Chris Hayes explains why Citizens United is the real scandal behind the IRS scandal

MSNBC host Chris Hayes on Monday night explained how the Supreme Court's controversial Citizens United ruling lead to the current IRS scandal.

The IRS on Friday admitted that it had targeted tea party groups applying to be social welfare nonprofits with extra scrutiny.

Hayes said the Citizens United ruling obscured the line between political organizations and social welfare organizations, such as the American Civil Liberties Unions and volunteer fire departments. Political organizations have been categorized under section 527 of the federal tax code, while social welfare organizations fall under section 501(c)(4).

"Citizen's United said essentially any organization of any kind can spend money out of its general treasury to run political ads," Hayes said, "and that decision brought about a pivotal moment for politics and taxes and campaign spending in this country and we're still dealing with the fallout."

Republican strategist Karl Rove and Democratic strategist Bill Burton used the Citizens United ruling to their advantage ahead of the 2012 elections. Both used social welfare nonprofits to run overtly political ads, allowing them to intervene in political campaigns without disclosing their donors. Hayes remarked that their example obviously inspired others to do the same.

"Suddenly, the IRS starts getting a flood of new applications from other political groups and strategists saying, 'Oh, oh, it turns out I too want to set up a social welfare organization that just so happens to be focused on taking the country back from Barack Hussein Obama,'" he said. "Now, here is the thing the IRS appears to have done unequivocally wrong, that we all agree was absolutely inexcusable. They reacted to all this by targeting one part of the ideological spectrum in looking at whether this flood of new applicants passed the smell test. Being skeptical about a new wave of wolves in sheep's clothing invading the nonprofit game was entirely appropriate."

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