The mechanism that allowed the IRS to deny right-leaning groups legal nonprofit status during Barack Obama’s administration is still on the books, but this week a conservative group is challenging the provision in court to prevent it from being weaponized again.
Back in 2013, when Obama was president and Lois Lerner led the IRS Tax-Exempt Organizations division, Americans learned that conservative groups seeking nonprofit tax-exempt status were being blackballed by the IRS.
A 2014 House Oversight Committee report shows how huge the scandal was when it was discovered: “A May 2013 review of the IRS tax-exempt applications found that not a single group identifying itself as ‘Tea Party’ was approved by the IRS after February 2010, when the new targeting criteria were instated, while dozens of ‘progressive’ groups were approved.”
But 11 years later, the same criteria on the application for a nonprofit 501(c)(4) tax-exempt status remain, leaving the door open to more corruption.
Lex Politica Attorney Chris Gober has been working since then to change the rule on behalf of Freedom Path, a now nearly inactive conservative issue advocacy organization that filed for tax-exempt status in 2011. After the IRS requested a list of Freedom Path’s donors in 2012, and the 2014 Lois Lerner scandal blew over, finally in 2020 — nine years after its application — the IRS denied Freedom Path nonprofit status on the basis of the same “Facts and Circumstances Test” weaponized against conservative groups in the scandal.
The Trump administration’s Department of Justice is defending the Facts and Circumstances Test as the case returns to court this week for a status report with Washington, D.C., District Judge Jia M. Cobb. Freedom Path is asking the court to declare the Facts and Circumstances Test “unconstitutionally vague.”
The IRS uses the 11-factor Facts and Circumstances Test (seen below) to evaluate whether a group’s advocacy communications, such as advertising campaigns, should be considered “issue advocacy” — which would allow the group to become a tax-exempt nonprofit — or if its communications should be considered a “political campaign intervention,” preventing the group from gaining tax-exempt status.
The test is subjective; results depend on the values of the person evaluating the applicant’s material.
“It has a necessary chilling effect, because conservative groups nationwide will have to self-censor rather than risk IRS retaliation,” Gober told The Federalist.
Hellbound and Down 