Federal Cout Throws Out Lawsuits by Tea Party Groups Against the IRS

Remember the hysteria in Teabagistan and among GOP political whores over the IRS's questioning or denial of far right groups seeking tax-exempt status, many under the guise of "educational" organizations even though the organizations' main goals was to either (i) engage in banned political activity and/or (ii) enrich the organizers (much like how Sarah Palin's PAC spends less than 6% of revenues on candidates).   Having filed numerous applications for non-profit clients for tax exempt status, the fury was always misguided, in my view.  The IRS always assumes that something is amiss and asks countless questions and/seeks further clarification even for organizations that ultimately gain tax exempt status.  Well, the IRS found away to turn the tables (at least for now) by granting the Tea Party organizations tax-exempt status.  The result?  Their lawsuits were thrown out and the IRS will still have the option of revoking their tax exempt status down the road when they violate the Internal Revenue Code and associated regulations.  Politico looks at the IRS's court win:

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.

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, 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.”