From Politico:
IRS Beats Tea Party in Court
By RACHAEL BADE |
10/23/14 3:23 PM EDT Updated: 10/23/14 6:39 PM EDT
The IRS may have inadvertently figured out how to
win its legal battles against aggrieved tea party groups: Give them what they
wanted in the first place — tax-exempt status.
That was a major reason a Republican-appointed
federal judge on Thursday threw out two lawsuits brought by more than 40
conservative groups seeking remedies for being singled out in the tea party
targeting scandal, a victory for the IRS.
Judge Reggie Walton of the U.S. District Court of
the District of Columbia dismissed almost all counts brought against the
tax-collecting agency in two cases, ruling that both were essentially moot now
that the IRS granted the groups their tax-exempt status that had been held up
for years.
Walton, a President George W. Bush-appointee, also
said individual IRS officials could not be fined in their individual capacity
for allowing such treatment because it could hurt future tax enforcement.
The ruling, which the groups could appeal, has
serious implications for tea party groups suing the IRS, suggesting they may
never receive compensation for the long waits they endured for a ruling on
their status.
The inspector general report that ignited the
targeting controversy last year found that applications sat in limbo for as
long as several years and that the groups were asked inappropriate questions
about their donors, political affiliations and random things like social media
posts.
Republicans said they were outraged at Walton’s
decision.
“You get
targeted and harassed for three years but, oh, because you finally get
[tax-exempt status], the three years of harassment doesn’t mean anything?”
asked Rep. Jim Jordan (R-Ohio), who heads a congressional subpanel
investigating the controversy. “I find that argument lacking tremendously in
light of what these people went through.”
But others said the agency needs to do more — not
less — to scrutinize nonprofit groups that don’t follow the rules and
over-engage in political activities. To obtain the status in question,
political activity must not be the groups’ primary activity — a vague and
difficult-to-administer test.
“Judge Walton got it right — there is no ongoing
injury to these groups,” said Paul S. Ryan [not the Rep.], senior counsel at
the Campaign Legal Center, which backs tighter rules on political nonprofits.
“The IRS needs to enforce tax law with respect to nonprofit political groups
more aggressively.”
A furor erupted in May 2013, after a Treasury
inspector general report blasted the IRS for using discriminatory labels to
sort through applicants seeking tax-exempt status using terms like “tea party ”
and “patriots."
Soon after a raft of right-leaning organizations
that applied for tax-exempt status sued the government. Some had had their
applications put on hold for years; others were asked what were later ruled
inappropriate questions about donors and political views during the application
process.
The groups in their suits alleged that the IRS
violated their First and Fifth Amendment rights with the inappropriate “be on
the lookout” list that used words like tea party to hold up their applications.
They sought monetary relief for their trouble as well as injunctive relief
barring the IRS from discriminating against conservative groups ever again.
The agency has since changed its practices,
including scrapping the lists.
When the suits at hand were filed, 22 of the groups
had already received their tax-exempt status, five had dropped their
applications altogether and just over a dozen were still waiting to hear from
the IRS.
Since then, the IRS had approved all but two,
rendering much of the arguments moot, the judge said — and preventing him from
considering the case.
“After the plaintiff initiated this case, its
application to the IRS for tax-exempt status was approved by the IRS. The
allegedly unconstitutional governmental conduct, which delayed the processing
of the plaintiff’s tax exempt application and brought about this litigation, is
no longer impacting the plaintiff,” Walton said in his decision to throw out
True the Vote’s lawsuit against the IRS.
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