IRS rarely audits nonprofits for politicking
When Republicans won control of the U.S. Senate in November, they could thank dozens of conservative "dark money" nonprofit groups for spending nearly $130 million to boost their preferred candidates or bash their political enemies.
Those nonprofit groups, including many that enjoy a preferred tax status because they purport to be focused on “social welfare,” are barred from engaging in electoral politics as their primary activity.
But the Internal Revenue Service, which is charged with policing the groups, almost never audits them to see if they’re spending too much money on politics, according to new information obtained by the Center for Public Integrity.
The IRS told the Center for Public Integrity that it has only begun auditing 26 organizations specifically for political activity since 2010. That represents a tiny fraction of the more than 1 million nonprofits regulated by the agency.
Related: Hobbled IRS can't stem 'dark money' flow
More than 100 nonprofit groups have directly involved themselves in elections during recent years, some spending into the tens of millions of dollars. The rest — largely charities that are generally prohibited from campaigning for politicians — are seldom monitored to ensure they follow federal law.
The situation leaves the groups largely free to operate like political committees without fear of reprisal.
Their involvement in politics, meanwhile, has accelerated since 2010, when the Supreme Court’s Citizens United v. Federal Election Commission decision ushered in unprecedented election spending by nonprofit organizations that don’t disclose their donors.
Such groups spent more than $336 million during the 2012 cycle alone compared to about $17 million during the 2006 cycle, according to the Center for Responsive Politics.
Related: How to fix the IRS nonprofit division
The lack of IRS oversight and enforcement stems from a confluence of factors — fewer employees are devoted to nonprofits at a time when the number of “dark money” groups applying for tax exempt status has skyrocketed, and the agency meantime has failed to clarify the rules surrounding political activity.
Internal IRS documents also show declines in the number of IRS employees investigating nonprofit groups and the number of employees who approve organizations’ application for nonprofit status, which allows the groups to avoid paying certain taxes.
“The IRS is not doing its job,” Sen. Bill Nelson, D-Fla., told the Center for Public Integrity. “There have been not only some obvious abuses of the tax exemption by some of these so-called social welfare groups, but I think some pretty flagrant ones.”
Help is not on the way. President Barack Obama last month signed into law a bill that chops the IRS’ annual budget by $345.6 million — reducing agency funding to 2008 levels.
Related: Decades in the making: The decline of IRS nonprofit regulation
It’s a decision IRS Commissioner John Koskinen says will result in hiring freezes and further job losses.
There’s more to this story. Click here to read the rest at the Center for Public Integrity.
This story is part of Consider the Source. Seeking to ‘out’ shadowy political organizations flourishing in the wake of the Supreme Court’s Citizens United ruling. Click here to read more stories in this investigation.
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Copyright 2014 The Center for Public Integrity. This story was published by The Center for Public Integrity, a nonprofit, nonpartisan investigative news organization in Washington, D.C.
