This post was originally published on Forbes Jul 19, 2015
I have been something of a skeptic of the narrative of the IRS Exempt Division targeting conservative organizations. As a matter of fact, one of my less than attentive commenters recently accused me of being, if you will excuse the expression, a Democrat. So when I see something, otherwise unremarked, that might support the narrative, I'm going to take notice. Such is Private Letter Ruling 201527043. The PLR is a denial of exempt status to an organization that I will call Ticket Back Home (TBH). (The public version of a private letter ruling does not include identifying information, so when I write about them I try to make up an appropriate name.)
TBH is concerned with illegal immigration, which is one of the Tea Party's biggest issues. Being descended from some of the huddled masses yearning to breathe free, famine refugees no less, I have a hard time connecting emotionally with the Tea Party animus toward the undocumented. Even if he is breaking the law, I just can't get mad at somebody who is shaping up at the Home Depot to go hang drywall or do some landscaping so he can send money home to the Old Country.
It Is About Jobs
TBH's concern about illegal immigration is one that resonates with the working stiff in me.
hard-working men and women have seen their job security, their benefits, and their paychecks shrink as forced and unfair competition from illegal workers strikes right at the heart of Americans' middle class hopes and dreams.
Of course in my line of work, illegal immigrants are not what is threatening the middle class. The powers that be in public accounting in the United States are entranced with their vision of a vast number of highly educated South Asians who can handle all that annoying compliance work at low wages and high billing rates without having to leave Bangalore. The income tax compliance needs of the 1% in the United States, once something of a white-collar jobs program for first generation college graduates, are now largely addressed by South Asians working with software developed by a Dutch company.
TBH is not concerned with jobs leaving the United States. TBH is more worried about the illegal aliens taking the jobs that cannot leave the United States.
Your activities are intended to improve the labor market conditions for U.S. citizens and legal immigrants by reducing the number of undocumented aliens in the U.S. labor market. You believe that entry level workers should benefit from the repatriation of undocumented aliens who can affect the availability of scarce jobs in the United States.. Your application materials include a brochure in which you state the following:
It's time the damage to the American worker stop;
the poorest of Americans are negatively impacted by illegal immigration;
hard-working men and women have seen their job security, their benefits, and their paychecks shrink as forced and unfair competition from illegal workers strikes right at the heart of Americans' middle class hopes and dreams.
Show Me The Way To Go Home
Unlike some anti-immigration groups, TBH does not seem to be acting nasty about it. Their approach is to help the undocumented aliens who no longer want to be here. The way they help them is by buying them tickets home.
You plan to screen undocumented aliens to identify those persons who are most likely to return home and least likely to seek to reenter the United States illegally. The selection of individuals for assistance is primarily based upon the results of fact-finding interviews. Your staff includes multilingual individuals to conduct interviews, which are usually in Spanish .....
You do not intend to assist any undocumented alien who has already been deported, because such persons may be more likely to return to the U.S. illegally.
I might not be really enthusiastic about the plan, but it strikes me that there are some people who might be helped by it.
The Ruling
The IRS was not buying it at all. The essence of the ruling is that there is not an exempt purpose here.
Your organizing documents expressly empower you to “protect the American worker by arranging, assisting and facilitating the repatriation of undocumented aliens who wish to return to their own countries but who are unable to return because of their lack of resources.” As explained below, such activities do not further exempt purposes.
Helping The Poor And Distressed
One possible exempt purpose is "relief of the poor and distressed". TBH wants to help people who want to go home and can't afford to go home. The IRS, however, does not like their focus in selecting people to help. TBH mainly wants to help people leave the United States who are least likely to return.
Undocumented aliens are not a charitable class per se. And while a person's inability to return to his home country because of a lack of resources may be the result of poverty or distress, your actual operations show that you are not concerned with identifying and assisting the poor and distressed among the undocumented aliens, but only with identifying those most likely to return home and least likely to seek to reenter the United States illegally.
I think the ruling went a little overboard in criticizing TBH.
Furthermore, even if the undocumented aliens you assist were poor and distressed, you have failed to show that your activities actually relieve their poverty or distress. Your primary activity is simply to provide undocumented aliens with transportation out of the United States. You do not appear to be concerned with their welfare during their stay in the United States or with whether their situation upon return to their home country would be an improvement on their situation in the United States. You do not provide transition or employment assistance. You do not offer assistance in helping undocumented aliens reenter the United States legally.
I don't think there is any charity that could stand up to that kind of scrutiny. When there is a big flood and the Red Cross kicks in its relief efforts, we don't criticize the Red Cross for not convincing people to build their houses someplace where it is less likely to get flooded. If I was stranded somewhere and someone helped me get home, I'd be thankful. I wouldn't expect that they should also solve all the problems that led me to being stranded.
The IRS is also skeptical about how much TBH would be helping distressed American workers.
The second “charitable class” you purport to serve are American workers. You claim that American workers “should ... benefit from the repatriation of undocumented aliens who can affect the availability of scarce jobs in the United States.” But American workers are not poor or distressed per se. And even if particular American workers do suffer from poverty or distress, it is mere surmise that such workers would benefit from the repatriation of undocumented aliens. You have made no objective showing that undocumented aliens, particularly those who lack the resources to return home, are employed in jobs that are scarce or sought by United States citizens.
Lessening The Burdens Of Government
I would think that TBH might have one on this one, but the IRS did not think so. If the undocumented aliens are here illegally, it would seem that helping them leave lessens the burden that the government has in kicking them out.
You do not claim to participate in any government program or to act on behalf of any governmental unit. We are not aware, and you have not shown, that the federal government has ever undertaken to provide transportation out of the United States to undocumented aliens who voluntarily choose to repatriate, or that a governmental unit has asked you to undertake such activities. You have neither established any concrete relationship with a governmental unit which might support a conclusion that you are acting on its behalf nor have you shown that the government has any control over your activities or that the government has provided for your support.
Targeting Conservatives?
I have been unable to penetrate the redaction on this ruling, so I have no candidates for the particular organization that was denied exempt status by this ruling. Reading between the lines of the ruling, it does seem to be coming from a place of right-wing populism, that I am not really that sympathetic with. Nonetheless, I think the IRS case for denying exempt status is on the weak side.
One thing that I have noted about the exempt organization controversy is that a lot of noise is made about all the hoops that organizations have to jump through to get exempt status, but there is little attention paid when there is an outright denial. This ruling, which has received no other coverage I could find is another example of that phenomenon.
I can't rule out that there is something altogether unsavory about this group that would cause me to sympathize with IRS in turning them down, but the rationale in the ruling does not really stand up
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