Controversy over the additional scrutiny the IRS paid to conservative organizations has raised attention about the regulations governing tax-exemption criteria.
Transcript:
Excerpt:
Jeffrey Brown: Today's hearing came to an end after six hours, but there's no end in sight to the three congressional investigations under way. More hearings are expected after the Memorial Day recess.
Even as these hearings unfold to find out exactly what happened at the IRS, there's continuing confusion about the tax laws and regulations at the heart of the matter: who qualifies for tax-exempt status, how is that determined, and other questions we will try to get at now with Duke University law professor Richard Schmalbeck. He's a former tax attorney. And Kim Barker, she's a reporter with ProPublica.
Well, Kim Barker, you have been looking at the history. So take us back. How did it come to be that groups can seek tax-exempt status in the first place?
KIM BARKER, ProPublica: It's a very good question, and nobody is entirely sure even how social welfare nonprofits came about in the first place.
All we know is that as part of the Revenue Act of 1913, Congress created the idea of social welfare nonprofits. Eventually, they were defined as being formed exclusively to promote social welfare. And then over the years, that was -- that exclusively was defined to mean that you should have a primary purpose as being a social welfare nonprofit.
So there's this big debate over exclusively vs. primary. In the '80s, it came about that these groups -- these groups started to interpret primary to mean that they could actually spend money on politics. And the IRS has agreed with that.
The real argument here is over whether they should have to disclose the donors for the money that they're spending on politics and on these political ads that are then reported to the FEC.
Continue at:
http://www.pbs.org/newshour/bb/government_programs/jan-june13/irs_05-22.html
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