Thursday, May 16, 2013

Business as usual at the IRS

I've been watching with some bemusement the current kerfuffle about the Internal Revenue Service scrutinizing applications by quasi-political groups seeking tax exempt nonprofit status. A number of questions have crossed my mind, including the obvious -- why the heck would groups that were created for political lobbying be referred to as "social welfare" organizations? -- but one thing struck me that doesn't seem to have been worth noting by the various talking heads. A number of the Tea Party organizations complained bitterly about the length of time it took for their applications to be processed. Most did eventually receive the desired tax exempt status, but in some cases it took over a year. 

Having had a personal experience with a small nonprofit group that was trying to obtain a related form of tax exemption, the 501(c)3, I must say the Tea Partiers have nothing to bitch about. Thirteen months for their paperwork to get processed? Pshaw. That's business as usual for the IRS. The group I was involved with was a local historical society -- an extremely small and poor group with an annual income of barely $1,000 (most of which goes for paying for liability insurance on a community hall) -- that was raising funds to do repair work on said hall. We decided to open a savings account so the money could earn a pittance in interest while it sat in the bank. At some point the account did generate interest; the bank sent the requisite information to the IRS, and, lo and behold, a year or two later our group began receiving correspondence asking for information on our budget, i.e., just how much money were we raking in annually and why weren't we paying taxes on it? Apparently if you show signs of having any income high enough that it can be rounded up to a whole dollar amount, the Internal Revenue Service wants its cut. That's when our correspondence with the IRS began.

They'd send us a letter, usually accompanied by a form of some sort. We'd respond. Several months would go by. They'd send us another letter. We'd respond. This went on for well over a year. The process was neither fast nor easy. It required multiple forms, a thick stack of copies of our financial records and incorporation papers, and a lot of patience. Eventually, a letter did arrive saying that our organization did indeed qualify for tax exemption.

In short, the length of time the process took for the Tea Party groups was totally within the norm for the way the IRS does business, regardless of whether it's with organizations or with individuals. They are the government. Nothing they do is fast or easy.

Incidentally, I do find it a tad bizarre that organizations that devote their time and energy to complaining that the government is inefficient should express surprise that the bureaucracy moved slowly. I also find it highly ironic that the same folks who rant about the need to downsize government are now saying (as I heard on NPR yesterday) that the IRS needs to hire more staff so applications don't take a year to process. The stupid, it burns.


  1. I've been under the IRS radar for a number of years now but during my working years I never had a bit of trouble with them and was never audited.

  2. Don't you have an NGO non-profit organization act and regs to incorporate under? In Sask we don't even talk to Revenue Canada to register as a non-profit. It is all spelled out in the legislation.

  3. We are so hung up on political correctness that it is unseemly to say the Republicans play the system more than Democrats - we must always claim the BOTH REPUBLICANS AND DEMOCRATS....

    The fact of the matter is that the Tea Party groups are partisan political organizations with a sole purpose of manipulating election results. They should be singled out for special scrutiny by the IRS - and most should not be given tax exemption.
    the Ol'Buzzard

  4. Gutting the staff of government agencies is the cause of most government failure, in my opinion. There aren't enough people left to do the work!!

  5. Susan, that's why the anti-government folks do it when they're in office: reduce staffing, put incompetents in charge (remember "Heck of a job, Brownie"?), and then when the not-enough-staff and their incompetent managers are unable to get things done, the anti-government folks say, "See, told ya. Government can't get anything done. Privatize."


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