made only an ‘inadvertent’ mistake.” [Greg Hinz, Crain's Chicago Business]
Taking advantage of the media bubble arising from the announced shutdown of Hostess snack-cake operations, Rep. Dennis Kucinich (D-Ohio) is back with a bill proposing to deny the deduction as ordinary business expenses of money spent advertising kids’ snacks. Kay Bell and Kelly Phillips Erb apply deserved ridicule (via Paul Caron/TaxProf).
Plus: Baylen Linnekin on Denmark’s planned repeal of a pioneering fat tax (earlier) and the rejection by voters in two California cities of soda taxes.
Paul Caron, TaxProf, on one of the more closely watched tax rulings. Earlier here.
At Prawfsblawg, Paul Horwitz, Rick Garnett and others have a discussion of claims (typified here and here) that it’s oppressive not to let churches electioneer with tax-deductible funds. Other views: Religion News Service/HuffPo, Bloomberg editorial, Stephen Colbert via TaxProf (to an IRS-defying pastor: “Other people have to use after-tax money for their political speech, but you guys get to use pre-tax money for political speech.”) Or is the better answer to liberate both secular and religious 501(c)(3)s to express election views, with the possible result of enabling political donors generally to take a tax deduction on money spent to promote their preferred candidates and causes?