IRS officials knew of agents’ tea party targeting in 2011
May 11th, 2013
06:16 PM ET
5 years ago

IRS officials knew of agents’ tea party targeting in 2011

Washington (CNN) - Officials at the Internal Revenue Service knew in June 2011 that their agents were targeting conservative groups for additional scrutiny on tax documents, an inspector general report to be released this week is expected to say, according to a congressional source familiar with the inquiry.

Further, an early timeline of events compiled by the inspector general and obtained by CNN indicates the agency's practice of singling out conservative groups began as early as March 2010, and in July of that year, unidentified managers within the agency "requested its specialists to be on the lookout for tea party applications." In August, specialists were warned to be on the lookout for "various local organizations in the tea party movement" applying for tax-exempt status. The specific criteria would change several times over the next two years, according to a portion of the report.

Following tea party complaints, IRS admits 'mistakes'

More: Palin blasts IRS 'corruption'

An IRS official on Friday admitted the agency made "mistakes" in the last few years with tax-exempt status applications and specifically those submitted by groups with the words "tea party" or "patriot" in their names. Multiple conservative groups have said their applications were delayed and returned with lengthy requests for supporting materials, sometimes including website printouts and lists of guest speakers.

The Treasury Department inspector general for tax administration launched an audit of the agency's practices, and spokesman David Barnes said the report is being finalized and is expected to be released this week.

Barnes said the review was requested by Rep. Darrell Issa, chairman of the House Committee on Oversight and Government Reform, and focused on programs and operations. An audit is separate from an investigation, which would assess wrongdoing such as violation of law or policies.

President Barack Obama's spokesman Jay Carney said Saturday that Obama believes the government should be staffed with "the very best public servants with the highest levels of integrity" and that "based on recent media reports, (the president) is concerned that the conduct of a small number of Internal Revenue Service employees may have fallen short of that standard."

"If the Inspector General finds that there were any rules broken or that conduct of government officials did not meet the standards required of them, the president expects that swift and appropriate steps will be taken to address any misconduct," he said in a statement.

Lois Lerner, director of tax-exempt organizations for the IRS, publicly admitted on Friday for the first time that agents used the keywords "tea party" and "patriot" to flag applications for further review, but she stressed that was done as a "shortcut" for picking the applications to review, not out of "political bias."

The IRS commissioner at the time said at a March 2012 congressional hearing that his agency did not target conservative groups for political reasons.

"I can give you assurances. We pride ourselves in being a nonpolitical, nonpartisan organization," Commissioner Douglas Shulman said. "There is absolutely no targeting. This is the kind of back and forth that happens when people apply for 501(c)(4) status."

The congressional source familiar with the inquiry understood that Lerner knew of the targeting in 2011 but sent letters to Congress earlier this year without disclosing the extent of her knowledge.

Lerner said on the Friday conference call that she "did not feel comfortable answering" as to when senior IRS officials became aware of the situation. She also said she could not give a time frame for when the IRS began looking into complaints.

She said the IRS has implemented changes to prevent similar mistakes in the future but could not say that any IRS employees had been disciplined.

The IRS said Sunday that the timeline in the inspector general's report was accurate, but that it "does not contradict" Shulman's March testimony.

"While Exempt Organizations officials knew of the situation earlier, the timeline reflects that IRS senior leadership did not have this level of detail," the statement from the IRS read. "The timeline supports what the IRS acknowledged on Friday that mistakes were made. There were not partisan reasons behind this."

The applications

The applications in question were processed by an office in Cincinnati that handles most applications for 501(c)(4) status and had seen the number of applications rise sharply between 2010 and 2012, Lerner said.

Some 75 conservative groups, flagged by agents because of their names, were among 300 groups singled out for this additional scrutiny, she said. The agency received more than 3,400 applications for 501(c)(4) status in 2012.

"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.

Officials with some groups subjected to the scrutiny said they would have had to supply thousands of documents, stacked inches thick, to comply with the requests. Some chose not to, saying the agency was attempting to bury them in paperwork.

Tax-exempt groups are allowed to advocate for causes 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.

The timeline

IRS scrutiny of conservative applications appears to have begun well before the groups had any idea they were in the spotlight.

The timeline prepared by the inspector general and obtained by CNN redacts events before March 2010 as well as several between then and July 15, 2012, when the timeline concludes. But between the omitted content is a series of events showing what was happening inside the agency.

Initially, unidentified managers from the Determinations Unit of the IRS searched for "applications involving political sounding names (such as ) 'We the People' or 'Take Back the Country.'" In mid-March 2010, the agency identified 10 tea party-related cases, and by April 5, there was a list of 18, though "three had already been approved as tax exempt," the report read.

In late April and May, specialists from the Technical Unit were involved, and on June 7, the "Determinations Unit began training its specialists on emerging issues to watch for, including an emerging issue referred to as Tea Party Cases."

That summer, an e-mail and a "be on the lookout" note were sent to employees that included a "coordinator contact for the cases."

Over the next year, some responsibilities shifted and new staff joined the effort.

The timeline suggests the first hesitation within the agency regarding the process came in June 2011, when "the acting director, Rulings and Agreements, commented that the criteria being used to identify tea party cases may have resulted in over-inclusion." But part of that entry, as well as the preceding one, are redacted from the timeline.

Later that month the director of exempt organizations was briefed on the efforts, and the criteria for evaluating applications were adjusted, one of several times the criteria would be tweaked. A guide sheet for handling applications was developed, and in September, "A Technical Unit specialist reviewed the list (of applications) to determine if any cases could be closed on merit or closed with an adverse determination letter," meaning the application would be accepted or denied.

The timeline continues to show incremental changes to the criteria, additional reviews and the involvement of counsel after the entry labeled "February-March 2012."

"Numerous news articles began to be published with complaints from tea party organizations about the IRS's unfair treatment," it read. "Congress also began to show interest in the IRS's treatment of Tea Party organizations."

Congress asks questions

By March of 2012, Congress was asking questions of the IRS. That month, Shulman denied the agency targeted groups for political reasons at the congressional hearing.

There was also an exchange of letters involving Capitol Hill, Shulman and Lerner.

"News reports ... indicate that the IRS effort lacks balance, with conservative organizations being the target of the IRS's scrutiny," Issa wrote to Lerner in a March 27, 2012, letter obtained by CNN. He noted a Capitol Hill news outlet had "contacted several liberal groups ... (and) none had received the recently-sent questionnaire."

Lerner responded that the IRS sets aside "applications that require further development by an agent in order to determine whether the application meets the requirements for tax-exempt status.

"... The revenue agent uses sound reasoning based on tax law training and his or her experience to review the application and identify the additional information needed to make a proper determination of the organization's exempt status," she wrote deeper in the eight-page response.

She did not disclose in that letter that the IRS targeted conservative groups, even if for nonpolitical reasons.

Separately, a dozen U.S. senators, led by Sen. Orrin Hatch, R-Utah, and Sen. Rob Portman, R-Ohio, sent Shulman a letter asking for more information about this situation.

Shulman's six-year term ended in November and the agency is currently led by interim commissioner Steven Miller.

CNN's Athena Jones and Ashley Killough contributed to this report.

Filed under: IRS
soundoff (487 Responses)
  1. f ray

    what to end stuff like this from happening and solve the budget problem? END the tax exemptions!!!!!!!!!!

    May 12, 2013 07:29 am at 7:29 am |
  2. Buddy

    power corrupts and absolute power corrupts absolutely. Obama should have realized this, but all fall prey to it.

    May 12, 2013 07:36 am at 7:36 am |
  3. peach

    IRS Corruption- everyone involved should be in jail now.

    May 12, 2013 07:39 am at 7:39 am |
  4. dina

    So let me get this straight. The Tea Party, who stands for "fiscal responsibility", had over 300 groups trying to avoid taxes? And why should a politically-based organization be avoiding taxes anyway?

    May 12, 2013 07:41 am at 7:41 am |
  5. David

    A group whose sole purpose is to reduce the size of government and to reduce taxes to laughable levels should rightly be given extra scrutiny when applying for differing tax status. These are people who will stop at nothing to keep from paying their fair share.

    May 12, 2013 07:46 am at 7:46 am |
  6. Redhead176

    Obama is making Nixon look like a Boy Scout as far as scandals.

    May 12, 2013 07:54 am at 7:54 am |
  7. Suur Kurat

    Of course the officials at the IRS knew. The people working at reviewing these taxpayer requests operate under strict procedures and instructions outlined in the IRS manual and official directives. No one deviates from them without specific instructions from the Commissioner of the IRS,

    May 12, 2013 07:56 am at 7:56 am |
  8. ConanX

    Your comment is awaiting moderation.
    "We're the Most Transparent and Ethical Administration in U.S." – President Obama

    May 11, 2013 08:05 pm at 8:05 pm |

    I guess a complicated post like this takes time to review.....

    May 12, 2013 08:07 am at 8:07 am |
  9. Skeptacular

    I'm against the majority of what the "Tea Party", Republicans, and a goodly number of politically-active conservatives believe and do in the service of their beliefs. That said, I believe in a two (or more) party system of democracy and firmly think only by scruples and a drive to be fair and honest on both sides can our government and its people thrive. The investigation should go on. From what we now know, Lerner should resign or be fired. We democrats are no better than those we criticize if we can't be examples of what we wish our adversaries to be.

    May 12, 2013 08:09 am at 8:09 am |
  10. djc60

    Tells us something we didn't already know.

    May 12, 2013 08:11 am at 8:11 am |
  11. rogerinorlando

    Let's see, political naifs financed, by and large, by shadowing millionaires and billionaires? Yeah, they need a little scrutiny.

    May 12, 2013 08:12 am at 8:12 am |
  12. Richard Hodges

    Who care what Sarah Palin says? Why do you keep publishing her moronic comments?

    May 12, 2013 08:13 am at 8:13 am |
  13. skog

    Inappropriate?!!!? Carney told reporters ! The presidents spokesman should be outraged and vow to put those responsible in jail sending a strong message that the IRS is a servant of the United States citizen not an overseer.

    May 12, 2013 08:13 am at 8:13 am |
  14. Bigjilm

    If a political party is applying for tax exempt status, they they should "all" be reviewed for scrutiny.

    May 12, 2013 08:23 am at 8:23 am |
  15. Robrob

    Wonder if i will get audited since i posted here. Corrupt S.0.B.'s. Time to move to Singapore i guess.

    May 12, 2013 08:26 am at 8:26 am |
  16. JD

    All the political organizations should be paying full taxes on everything. That's part of the reason our country is in trouble now, there are too many organizations that don't pay fair and equal tax, it all gets dumped on the working class that does. It's too easy now days to come up with an excuse to keep from paying fair share of taxes. Pailin should be more worried about paying back Alaska the funds and taxpayer money she cost them at her personal expense instead of the flea parties!

    May 12, 2013 08:27 am at 8:27 am |
  17. Redspotz

    Nixon used the IRS to target political enemies, so did LBJ. Now Barry. . .

    May 12, 2013 08:28 am at 8:28 am |
  18. don in albuquerque

    Going after the Baggers? Good Job!!!!!!!!!!!!! Let em squeal like pigs!

    May 12, 2013 08:29 am at 8:29 am |
  19. itengineer

    Not only has the IRS been corrupted by Democrats but the FBI, Human Health Services etc. This is a slippery slope. Do you really want BIG Brother government regulating everything you do or say? We are almost there,folks. The Internet will be "regulated" and political correctness police will be monitoring every word you say. Don't believe it? Then you are very foolish.

    May 12, 2013 08:29 am at 8:29 am |
  20. steve

    It's very interesting their are no comments here. I guess the comments didn't fall into the Clinton News Networks game plan. Now, this is an IRS office in Cincinnati Ohio, also Google up Melowese Richardson a black woman poll worker that bragged to a local TV news crew on camera that she had voted twice for Obama. An investigation by the election board discovered she at voted under 6 different names, all registered at her address. She was arrested, but like Fast and Furious, today, dead silence.

    May 12, 2013 08:29 am at 8:29 am |
  21. djc1960

    Tells us something he didn't already know.

    May 12, 2013 08:30 am at 8:30 am |
  22. Jeb

    How long with the administration continue to deny that these actions by the IRS were politically motivated will be a good indication of just how much the Obama administration is embracing corruption.

    May 12, 2013 08:34 am at 8:34 am |
  23. Dan E

    Barak Milhous Obama
    Dems need to look in the mirror

    May 12, 2013 08:35 am at 8:35 am |
  24. U.S. Citizen

    This Presidency is trying to turn the IRS into an equivalent to the post WWI German Brown Shirts or Third Reich.

    May 12, 2013 08:41 am at 8:41 am |
  25. TampaJoey

    The government has to squeeze every penny out of hard working Conservatives to pay for all of Obama's handouts. Buying elections is expensive.

    May 12, 2013 08:44 am at 8:44 am |
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