My Tea Party group’s futile attempt to get IRS tax-exempt status

My Tea Party group’s futile attempt to get IRS tax-exempt status

The news dam has broken, and a deluge of stories from conservative citizen groups of horrendous dealings with the Internal Revenue Service is now spilling out.

I would like to share the background on my group’s quest for tax-exempt status.  The Southern California Tax Revolt Coalition was formed in February 2009 in the wake of the first national tea parties.  We then applied for IRS 501(c)(4) status in July, but abandoned that effort in April 2010, when it became clear to us that the IRS was just delaying.

Dawn Wildman, the President of the organization, offers these details:

After we held the first tea party in California, in San Diego, Leslie, Sarah and I decided we saw a need here for a group that would be honest with the electorate about how bad policies would affect their bottom line and budget. So we did what most responsible citizens would do, we incorporated as a business in California so we could protect our work, ourselves and the public we dealt  with on a regular basis. We decided an LLC [Limited Liability Company] suited what we were doing and for us personally. So it was done, and the Southern California Tax Revolt Coalition, LLC was born in February of 2009.

Then we decided we should attempt to get federal IRS tax exempt status of 501c4 so we could further raise money to effect real change in our community. We never expected to raise huge sums of money but knew we needed to further protect the organization and all of those people who believed in us and what we were doing. We even asked for help from our members to raise the administrative fees [$1500] that were required for us to even file the application with the IRS. After we had finished the pages and pages of information for the application and wrote our check for the fee we sent out our application if the IRS would reject our application based on our name alone — the Southern California Tax Revolt Coalition. [This was July, 2009.]

No need to wonder:

…we heard back from the IRS that they needed more information from us, and we complied [early 2010]. We didn’t have a ton of information for them however as we had only begun, we had no long term budgets because we were a new organization. But we sent all we had. Then we heard the IRS did not like that we had formed as an LLC, and not just incorporated. I told them that we saw no law or regulations that said we could not be an LLC and asked them to justify which laws or regulations this broke so we could do further research. We learned after this that it was futile to keep fighting with the IRS as they held all the cards and we had nothing to leverage our selves with, so we gave up. [April 2010]

(Click HERE to listen to AM640’s John and Ken Show interview with Wildman for more of the story)(at 5:00):

“It became just this mountain of paperwork back and forth. And we just decided at that point that you know we saw the writing on the wall … We were some of the biggest critics of the federal government, of course they weren’t going to help us out…. We knew we were the beginning of some big snowball. We kept hearing from other groups, oh, there’s a two-year backlog.”

The LLC-hammer was the particular tool the IRS decided it would use against us; and it was decided that if it wasn’t that, the agency would come up with another issue.  So we went forward without the tax exempt status.

It would be interesting to see which of the IRS staffers handled our application. But, I digress.

Actually, ours is the rare case that California’s regulations were much less restrictive, and our group is now recognized as a non-profit in the Golden State.  So, happily we don’t have to pay state taxes on donations.

Ironically, we dissolved the LLC in 2012 during the state-application process.

On the other hand, President Obama’s half-brother formed a shady charity — and the approval for its retroactive exempt status was signed by a senior IRS official:

Lois Lerner, the senior IRS official at the center of the decision to target tea party groups for burdensome tax scrutiny, signed paperwork granting tax-exempt status to the Barack H. Obama Foundation, a shady charity headed by the president’s half-brother that operated illegally for years….

Lerner also appears to have broken with the norms of tax-exemption approval by granting retroactive tax-exempt status to Malik Obama’s organization.

In conclusion, the progressive group’s experience with the IRS was a real tea party. In contrast, we went through challenges that make the 12 Labors of Hercules seem easy.

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