The Treasury Inspector General for Tax Administration’s report that is at the center of the current firestorm over potential political bias at the IRS asserts that the IRS used “inappropriate criteria” to choose applications for tax exempt status that would be subject to further review. These criteria were both names and policy views clearly associated with conservative causes. (See my reproduction of Table 3 of the TIGTA report below.) Despite numerous IRS statements that other criteria were also used, the TIGTA report provides no analysis of these other criteria except to acknowledge that IRS made statements claiming that they exist.
Figure 3. Criteria for Potential Political Cases (June 2011)
"Tea Party," "Patriots" or "9/12 Project" is referenced in case file
Issues include government spending, government debt or taxes
Education of the public by advocacy lobbying to "make America a better place to live"
Statement in the case file criticize [sic] how the country is being run
|Source: TIGTA, "Inappropriate Criteria Were Used to Identify Tax-Exempt Applications to Review, May 14, 2013.|
In its report TIGTA examined 296 “potential political cases” that were selected by the IRS between May 2010 and May 2012 for additional review. About one third of these were for 501(c)(3) status (which means contributions to those organizations are deductible) and the rest were for 501(c)(4) status (which means the organization can engage in a lot of political activity but does not have to disclose its donors).
TIGTA examined the names of these 296 organizations and found that 98 of them had either “Tea Party”, “Patriots,” or “9/12 Project” as part of their name. This is the basis of Figure 4 in the report reproduced below.
What does this pie chart tells about political bias at the IRS? Not much, really. Detractors of the IRS will note that many conservative groups may have been “inappropriately targeted” for their policy views and classified in the “other” category shown in the chart. Defenders of the agency can point out that just because a group has Tea Party, etc. in its name does not mean the IRS selected it for that reason.
Ultimately, to address the question of whether the IRS’s review of applications for tax-exempt status has a disparate impact on one side of the political spectrum or the other, we will need to know more about makeup of new advocacy organizations being incorporated during the relevant timeframe. For example, if there was an explosion in the creation of potentially political conservative organizations in the last few year (that was disproportionate to the creation of non-conservative organizations), more conservative groups would be targeted than non-conservative groups even if there was no political bias. Looking at the make-up of groups selected tells us nothing about bias unless we know the make-up of the group from which they were selected.