This is the Cato Daily Podcast for Wednesday, May 15th, 2013.

I'm Caleb Brown.

The IRS played favorites when handing out special tax status to non-profit groups

according to a new Inspector General's report.

Tea Party groups were singled out for extra scrutiny while progressive and

liberal groups got a pass.

Michael McLeod Ball is the chief of staff in the legislative office in the

ACLU in Washington DC. We spoke yesterday. I was talking to a friend of mine who deals

with a lot of C4s and helping them get set up and that sort of thing and he said I'm not sure what

statute was violated here.

There may not have been a statute violated and that actually is the big problem. As know as bad as this incident was these kinds of

incidents have happened before. So it's the pattern that really is the problem

and the existing statute and regulations that allow it to happen and will continue to allow

it to happen unless the laws or regulations are changed.

That's the real problem.

Is part of the problem that the IRS can read statutes one way and various groups in the public

taxpayers can read statutes a whole another way?

Well the ambiguity certainly is a problem, yes, and the IRS is not alone in having to deal with that kind of problem.

But here the decision is making, deciding whether an organization is tax exempt, qualifies for 501c4 status in this particular

case.

And in order to do that, the IRS has to determine that this social welfare organization is acting

exclusively for social welfare purposes and that's the language of the statute.

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