IRS investigation ignored most-influential groups

Associated Press

WASHINGTON

There’s an irony in the Internal Revenue Service’s crackdown on conservative groups.

The nation’s tax agency has admitted to inappropriately scrutinizing smaller tea-party organizations that applied for tax-exempt status, and senior Treasury Department officials were notified in the midst of the 2012 presidential election season that an internal investigation was underway. But the IRS largely maintained a hands-off policy with the much larger, big-budget organizations on the left and right that were most influential in the elections and are organized under a section of the tax code that allows them to hide their donors.

“The IRS goes AWOL when wealthy and powerful forces want to break the law in order to hide their wrongful efforts and secret political influence,” said Rhode Island Sen. Sheldon Whitehouse, a Democrat who is pushing campaign-finance-reform measures to force big outside groups to disclose donors.

Karl Rove’s Crossroads GPS and the Koch brothers’ Americans for Prosperity were among those that spent tens of millions of dollars on TV ads and get-out-the-vote efforts to help Republicans. Democrats were aided in similar fashion by Priorities USA, made up of former Barack Obama campaign aides, and American Bridge 21st Century Foundation, an opposition research group.

Yet those groups so far have escaped probes into whether they have crossed the blurry line under the law between what constitutes a tax-exempt “social welfare” organization that is free from donor reporting requirements and a political committee subject to taxes and disclosures.

Watchdog groups and lawmakers who have sought more disclosure and restrictions on such groups claim an injustice. They say the IRS saga over the targeting of smaller groups shines a bright light onto the agency’s failure to guard against the flood of secret money into the political system through the creation of the deep-pocketed groups. Other advocates of reform worry that government regulators will be less likely to scrutinize the tax-exempt status of the bigger groups out of fear that they will appear to be targeting groups for political reasons.