By David K. Shipler
The Internal Revenue Service looks more befuddled than partisan when it comes to enforcing the federal prohibition against mixing political activity with the benefits of tax-exemption—a concept introduced into law in 1954 by Sen. Lyndon B. Johnson to help himself in a tough reelection campaign.
In practice, the statute has been widely ignored, even as conservative churches have made repeated efforts for years to provoke the IRS into withdrawing their tax-exempt status so they could challenge the law’s constitutionality in court. In the run-up to the election last fall, right-wing preachers denounced President Obama from the pulpit, endorsed conservative candidates, and urged parishioners to campaign and vote against politicians who favor abortion rights and same-sex marriage—and publicized their sermons widely to spark a reaction.
It hasn’t worked. The IRS has not taken the bait, at least so far, and the recent tempest makes it even less likely that the agency will gather its courage in the face of a well-organized conservative movement.
Indeed, the ban on electioneering by tax-exempt organizations was enacted to combat right-wing influence in the “anti-communist frenzy of the 1950s,” writes James D. Davidson of Purdue. “It was prompted by Johnson’s desire to challenge McCarthyism, protect the liberal wing of the Democratic Party in Texas, and win reelection.” Johnson was facing a tough race against an extremist Dixiecrat assisted by big money through The Committee for Constitutional Government (founded by publisher Frank E. Gannett) and Facts Forum (funded by oil magnate H.L. Hunt, a friend of McCarthy).
Johnson wanted Dixiecrat support, so couldn’t attack those groups directly, which in any case would have made him seem soft on communism—a death knell in Texas. Instead, on July 1, 1954, he rose in the Senate to propose an amendment to the tax-exemption statute, which already restricted lobbying. Now he asked that the ban be extended to political campaigning. “The whole thing was over in a matter of minutes,” writes Davidson. “There was no discussion, and the amendment was passed on voice vote.”
The change was made in Section 501 (c) (3), which applies to churches and other non-profits. It prohibits “substantial” attempts to influence legislation and bars any participation or intervention in political campaigns. Donors get tax deductions for their gifts.
Tea Party and other such groups have applied under another section, 501 (c) (4), which grants exemptions to organizations “operated exclusively for the promotion of social welfare.” Donations are not tax-deductible, but the organizations pay no taxes on income. The current controversy erupted as conservative groups in question have tried to stretch the meaning of “social welfare,” defined not by the statute but by IRS rules, which require the organization to be “primarily engaged in promoting in some way the common good and general welfare of the community.” The section contains no explicit ban on political activity, but an IRS advisory states that “promoting social welfare does not include direct or indirect participation or intervention in political campaigns,” although “some political activity” may be acceptable.
This is a bit squishy. According to the IRS examples, c-4 organizations approved in the past may rehabilitate and place the unemployed, provide a school district with a stadium, “develop methods of achieving simplicity and dignity in funeral and memorial services,” provide youth leadership training through a junior chamber of commerce, help financially-strapped individuals solve budgeting problems and pay their debts, run a roller skating rink for all residents of a particular locale, provide a shooting range and safety instruction, and so on.
If blatantly political activities are to be formally accepted under the law’s “social welfare” rubric, it will be a legal shift, so how the question is handled is important. On the one hand, any whiff of IRS politicization, especially given its sordid history, deserves alarm and condemnation. Republicans should know, since President Richard Nixon was a master at using government’s formidable taxing power against political opponents. If Obama were as ethically corrupt, Mitch McConnell and John Boehner would be at the top of the audit list. But there’s no indication—as of yet—that the White House had anything to do with IRS employees’ fingering Tea Party and other conservative organizations for special scrutiny in their applications for tax-exempt status.
On the other hand, the vagueness of the law and the confused landscape of free-wheeling political organizing lend themselves to inconsistent and inadequate enforcement. The IRS officials may have had a political agenda, as Republicans insist, or they may just have been struggling bureaucrats who happened on an unacceptable way of coping. They faced a sudden flood of applications from groups—largely from the right—that skated very close to the ill-defined edge of what the law permits in exchange for being exempt from taxes.
It may be a Faustian bargain, this deal of tax-exemption in exchange for a limitation on speech and electioneering, and it could easily be repealed by Congress. But as long as it’s on the books, the IRS is obligated to enforce it, and that puts the agency smack in the middle of the morass of politics. Policing requires careful examination of every application for tax-exempt status from every organization—left, right, middle, and in between—to be sure it is not merely a façade erected to shield from taxation an organization extensively involved in an election campaign.