IRS officials knew of agents’ tea party targeting in 2011
May 11th, 2013
06:16 PM ET
12 months 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. Mac

    So, the IRS was targeting known Anti Tax advocates? Sounds like someone knows who the proper suspects are and was acting accordingly. Not sure what the issue is here other than the perceived politics. The DEA focuses on drug dealers and the IRS's job is to catch tax cheats. And whos more apt to cheat at their taxes than someone who's already dead set against paying them.

    May 12, 2013 12:43 am at 12:43 am |
  2. Marcus

    tax exempt status for any political group is rediculous, but politicians write the rules so here we are...

    May 12, 2013 12:59 am at 12:59 am |
  3. Anon

    Tax Audits Are No Laughing Matter ~ reported from WSJ online on May 18, 2009

    May 12, 2013 01:05 am at 1:05 am |
  4. Spence

    Thank goodness that the Great God King Obama has sent his minions in the IRS to attack those evil conservatives.

    May 12, 2013 01:08 am at 1:08 am |
  5. Bob

    So we already have a bunch of people begging for violent revolution. Why provoke them?

    May 12, 2013 01:14 am at 1:14 am |
  6. Hmmm

    Right out of the Putin playbook

    May 12, 2013 01:15 am at 1:15 am |
  7. RandyKC

    With 501(c)(4) status, generally the advocacy of a particular candidate in an election – is taxable. So, if the filing has a political candidate's endorsing party in the name, then isn't it reasonable to investigate that organization. This is not a witch hunt. This is the IRS doing it's job. I'm sure the republican backers of those 501(c)(4) organizations are trying to cloud the issue as much as they can.

    May 12, 2013 01:16 am at 1:16 am |
  8. Anonymous

    The IRS giving extra scrutiny to Tea Party groups... sounds like something that would come out of a Republicans play book. And they have the nerve to be upset because they were victims of something that may have stooped to their own typical low level of political strategy....

    May 12, 2013 01:20 am at 1:20 am |
  9. Snidely DooRight

    Why would this act not be classified as sedition?

    May 12, 2013 01:25 am at 1:25 am |
  10. Peter

    Why wouldn't they? I bet these same groups advocate for the Federal Government to screen Muslim men more carefully for terrorism on planes... these guys advocate no government and no taxes... makes sense that they would be more likely to try and dodge their fair share. Sounds like good agents to me, and they should be rewarded and promoted.

    May 12, 2013 01:28 am at 1:28 am |
  11. Rob

    Considering the tea party is generally backed by corrupt billionaires (see Koch brothers), I don't see why they wouldn't be subject to the extra scrutiny.

    May 12, 2013 01:33 am at 1:33 am |
  12. hkirwin

    American's should be insensed with this. This is the primary reason democracy fails. We are in the fast lane to a banana republic. The Obama administartion will go down in history as the most corrupt administration ever in American politics.

    May 12, 2013 01:36 am at 1:36 am |
  13. nomad2003

    And now this department will be collecting all your medical information what coverage you have, and sharing data Health department and registering voters.... what a invasion of privacy...

    May 12, 2013 01:50 am at 1:50 am |
  14. nomad2003

    and what they did was ILLEGAL not just a mistake... but with this administration those responsible will be promoted.

    in our jobs, we would be fired for doing illegal activities....

    May 12, 2013 01:52 am at 1:52 am |
  15. Alyn

    We need to put an end to the IRS MAFIA' sticking their hands in our pockets! I work too Damn hard for them to steal 20% of my hard earned money!

    May 12, 2013 01:55 am at 1:55 am |
  16. Norm

    This is disgusting and not just a little bit scarey.

    May 12, 2013 02:08 am at 2:08 am |
  17. angry

    i have no problem with this. The tea party is know to ignore the laws , especially tax laws. Arrest the whole bunch of them and leave the IRS alone.

    May 12, 2013 02:12 am at 2:12 am |
  18. BO

    Obama's Nazi tactics have started early. He has big plans for the IRS when it comes to ObamaKare.

    May 12, 2013 02:18 am at 2:18 am |
  19. Jim Vanderber

    The IRS says it used the words "Tea party" and "Patriots" as a short-cut to target right wing groups because staffers were overworked. They say there was nothing political about it. Sooo ... what words did the IRS use to target corresponding LEFT wing groups???

    May 12, 2013 02:21 am at 2:21 am |
  20. Mary

    Well what do they expect when they're so publicly anti-tax? Of course the IRS is going to be more careful checking that they're not doing anything dodgy.

    May 12, 2013 02:32 am at 2:32 am |
  21. Jo

    So unprofessional and deceptive of these IRS agents. This is what feeds increased distrust of the government by conservatives in the short-term, and by liberals and all in the long-term. I think there's a lot of this by the left where they try to force their beliefs through whatever influence they have. There's probably some on the right, but this seems to be more prevalent by liberals from my experience (though I'm sure many would disagree).

    May 12, 2013 02:33 am at 2:33 am |
  22. James

    Obama's stooges.

    May 12, 2013 02:46 am at 2:46 am |
  23. 1776

    Awfully quiet on here. Wonder why???

    May 12, 2013 02:46 am at 2:46 am |
  24. Name

    Surprisingly believable. This administration is a joke...

    May 12, 2013 03:07 am at 3:07 am |
  25. Name dawgfud

    And you believe these people can be trusted with the list of every person who owns a fire arm? Get real! I don't trust the government with knowing my social security number anymore!

    May 12, 2013 03:22 am at 3:22 am |
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