The part of the report that made me believe that much of the whining about this whole incident is phony is this:
As of May 31, 2012, 32 (36 percent) of 89 I.R.C. § 501(c)(3) potential political cases were open more than 270 calendar days, and the organizations had responded timely to all requests for additional information, as required. As of the end of our fieldwork, none of these organizations had sued the IRS, even though they had the legal right. In another 38 open cases, organizations were timely in their responses to additional information requests, but the 270-calendar-day threshold had not been reached as of May 31, 2012. These 38 organizations may have the right to sue the IRS in the future if determinations are not made within the 270-calendar-day period.
So, none of the organizations that have the right to take the IRS to court over their exempt status determination being delayed have bothered to do so.
A commenter on a New York Times piece gave a great summary of the insignificance of the whole thing:
As a CPA who has prepared applications for exempt status, I do not see how any tea party organization was harmed. A nonprofit can commence operations while the application is in process, and all of these applications were either approved or are still in process (except for a few withdrawn by the applicants themselves).
The report still makes a good read though. In the final stage of my career, I developed a small appreciation for what it is like to be inside the bowels of a large organization where competing and contradictory directives come from different management levels with different agendas, which is the story I read in the IG report.
The IRS was criticized for not paying enough attention to political activity of exempt organizations and hit with a surge in applications. They formed a specialist group to review applications of organizations that appeared to be likely to engage in political activity. If your application got sent to the specialist group, it was slowed down. Ultimately, they became paralyzed because they could not figure out what criteria they should be using. More people got involved. The left hand did not know what the right hand was doing.
In my view the underlying problem is trying to use the IRS exemption process to accomplish too many competing objectives. Their mission is to collect taxes and that is a big enough job for them. My sympathy right now is with the line employees in the exempt group. I suspect some of them will be posting the little poem that I have seen in offices here and there over the years:
It’s not my job to run the train, the whistle I can’t blow.
It’s not for me to say how far the train’s allowed to go.
I’m not allowed to blow off steam, nor even clang the bell.
But let the damn thing jump the tracks….and see who catches hell.
You can follow me on twitter @peterreillycpa.