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How Much Scrutiny Is Fair When Seeking To Be Tax Exempt?

Flickr user Rob Chandanais (BlueRobot)

A fact that is being overlooked as the IRS scandal plays out is that both conservative and progressive groups were required to answer additional questions. Two Texas groups talk about the extra questionnaire and why they feel they deserve to be tax free. Also on this show: In the last two years, 60 women's health clinics were forced to close, so why did the state have $2.3 million in unspent federal funds, which was available to keep clinics running?

Sorting through the outrage

Lawmakers are investigating what happened at the Internal Revenue Service, turning their attention to the question of whether officials misled Congress about a policy that targeted conservative groups for extra screening when seeking a tax exemption.

The conservative groups had the words "Tea Party," "9/12" and "patriots" in their titles and they were seeking tax free status while saying they were non-political.

Under the law to receive tax-exempt status, 501(c)4 groups are required to exclusively be working for social welfare and not be involved in politics.

Over the years, that "exclusively" was interpreted by the IRS to mean "primarily" and from there it became increasingly difficult to tease out which groups qualified for the tax free status – especially after the U.S. Supreme Court’s Citizen’s United Ruling.

Texas conservative organizations were caught up in the net of the IRS and had their 501 (c) 4 status request delayed, but there are also reports that Texas progressive organizations were also subjected to the same level of scrutiny.

As the investigation unfolds we’ll have to wait and see if that’s a false equivalency.

Pressure on Texas groups

The Waco Tea Party is one of the conservative organizations that says they were treated unfairly by the IRS. Toby Marie Walker is the president of the Waco Tea Party, who is in Washington D.C. to attend the IRS hearings.

"We applied for 501(c)4 tax status in July 2010 and then we didn't hear anything from the IRS about the application other than, 'Hey, we received your application.' February 2012 we received a letter of demands for a series of questions and it was 22 questions, 12 subsets, so it was a good amount of questions that they wanted. It took us eight or nine months back and forth with them and then we received our status March of this year."

There are Texas liberal groups that also had their IRS 501(c)4 applications held up and subjected to additional scrutiny.

We don’t know yet how the number of liberal groups vs. conservative groups compares, but Progress Texas says they had to deal with the same issues the Tea Party groups did with the IRS.

Ed Espinoza is the director of Progress Texas, one of the groups who had to answer additional questions.

"We had a nine page, 21 question document, it was very in-depth. I think that any organization that is requesting to not pay taxes because you are doing some sort of greater good, there should be a higher threshold for you to demonstrate that you re doing something that is legitimate. In our case we were happy to do that, we accepted as part of the vetting process and ultimately our status was accepted - and as I understand it, all the other conservative groups, the Tea Party groups, were accepted as well."

Also on this show:

Women's health care in Texas

Times are tough these days in Texas for low income women seeking low cost or free reproductive health care. In the last two years, 60 women’s health clinics have been forced to close in the state, cutting off an estimated 140,000 women from their services.

What makes these facts all the more unsettling is that the Texas Department of Health was sitting on $2.3 million in unspent federal funds, which were supposed to be spent to keep the clinics running.

Freelance writer Carolyn Jones discovered this with a freedom of information request while investigating the Texas Department of Health State Health Service. Jones is a frequent contributor to the Texas Observer.

"The Department of Health explains that they had this amount of money left because they had been keeping the money aside for several large providers who'd planned to expand their services, but it turns out they didn't. They also kept some money aside for providers who billed late in the session, and as the Department of State Health Services said to me by email when I asked them about this, they said that this $2.3 had been an estimate and it would come down once the providers had filed their claims. They also said to me it's common practice to not spend a budget like this down to zero."

David Martin Davies can be reached at dmdavies@tpr.org and on Twitter at @DavidMartinDavi