IRS Taking Harder Look at Political ‘Charities’

Is the IRS starting to look into political groups set up as 501(c)4s?

A Wall Street Journal article last week reported that the agency was “taking initial steps to examine whether Crossroads GPS, a pro-Republican group affiliated with Karl Rove, and similar political entities are violating their tax-exempt status by spending too much on partisan activities.” But the IRS told TPM that the plan has been around for a while.In an article published Wednesday, the Journal reported:

Holly Paz, a senior official in the IRS’s tax-exempt division, said Friday that the agency was working on a questionnaire to send to some of the largest of the groups. Sending such a questionnaire is considered to be the first step in an IRS investigation.

The voluntary questionnaires will ask the organizations about their activities and compliance, said Ms. Paz, the IRS’s director of tax-exempt rulings and agreements, speaking at a conference of the American Institute of Certified Public Accountants.

Contacted by TPM last week, IRS spokesman Dean Patterson said in an emailed statement that Paz’s comments at the conference “are the same as what we’ve had on our web site and in our Exempt Organization work plan since February.” He pointed us to a passage on “501(c)(4), (5) and (6) self-declarers” in the agency’s 2012 Exempt Organization work plan that reads, in part:

“In FY 2012, EO will send a comprehensive questionnaire to organizations based on Form 990 filings to assess compliance in this area.”

According to Patterson, the questionnaire is not yet ready to send out.

“We have not announced when the questionnaire will be sent, and we have not announced any specific details about this beyond what’s in the work plan. Other details have not been finalized, such as who will receive the questionnaire or the size of the groups receiving the questionnaire,” he said in the statement. “We anticipate asking groups a range of questions on topics including executive compensation, member services, political activity and a number of other issues.”