As I hope I stated in my original blog post, my direction in these posts will generally be the discussion of current accounting/tax standards, how I see these standards possibly affecting society, and how some current events taking place might relate to the accounting and tax standards I’ve been discussing. In that regard, I’d like to discuss the recent IRS scandal in Washington concerning its scrutinizing of conservative groups applications to be recognized as 501(C)4 organizations, ones granted tax-exempt status as long as their primary goal is not political in nature.
Regardless of which groups were being scrutinized and which groups were being breezed through, in my opinion, the granting of tax-exempt status for “social welfare” groups, except for those that are strictly providing services for those less fortunate, has to be one of the most subjective processes imaginable. I made my case for a Flat Tax in my post “The Flat Tax”, where everyone pays the same tax rate on every dollar of income earned, from the first to whatever dollar anyone earns. In this scenario, there wouldn’t be any need for some groups being granted tax-exempt staus when some others are not; every group pays tax on the income it brings in, except if the group is specifically helping the less fortunate; i.e.: helping alleviate the government’s burden of helping these folks. Let’s face it, regardless of what these “public initiative” groups say, they are in place to promote their agenda, whether it be liberal, conservative, libertarian, whatever. In my opinion, there isn’t any need whatsoever for groups of this nature to have immunity from paying taxes.
Now for the current IRS scandal. Based on news reports I have read/heard, this scrutinizing of conservative groups started as far back as March of 2010, increasing significantly after the November 2010 mid-term elections, where conservatives took back control of the House of Representatives in Washington. All this information came out of an audit of the IRS Exempt Organization Rulings and Agreements office located in DC and the Determinations Unit located in Cincinnati, OH, between June of 2012 and February of 2013, completed by the Treasury Inspector General for Tax Administration (TIGTA). The audit was initiated due to several members of Congress notifying the Inspector General’s Office of concerns that the IRS was: “1. targeting specific groups applying for tax-exempt status; 2. delayed the processing of targeted groups’ applications for tax-exempt status; and 3. requested unnecessary information from targeted organizations”.
Inspector General audits are quite commonplace, trying to alleviate concerns that government actions might be running amuck. The point I want to make here is the absurdity, in my opinion, that no one was aware of this particular audit in the White House or the Obama Administration. Based on my history in banking and business, whenever an audit is being done, ALL the powers-that-be are made aware of the fact. Since the Inspector General for Tax Administration is a part of the Treasury Department, the “powers-that-be” would include up to the Treasury Secretary or at least his assistants. Frankly, to think that an audit that could potentially be as explosive as this one has become would not get to the President’s ears/desk is just ludicrous, in my opinion.