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. Stevel

    So what's the big deal, it is called profiling. It is where you have a group has a high probability that there could be issues and you take an extra close look at them.

    May 12, 2013 01:37 pm at 1:37 pm |
  2. Larry trickel

    The question should be: is this a crime? The answer is "yes". The next question: who committed the crime? And then: what action is being taken aginst that person. Like firing them. This administration doesn't want the questions or the answers. They just blame everyone else.

    May 12, 2013 01:42 pm at 1:42 pm |
  3. Sailor

    I can see Obama's nicotine stained fingers in this mess.

    May 12, 2013 01:44 pm at 1:44 pm |
  4. shabba shabba

    Duh !! What do u expect ? The Tea Party doesn't want to pay taxes. Its the IRS job to collect taxes. Its has always been my understanding that IRS can audit anyone. It would seem logical to focus on the one group who advocats not paying taxes. Call me crazy.

    May 12, 2013 01:45 pm at 1:45 pm |
  5. Scarface86

    Miki thinks: The Tea Party is against over taxation. They are not against paying taxes in general. You need to stop misrepresenting them.

    May 12, 2013 01:46 pm at 1:46 pm |
  6. GOP= Greed Over People (Party)

    The Tea Party openly states that it is against paying taxes. If the IRS did nor investigate the activity of the Tea Party it would not be doing its JOB. If a group is against taxes it is only common sense to go over each account with a fine tooth comb. Whiny complaints!

    May 12, 2013 01:46 pm at 1:46 pm |
  7. America Shrugged

    This is no different than those State Department folks back prior to Obama becoming President, who were looking through all of his private passport information. Everyone person or group vying for tax exempt status should have to go through a rigorous scrutiny. With all these 501C (4) groups raising money through politics and then giving others that money (some good, some bad), they should all be checked out.. This is how terrorists raise money to fund their activities as well.

    May 12, 2013 01:48 pm at 1:48 pm |
  8. Ron

    Well. Maybe if these rich people.paid their fair share of taxes and played by the rules maybe just maybe they wouldn't be targeted. But remember the Bush Administration staged 9/11 and lied about Iraq and through our countries economy into the tank. I'm sorry but these conservative white men are evil and nasty.

    May 12, 2013 01:49 pm at 1:49 pm |
  9. awaiting moderation

    They are not the only government agency smelling around for Republican hanky panky.They have all the info in the world at their fingertips and growling all the time and always griping about the Chicoms tuning in to their computers.Put enough Republicans in jail more bills will not get paid. Who is going to pay the bills if you lock all the Repubs up?

    May 12, 2013 01:50 pm at 1:50 pm |
  10. awaiting moderation

    I know the right ones are reading the comment,that is all that matters.

    May 12, 2013 01:52 pm at 1:52 pm |
  11. llllllllll

    Heck with the Tea Party, think we need one big bEeR PaRtY!

    May 12, 2013 01:52 pm at 1:52 pm |
  12. Smeagel4T

    Strange how Tea Partiers suddenly have a problem with profiling for the sake of efficiency, when they advocate for it at airports. Why would anyone be suspicious of a group applying for "social welfare" status when that group does not believe in "social welfare"?

    May 12, 2013 01:53 pm at 1:53 pm |
  13. Heebeejeebee

    What a dilemma conservatives, especially extreme conservatives have here. they want government down-sized but don't like the consequences of cutting stuff (the need to find ways to expedite work that needs to be done with fewer people). they accuse the press of being liberal but here we have the press being... what? very amusing.

    May 12, 2013 01:58 pm at 1:58 pm |
  14. richie rich

    The "Tea Party" is bogus and they know it. They targets Republicans aka conservatives or the ones hwo pay taxes to support his 47% non tax paying bums. This is a first in US history but not surprising under this tyrant muslim socialist.

    May 12, 2013 01:59 pm at 1:59 pm |
  15. Arnold J. Malerman, DDS

    If this had been the IRS targeting a liberal organization the media would have been all over the story. Instead theattitude of the press seems to be, "tisc,tisc." Shouldn't ABUSE OF GOVERNMENTAL POWER be CNN's lead story?

    May 12, 2013 02:06 pm at 2:06 pm |
  16. mick

    it's becoming clear even to Democrats that Obama might be the most corrupt president we've ever seen.

    May 12, 2013 02:11 pm at 2:11 pm |
  17. Matt

    I hope the author of the inspector general report is prepared for the smear campaign to come. You think Ken Starr got raked over the coals? You haven't seen anything yet.

    May 12, 2013 02:13 pm at 2:13 pm |
  18. kstulak

    It would be great if obama and hillary would just go away, far far away

    May 12, 2013 02:13 pm at 2:13 pm |
  19. A2B1261

    Fact, ACLU has openly stated and argued in court that it is lawful to refuse to pay taxes as a protest to Iraq war. No investigation for them

    Fact, it was not just the tea party targeted 'the group zombie obama supporters' keep saying the IRS was justified in targeting, it was every conservative organization with xyz name in their title.

    May 12, 2013 02:14 pm at 2:14 pm |
  20. christy

    Everyone knows the Tea Party's become just another tool doing the dirty work for the Kochs. While they prance around with teabags hanging from their hats acting like spoilt children and making complete fools of themselves (and our country) the Kochs are sitting up in their offices pulling the strings. Now they're crying "vast liberal conspiracy". If the iRS is looking closely at them it's because they've earned it.

    May 12, 2013 02:15 pm at 2:15 pm |
  21. Paul Brinkley

    It is really sickening to see what politics is doing to our country. The Democrats are so utterly corrupt that their members defend things like this.

    May 12, 2013 02:19 pm at 2:19 pm |
  22. Snoop

    For all of you misinformed people – The TEA party is not against taxes. It is against constantly raising taxes while wasting money. Please stop spreading lies.

    And "Policy" – I'm sure you won't mind sharing with us the name of this 527 that you are associated with. If you won't, I'm calling bs on the whole post.

    May 12, 2013 02:22 pm at 2:22 pm |
  23. edmundburkeson

    Good news: Washington has changed. Bad news. Looks more like Chicago!

    May 12, 2013 02:28 pm at 2:28 pm |
  24. jake

    I think all anti-american group should receive special scrutiny – especially organizations that advocate shirking tax obligations of advocate the overthrow of the rightfully elected government. I see nothing wrong with this......

    May 12, 2013 02:31 pm at 2:31 pm |
  25. DuhItIsThatSimple

    If you are a group who has, in the past, literally called for the overthrow of the government and whined loudly about you being entitled to not having to pay taxes, you should probably expect to come under scrutiny from the tax collectors.

    May 12, 2013 02:32 pm at 2:32 pm |
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