(CNN) - Responding to a flurry of complaints from conservative groups seeking tax-exempt status, the Internal Revenue Service admitted Friday it made "mistakes" in the last few years while trying to process those requests.
Multiple tea party groups reported significant delays and excessive questioning from IRS officials while trying to obtain 501(c)(4) status.
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While the groups and conservative members of Congress cried foul, the agency strongly contests the notion that groups were targeted out of political bias.
Lois Lerner, director of tax exempt organizations for the IRS, said on a conference call Friday that the IRS office in Cincinnati that handles most applications for 501(c)(4) status had seen a strong uptick in applications of 1,500 to 3,400 between 2010 and 2012.
Any applications that were incomplete, lacked consistent information, or indicated a group would be involved with some type of advocacy, were filed into a certain group for further review.
However, approximately 75 of the 300 groups that were filed for further review were simply filed because they had the names "tea party" and "patriot," Lerner said.
"They did pick the cases by names and that's absolutely inappropriate and not the way we should do things," she said, though stressing it was done as a "shortcut," not out of "political bias."
Lerner did not disclose what the remainder of the 300 groups had in common, or whether they had any political affiliations. She repeated that they ranged across a "broad spectrum" of groups and did not release any names.
"It was an error in judgment and it wasn't appropriate," Lerner said. "But that's what they did."
The AP first reported Friday's IRS admission, when Lerner answered a question about the issue at a conference in Washington. The IRS later held the conference call with reporters.
Groups applying for tax exempt status are allowed to do advocacy, so long as their primary activities are dedicated to "social welfare," according to IRS rules. When an advocacy case is filed for further review, the IRS tries to determine if the group plans on sticking by that calculus.
However, when the IRS employees were seeking to make that determination, Lerner admitted they went too far.
"Some of the letters were far too broad," she said, adding that some asked for donor lists. "When this came to my attention, we took some action to try and undo some of these things."
See a sampling of a questionnaire (provided by The American Center for Law and Justice).
When Eric Wilson, executive director for the Kentucky 9/12 Project, filed for not-for-profit status in December 2010, he was told he'd receive a response within 90 days. What he received instead was an inquiry with a total of 88 questions asking for what he describes as "far reaching information."
They wanted membership lists and detailed information about directors of the group, such as their private activities outside the organization, he said. They also requested copies of pages on their website and social media accounts, such as Facebook and Twitter.
To comply with every request, Wilson said it would have required 5,000 printed pages. "They were trying to bury us in time and money," he said.
Wilson responded with a one-page letter, saying the questionnaire was beyond normal requests and they would not comply. He started noticing posts online and through contact with like-minded conservative groups that they were receiving similar questions from the IRS.
Last month, on April 1, Wilson finally received his approval letter from the agency in a 200-word letter, simply stating they had been designated a 501(c)(4) organization with no explanation for the delay.
While Wilson described the IRS' comments today as a "victory for free speech and liberty," he still wants more questions answered and called for further review.
The issue began getting national attention, with members of Congress weighing in and legal groups fighting on behalf of the conservative groups. In March 2012, a dozen U.S. senators led by Sen. Orrin Hatch, R-Utah, and Sen. Rob Portman, R-Ohio, sent a letter to IRS Commissioner Douglas Shulman asking for more information about this situation.
The American Center for Law and Justice in Washington represented 27 of the groups and lobbied for action to be taken on the matter.
"The IRS admission and apology should have come much sooner," Jay Sekulow, Chief Counsel of the ACLJ, said. "It took the threat of legal action to get the IRS to make this admission. And while many of the organizations we represent have finally been granted tax-exempt status, we demand the IRS to immediately approve the pending applications for the remainder of our clients."
Tom Zawistowski, executive director for the Portage County TEA Party who helped lead the then-Ohio Liberty Council, also experienced difficulty for three years and worked with the ACLJ. He said Friday the apology was "appropriate."
"I think it was without doubt wrong. We knew it was wrong in the beginning," he said. "They had no right, whatsoever,...no right to deny us tax exempt status that 501(c)(4) groups routinely received."
Zawistowski said he has a four-inch thick binder of stuff they were asked to send, including speakers lists and printouts of every page from its website and Facebook page, every tweet.
Click here and here to see the questionnaire sent to Zawistowski.
He also refused to comply. Zawistowski applied for the status in June 2009 and received final confirmation on December 22, 2012.
In an appearance before the House Ways and Means Subcommittee on Oversight in March 2012, Shulman was asked about the controversy. Rep. Charles Boustany, R-Louisiana, asked if it was true the IRS was politically targeting conservative groups.
"Yes, I can give you assurances. We pride ourselves in being a non-political, non-partisan organization," he said. "There is absolutely no targeting. This is the kind of back and forth that happens when people apply for 501(c)(4) status."
Reaction to the IRS' admission was swift. House Majority Leader Eric Cantor announced Friday the House would investigate the matter, saying in a statement "the IRS cannot target or intimidate any individual or organization based on their political beliefs."
Senate Republican Leader Mitch McConnell called on the White House to conduct "a transparent, government-wide review" to ensure similar practices weren't being carried out at other agencies.
McConnell, who called an apology from the IRS insufficient, deemed the IRS tactics "political thuggery" with no place in American politics.
"Now more than ever we need to send a clear message to the Obama Administration that the First Amendment is non-negotiable, and that apologies after an election year are not an sufficient response to what we now know took place at the IRS," McConnell wrote in a statement.
The left-leaning American Civil Liberties Union also called out the IRS.
"Even the appearance of playing partisan politics with the tax code is about as constitutionally troubling as it gets," Michael Macleod-Ball, chief of staff at the ACLU's Washington legislative office, said in a statement. "With the recent push to grant federal agencies broad new powers to mandate donor disclosure for advocacy groups on both the left and the right, there must be clear checks in place to prevent this from ever happening again."
Tea Party groups were similarly incensed. The Tea Party Patriots, one of the nation's largest, rejected an IRS apology and insisted on resignation from the officials involved in the targeting.
"The IRS has demonstrated the most disturbing, illegal and outrageous abuse of government power," wrote Jenny Beth Martin, national coordinator for Tea Party Patriots, in a statement. "This deliberate targeting and harassment of tea party groups reaches a new low in illegal government activity and overreach."
Meanwhile, two Republicans on the House Oversight Committee, Chairman Darrell Issa and Rep. Jim Jordan, wrote in a joint statement, "The fact that Americans were targeted by the IRS because of their political beliefs is unconscionable. The Committee will aggressively follow up on the IG report and hold responsible officials accountable for this political retaliation."
The Democratic chairman of the Senate Permanent Subcommittee on Investigations, Sen. Carl Levin, also said an investigation into the matter was required.
Treasury Spokesman Anthony Coley said his department would "fully support the IRS Inspector General's review of this matter."
"The Treasury Department expects all individuals and organizations to be treated fairly by the IRS. Anything less is inappropriate and unacceptable," Coley said.
Jay Carney, President Barack Obama's press secretary, said Friday the IRS' actions were "inappropriate."
"We would fully expect the investigation to be thorough and for corrections to be made in a case like this," Carney continued. "And I believe the IRS has addressed that and has taken some action, and there's an investigation ongoing."
Of the 300 groups that were filed for further review, 130 have been approved, 180 are still in process and about 25 are under review, Lerner said.
Asked when the IRS began looking into complaints, Lerner said she could not give a time frame. Pressed further on when senior IRS officials became aware of the situation, Lerner said she "did not feel comfortable answering."
Lerner said they have implemented changes to prevent similar mistakes in the future. When asked if there has been disciplinary action, Lerner said "No." Attempting to clarify later, she said she meant to say she wouldn't comment on personnel issues.
These were not "mistakes" they were directives at the behest of Obama.
They were more thoroughly reviewed. So what. That's the way it should be.
Republicans are such whiners. If you want to talk about corruption and abuse of power we can talk about Nixon’s enemies list.
40 years ago. Yeah, that's a good start....
It's entirely appropriate that groups with "Tea Party" and "Patriot" in their names be flagged and most probably not given tax exempt status as their primary purpose is political, not "social welfare" as generally understood. These groups claim tax-exempt status under section 501 (c) (4) of the federal tax code, which is for social welfare groups. What is the "social welfare" that Tea Party organizations claim?
Fortunately Obama should be able to break the cycle of synogagues and churches failing to pay their "fair share" during his second term. Rabbis and Priests are the parisites of the USA that take in billions in unreported cash and need to contribute to the ailing financial health of the country that they have ABUSED for too long.
From reading some of these comments I guess this kind of behavior is acceptable to some. It's sad to see what we have become.
During a sequester, when many government workers are concerned about losing their jobs, or at least will take a huge hit in salary, this is a ridiculous waste fo time. Moreover, it has a simple, equitable solution. Eliminate this status altogether. No group that is specific to any particular political view should be afforded tax exempt status, regardless of their "mission".
skytag – and what happened to Nixon? He left office in disgrace.
asdf – there are just as many left-leaning organizations as right-leaning using non-profit status. The whole point is government power should not be used to silence opposition no matter who is in power! This is the very reason our country was founded!!!
Mistakes? That's it .......... mistakes. Watergate was just a mistake?! This was criminal intent, another example of dem politics. The double standard prevails.
This is more than wrong it should be criminal and the persons involved should not only lose their jobs and pensions but prosecuted. It is crap like this that fuels the feelings of mistrust of our government. I don't care what party affiliation you have you should be outraged that employees of the IRS took it upon themselves to "punish" any group. I am an independent voter and I am appalled at what people will do for their "party", it is a sickness.
tea party is the complete opposite of "nonprofit" and "patriot"
Why should ANY political group get tax exempt status?!?! I haven't found any political group that is for the good of the people. They are just for the welfare of themselves! They should be taxed, because they are out to make as much money as they can. There should also be a law that states "for a non-profit group to be exempt from taxes, no employee can make more than $1,000 per week."
It appears some of you need a reality check. This isn't anything new. If the tea party wants to get a pass on paying taxes, well they have to go thru the process of meeting the requirements. Now you want the Government to roll over and give them a free pass. Wake up, this is nothing new. How many tea party member would love to get a tax exempt status? Don't forget, Freedom isn't free.
tax every single teatard group.....they are UNAMERICAN...here is one example: one group of two people: toothless husband and wife and claiming tax free status???? sickos all of them...
Wasn't the head of the IRS a Bush appointment? So maybe Karl Rove is behind all this. Everyone knows he hates the Tea Party...
Proof the government cannot be trusted, wake up people they should always be watched. No matter who is president. The patriot act should not have been passed, and this IRS action should not have happened.
This is a group that gets together and agree in lies,very dangerous especially if you know about the LAW.
When a group of people claims they shouldn't have to pay taxes, that triggers increased scrutiny from the IRS... Exactly as it should.
Unfounded accusations. The new "scandal" that is all the rage among idiots.
These orgs shouldn't be non-profit anyway. The damn politicians always make the laws favor their own interests not the public's.
The IRS regularly imprisons people, physically and financially and now we must turn the tables and crush them
So let me get this straight TP/GOP ppl - Political groups identifying themselves as the Tea Party (after and anti-tax protest in 1773) who promote the word "tea" as an acronym for "Taxed Enough Already" apply for tax exempt status, and the IRS SHOULDN'T have bothered to look into them with extra care? That is your argument? BWAA-HAH-HAH-HA-HAAAAA!!!! Honestly, I'd have more respect for the IRS if they just stood up and said: Damn straight we red-flagged those apps, what of it?!
I don't cast my vote on either of these sides, but when government agencies target one party over another in order to keep power ... THAT should send chills down our spines. Things like this and the patriot act do not bode well for the future of America.
Be careful which side of the political fence you accuse. The republicans side had more votes to lose than the dems had because the votes going to a tea party candidate came from a voting republican.
This is not acceptable, credit should be given to the IRS for admitting mistakes, but these Liberal government employees need to be fired. There is NO room for this kind of conduct.