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. Thomas

    Do you think the National Rifle Association should lose their tax-exempt status?

    May 12, 2013 10:41 am at 10:41 am |
  2. wade

    I had to laugh at someone who said AS IF OBAMA CONTROLS EVERY GOV AGENCY. WOW I thought I just wanted to slap some sense into that mo*on. That is Obama;'s job to control GOV agencies. He is the President the the executive branch of GOV. He is suppose to control it all that is why he was elected! The fact that his own people do not understand that is why America is falling apart. We all know that if this would have happened to the hate group called liberals under a Republican President there would be calls for IMPEACHMENT or TREASON. We all know that.

    May 12, 2013 10:42 am at 10:42 am |
  3. Ed

    If the dept. in controversy is a screening center for 501(c)(4) applicants, and 501(c)(4) requires a "social welfare" mission as an eligibility requirement, using political terms for screening does not seem as abhorrent as some will try to cast it.

    Moreover, this particular "movement" espouses, quite aggressively, anti-tax ideology. It seems reasonable for a screening unit to be looking for fraudulent exemption applications by political organizations posing as "social welfare" organizations.

    Tempest in a teapot...

    May 12, 2013 10:43 am at 10:43 am |
  4. samikep

    Isn't this the same IRS that will be handling Obamacare?

    May 12, 2013 10:47 am at 10:47 am |
  5. gcrow

    I'm a libertarian who has voted for both Dems and Republicans. No doubt this is the most incompetent, corrupt, self-serving, arrogant, Chevez- like leftist Administration ever. To call them a bunch of thugs would be kind.

    May 12, 2013 10:51 am at 10:51 am |
  6. Fair is Fair

    The Unamerican Tea Party

    The Tea Party is filled with unamerican separatist confederates, why shouldn't they have been targeted?
    Don't let yout partisan ideaology blind you. Those who are in power change over time (thank God). So tomorrow, it may be YOU that is being targeted. Going to feel the same way then? This is WRONG no matter who is in charge.

    May 12, 2013 10:52 am at 10:52 am |
  7. Mark

    These are anti-tax extremists. Wouldn't it make sense to make sure that these people, who have named their organizations after a violent, anti-tax demonstration, are properly operating tax-wise?

    May 12, 2013 10:55 am at 10:55 am |
  8. DavM

    Comrade Obama fails America and democracy again. Uncle tom Obama is doing his best to promote and implement the communist agenda in America.

    May 12, 2013 10:55 am at 10:55 am |
  9. John

    Doesn't surprise me at all. This is the same pattern for the administration- either support them or deal with threats and then lies to cover it all up. The embarrassment continues.

    May 12, 2013 10:55 am at 10:55 am |
  10. Jonus Grumby

    Another corrupt government agency. What a surprise.

    May 12, 2013 10:57 am at 10:57 am |
  11. John

    When you have people avowing to be anti-tax isn't this a tale-tell to the agency that it should pay closer attention to organizations that front for these people.

    May 12, 2013 10:59 am at 10:59 am |
  12. Steve

    What is there to apologize for? The 501(c)(4) orgs need more scrutiny. Especially newly formed ones in an election year. Does anyone believe these orgs weren't set up for political reasons? To be able to hide their donor lists? IRS is simply doing its job.

    May 12, 2013 11:00 am at 11:00 am |
  13. caesarbc


    May 12, 2013 11:01 am at 11:01 am |
  14. GaryOwen27

    I have a new and endearing love for the IRS.

    May 12, 2013 11:03 am at 11:03 am |
  15. Tanks

    Where is Candy when you need her???!!!

    May 12, 2013 11:05 am at 11:05 am |
  16. Rob

    Does anyone really think Obama cares about this? He will continue to send his taint meat, Jay Carney, to tap dance for a complicit media.

    May 12, 2013 11:07 am at 11:07 am |
  17. Polopoint

    People should be fired here. This kind of intimidation and big brother government is not okay.

    May 12, 2013 11:12 am at 11:12 am |
  18. Bob Knows

    The IRS was just following Obama's orders. Tyranny starts at the top.

    May 12, 2013 11:13 am at 11:13 am |
  19. DB

    It's all race related. Go to any government office now and ask yourself, does the staff represent the percentage of the American race cross section? In all the cases I have seen it does not.

    May 12, 2013 11:14 am at 11:14 am |
  20. Bob Knows

    Maybe there was a fire, or maybe Odumbo regime wanted the press corps out of the way to do some more criminal activity. With Odumbo you just don't trust anything they ever say.

    May 12, 2013 11:15 am at 11:15 am |
  21. Big_D

    So they all filed paperwork with the exact same name "Tea Party" and they wonder why they had problems, priceless. Isn't this all an abuse of a tax code that was never meant to create these type of organizations to begin with? Aren't these the same groups that funneled billions of corporate dollars into our elections? Screw them!

    May 12, 2013 11:20 am at 11:20 am |
  22. cel1

    Hey CaesarXIII, it's not just IRS at it, the FBI never destroyed the files they had under J Edgar Hoover, on every American. We're all still being watched.

    May 12, 2013 11:20 am at 11:20 am |
  23. g

    all terrorist groups should be looked at even domestic

    May 12, 2013 11:24 am at 11:24 am |
  24. Charlotte

    Given that the teaturdies are funded by the Koch Brothers who have no respect for tax law, it's perfectly legitimate for the IRS to target them. If no wrongdoing surfaces then that's to their benefit. Don in Mo is a deluded asshat to think that our leader has no integrity. He's got more integrity in his little toe than the entire state of Missouri rolled together. But imbeciles have a hard time understanding these things.

    May 12, 2013 11:24 am at 11:24 am |
  25. Reckless

    I hope that everyone realizes this is because for years the Tea Party in particular have been cheating on their taxes. They claim to be social welfare organizations, but in reality are cheating on their taxes while running a political organization.

    May 12, 2013 11:24 am at 11:24 am |
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