The IRS storyline after the Senate hearing yesterday

After the Senate Finance Committee hearings on Tuesday May 21, what is the storyline on the IRS targeting Tea Party applications for tax exempt status?

Let's list some key events in table form (there is more complete timeline in the May 19 American Thinker:


Nov 2008

Obama elected president


Feb 2009

Rick Santelli says in a rant on CNBC we need a Tea Party (referring to the original Tea Party in 1773) to mobilize the interests of the public that is not on the inside in Washington


Apr 2009 launched - a step toward defining the Tea Party idea


Feb  2010

Citizens United Supreme Court judgment issued


Mar 2010

Alleged increase in demand for 504 (c) (4) exemptions, although the specific numbers are not clear


Mar 2010

IRS Determinations Unit in Cincinnati begins to target applications of conservative groups


Aug 2010

Ron Paul outlines Tea Party foreign policy in Foreign Policy journal




Republicans surprise by winning control of House with Tea Party support - Tea Party votes "come out of the woodwork" - were not picked up in polling


Jul 2011

Language used by Determinations Unit is softened


Jan 2012

Determines Unit resumes targeting conservative applications


Mar 2012

Intensified Tea Party complaints - senators send letter to IRS




Another letter to IRS from senators

In the Senate Finance Committee hearing, we can see that the Democratic story is going to be that the law was too vague and put too much of a burden on IRS discretion on what constituted political activity for a tax exempt organization. This story is not getting much traction as it turns out that the law is 50 years old.  Several Democratic senators are positioning themselves as being hard on the IRS by being disappointed with the IRS because it had not clarified this allegedly vague law on what constitutes a 501 (c) (4).  It's a bit irritating to watch this line of argument, but the Republicans are pushing back well on this and the age of the law is going to make this story a nonstarter.

The first IRS story is that this was "terrible customer service" in the immortal words of the acting Commissioner Steven Miller.  Nobody is buying that, even the Democrats.

The second IRS story is that there was a flood of applications for 501 (c) (4) status because of the Feb 10 Citizens United Supreme Court decision.  It's not clear if the numbers support this claim.  Applications for tax exempt status doubled from 1,500 in 2010 to over 3,000 in 2012, but the exact timing of that increase is not clear.  The IRS tried to imply that it was overwhelmed by this increase in tax exempt applications and that was the reason for the delay in approval of conservative groups.  This has pretty much fallen apart because it is contradicted by the Inspector General who concludes both in testimony and in writing that conservative groups were targeted.

Various Democratic questions and the two IRS Commissioners tried to come back to the Citizens United decision, implying that it was not legitimate and that it unleashed an avalanche of presumably unworthy conservative groups who wanted to keep their donors anonymous.  Senator Toomey drove a stake through this line of argument by noting that the Federalist Papers were written anonymously.

So, what happened?  Probably the Citizens United decision did result in a significant increase in applications for 501 (c) (4).  But, what really happened was the Tea Party phenomenon came out of the woodwork in 2009, Points 2. and 3. in the table above.  The conservative base was radicalized by the extreme nature of the Obama administration and was catalyzed by Rick Santelli's rant on CNBC in Feb 2009.  Everybody, but particularly the Democrats underestimated the Tea Party which gave the Republicans control of the House in 2010, derailing the Obama express. 

So, what was the problem for the Democrats in 2012?  That the Tea Party would strike again!  Compounded by the fact that for some reason, the Tea Party had not shown up in polls.  Thus, it was a stealth bomber.  The Obama campaign could not calculate its activity or its effect. 

Alas, as we know, in 2012, the Tea Party did not show up at the polls.  While we will never know the specific reason for that, we know what the IRS can signal to the White House from its targeting and thus shutting down Tea Party tax exempt organizations...

Mission accomplished.