Congress Sics IRS on “Enemies”

Bruce Krasting's picture

I was thinking of writing a book. “The Coming Age Warfare”. If I did get around to it, the following story might be the first chapter. Like most wars, the one I see coming between young and old will simmer for years. Along the way there will be skirmishes that result in injury and bad feelings. I find this example comical. But there is nothing funny about it.

Three members of Congress have shot a cannon at the American Association of Retired Persons (AARP). Republicans Herger (CA), Boustany (LA) and Reichert (WA) sent a letter to the head of the IRS asking that the tax status of AARP be reviewed.



AARP is a 501(c)(4). That means they pay no taxes at all. Sort of like a church. At first look this might make sense. After all, the AARP is a non-profit that is just trying to help out the oldsters. Right?


Wrong! AARP took in $600,000,000 during 2010 from endorsement deals. Not a penny of taxes was paid.

Anyway, the AARP fired back with a (mealy mouthed) letter the next day:


AARP Response to Recent Letter from Reps.
Herger, Boustany and Reichert

We are disappointed that the letter seeks to decry the exact kind of pro-consumer, market-changing efforts that AARP has led since our founding in 1958.


You can bet the folks over at the AARP are “disappointed” that some congressmen have sic’ed the IRS on them It’s worth $150mm a year to them.

I wouldn’t worry about the AARP just yet. They have an army of political friends and some big shot lawyers. It’s a safe bet that the IRS sits on this until 2013 when a (potentially) new IRS Commissioner has the corner office. In the meantime, one can expect that the AARP will direct their campaign investments contributions wisely. They will support those candidates who will push to preserve the cushy tax status of the AARP.



This business with tax breaks for the AARP (and other big 501(c)(4)s) is another good example of how screwed up our tax laws are. The current system just creates carve-outs and preferences for powerful groups. Why? The answer is that those same powerful groups have control over the outcome.



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Miss Expectations's picture


Saw this article about Titanium Dioxide nanoparticles today and thought it might interest you, Bruce:

ConfederateH's picture

After recently spending an entire afternoon playing telephone tag with the IRS I was promised a return call from an IRS agent within 3 days.  After 2 weeks I finally went through their phone menues and 30 minutes of hold and got to speak to a competent representative.  She needed me to fax my returns because to pull them from archives would take up to 7 weeks.  "I have no fax, can I please, please email you my pdf from turbotax because I have no fax" I replied.  No, she said, we cannot give out email adresses.   So she waited on hold for 10 min while I found a free fax service.  I finally managed to email/fax my coverletter to her.  "I need the first 5 pages of your 1040NR and your 2555" she insisted.  I screwed around for another 20 minutes trying to cut forms and pages from my turbotax return while she waited on hold.  In the end I could not get her my returns and I gave up.  Knowing that I could not call her, she asked for my phone number and said she would call back in 7 weeks.  Yeah, right.  Meanwhile they are threatening to put leins on my property.

MachoMan's picture

Just throwing this out there...  why not send her a letter, certified mail, return receipt requested, with the documents enclosed?

Presume that they're nice people that don't want to put liens on your property...  give them EVERY reason not to do so...  of course, if things turn sour, then you look like a saint to the court when you tried so many times to comply (each attempt being documented by the USPS).  Once they get certified mail from you, you get taken off the "deadbeat" list (in their minds).

Fight the liens...  an ounce of prevention.

ConfederateH's picture

I live in Switzerland.  I sent the first snail mail A-post, not registered.  I don't have a mail address for her either, so it goes into the routing center and it takes "up to 2 weeks" for it to arrive.  Next time I'll send it registered.

MachoMan's picture

based upon your first sentence, I would suggest not fighting with the IRS or giving them any reason to dive further into your financial affairs.  However, a successful objection will likely net you some goodwill and possibly take you off the "automatically audit" list for a few years.

ALWAYS, ALWAYS, ALWAYS redundantly record your correspondence with the IRS.  They will routinely lose your shit.

You'll need to show them all the math of your calculation of basis + present a settlement statement...  frankly, they've had a lot of people filing improperly for the FTHBC and I speculate have been given a directive to make sure all are legit.  If you have all of the necessary documentation to prove your basis AND you file all of the proper forms, then they will leave you alone... 

My guess is that it's simply a documentary mixup...  but, remember that your basis for FTHBC recapture purposes is your traditional basis LESS the $7500... 

Printfaster's picture

A couple of things overlooked.

AARP uses United Health to provide the insurance.  AARP was a key player in the Obamacare legislation, quite favorable to United.  The other is that AARP/United have a virtual monoply on Medicare supplement.

disabledvet's picture

I agree "phucktards" isn't a nice word. And if I offended anyone by using the term "retardism" in an inappropriate manner I'm sorry.

Lord Koos's picture

More divisive, nasty scapegoating.  Nice try Bruce.

disabledvet's picture

I'm shocked! At Zero Hedge? What IS the world coming to!!????

non_anon's picture

With the IRS, might is right, they are our enemy, a Congressman tried to reign them in and this is what he got

The George Hansen Story

the grateful unemployed's picture

personally shook the mans hand, in 1974? he was campaigning in Idaho, Montpelier, near the Utah border. i was working a construction job on the gas pipeline.

as i understand it he was the only Congressmen ever convicted under the new Sunshine Laws, part of the post Nixon era legislation to make government more transparent. you had to reveal your campaign contributors.

irony that the money today is far greater than anything these guys were raising, and the system today is far more corrupt and there is no punishment because anything goes. it's a bit like the repeal of Glass Steagall just before the financial collapse, in this case the moral and ethical collapse of American politics came later, after (SCOTUS) the new rules allowing politicians to accept money from corporations and foreign governments without disclosing it. 

basically he got ten years to life for having a roach in his sock, while guys like Bush were doing crack in the WH.

masterinchancery's picture

Non profits can't endorse political candidates--why is AARP exempt?

the grateful unemployed's picture

PAC money doesn't constitute an endorsement?

ceilidh_trail's picture

OT- Washington DC is building a tunnel to divert sewage from the Potomic to further out. It will cost 2.6 billion$ over 14 years. Guess who gets to pay for this? In the rest of the country, locals are stuck with the bill mandated by the feds. In my area, we have a similar expense to alleviate the same issue- roughly 2 billion$ that us locals are stuck with. Once again, they take care of themselves...

GeezerGeek's picture

There is a significant amount of mobile sewage walking around DC that needs to be flushed. 535, give or take a few, at last count. Until then, to save taxpayer dollars, I suggest they all be given living quarters at the nearest FEMA camp to reduce housing expenditures. Send VPOTUS, FLOTUS, and SCOTUS there too.

Gotta go, someone's knocking on my door. Loudly.

Edit: I forgot - add TOTUS to the list.

That knocking is getting REALLY loud.

Printfaster's picture

Follow the money.

The money is going to the Davis-Bacon construction unions.  Thence the money goes back to political campaigans to elect officials that will regulate more and provide more work for Davis-Bacon unions.

And so it goes.  Make work to fund the rich who sit in Washington.  Those doing the construction are mere mules to move the money around.

NotApplicable's picture

DC has the be the only example in nature where a swamp was drained and then it filled with rats.

ebworthen's picture

AARP is quasi-religious age based corporate Ogre; the very pretense is discriminatory.

What, the senior citizens can't vote at the ballot box and with their money on their own? 

Have we not learned what happens when we turn our voice and rights over to large organizations and corporations?

p.s. - The I.R.S. is the K.G.B. with calculators, and guns, and more lawyers.

blunderdog's picture

One of the features of capitalism is that money buys political power and influence.

Is that something to complain about?  This is intentional.  Corporations can't vote, and individuals can only contribute tiny amounts of money to political candidates.

We reap as we sow.

Don Levit's picture

Blue Cross used to be a 501(c)(4) until it lost its tax-exempt status in 1986, with the passage of 501(m).

They had evolved into very close look-alikes of their for-profit competitors, so the Blues were no longer deserving of their federal tax-exempt advantage over their for-profit competitors.

To fully earn 501(c)(4) status, an insurer must distinguish itself from the herd, through its unique products and ways of operating.

The possibilities are many and timely for new not-for-profit insurers to provide real competition for the commercial insurers.

Don Levit

mind_imminst's picture

Having run a non-profit before, I don't think AARP qualifies - they should be taxed, however, I would rather see the tax code gutted. Fair tax, consumption tax, almost anything would be better than the byzantine, progressive, manipulated, stupid tax system we have now.

GeezerGeek's picture

I agree. But how can congresscritters help their cronies if they can't carve out a few nooks and crannies in the tax code? Without those they'd have to go to the trouble of giving grants for things like, oh, studying shrimp on treadmills.

boiltherich's picture

Early on in 2011 I wrote a somewhat loud and disrespectful letter to a congressman who shall remain nameless.  By the end of February I got a bill from the IRS for for $500, the first of 15 repayment installments on the 2008 BushCo first time homebuyer tax credit.  I no longer have the house in question since it was foreclosed upon in July 2009, so I had to file a 1040EZ with an attached IRS Form 5405 which is the worksheet for calculating repayment liability for the tax credit.  The instructions VERY clearly said that repayment liability was limited to gain on the sale (including foreclosure) on the home if you were no longer residing in the house for which the credit was received.  So, my liability was zero as there was no gain on the foreclosure.

So I get a letter from the IRS a few weeks after I filed saying I was denied this zero liability and that furthermore I was being denied the original eligibility for the 2008 tax credit retroactively, they now billed me $8,295 which was the original $7,500 tax credit PLUS interest and penalties for having taken a tax credit they now said I had never been eligible for.  Never mind that I had met all criteria for the credit when I got it, and it was the IRS itself that determined that fact in 2008.  And at the same time I got that letter billing me thousands I did not have I also got a letter auditing me for 2008. 

I wasted zero time on the matter, I went right down to my congressman's office and asked for intervention by an ombudsman to deal with the matter, but the same week I got the bill and the audit notification I also got a letter from Social Security saying my SS disability was being reviewed.  That was late May/early June, and that matter is still not resolved. 

I knew I was in the right on all matters in question, but for nearly the entire year I was under the gun with this gigantic billing over my head, I only got the letter exonerating me of the debt the day before Thanksgiving.  The SS situation is still pending.

Was this a case of congressional reprisal?  Or, was it just a stupendously implausible set of coincidences?  I will never know the answer to that I think but one thing is certain, I will never again pen a critical word of my congressman, or the POTUS, or GS or the Fed for that matter, they simply have too much power and we too little at this point in our republic to risk it.  Even if it was just an overzealous staffer that initiated the action the atmosphere of freedom is now toxic and unbreathable, the reality is you can end up in GITMO for life now uncharged if that is what they feel like doing and in such situations you bet your ass might makes right. 

We see a lot here about how to survive what is coming, how to avoid XY and Z, the meaning of freedom ad infinitum, but I have come to the conclusion that most of the talk is 20 years too late.  We already lost, they were just good at keeping up the pretenses and now those pretenses are being discarded.  Imagine the chilling effect this all has on someone who not only gets SS but also is reliant upon Medicare or Medicaid for their insurance who might have kids to keep alive, or someone in a HUD house or with an FHA mortgage, you think they will risk speaking up for their rights if they know the levers of government can and will be used against them?  Levers they cannot even hope to prevail against? 

MachoMan's picture

Your post is not accurate on your requirement to repay the credit...  Your basis in the home sold, for purposes of the FTHBC recapture, is your actual/traditional basis LESS the FTHBC...  In other words, you must have lost at least $7500 in the transaction or else you get to pay the fiddler...  although, you should only be taxed to the extent of your gain.

What was your loss on the property? 

non_anon's picture

welcome to the machine, wake up people!

NotApplicable's picture

Ah, it's the ole doctrine of "Do as I say and nobody gets hurt!" complete with the rebuttal of "the squeaky wheel gets the grease."

It's an expensive lesson to some, but learning that the word government is synonymous with mafia is invaluable if one wants to live long and prosper. As "it" taught me "itself," situational awareness demands proper identification of the enemy.

the grateful unemployed's picture

i wouldn't go tin foil hat over this. my neighbor has owed the IRS a rather large sum for years, but this year the IRS said 'no mas', and put a lien on his wages. and the guy is really hurting, is usually behind on his rent. things are tough, and the IRS (and SSN) are going after the low hanging fruit. GE has the lawyers, and a guy on the Presidents economic team. you might find a good paralegal, just don't take it personally, lots of people are probably getting these letters.

falun bong's picture

My suggestion is to go to the county law library yourself and do some research. Look for "procedural defects". These are technicalities that, if not followed to the letter, can get a case thrown out. The IRS must file certain notices in 90 days, certain notices in 60 days etc. They never comply in my experience. I won one of these extortion attempts by the government, they said I owed $450k (on a judgement where they said I received an inheritance, I never did, Forbes mag ran an article called "Death, Taxes, and Then Some" about my case.). I found a defect in their procedure, then asked a lawyer to file a certain kind of motion, for a fixed fee, in a certain court. Next thing was the IRS called me and said "well, not $ about $4K?" I said no, as this was purely a case of my government trying to extort a small amount since they thought my court costs would be higher. I proposed $2k, and said I wanted a letter from the State Attorney General stating that if anyone, at any time, for any reason, should contact me about the matter in the future, they should contact the AG and clear it up.

I framed the cover sheet of my winning lawsuit: "Falun Bong" versus The United States of America

onlooker's picture


I have not reregistered in AARP. As a retired person having dealt with AARP using its services and watching its political stances------ it is my opinion that overall they are not an asset to the geezer community, maybe just the opposite.


Sic um IRS.

the grateful unemployed's picture

I don't like McDonalds, can we put them out of business too?

Dr. Acula's picture

Paraphrasing: "I'm not a fan of X, so I think X should be subjected to extortion".


NotApplicable's picture

Well, what is "the law" other than a tool to be selectively applied against one's enemies, where its effectiveness depends on the political connections of both parties. My favorite example of this comes from the movie Johnny Dangerously, specifically the scene where Johnny's little brother the "Whiz Kid D.A." gets told how things really work in the world. They then "make him the offer he can't refuse" where they describe the fabulous life he can lead if only he "Play Ball!" The other choice? Well, we really don't want to go there, do we?

the grateful unemployed's picture

actually i think its the other way, " I am a fan of X, therefore I think they should be subject to extortion."

the grateful unemployed's picture

yes except most of the for profit US corporations like GE don't pay taxes either

eatthebanksters's picture

So then, before we create new taxes (on the rich), why don't we close some loopholes? Same effect, increased tax revenues.  Weall know why tgey want to increase taxes...because its a lot harder to get a tax increase passed than closing tax loopholes. The Dems want money for bigger government so if they can raise taxes and then close loopholes its even better for them; just not for everyone else...

the grateful unemployed's picture

so we agree for all practical purposes there is no difference between GE and AARP, for tax purposes. Now imagine if three GOP leaders proposed a specific levy on GE, what sort of uproar would that cause, and counter claims that it amounts to demanding the IRS selectively enforce its laws? it's a bit like arresting the guy with a pot garden, while the big Pharma companies sell and manufacture mind altering drugs? (with the approval of their lapdog the FDA, not to confuse anyone about what fascism really is, if we choose to regulate your product, you can sell anything you want)

now the point is that AARP's product is regulated by the insurance industry. (one thing about the GOP that I like is the way they can make relative comparisons which always stop short of their end game, they can never seem to see where they are going)

Silver Dreamer's picture

Again, folks are missing the point.  The IRS exists specifically to make sure the tax slaves remain tax slaves and the large corporations remain tax free.  It is a tool of the system to maintain the structure of society.  It, by design, favors fascism.  That is the main reason the damned thing needs to be shut down!

wisefool's picture

They are people according to Mitt Romney. I'd never want a person to pay taxes.

the grateful unemployed's picture

i guess the smart thing for individual taxpayers to do is incorporate

robobbob's picture


Not necessary, but I think worth mentioning in support of your article.

The majority (60% +/-) of AARP's income is not made by memberships or donations, it is from SELLING INSURANCE and receiving royalties for endorsing insurance plans.

AARP has used their political muscle to shape public policy, ie supporting Obamacare, that create conditions that will boost their profits either directly or by assisting the companies that they have commercial ties to.

What you have is an organization, using is political influence to increase its profits, which are then used to further its political influence.

This is not the work of a non profit, non biased, entity. The US is being suffocated by this false idea that non-profit means some sort of charity. The AARP is just one of many.


steve from virginia's picture

ZH is turning into comic relief!

Same folks who decry taxes and the hated government are ready to let slip the dogs of taxation upon the ... Catholic Church.

Y'all goin' to hell ... before yr dead!

The AARP can muster a massive army of old geezers to slam the polls. This makes the AARP a force to be reckoned with. Any Congressmen foolish enough to take on the AARP find this out the hard way.

Why does one suspect that Social and Medicare are 'third rails' of politics? The same army of geezers supports the churches. Geezers are the one constituency that votes without exception. The ones without Alzheimer's remember whom to vote against.

I don't know what has gotten into the GOP, some sort of brain disease that causes them to support -- by way of the back door -- President Obama.

GeezerGeek's picture

I joined AARP at an early age simply because of the travel discounts available. I used to travel frequently, but once I stopped traveling I stopped being a member. As a small government type, I found their liberal/progressive/fascist tendencies abhorrent. I always was against SS and Medicare, too. If I could get my SS contributions - and those of my employer - in a lump sum distribution I would.

Since I can't, I'm about to start collecting in February. While technically not true, I still look at that as my money. As for Medicare, I'm not rich enough to opt out. To be honest, it somewhat irritates me when people on SS and Medicare are lumped in with the rest who 'get something from the government'. I'd feel differently if I'd had alternatives over the last 40+ years, but the Feds are very stubborn about not letting individuals sink or swim on their own. 

NotApplicable's picture

Over time though, power passes down through the generations, and I don't think too many people beyond the Boomers will join the AARP herd (just like they don't shop at Sears). So, in that respect, I agree with Bruce, that it is the first shot in an inter-generational war over resources.

Shizzmoney's picture

Maybe the age wars will be a good thing to unify people.

Most old people don't understand #OWS and its concept; all they see is what the news tells them: "Whiners" "Dirty, hippy communists who can't get a job". 

The age war will be a direct war on their pensions, through monetary policy, then through austerity. 

Once those are gone, and I root for this hard, then they will finally know what #OWS has been saying all along:

The financial system is fucked, and these assholes do not care about you.

lostintheflood's picture

oh, Shizzmoney Shizzmoney Shizzmoney...your statement reflects prejudicial thinking...have you been to ows?  if you had, you would've seen people of all ages there working together.  you speak from the sidelines.

itsonlymoney's picture

Most old people don't understand #OWS and its concept; all they see is what the news tells them: "Whiners" "Dirty, hippy communists who can't get a job". 

Who the fuck are you to decide what "old people" understand or don't?  When we see people whining and who don't care about personal hygiene and live communally, we don't need the "news" to tell us what that is - anybody can see it and understand.  And by the way, it is we "old people" who have ensured the contiunuation of a system where you pissant #OWS assholes can complain about what a raw deal you have.  Grow the fuck up. 


OldTrooper's picture

And by the way, it is we "old people" who have ensured the contiunuation of a system where...

Are you sure you want to claim responsibility for continuation of the system?  But of course, you are right, all 'old people' have played a part in continuing and expanding 'the system'.  Younger people are absolutely right to hold our feet to the fire on this.  It wasn't the younger folk that got us where we are - and them lying down and getting bled dry for the rest of their lives to pay for our mistakes would be a raw deal.

GeezerGeek's picture

You are correct in saying it wasn't the younger folk that got us where we are. I'm not certain about the part that says "our mistakes". In fact, it wasn't the boomer generation that did it, either. Social Security and the rest of the welfare state programs came about under FDR and subsequent members of the 'greatest generation'. The same wonderful group that beat the Axis powers and made the world safe for democracy also saddled us with out unsustainable welfare state. There aren't many of those folks left now.

In a way one can't blame them for wanting a little security, having suffered through the Depression prior to WW II. After all, they didn't have the Internet to tell them not to trade liberty for security. (Remember, Algore wasn't born until 1948.) I suppose boomers can be blamed for not dismantling the welfare state, SS and all, but too many got turned on to JFK to ever be conservative.Then there was Clinton. And later Obama. Pretty faces, no substance, easy to market. (Not that I was a fan of most of the other presidents, either, like Johnson, Nixon, Ford, Carter and the Bush duo.)

I was always one of the few conservatives in my age group - yes, I'm one of those detested boomers. I keep hoping that subsequent generations will rediscover self reliance, etc. Talking to my son's friends, I'm not encouraged.