Rob Natelson: Some Reasons Why There Is Probably A Lot More Improper Tax Agency Targeting You Don’t Hear About

The news outlets tell us the IRS has been targeting conservative non-profits for unfavorable treatment.

Based on my own experience, my guess is that these things happen far more often than reported—both on the state and federal levels.

In the 1990s, I was the subject of some suspicious audits by the Montana Department of Revenue (DOR). There were several reasons those audits were suspicious. First, my accountant told me it was quite rare for DOR to audit anyone who had not previously been audited by the IRS—and I had not been. Second, the audits came just when I was publicly criticizing then-Gov. Marc Racicot for promoting and signing large tax hikes and endorsing an early form of Obamacare. In fact, I was seriously considering running against him in the GOP primary, which I later did.

Third, I had annoyed Racicot’s revenue director by loudly refusing to join one of those phony “tax review commissions” that officials were often setting up in those days to induce Montanans to swallow a sales tax. Fourth, I had always kept my personal taxes squeaky clean—if anything, I had a tendency to overpay. And there was a fifth reason for my suspicions, but to reveal it would involve publicly disclosing a particularly burdensome audit that DOR inflicted on a person who has not authorized disclosure.

Anyway, I weighed whether to say anything publicly about the audits, but decided against it. Despite my suspicions, I had no absolute proof (and still don’t) that I was being targeted. If I made the charge, it would of course be denied. And in those days, the daily newspaper editorial writers and reporters were almost all huge Racicot supporters, and a lot of them didn’t think much of me. I could foresee them staunchly defending the administration and dismissing me as a paranoid or “whiner” (a term the Great Falls Tribune actually did apply to me).

And because I was controversial, I knew that many Montanans would be willing to believe the worst of me. If I was being audited, in their eyes I must be guilty.

So I never said anything publicly about these audits till now.

There’s more: I’m told that under the Clinton administration (1993-2001), the IRS audited just about every free market think tank in the country. Late in the ‘90s, several of us tried to get non-profit tax exemption for a Montana think tank—a prototype of MPI. Not surprisingly, in view of what the IRS was doing elsewhere, the agency denied the application—again, on suspicious grounds. But I said nothing publicly for the kind of reasons listed above.

And for those same reasons, I don’t regret being silent. But my decision explains, I think, why we don’t hear about this sort of thing more often.

P.S.: Just to satisfy your curiosity: After a great waste of my time and that of my accountant, the DOR audits found no wrongdoing. Because of miscalculations on my tax return, I got a modest refund for one year, and paid a modest deficiency for another. As for the application for non-profit tax exemption for our think tank, the application was denied, and we saw the handwriting on the wall and did not renew it. It was several more years before Montana had the consistent free-market voice she now has in MPI.