May 10th, 2013
12:53 PM ET
10 years ago

Following tea party complaints, IRS admits 'mistakes'

(CNN) - Responding to a flurry of complaints from conservative groups seeking tax-exempt status, the Internal Revenue Service admitted Friday it made "mistakes" in the last few years while trying to process those requests.

Multiple tea party groups reported significant delays and excessive questioning from IRS officials while trying to obtain 501(c)(4) status.

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While the groups and conservative members of Congress cried foul, the agency strongly contests the notion that groups were targeted out of political bias.

Lois Lerner, director of tax exempt organizations for the IRS, said on a conference call Friday that the IRS office in Cincinnati that handles most applications for 501(c)(4) status had seen a strong uptick in applications of 1,500 to 3,400 between 2010 and 2012.

Any applications that were incomplete, lacked consistent information, or indicated a group would be involved with some type of advocacy, were filed into a certain group for further review.

However, approximately 75 of the 300 groups that were filed for further review were simply filed because they had the names "tea party" and "patriot," Lerner said.

"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."

Lerner did not disclose what the remainder of the 300 groups had in common, or whether they had any political affiliations. She repeated that they ranged across a "broad spectrum" of groups and did not release any names.

"It was an error in judgment and it wasn't appropriate," Lerner said. "But that's what they did."

The AP first reported Friday's IRS admission, when Lerner answered a question about the issue at a conference in Washington. The IRS later held the conference call with reporters.

Groups applying for tax exempt status are allowed to do advocacy, 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.

However, when the IRS employees were seeking to make that determination, Lerner admitted they went too far.

"Some of the letters were far too broad," she said, adding that some asked for donor lists. "When this came to my attention, we took some action to try and undo some of these things."

See a sampling of a questionnaire (provided by The American Center for Law and Justice).

When Eric Wilson, executive director for the Kentucky 9/12 Project, filed for not-for-profit status in December 2010, he was told he'd receive a response within 90 days. What he received instead was an inquiry with a total of 88 questions asking for what he describes as "far reaching information."

They wanted membership lists and detailed information about directors of the group, such as their private activities outside the organization, he said. They also requested copies of pages on their website and social media accounts, such as Facebook and Twitter.

To comply with every request, Wilson said it would have required 5,000 printed pages. "They were trying to bury us in time and money," he said.

Wilson responded with a one-page letter, saying the questionnaire was beyond normal requests and they would not comply. He started noticing posts online and through contact with like-minded conservative groups that they were receiving similar questions from the IRS.

Last month, on April 1, Wilson finally received his approval letter from the agency in a 200-word letter, simply stating they had been designated a 501(c)(4) organization with no explanation for the delay.

While Wilson described the IRS' comments today as a "victory for free speech and liberty," he still wants more questions answered and called for further review.

The issue began getting national attention, with members of Congress weighing in and legal groups fighting on behalf of the conservative groups. In March 2012, a dozen U.S. senators led by Sen. Orrin Hatch, R-Utah, and Sen. Rob Portman, R-Ohio, sent a letter to IRS Commissioner Douglas Shulman asking for more information about this situation.

The American Center for Law and Justice in Washington represented 27 of the groups and lobbied for action to be taken on the matter.

"The IRS admission and apology should have come much sooner," Jay Sekulow, Chief Counsel of the ACLJ, said. "It took the threat of legal action to get the IRS to make this admission. And while many of the organizations we represent have finally been granted tax-exempt status, we demand the IRS to immediately approve the pending applications for the remainder of our clients."

Tom Zawistowski, executive director for the Portage County TEA Party who helped lead the then-Ohio Liberty Council, also experienced difficulty for three years and worked with the ACLJ. He said Friday the apology was "appropriate."

"I think it was without doubt wrong. We knew it was wrong in the beginning," he said. "They had no right, whatsoever, right to deny us tax exempt status that 501(c)(4) groups routinely received."

Zawistowski said he has a four-inch thick binder of stuff they were asked to send, including speakers lists and printouts of every page from its website and Facebook page, every tweet.

Click here and here to see the questionnaire sent to Zawistowski.

He also refused to comply. Zawistowski applied for the status in June 2009 and received final confirmation on December 22, 2012.

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."

Reaction to the IRS' admission was swift. House Majority Leader Eric Cantor announced Friday the House would investigate the matter, saying in a statement "the IRS cannot target or intimidate any individual or organization based on their political beliefs."

Senate Republican Leader Mitch McConnell called on the White House to conduct "a transparent, government-wide review" to ensure similar practices weren't being carried out at other agencies.

McConnell, who called an apology from the IRS insufficient, deemed the IRS tactics "political thuggery" with no place in American politics.

"Now more than ever we need to send a clear message to the Obama Administration that the First Amendment is non-negotiable, and that apologies after an election year are not an sufficient response to what we now know took place at the IRS," McConnell wrote in a statement.

The left-leaning American Civil Liberties Union also called out the IRS.

"Even the appearance of playing partisan politics with the tax code is about as constitutionally troubling as it gets," Michael Macleod-Ball, chief of staff at the ACLU's Washington legislative office, said in a statement. "With the recent push to grant federal agencies broad new powers to mandate donor disclosure for advocacy groups on both the left and the right, there must be clear checks in place to prevent this from ever happening again."

Tea Party groups were similarly incensed. The Tea Party Patriots, one of the nation's largest, rejected an IRS apology and insisted on resignation from the officials involved in the targeting.

"The IRS has demonstrated the most disturbing, illegal and outrageous abuse of government power," wrote Jenny Beth Martin, national coordinator for Tea Party Patriots, in a statement. "This deliberate targeting and harassment of tea party groups reaches a new low in illegal government activity and overreach."

Meanwhile, two Republicans on the House Oversight Committee, Chairman Darrell Issa and Rep. Jim Jordan, wrote in a joint statement, "The fact that Americans were targeted by the IRS because of their political beliefs is unconscionable. The Committee will aggressively follow up on the IG report and hold responsible officials accountable for this political retaliation."

The Democratic chairman of the Senate Permanent Subcommittee on Investigations, Sen. Carl Levin, also said an investigation into the matter was required.

Treasury Spokesman Anthony Coley said his department would "fully support the IRS Inspector General's review of this matter."

"The Treasury Department expects all individuals and organizations to be treated fairly by the IRS. Anything less is inappropriate and unacceptable," Coley said.

Jay Carney, President Barack Obama's press secretary, said Friday the IRS' actions were "inappropriate."

"We would fully expect the investigation to be thorough and for corrections to be made in a case like this," Carney continued. "And I believe the IRS has addressed that and has taken some action, and there's an investigation ongoing."

Of the 300 groups that were filed for further review, 130 have been approved, 180 are still in process and about 25 are under review, Lerner said.

Asked when the IRS began looking into complaints, Lerner said she could not give a time frame. Pressed further on when senior IRS officials became aware of the situation, Lerner said she "did not feel comfortable answering."

Lerner said they have implemented changes to prevent similar mistakes in the future. When asked if there has been disciplinary action, Lerner said "No." Attempting to clarify later, she said she meant to say she wouldn't comment on personnel issues.

Filed under: IRS • Tea Party
soundoff (312 Responses)
  1. Dude in Colorado

    However, approximately 75 of the 300 groups that were filed for further review were simply filed because they had the names "Al Que'da" and "jihad," Lerner said.

    "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."

    Would anyone care if the story read like this?

    May 12, 2013 03:29 pm at 3:29 pm |
  2. JnP

    Liberal media tucks the story away under the heading of "mistakes admitted" effectively glossing over the true story - a government organization exhibits political bias through an abuse of power. I do however give credit to Lerner for admitting the action happened.. unfortunately he is naive to assume it wasn't a silencing maneuver his powerful employees used against a rising political opposition.

    May 12, 2013 03:49 pm at 3:49 pm |
  3. MesaMax

    Nixon used the IRS against his enemies. NIxon directed the Watergate Coverup. Now Obama used the IRS against his enemies. Now Obama directed the Benghazi Consulate Massacre Coverup. Same actions, same final result??

    May 12, 2013 05:02 pm at 5:02 pm |
  4. MB

    "the number of groups seeking tax-exempt status more than doubled from 2010 to 2012, to more than 3,400.: "... some withdrew their applications." This should tell you something. Let's investigate the IRS's behavior, yes, no doubt... but let's be thorough – they should also investigate those complaining organizations who's applications were approved to check that their activities were on the up and up. I'd be willing to bet there'd be some interesting things found there also...

    May 12, 2013 05:19 pm at 5:19 pm |
  5. Shankar

    IRS Need to be abolished along with FED. These entities are "Anti Constitution of States".

    May 12, 2013 06:58 pm at 6:58 pm |
  6. mbondr

    Out of 1,500 to 3,000 more applications, 175 to 300 where picked because they had the name "Patriot" or "Tea Party" in them? Huh? Was that written down somewhere? Is there a form that asks, "And Auditor, you picked this applications becasue . . ."? And Lois Lerner, director of tax exempt organizations for the IRS, knows this how? A Director? A middle level manager is making public statements? Who is pushing this story? CNN, you really have to start thinking. Your market share is dying with your audience. You can't be the new Fox News.

    May 12, 2013 07:15 pm at 7:15 pm |
  7. Rina

    If it were up to me, NONE of these "agencies" would have tax-exempt status. Let them pay their taxes like everyone else. Same with churches. Tax them too. I'm sick of certain groups getting a free ride. EVERYBODY pays their fair share. Corporations are people too, right? Let them pay as well and then we wouldn't HAVE this nonsense.

    May 12, 2013 07:51 pm at 7:51 pm |
  8. independent

    GOOD JOB IRS !!!...keep up the good work

    May 12, 2013 08:02 pm at 8:02 pm |
  9. elle

    It's an abuse of 501c4 ststus to play politics too. Calling a political organization a "social welfare group" is the biggest joke ever.

    I was on the Board of Directors for a sports organization that advocates healthy activities for women, coaches teens and mentors them in sports, volunteers time and gives money to rape advocacy groups and animal shelters and urban hunger relief groups and WE were given the third degree about being given a non-profit status. We were turned down initially for a 501c3 and were made to produce every bit as much evidence as they were and it took just as long. That is part of the process. It is long and detailed so people aren't given a tax exempt status when they shouldn't be.

    If these clowns want to cry about being treated LIKE EVERYONE ELSE, they probably should complain about the process itself.

    May 12, 2013 08:04 pm at 8:04 pm |
  10. Pat

    Is this the next phase, a sort of antithesis of McCarthyism?

    May 12, 2013 09:32 pm at 9:32 pm |
  11. simplyput

    This article had around340 comments at 3pm today; now it has just over 300. Mine is now missing, so I repeat: Dems who are *leaning forward* will be falling off their chairs when the IRS begins controlling Obamacare. This is not about political parties, rather private property...with a dash of Aegism.

    May 12, 2013 09:57 pm at 9:57 pm |
  12. simplyput

    Make that ageism

    May 12, 2013 09:58 pm at 9:58 pm |
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