Fixing the IRS: Avoiding Political Bias Is Paramount

The controversy over the Internal Revenue Service’s handling of applications for tax exemption from conservative groups has put the tax agency in the hot seat.

The Chronicle invited nonprofit and legal experts to suggest remedies:

• Today: Avoid political bias
• Monday: Clarify the rules on political involvement
• Tuesday: Improve the application process
• Wednesday: Provide more money for enforcement

We encourage you to join the discussion in the comments section.

Avoiding Political Bias Is Paramount

Cleta Mitchell
Lawyer

We are taught that America is a “nation of laws, not of men.” The IRS needs a refresher course in that lesson.

Return to the “rule of law.” That is the key lesson arising from the developing story of the inner workings and malfeasance of the Internal Revenue Service regarding the review of applications for exemption by nonprofit organizations.

To seek recognition as a tax-exempt 501(c)(3) organization, applicants must fill out Form 1023. It is extensive and requires an organization to furnish substantial information about its proposed exempt purpose, its budget and financial information, and much more. That questionnaire and the information sought for purposes of the IRS review have been published and properly promulgated by the IRS.

Before April 2010, the standard of review was relatively consistent and follow-up questions were directed at information contained in the application. What changed in 2010—which continues today, despite the IRS’s assertions to the contrary—is a complete departure from the objective standard based on duly published questions that all applicants must answer to a subjective, constantly changing, and completely mysterious and amorphous process that seeks information far afield from the approved areas of inquiry.

We must demand from the IRS the same thing we must demand of all government agencies: a notice of the legal standard that is to be applied, which must be objective, well defined, duly adopted, and known to the citizens—with consistent adherence to that standard by the government.

We are taught that America is a “nation of laws, not of men.” The IRS needs a refresher course in that lesson. When government agents abandon the rule of law, we lose one of our country’s most precious principles.

Cleta Mitchell is a lawyer who advises nonprofits and specializes in campaign and election law. She has filed suit against the IRS on behalf of True the Vote, a conservative group whose application for tax-exempt status was delayed by the tax agency.

Douglas Rutzen
International Center for Not-for-Profit Law

Perhaps the most enduring legacy from this controversy may relate to the bipartisan consensus that the government should not target nonprofit organizations based on the organization’s political views.

From an international perspective, the current controversy over the Internal Revenue Service is a very small part of an ongoing global debate about the relationship of governments to civil society. Indeed, I am writing this submission from Geneva, where I am participating in discussions at the U.N. Human Rights Council about civil-society legal issues. While international colleagues have expressed some interest in the substance of the IRS dispute, they are more interested in discussing the response that occurred.

Colleagues noted that in their countries, there is no chance that the head of state would have made public statements defending nonprofits associated with the political opposition. In fact, it would be more likely that responsible officials would have been promoted than forced to resign, and the legislative branch would not have held hearings to hold the implementing agency to account.

As a result, perhaps the most enduring legacy from this controversy may relate not to legislative reform or new guidance on the contours of 501(c)(4) social welfare organizations. Rather, it may relate to the response, which reflected bipartisan consensus that the government should not target nonprofit organizations based on the organization’s political views.

If this is etched into our collective political consciousness inoculating future generations from this peril, the current controversy will have an important legacy indeed.

Douglas Rutzen is president and CEO of the International Center for Not-for-Profit Law.