The IRS Audit From Hell

From prominent election lawyer Cleta Mitchell comes the disgusting detail with which the IRS hounded conservative groups, demanding so much information as to constitute a deliberately crippling workload.

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Mitchell notes that prior to 2010, the scrutiny of 501(c)(3) and 501(c)(4) applications was brief and non-intrusive. She reprints a typical questionnaire to one of her clients in 2009, asking little more than an update on its articles of incorporation. Mitchell says that before 2010, applications for 501(c)(3) took 3-12 months and for 501(c)(4)s usually only 3-6 months.

Then, in 2010, it all changed.

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To show how impossible compliance with the document requests was (and is) for would-be 501(c)(4)s and 501(c)(3)s, she submits actual questionnaires sent to her clients during 2011 and 2012 as they sought tax exempt status.

The IRS asked one client seeking a 501(c)(4) designation 124 separate questions. This client first applied in September 2010 and its application is still pending). Here are just some of the questions IRS asked:

–What are your activities for the coming year?

–Attach copies of brochures, pamphlets, newsletters, fliers, advertisements or any literature you have issued.

–Will you offer classes, workshops or lectures? If so, covering what? Submit sample of materials used. How will fees be determined? How much of your gross receipts will come from these? How many staff will be allocated? Will you pay honoraria?

–Who selects materials for your website? On what criteria? Is it free? Is it copyrighted? Who controls the data? Do you sell ads? What are annual gross receipts? Will you sell products on line? Please explain in detail.

–Will you conduct rallies for or against any public legislation or candidates? Time and location of each rally, copy of each handout, names of people in your organization and their compensation and time on the rallies, what percent of your time will be spent on these? What expenses?

–Explain the nature and extent of lobbying, staff time.

–Have any candidates addressed your group, who? When? What materials? Attach video or audio recordings if any.

–Have you worked with any other group? Give details, cost, staffing, percent of time.

–Do you conduct voter registration or get out the vote drives? Time and location? On whose behalf? Submit all printed materials. What percent of time and staff and money will you spend on it?

–Will you use an officer’s personal residence for your work? Details? Cost?

–Provide all leases, contracts, rentals, loan or financing agreements

–How do you solicit funds? Send copies of all solicitations, brochures etc. Fundraising costs? What percent of staff and budget on fund raising?

–Financial statements 2007-2011. Breakdown of income and spending.

–What employees? For each: title, duties, pay.

–Resumes of all directors and officers

–Any involvement in litigation? Explain?

And Mitchell would bid us bear in mind as we read the questions that 501(c)(4) can spend 100 percent of its time lobbying. Advocacy is totally permissible for all exempt organizations. A 501(c)(4) can spend money on partisan campaign intervention, as long as it is less than half of its work. So why the intrusive questions?

Reading over the questionnaire, one is reminded of southern literacy tests designed to keep blacks from registering by demanding an inordinate level of detail and specific answers.

This IRS questionnaire, and the hundreds like it sent to conservative groups had no purpose other than to stop their political activity and force them to spend full time filling out endless forms. Talk about a chilling effect on free speech!

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