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. Scott

    Political groups are not tax exempt. There is no controversy here.

    May 11, 2013 07:50 pm at 7:50 pm |
  2. FubarObama

    I have never seen an administration with such a lack of transapraerncy , like the Obama's. Targeted groups are being attacked, states are being sued, class warfare at the highest levels. Lies, Corruptions, coverups, more lies, zero foreign policy. Truly incredible !!

    May 11, 2013 07:52 pm at 7:52 pm |
  3. Ron

    Knew About It ! Barrack told them to do it !!!!!!!!111

    May 11, 2013 07:54 pm at 7:54 pm |
  4. Nicole Chardenet

    I wonder how outraged Sarah Palin was when it was revealed the Bush administration removed all right-wing American groups off the terrorist lists, and added several left-wing groups that were not terrorists.

    May 11, 2013 07:55 pm at 7:55 pm |
  5. taxpayer12

    Is this really that surprising?? Is anyone willing to take bets that a congressional investigation of this would lead back to the whitehouse? It more than likely would, and then the Dems would say once again just like when Obama sent arms to mexican drug lords, and just like the Begazi cover up, and just like the health care fraud programs that it just the Republicans whining, Truthfully there are just to many coincidences here. This whitehouse administration is corrupt.. the worst thats been seen in many years. Outright lies to the american people, taking advantage of their positions like has never been seen before. This is the closest we have come to socialism yet a new brand of Nazi's maybe. The theme is constant the government fails us again. How can we trust a government like this.

    May 11, 2013 07:57 pm at 7:57 pm |
  6. Guest

    I'm not a fan of the Tea Party and I think they're nothing more than a quasi-populist corporate-backed political interest group. However, I think the IRS has way too much unchecked power. Time to clip those wings.

    May 11, 2013 08:00 pm at 8:00 pm |
  7. blakenaustin

    It is time for a little accountability and some limits around the authority of the IRS. It cannot be trusted.

    May 11, 2013 08:01 pm at 8:01 pm |
  8. HenryB

    I would have flagged these crazy people too. Losers (the tea partiers that is).

    May 11, 2013 08:02 pm at 8:02 pm |
  9. mick

    Obama is the most corrupt president ever.

    May 11, 2013 08:02 pm at 8:02 pm |
  10. Californian

    As much as I dislike most everything about the tea party, what the IRS has done here makes me sick. It appeared to me that the tea party was gracefully losing any credibility and popularity among conservatives. I'm afraid that the disgraceful actions mentioned will give renewed interest to their cause. Hell, I would support them if they didn't stand for policies that I consider unconscionable. Now I wonder what agencies the conservatives will be able to use against those who are not in line with their ideology? Don't get me wrong, I'm not just worried for myself. This kind of crap shouldn't happen on either side!

    May 11, 2013 08:02 pm at 8:02 pm |
  11. ConanX

    "We're the Most Transparent and Ethical Administration in U.S." – President Obama

    May 11, 2013 08:05 pm at 8:05 pm |
  12. Dave

    Generally people who are opposed to taxation are more likely to find ways to not pay their fair share.

    May 11, 2013 08:10 pm at 8:10 pm |
  13. TP320

    Nobody is bothered by this??????

    May 11, 2013 08:11 pm at 8:11 pm |
  14. Rick McDaniel

    They were KNOWINGLY playing politics, by trying to get all of the information they could, on the Tea Party, for the Democrats. Obviously, the Tea Party worries the Democrats.

    May 11, 2013 08:14 pm at 8:14 pm |
  15. Hal Atosis

    Sure they randomly choose – from Republican and conservative groups.

    Nice reign of corruption Barry. Billary is toast in 2016 now.

    May 11, 2013 08:15 pm at 8:15 pm |
  16. Sheila

    This is tyrannical. That is all.

    May 11, 2013 08:17 pm at 8:17 pm |
  17. Just

    Our government is beginning to smell like a third world dictatorship.

    May 11, 2013 08:18 pm at 8:18 pm |
  18. bezboz

    Corruption in another Obama administration branch of government? Say it's not so!

    May 11, 2013 08:19 pm at 8:19 pm |
  19. Jim

    Where are all the 'civil libertarians' screaming about how this is a politically-motivated IRS trampling on the rights of groups to dissent with the government??? Oh yeah, liberals are in charge, never mind....

    May 11, 2013 08:21 pm at 8:21 pm |
  20. BHO123

    As it should be. This isn't the time to take away from our president. This is HIS time to shine. OUR people have come a long way.

    May 11, 2013 08:22 pm at 8:22 pm |
  21. greatwhitehope

    What????? No comments? Probably edited out!

    May 11, 2013 08:24 pm at 8:24 pm |
  22. Caught Red Handed

    Looks like it's time to really clean out that white house and everyone who puts their image and that of the current administration's ahead of what is really best for the country.

    May 11, 2013 08:25 pm at 8:25 pm |
  23. dimond dragon

    "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.""

    That is the EXACT DEFINITION of "Political BIAS" by targeting a group based on its NAME, and EXPECTING to find "abuse" of tax law based on that "name."

    May 11, 2013 08:25 pm at 8:25 pm |
  24. Jewels

    Sadly, I don't have an ounce of empathy for the so-called "tea party"....

    May 11, 2013 08:27 pm at 8:27 pm |
  25. Mike

    Everyday our country becomes more and more everything the forefathers fought against.

    May 11, 2013 08:28 pm at 8:28 pm |
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