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. itengineer

    Back in the years of Richard Nixon, the Press went crazy over a purported "enemies" list. Well, we have it today with this administration. Of course, we have a Democrat in office now. That's the only difference. We cannot rely on the honesty of the Press.

    May 12, 2013 08:52 am at 8:52 am |
  2. EVN

    In response to a plethora of tax exempt applications from groups that have the severe cutting of taxes as a primary agenda the IRS was simply look out for its survival like any other bureaucratic animal would. Delay, inundate the requestor with inane requests, don't respond – pretty typical bureaucractic behaviour. It's pathetic – but typical nonetheless.

    And for all those out there calling for tax reform and a simplification of our income tax code – it's never ever ever going to happen. In a country that produces less and less at home, and has shifted from a manufacturing economy to a service and consumer economy, everyone involved in the horror that is the tax code has a vested interest in its continuation and further convoluted spreading like a cancer that affects the entire body. Just think of all those lobbiests, accountants, compliance officers and staff (both at the IRS and at the companies that have to comply with the IRS code boondoogle) and all the rest directly or indirectly dependent upon the tax code for their livelihood. If we ever simplified the code and made it even close to understandable to the average person it would set off an unemployment debacle worse than the housing meltdown did. America needs its IRS – and your job may very well depend on it. So just be thankful that we have the most ridiculous tax code in the world, and that status quo conscious IRS managers and leaders had the foresight to circle the wagons.

    So let's not gang up on the IRS for throwing roadblocks in the way of the very organizations that were forming to gore the ox. The ox was only protecting its back end, and doing its part in keeping a good chunk of America employed in getting special deals for the corporations and the wealthy, helping the rest of us figure out just how many pounds of flesh in tribute needed to be paid for this or that, and making sure that we all did our part to keep that overgorged ox alive and growing bigger and bigger.

    May 12, 2013 08:54 am at 8:54 am |
  3. Dan

    Does anyone else find it amusing that the IRS got audited?

    May 12, 2013 08:57 am at 8:57 am |
  4. Rodboy

    I would bet we won't get many posts here – and the mister clean slate is getting dirtier all the time. Looking out for the small people is fading into the past. He was looking out for the liberals, so much for rule of law and honesty.

    May 12, 2013 08:58 am at 8:58 am |
  5. VstarGuy

    This is nothing new! It's been going on ever since the IRS was established in 1862! Initially it's been the instrument of collecting revenue and is now an instrument to keep people "in line" and not making waves against the current admin in power! It continues to this day and it's no better than the KGB! It should be controlled by a committee and not by one individual!. I believe every tax return that's filed with the IRS has mistakes in it given today's public intelligence, it's a safe bet that I'm right. If the IRS goes after members of the "Tea Party" could easily go after you tomorrow!
    Wake up America ....the leadership and control of the IRS must be changed to be responsible to a committee of many and not under control of one person.

    May 12, 2013 09:00 am at 9:00 am |
  6. JR

    Don't examine them IRS just take them out and hang em'. It's what right for America. Tea Baggers. Two-faced, GOP hypocrites. Nothing more.

    May 12, 2013 09:01 am at 9:01 am |
  7. Yvonne

    So who is fired?

    May 12, 2013 09:03 am at 9:03 am |
  8. jerpell

    Do you think our government has grown a little to large and powerful?...Our government should be afraid of the people....The people should never be afraid of its government!....

    May 12, 2013 09:07 am at 9:07 am |
  9. Richard Long

    It's official... the IRS is now a political weapon.
    Just think, the IRS will now have access to all of your medic records thanks to ObamaCare!

    May 12, 2013 09:12 am at 9:12 am |
  10. The Unamerican Tea Party

    The Tea Party is filled with unamerican separatist confederates, why shouldn't they have been targeted?

    May 12, 2013 09:14 am at 9:14 am |
  11. Mike in SA

    The notion that this was not politically motivated is utterly ridiculous and insulting to peoples' intelligence. Were "progress", "progressive", "forward" or other terms linked to the Democrat left also included in the BOLO??? No.

    May 12, 2013 09:18 am at 9:18 am |
  12. mike Lake Orion Michigan

    Sounds like another arm of the Obama Administration.

    May 12, 2013 09:19 am at 9:19 am |
  13. hobe

    I don't understand why Tea Party groupds are applying for tax-exempt status in the first place? Can anyone explain why a political group should have tax-exempt status.

    May 12, 2013 09:19 am at 9:19 am |
  14. tayllor1234

    This is today's progressive liberalism in a nut shell, merely an example of who liberals are and what liberalism has become. Lies, deceit, intimidation, totalitarianism, enemies of freedom, enemies of freedom og speech, enemies of freedom of religion, enemies of liberty. Today, Dem liberal terrorist Bill Ayers could not be more proud of you liberals.

    May 12, 2013 09:21 am at 9:21 am |
  15. ratherbboating

    Another day, another coverup by the White House.

    May 12, 2013 09:23 am at 9:23 am |
  16. tea?

    The Tea Party should be used to delays. They're so concerned about debt, but they waited 8 years until Bush was out of office to complain about it.

    May 12, 2013 09:32 am at 9:32 am |
  17. Reese

    I do not believe that this is an action that was coordinated by high-level Obama administration officials. However, for the IRS to state that this was not done out of political bias is absurd. If every instance of "Tea Party" was replaced with
    "African American" and each instance of "Patriot" was replaced with "hispanic", then the left would be screaming about racism. Even if you are a leftist, you should be condeming this. If you don't, then ten years from now it could be the same story, only with "progressive" in the headlines. This is unacceptable from ANY standpoint.

    May 12, 2013 09:34 am at 9:34 am |
  18. Steve

    Unbelievable partisanship. Disgraceful. But then, would we expect anything else from this administration?

    May 12, 2013 09:41 am at 9:41 am |
  19. Jim

    This is just the tip of the floating turd-berg that is the obama White House. When he talked about 'transparency,' what he meant is their criminal activity would be transparent to everyone.

    May 12, 2013 09:48 am at 9:48 am |
  20. rl

    I see nothing wrong with much more scrutiny on a group liberal or conservative that says their main purpose is the destruction of the United States of America. They should get intense scrutiny. If I had made written notice that as a Progressive I wanted to overthrow government of the United States of America I have no doubt my scrutiny would be in jail.

    May 12, 2013 09:49 am at 9:49 am |
  21. AJW3

    Of course this is breaking news at FoX...............As if Obama controls every government agency single handed. Keep pulling it out of you hat GOP.

    May 12, 2013 09:50 am at 9:50 am |
  22. ru serious

    ...and all of this just rolls off the back of the Obama administation. Somehow, he is never held accountable for anything. Just imagine if this had been Bush admin....the libs would be howling for his head. Not to mention the fiasco that was Bengazi. What a disaster.

    May 12, 2013 09:55 am at 9:55 am |
  23. ally buster

    The IRS is ALLOWED to investigate any and all tax returns, last time I checked.

    Sour grapes over the demise of their silly ideology and party....

    May 12, 2013 09:56 am at 9:56 am |
  24. Don in Mo

    Someone needs to tell him that it starts at the top. When we have a leader with integrity we'll have government with integrity:
    Obama believes the government should be staffed with "the very best public servants with the highest levels of integrity"

    May 12, 2013 09:59 am at 9:59 am |
  25. CaesarXIII

    What a blatant slap in the face to every American. Whether you're a Democrat, Republican, or Tea Party whatever.. This should make your stomach turn as a citizen of this country to know that your own government is working behind the scenes to make your life miserable. The sad part is there's so many examples of it going on and everyone just ignores it with lame excuses.

    May 12, 2013 10:00 am at 10:00 am |
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