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Does the IRS discriminate in its tax practices?

The Internal Revenue Service (IRS) was recently accused of discriminatory practices. In Linchpins of Liberty v. United States of America, a group of plaintiffs allege that the agency intentionally delayed the approval of their tax-exempt status.

How did these groups build a case against the IRS? One of the linchpins for the case is the fact that the tax laws are designed to be “administered fairly and without regard to politics of any kind.” These allegations involve delays to the tax exempt status of conservative groups, like the Tea Party. 

The delay was the result of the agency contacting the organizations with broad requests, including the names of contributors to the organizations. This led to hesitancy amongst potential donors and caused hurdles for the organizations to partake in activities that were otherwise available.

What was the holding in this case? The then Director of the IRS’s Exempt Organizations Division is quoted in the case. She states that the agency used a method to target certain organizations. She stated that this was “absolutely incorrect,t it was insensitive, and it was inappropriate.”

In addition to this admission, audits conducted by the Treasury Inspector General for Tax Administration (TIGTA) found that the IRS was searching for organizations with “political-sounding” names and was “on the lookout” for “Tea Party” applications.

Does the IRS use discriminatory practices? This case provides one example of discrimination by the IRS. It led to a change in procedures designed to ensure the fair and impartial application of tax laws.

However, the case serves as a reminder to closely examine tax controversies. Do not ignore any concern that a tax issue is unfair, biased or simply wrong. Contact an attorney to discuss your legal options. 

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