I felt it a good time to weigh in on the brewing Exempt Organizations brew-ha-ha at the IRS.  The delay in processing applications for political reasons strikes me as kind of petty.  For the most part the EO branch employees that I’ve dealt with are conscientious, but thorough and ultimately fair.  And certainly what could be an dicey charity might get extra scrutiny and well it should.  However, the 501 (c)(4) organization which does not give donors the benefit of a deduction has been honored in the breach for years.  Even some 501(c)(3) organization such as Greenpeace and Family Foundation tip toe along the precipice between proper and improper expenditures.  When is it lobbying and when is it education?  Is indoctrination, education?  Those are the types of things that have pretty much been allowed to happen over the years.   So, the genie is kind of out of the bottle on these things.

More concerning is the disclosures of sensitive information by the EO section of Anti-Same Sex Marriage Groups.  Disclosures are a career killer at the IRS. This is because they subject the Service to huge potential liabilities.  Under Section 7431 of the Code, the victim of an illegal disclosure may sue the Service for $1000 for each disclosure.  So suppose you have a donor list of 100 names.  That might be deemed to be 100 disclosures.  Further, let’s say its put on a website and that website has 100,000 hits.  The could possibly be 100,000 disclosures.  In addition to these penalties, the victim gets their damages as determined by a jury  So, for example let’s say your giving goes down by $1,000,000 as a result of these disclosures and you can quantify those damages, you get those.  You also can get punitive damages if the disclosure was willful.  That’s potentially 5-9 times the damages you suffered.  You also get attorneys fees.    This is an area where the Service needs to really clamp down on their employees.  No one likes the IRS.  No one likes the IRS disclosing material illegally or sloppily.   This is an area where the IRS could get hammered by the right organization.