IRS officials knew of agents’ tea party targeting in 2011
May 11th, 2013
06:16 PM ET
9 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.

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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

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. kg

    I wonder how many people on the tea party membership lists also got audited on their personal income tax returns. This is criminal, or should be, when you think about the implications. A government agency intentionally interfering with the election. You can certainly tell a Chicago Democrat is in office!

    May 11, 2013 10:55 pm at 10:55 pm |
  2. mark parker

    Why is this not a lead story?

    May 11, 2013 11:10 pm at 11:10 pm |
  3. Sarcastro

    Stop worrying about the IRS and keep those watchful eyes on Russia please. The country needs you as our first line of defense against those Russian Nazi Commies.

    May 11, 2013 11:12 pm at 11:12 pm |
  4. jon

    Further proof that unless people hold dear their second amendment that one day something will happen to make them wish they had.

    May 11, 2013 11:15 pm at 11:15 pm |
  5. Just

    Lets see if the administration blames this on a U Tube video. Hope and change is here.

    May 11, 2013 11:20 pm at 11:20 pm |
  6. Georgie

    The countdown has begun!, ...How long before these GOP/Tea Party fools blame President Obama?

    May 11, 2013 11:20 pm at 11:20 pm |
  7. frangarawr

    That's interesting.

    May 11, 2013 11:21 pm at 11:21 pm |
  8. Larry L

    If a group makes it public they detest our federal government and do not want to pay federal taxes why wouldn't they be more likely to cheat? Why wouldn't they get closer scrutiny?

    May 11, 2013 11:42 pm at 11:42 pm |
  9. Flora

    I don't care if you're liberal, conservative or sane, this is a disgustingly corrupt practice.

    May 11, 2013 11:42 pm at 11:42 pm |
  10. Dave

    No surprise here. The current administration has never had a problem taking shortcuts. Looking back at the Obama administration, the rhetoric is inspiring, but the reality of how policies have been applied have been a dark reflection of the promise. From ACORN to Bengazi to this, the administration has repeatedly lived somewhere between condoning and participating in criminal activity.

    In this case, it seems like pretzel-logic for the IRS to admit to placing additional scrutiny on Tea Party groups while denying that the scrutiny was biased. While I would identify myself as being pretty far to the left of the Tea Party, I am disappointed by the relatively low ethical standard demonstrated in this administration from the top down.

    May 11, 2013 11:43 pm at 11:43 pm |
  11. Jim Vanderber

    I'm sure that Obama is eternally grateful to the IRS for all it's help in his reelection campaign.

    May 11, 2013 11:47 pm at 11:47 pm |
  12. Foodpimp

    This should scare everyone.

    May 11, 2013 11:49 pm at 11:49 pm |
  13. Name Uche Agonsi

    Come on folks, these Tea Party Chaps are wheedles. They talk, laugh, breath, & even mess tax cuts.....give me some credits here, they derserve special tax scrutiny.

    May 11, 2013 11:50 pm at 11:50 pm |
  14. Bhaadu

    THIS fits the classical definition of IRONICAL! lol!

    May 11, 2013 11:52 pm at 11:52 pm |
  15. Kss

    Of course the tax man is going to target the anti-tax folks!

    May 11, 2013 11:54 pm at 11:54 pm |
  16. lex

    Its about time the corrupt Obama administration is attacked by the media. Fair is fair.

    May 11, 2013 11:59 pm at 11:59 pm |
  17. freedom

    LOL implying the IRS, Republicans, and Democrats aren't all on teh same Wall Street / Banker-owned team anyways.

    May 12, 2013 12:06 am at 12:06 am |
  18. Oscar Otega

    Another agency of our goverment thats corrupt! Whats new? Revolt take back your country.

    May 12, 2013 12:07 am at 12:07 am |
  19. Bob

    Liberal fascist operating in the worst possible manner. These people need to be fired and even prosecuted.

    May 12, 2013 12:08 am at 12:08 am |
  20. Oscar Otega

    Cant understand why the American people are so upset with their goverment, they ile, the feed us misinformation, and they forget who they work for. Someone needs to answer for this. Some heads better roll.

    May 12, 2013 12:12 am at 12:12 am |
  21. Melanie

    I don't understand the problem. Any group with "patriot" or "Tea Party" in it's name is suggestive of a political rather than non-profit motive. The IRS is not obligated to play ignorant..

    May 12, 2013 12:22 am at 12:22 am |
  22. cgs

    BO and his administration are a bunch of corrupt, bully thugs! Congratulations America for voting with such stupidity!

    May 12, 2013 12:23 am at 12:23 am |
  23. Mel Glen

    Sounds like we need to have some heads of the IRS face prosecution for abuse of power.

    May 12, 2013 12:26 am at 12:26 am |
  24. Emmanuel Goldstein

    What is only briefly touched upon is that the 501s can't be political organizations. This is called using common sense. An organization that has tea party in its name is obviously most likely a political organization. The same people that think this is horribly immoral are the same people that think its okay to pull over someone who is black because "black people commit more crime".

    May 12, 2013 12:33 am at 12:33 am |
  25. scootfl78

    Shouldn't a group that has anti-American rhetoric with their posters, slogans, and speakers that speak of taxes as if its the devil's work be targeted by the government agency that's in charge of enforcing the payment of taxes?

    Why are conservatives so upset about this if they keep claiming otherwise the government isn't doing its job? The IRS was doing its job here. Geeze, its so unlike conservatives to be this hypocritical....oh wait...I'm getting conservatives confused with decent people.

    May 12, 2013 12:39 am at 12:39 am |
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