IRS scandal: Whose constitutional rights are at stake?

Lyle Denniston examines the actions of several IRS employees who allegedly targeted conservative groups seeking nonprofit status, and if there is a constitutional issue at the heart of the controversy.

"The American people deserve answers about how such seemingly unconstitutional and potentially criminal behavior could occur, and who else was aware of it throughout the Administration."

– Senator Marco Rubio, Florida Republican, in a letter Monday to Treasury Secretary Jack Lew, calling for the Treasury's "full cooperation with all investigations" of the scandal involving the Internal Revenue Service's actions in making it tougher for specific ideological organizations to gain tax-exempt status under federal law.

"If the initial reports are verified, it is breathtaking that the IRS seems to be harassing mom & pop tea party organizations while ignoring what appear to be blatant abuses of the tax status right under its nose by groups pumping tens of millions of dollars into partisan political advertising."

– J. Gerald Hebert, executive director of the Campaign Legal Center, an advocacy group promoting election finance reform, in a statement on Monday reacting to the scandal.

It is a core constitutional principle that the federal government cannot use its awesome powers — over taxes, or anything else — to single out groups because of their political views and treat them more harshly. That violates their rights of free speech and free association under the First Amendment, and their rights against arbitrary government action under the Fifth Amendment's Due Process Clause.

But, even as the IRS scandal over the tax-exempt status of tea party–related political groups stirs widespread criticism, it may be harder to keep in mind also that, constitutionally, no group in America has a right to be exempted from taxes. A right to equal treatment by the IRS is not the same thing as a right to an exemption.

Someone within IRS, acting properly and within the law, has to make a decision about whether a group can qualify for an exemption from paying federal taxes. And the law is quite clear that organizations that are set up to do charitable work are not allowed to get or keep tax-exempt status if they are actively engaged in political campaign activity, or in lobbying Congress. If an organization is set up to promote a particular policy agenda, benefiting the "general welfare" of the people, however, it might qualify for tax-exemption even if it does some lobbying related to its policy goals, but it might risk that status (or be denied it in the first place) if its political actions become its "primary activity."

As is obvious from such a general summary, someone has to interpret when an organization seeking to be relieved of paying taxes is doing too much or the wrong kind of lobbying or politicking.

The IRS has been immersed in controversy for years about how it enforces the limitations that do exist. The new scandal, of course, is a very different controversy, because it involves claims of a serious abuse of government power, not of inaction or administrative agency laziness. But the new scandal will only intensify the already insistent demands that the IRS do something to reform its tax-exempt review process.

The IRS, for example, still has not resolved complaints that it has hesitated to monitor the kinds of political activity in which the new super PACs can engage and still obtain or retain an exemption. That issue was stirred up by the actions of scores of PACs in last year's presidential election, and the IRS has yet to indicate what it will do—if anything—about that.

While lawyers for 10 tea party groups with exemption requests pending asked the IRS on Monday to immediately grant those requests, or else face legal action, it is not clear that the new scandal itself must necessarily lead the IRS to do so. Again, while any IRS review of a pending application would have to be done within the rules and without discrimination, past misconduct by that agency does not translate into a mandate to start granting exemptions in batches to victims of its prior abuses.

Obviously, a lawsuit filed on behalf of any group still awaiting a response from the IRS is sure to make the point that each such group is a victim of the scandal, and the only proper remedy for that is an exemption, granted without delay. But each court reviewing such a legal claim will take the time to determine if a particular group has made the connection. Even if a court finds that a specific entity was victimized, that would not necessarily lead to an order for an exemption. That is an issue of tax law that has to be sorted out organization by organization. A court might order the IRS to give a group a fair hearing, but might not tell it to grant a specific exemption without proof that it actually satisfied the legal standards.

And there is another legal obstacle that any such lawsuit might have to overcome. Ordinarily, a court will not review an IRS order dealing with the exemption question until after such a request has been formally denied. That is the kind of final action that could set judicial review in motion. The mere fact that a request remains pending would not mean it had been denied.

At this stage, it seems most likely that the scandal will unfold primarily within the political branches of the federal government, with hearings in Congress to establish what went wrong and who was responsible, and with efforts in the executive branch to order some reforms without waiting for the possibility of new legislation curbing the IRS's review powers.

There will be constitutional complaints, of the kind that Senator Rubio made in his letter to the Treasury on Monday, but it could be some time before firm answers are available on whose rights were actually violated. Initially, though, that is most likely to be a judgment that is made politically rather than judicially.

Lyle Denniston is advisor on constitutional literacy at the National Constitution Center'. He has reported on the Supreme Court for 55 years, currently covering it forSCOTUSblog, an online clearinghouse of information about the Supreme Court's work.