May 21,2013

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Baucus Calls IRS Targeting Conservative Groups "Intolerable," Pledges to Investigate

Finance Chairman Says Congress Must Review and Reform Vague Laws Pertaining to Tax Exempt 501(c)(4) “Social Welfare” Organizations

WASHINGTON – At a Senate Finance Committee hearing today, Chairman Max Baucus (D-Mont.) said high-ranking IRS officials should have taken firm action – including potentially transferring or firing employees – to end the screenings of conservative groups’ applications for tax exemptions.  Senator Baucus said further investigation must look into the hundreds of applications that were flagged by IRS employees but did not use political screening terms.  He also said Congress must reform the nation’s tax laws pertaining to 501(c)(4) “social welfare” organizations to prevent such behavior from reoccurring.

“We need to understand how and why this targeting occurred.  We need to know who was involved and who was responsible, and we need to install new safeguards to ensure this targeting never happens again,” Senator Baucus said.  “There are countless political organizations at both ends of the spectrum masquerading as social welfare groups in order to skirt the tax code.  Once the smoke of the current controversy clears, we need to examine the root of this issue and reform the nation’s vague tax laws pertaining to these groups.”

Senator Baucus said further investigation must uncover who is responsible for the IRS’s reported behavior and why the controversial  actions of the “determinations unit” of the IRS’s Cincinnati office were allowed to reemerge after IRS officials in Washington attempted to end them. 

According to data collected by the website, 501(c)(4)s spent $254 million in the 2012 election – an amount equal to the combined spending of the 2012 Democratic and Republican political parties.  Senator Baucus said that neither the tax code nor the regulations pertaining to nonprofits provide clear standards for how much political activity a 501(c)(4) group can undertake.  He added that the tax code also lacks a clear definition of what qualifies as political activity and that these ambiguities may have led, in part, to the IRS’s behavior.

On Monday, Senators Baucus and Hatch sent a letter to Acting IRS Commissioner Steven Miller as part of the Finance Committee’s formal independent investigation to request additional documents that would shed light on the scope and origin of the IRS’s behavior and ask how the IRS plans to guarantee it does not happen again.