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'
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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 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.
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.
This cannot stand. No matter your political views this kind of abuse of power to influence elections puts us on a path to dictatorship. If the media sweeps this under the rug then there is no hope. None. The political winds inevitably change over time and those who collude and allow these crimes to pass unpunished will find the same tactics being used against them. Do we want these abuses of governmental power to become the new normal? We will be setting precedent in the coming months. We must not set the wrong one. Our great nation is at stake.
While they're at it someone should publish how often individual senators encouraged the IRS to "go after/investigate" Americans and American businesses. It would be interesting to see which congress folks were also abusing their power.
"Political thuggery" is what Mitch McConnell calls this. Well, if anyone should know what "political thuggery" is, it's him. He's been a political thug since Obama was sworn in back in 2009. Why are any political activist groups tax-exempt? Not a single one of them should be. Every last one of them should be taxed!
I don't belong to any particular party, but I was dismayed to see some Democratic commenters on Huffington dismiss it as much ado about nothing. Usual rules apply. Whatever political party you belong to, put the shoe on the other foot. If you can honestly say it's no big deal if it happened to your preferred party, I'd be surprised. The law should protect all equally.
Hmmm ... Lets see... Hmmm.... 2nd amend hmmmm....aa.....hmmm...f the lubs. I bet i could put out a crap song o i mean rap song about f*** the lib and the white kids that buy the crap i mean rap that came from my gen. Wouldnt know it espiacally since the black com. Forgot long ago that rock and roll was liberol ... Check tina turner ... Whole lots of others ! Tired of bein told becouse i was born white i made the "black man where he is " im 39 yrs old today , i live in opoverty ... Im whie ... Willfare gives me bs ive worked .. Been in the military gettin ready to go back to school im tired of bein told im the reason why somepeople cant get the f up and find a job u ...u mean u cant be rich .. Well then u havent enslaved enough ...repulican ...or f u lib. Libs just tell the same bs and rip off tru freedom by restricting gun ownership .... Get a clue libs obama are !!!!! 17trillion in dept ... Yea take away the right to own a firearm .... How about this target the high crime areas .
Why isn't a congressional committee going after Shulman for perjury??
In an appearance before the House Ways and Means Subcommittee on Oversight in March 2012, Shulman was asked about the controversy. Rep. Charles Boustany, R-Louisiana, asked if it was true the IRS was politically targeting conservative groups.
"Yes, I can give you assurances. We pride ourselves in being a non-political, non-partisan organization," he said. "There is absolutely no targeting. This is the kind of back and forth that happens when people apply for 501(c)(4) status."
Is it possible remotely possible that ultra conservatives groups cheat more. Same with extreme left.
Both are known for notorious outright lying when speaking in public.
The tea party is anti=tax so it makes sense their returns oughta be looked at.
"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.' "
ROTFL it's like saying "we only went after black people to shortcut finding criminals, not out of racism"
Why waste time on the tea party at all, just deny them full out. Bunch of hooligans.
" IRS officials knew of agents’ tea party targeting in 2011"
King Obama doesn't respect his employers (we the people), he's never run a business, lived a charmed life in Hawaii. He brings the hammer down on any of those who disagree with him, just like insulting "those who hang on their bibles and guns". He should remember the four boxes of democracy. He's a disgrace. He only cares about helping people of his own color... it's hard working small business men like me that have to pay for his Obama-phones and free healthcare for illegal aliens. Drop dead POTUS, you're a disgrace to the office.
Let's see the gymnastics supporters will go through to justify this.
It's very easy. This isn't ok. It isn't ok when used against liberal groups and it's not ok against conservative groups. If you try and justify this case, you are wrong.
More problems for Obama and his mouth piece Carney......When are they going to learn to tell the truth, quit blaming others for their own screw ups?
they should target all of these leftist hollywood liberals who take every tax loophole possible then cliam they would pay more taxes if they could.
Why should any political gop stooge orginazation not pay taxes,oh ,its the gop that wants all benifets but doesn't want to pay for it .make them pay double taxes. It's the same as taxing the Nazi party or communist party.
If this turns out to be true, Federal laws have been violtated and felonies have been convicted. Who knows, if some of these conservative groups had not been harassed by the IRS they might have had affected the election. Which is probably what the Obama administration, and obviously the IRS wanted.
This is the reason there will never be a flat tax in this country. The power that both parties wield using the IRS and it's taxing codes will never be relinquished freely.
Another day, another Scandle for the Transparent Obama administration and friends.
IRS knew it? Conservative bigot racist Obama was directly behind it. He is the one who gives all the orders while munching on dog meat which he still loves to secretly eat and while smoking his filter less Camel cigs.
Wow....what free country we live in
Well, unfortunately the word patriot has been dirtied by the far right and the tea party.
wow, more and more lies and attempted cover ups, (knew in 2011 but in 2012 testified that they did not do) by the most transparent and caring Administration ever. Seems more like the most corrupt and do or say anything to stay in power and destroy your opponents.
That strategy seems to be something used by politicians coming out of some mid-west town, just can not put my finger on it...maybe CHICAGO?
No harm, no foul!
It would be inspirational to read a news report about some courageous IRS employees who were fired for refusing to follow orders. Hopefully, we can learn more about who issued these orders. Does the IRS have a Code of Business Conduct that mandates honesty, integrity and compliance with law? Government power has limits and the IRS is responsible for treating every taxpayer fairly and equally under the law. Am I right?