The IRS Audit From Hell
Published on TheHill.com on May 21, 2013
From prominent election lawyer Cleta Mitchell comes the disgusting detail with which the Internal Revenue Service hounded conservative groups — they demanded so much information it constituted a deliberately crippling workload.
Mitchell noted that prior to 2010, the scrutiny of (c)(3) and (c)(4) applications was brief and non-intrusive. She reprinted a typical questionnaire to one of her clients in 2009, asking for little more than an update on its articles of incorporation. Mitchell says that before 2010, applications for (c)(3)s took 3-12 months, and for (c)(4)s, usually only 3-6 months.
Then, in 2010, it all changed.
To show how impossible compliance with the document requests was — and is — for would-be (c)(4)s and (c)(3)s, she submitted actual questionnaires sent to her clients during 2011 and 2012 as they sought tax exempt status, for comparison.
The IRS asked one client seeking a (c)(4) designation 124 separate questions. This client first applied in September 2010, and its application is still pending. Just some of the information the IRS requests includes the client’s planned activities for the coming year, and the nature and extent of its lobbying and staff time, and copies of brochures, pamphlets, newsletters, fliers, advertisements and any literature it’s issued; whether it will conduct rallies for or against any public legislation or candidates, including the time and location of each rally, a copy of each handout involved, the names of people in the organization involved and their compensation for and time spent on the rallies, as well as the percent of the organization’s time will be spent on the events and the total expense; whether it will offer classes, workshops or lectures, and if so, the topics, including a sample of materials used, and information on how fees will be determined, how many staff will be allocated, and whether honoraria will be paid.
The list continues: The IRS wants to know who selects materials for the client’s website, on what criteria, whether it is free, whether it is copyrighted, who controls the data, whether the site sells ads or products online, its annual gross receipts, all in detail; whether the client has worked with any other groups, with relevant details on costs, staffing, and percent of time involved; whether any candidates have addressed the client, including who, when, with what materials, and asks for video or audio recordings if available; it asks the group conducts voter registration or get out the vote drives, including the time and location of events, on whose behalf, the percent of time, staff and funds will the client will spend on it, along with any printed materials.
And that’s not all — it further inquires as to whether the client would use an officer’s personal residence for its business, and the cost of doing so, along with all leases, contracts, rentals, loans and financing agreements; it wants to know how it solicits funds, with copies of all solicitations and brochures, and its fundraising costs, including the percent of staff and budget used on fundraising; for this client it asks for financial statements from 2007-2011, with a breakdown of all income and spending, information about its employees such as title, duties and pay, along with the resumes of all directors and officers; it wants to know any and all involvement in litigation, in great detail.
And Mitchell would bid us bear in mind as we read the questions that a (c)(4) can spend 100 percent of its time lobbying. Advocacy is totally permissible for all exempt organizations. A (c)(4) can spend money on partisan campaign intervention, as long as it is less than half of its work. So, why the intrusive questions?
Reading over the questionnaire, one is reminded of Southern literacy tests designed to keep blacks from registering by demanding an inordinate level of detail and specific answers.
This IRS questionnaire, and the hundreds like it sent to conservative groups, had no purpose other than to stop their political activity and force them to spend their time filling out endless forms. Talk about a chilling effect on free speech!
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