Ways and Means Readies a Batch of Bills Targeting IRS

Now that they control both chambers of Congress, Republicans are wasting no time advancing pent-up bills intended to crack down on alleged political bias at the Internal Revenue Service, moving a batch of bills out of the Ways and Means Committee on Wednesday for coming floor action.

Though the most visible policy-oriented legislation would repeal the estate tax, the narrower set of bills was aimed at the tax agency’s Exempt Organizations division, where the imbroglio over mishandled applications from largely conservative groups revealed in 2013 set the course of the Republican bid to rein in the tax agency.

Designed to pressure IRS employees toward more transparency, the bills do not address the issue of how to define a social welfare organization that is not political—for which the IRS is working on revised regulations—and none appear to acknowledge the staffing, procedural and policy changes made at the Exempt Organizations division over the past two years.

Bills reported out Wednesday included:

• H.R. 1058 by Rep. Peter Roskam, R-Ill., to “ensure that IRS employees are familiar with and act in accordance with taxpayer rights, including the right to be informed, to be assisted, to be heard, to pay no more than the correct amount of tax, to an appeal, to certainty, to privacy, to confidentiality, to representation, and to a fair and just tax system;”
• H.R. 1152 by Rep. Kenny Marchant, R-Texas, to prohibit IRS employees from conducting official business using personal email;
• H.R. 1026, by Rep. Mike Kelly, R-Pa., to “stop the IRS’ misuse of a provision designed to protect taxpayers to instead protect government employees who improperly look at or reveal taxpayer information;”
• H.R. 1314, by Rep. Patrick Meehan, R-Pa., to codify the right for organizations denied tax exempt status to file an administrative appeal;
• H.R. 1295, by Rep. George Holding, R-N.C., to streamline the “burdensome IRS process by allowing groups to declare their tax-exempt status rather than wait for endless amounts of time to gain approval;” and
• H.R. 709 by Rep. James Renacci, R-Ohio, to authorize the IRS to terminate employees who target individuals based on their political beliefs.

“Though it’s been nearly two years since we learned of the IRS’ abuse of power, the American people’s distrust in the agency remains,” Renacci said. “If someone at the IRS targets taxpayers based on their political beliefs, he or she should be held accountable. It’s that simple.”

With the exception of the repeal of the estate tax, the bills did not provoke opposition from ranking member Rep. Sander Levin, D-Mich., long a critic of the Republicans’ focus on the IRS targeting controversy. “Five of the seven bills we have seen before – they were on the floor last year. We do not oppose them,” he said in his opening statement. Levin said he would back Holding’s bill to require 501(c)(4) organizations to provide notice to the IRS within 60 days of forming, and said he hoped to amend it to also require new nonprofits to declare whether they plan to engage in political activity.

The IRS, meanwhile, just released its annual Data Book showing that the number of nonprofit applications for tax-exempt status rose while the number of denials shrunk. As Paul Streckfus, editor of an exempt organizations newsletter, noted, the IRS—which is using a new simplified application form—processed 117,538 applications in fiscal 2014, rejecting only 89 (6,793 were withdrawn or incomplete).

“My calculator says 89 disapproved applications out of 117,538 reviewed applications comes to 0.08 percent. Hardly enough to make the whole exercise worthwhile,” he wrote. “On the other hand, rubber-stamping almost all applications may be creating a future time bomb…. We can’t count on audits of the current 1,568,454 section 501(c) organizations to do much to improve compliance.”

(Image via Mark Van Scyoc / Shutterstock.com)