Court Dismisses Tea Party Suits Against IRS

October 31, 2014 Posted by Jessica Shofler in IRS, News, Nonprofits

tea partyHow do you solve a problem like a tea party group lawsuit? The IRS may have just found the answer: give the group tax-exempt status.

In the wake of the Treasury Inspector General report that called out the IRS for using discriminatory labels to sort through exemption applications, such as the term “tea party,” more than 40 conservative groups brought two lawsuits against the IRS for allegedly being singled out for perceived tea party affiliation. Last week U.S. District Court Judge Reggie Walton (who was appointed by President George W. Bush) dismissed almost all of the counts, finding them to be essentially moot as the IRS has now granted almost all of the groups exempt status.

Judge Walton also found that the individual IRS officials named in the suits could not be fined in their individual capacity because it could hurt future tax enforcement.

Finally, Judge Walton denied injunctive relief that would have prevented the IRS from targeting tea party groups in the future. He believed it to be unnecessary, explaining that “there is no reasonable expectation that the alleged conduct will recur, as the defendants have not only suspended the conduct, but have also taken remedial measures to ensure the conduct is not repeated.”

There were mixed reactions to the verdict. Rep. Jim Jordan (R-Ohio), who is heading an investigation into the tea party scandal asked, “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?”

Paul Ryan, senior counsel at The Campaign Legal Center, a nonpartisan, nonprofit organization that works in the areas of campaign finance and elections, political communication and government ethics, countered: “Judge Walton got it right — there is no ongoing injury to these groups . . . The IRS needs to enforce tax law with respect to nonprofit political groups more aggressively.”

Unsurprisingly, many of the tea party groups are planning to appeal the decision.

NOTE: The information contained herein is not intended to be legal advice and the reader should know that no Attorney-Client relationship or privilege is formed by the posting or reading of this article which is also not intended to solicit business.

Casey Summar, Partner, The Law Firm for Non-Profits,1812 W Burbank Blvd, #7445, Burbank, CA 91506

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