Thursday, February 16, 2012

A Wink's as Good as a Nod to a Blind Man

I've always considered myself to be a reasonably intelligent and informed individual. I've taken pride in the recognition that the things I don't know far outweigh the things I do know, and the never-ending desire to shift that balance. Shame on me, then, for not being conversant with something known as a 501(c)(4) organization (and thanks to the folks at United Republic for bringing the subject to my attention).

The IRS describes such an organization as "an organization (which) must not be organized for profit and must be operated exclusively to promote social welfare." The regulation does not actually define "social welfare"; it gives some examples of specific situations where an organization would or would not be in compliance. In essence, the regulation speaks more to what is NOT promoting social welfare, leaving an enormous chasm into which one could spin almost any definition of the term. The stipulation that such an organization "must operate primarily to further the common good and general welfare of the people of the community" is laughably vague and ripe for abuse.
"But wait!", you say. The regulation also contains the following: "The promotion of social welfare does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office." A sign of hope? A loophole closed? Alas, one has only to read the very next sentence to become crestfallen: "However, a section 501(c)(4) social welfare organization may engage in some political activities, so long as that is not its primary activity." And so we return to the semantics game. If the regulation's attempt to clearly define "social welfare" is lacking, its attempt to define the word "primary" is non-existent. Who determines the "primary" purpose of the organization in question - the organization itself? Isn't that akin to asking a weekend duffer what he got on the last hole when there was a $5 Nassau at stake? If the determination is to be made by the IRS, then what are the standards for making this determination? My hair hurts after poring through 66 fascinating pages of IRS verbiage, and my vision may be blurry, but I can't seem to find ANY definition of the term "primary." Note the following in Rev. Rul. 61-177, 1961-1 C.B. 117: "a corporation organized and operated primarily for the purpose of promoting a common business interest is exempt under IRC 501(c)(6) even though its sole activity is introducing legislation germane to such common business interest." I could drive a Mack truck through that hole.
The above begs the following question: Who actually wrote these regulations? This is not a rhetorical question; I really don't know the answer. The cynic in me suspects it is the same people who write most of the legislation introduced into Congress, i.e. NOT the people we elect and/or pay to do it. If it looks like a skunk and it smells like a skunk, it's a skunk.
Still not throwing up, dear reader? These organizations are not required to publicly divulge their donor rolls. This cozy little set of circumstances allows "shadow" groups to obfuscate and distort the process, effectively disenfranchising the electorate. This is the classic, modern definition of the Golden Rule: He who has the gold makes the rules.
I hope you're starting to feel like Howard Beale.

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