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Understanding and solving the IRS problem

May 25, 2013

[J.P.'s Moment of Common Sense on Broad View, KRNG 101.3 FM Reno. Listen live Saturdays at 11:00 AM Pacific Time.]

Hey, good news, we finally found something that brings Republicans and Democrats together: the IRS scandal. For the first time in years I'm having polite conversations about politics with liberals, thanks to our mutual hatred for the Internal Revenue Service.

Sure, yeah, I have to talk a little slower and use smaller words, but still... it's nice.

It's not quite wolves lying down with sheep but Republicans are holding hearings in the House, Democrats are holding hearings in the Senate, and everybody is on the same page: attack the IRS! We are witnessing a level of spontaneous cooperation between enemies not seen since Sunnis and Shiites came together to knock down Saddam Hussein's statue in Iraq.

Unfortunately, there's an incredible amount of misinformation being published about the IRS scandal. From the New York Times to Fox News, everywhere you look the sorry state of journalism in this country is demonstrated daily. It's especially bad in liberal publications which are trying to apologize for the IRS by arguing that Tea Partiers, being politically motivated, shouldn't be tax exempt at all.

That is incorrect analysis. Incorrect, lazy, and sloppy.

This was never about whether anybody should be tax exempt. Never. Every time you hear or read something about who or what, should or should not be tax exempt, that person is an ignoramus. When Tea Party groups apply for 501(c)(3) or 501(c)(4) status, the issue isn't exemption from taxes. Anybody who doesn't intend to make a profit can be tax exempt. They don't even need permission from the IRS. For instance, when someone in your community gets sick or hurt and someone else starts collecting money to help them, they don't wait for the IRS to give them approval. They collect the money and give it to the beneficiary. There's nothing taxable about that.

Here's something you might not know: in addition to 501(c)(3) and 501(c)(4) organizations (the two most commonly mentioned), there are twenty seven other kinds of tax exempt organizations under Section 501(c). 501(c)(1), for instance, describes non-profit businesses like federal credit unions. 501(c)(29), the last one, is for non-profit health insurance issuers.

Exciting stuff, I know.

And if none of the twenty nine 501(c) choices wet your whistle, you can be tax exempt under various other sections of the IRS code. Section 527, for example, is for politics. In other words, you can campaign for Mitt Romney or spend all your money promoting the Democrats Party and still be tax exempt, so God knows why the left is howling about Tea Party groups being political.

The issue is not whether Tea Party groups should be tax exempt—it's what kind of tax exempt they should be. Most of the choices are pretty much the same, with small differences and slightly unique requirements, but two of them stand out from all the rest: only donations to 501(c)(3) organizations are tax deductible—those are churches and charities; and only Section 527 organizations must publicly reveal the names of donors.

I've embedded a chart at this point, with nine common examples of tax exempt entities, showing how these two specific types of tax exempt organizations are different:

Every group lusts after 501(c)(3) status so they can tell potential donors their contributions are tax deductible—enormously helpful when it comes to fund raising—and if they can't get that one they'll settle for 501(c)(4) status because although the donations aren't deductible, at least donor names remain secret.

If they can't get IRS approval for any sort of 501(c) status, they have to go with Section 527 and reveal to the public the sources of their money. Big deal. Obama and the Democrats learned how to finesse that one: they simply make sure their illegal donations come in by credit card and are small enough so they don't have to verify the source. Obama got millions of dollars from Palestinians and other foreign sources when he ran for president... at three, ten, twenty dollars a pop.

That's totally illegal but once he was president who was going to call him on it? The IRS?

IRS agents are vicious, arrogant, little cretins who ruin people's lives and anyone who deals with them comes away suspecting they don't so much follow the law as use it to justify whatever sadistic punishment they feel like inflicting that day. If that sounds harsh, you haven't been watching. They've spent the last few weeks admitting that's what they were doing. We have two upper-level IRS executives relieved of their duties so far, one of them after pleading the Fifth in a congressional hearing, and the universal disgust of Americans for what they're seeing is our big chance to get rid of these insects once and for all.

Don't listen to the dummies who want a flat tax. Lobbyists will descend on the flat tax like locusts on a wheat field. The flat tax is still an income tax that Congress can befoul and eventually twist into a monstrosity exactly like we suffer under now.

The answer is the Fair Tax—look it up—a national sales tax that replaces everything: income taxes, Social Security taxes, and Medicare taxes. No more withholding from our paychecks, no more filing of tax returns, no more IRS snooping into our private financial lives. We get to decide when and how much tax we want to pay.

It's now or never, people.

That's... today’s dose of common sense.

"The only difference between death and taxes is that death doesn't get worse every time Congress meets." — Will Rogers

"We don't pay taxes. Only the little people pay taxes." — Leona Helmsley

"Elections should be held on April 16th—the day after we pay our income taxes. That is one of the few things that might discourage politicians from being big spenders." — Thomas Sowell

From Grand Rapids, Michigan, USA       

May 30, 2013 - My husband and I have been in support of the Fair Tax for years. Great article! – Hardcase, Michigan

May 29, 2013 - The whole IRS thing is manufactured outrage: George Will has the gall to ask: What if the Bush admin used the IRS to target liberal groups? WHAT IF???? He did! Not only using the IRS, but the FBI and the CIA as well!!! (Link.) This is just chapter 53 in the Great Book of Republican Hypocrisies – Henk van O., Netherlands
J.P. replies: If there is anything more irritating than people who attempt to excuse evil by spurriously claiming someone else did it, too, I don't know what it is. Even if there was some kind of moral equivalence between the audit of one church and the NAACP under Bush and the SYSTEMATIC OPPRESSION OF AN ENTIRE POLITICAL VIEWPOINT AS WE HAVE SEEN UNDER OBAMA (which there is not), it would not excuse what the Obama adminstration has done. Both audits mentioned in your link came after flagrant partisan electioneering in violation of the organizations' tax exemptions, and neither organization was ever denied tax exempt status and thereby put out of business before they could even get started. As for what the Secret Service does to protect a president's safety, Salon, true to its longstandng lack of journalistic integrity, is simply throwing mud against the wall hoping something will stick and distract the gullible from what the IRS has been doing.

May 28, 2013 - It's difficult to believe in one breath that the IRS says it is non political on one hand yet donated money through its labor union to a majority of democratic candidates in the last several elections. Although there are those that will tell you or try to convince you that it is merely a coincidence. That Colleen Kelley head of the NTEA labor union visits "PoTUS" himself, and the very next day their idea/decision for further scrutiny of Conservatives groups applying for 501/c begins. – Pam T., Virginia

May 25, 2013 - So glad to see you promote the Fair Tax. I have been promoting this for 2 years now and it is so simple and logical and I'm certain that will be it's downfall! LOL! – Dianna A., Michigan

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