Josh Barro, Columnist

Does the IRS Even Understand the Tax Code?

If you don't want IRS agents to behave badly, give them rules so clear they can't misapply them.

May 21, 2013 at 4:52 PM UTC

Josh Barro is the lead writer for the Ticker, Bloomberg View's blog on economics, finance and politics. His primary areas of interest include tax and fiscal policy, state and local government, and planning and land use. Previously, Barro was a Senior Fellow at the Manhattan Institute for Policy Research and a commercial real estate banker at Wells Fargo. He holds a bachelor's degree in psychology from Harvard and lives in Queens, New York.

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The Internal Revenue Service's Inspector General released a report last week detailing how the agency inappropriately singled out conservative nonprofit groups for investigation. Among the IRS's many problems, the report said, were its employees' confusion about the two sections of the tax code governing many nonprofit organizations that are active on public policy: "We also believe that Determinations Unit specialists lacked knowledge of what activities are allowed by I.R.C. § 501(c)(3) and I.R.C. § 501(c)(4) tax-exempt organizations."

On Friday, the Thomas More Society, a conservative public interest law firm, released documents providing more evidence that the IRS had agents enforcing laws they didn't understand. The society released communication between three anti-abortion groups (its clients) and the IRS regarding their 501(c)(3) status. The questions the IRS asked often reflected a misunderstanding of the law.