MUCH More Than a Smidgen--Issa Releases Report On IRS Targeting Of Tea Party Groups

The Republicans in the House Oversight and Government Reform Committee led by Chairman Darrell Issa (R-CA) released a new staff report with a very long name “The Internal Revenue Service’s Targeting of Conservative Tax-Exempt Applicants: Report of Findings for the 113th Congress.” (embedded below) The report represents findings from the review of over 1.3 million pages of documents and 52 transcribed interviews with IRS, Treasury, and Justice Department employees and lays out the story of the IRS targeting of conservative  organizations.

For twenty-seven months, from February 2010 until May 2012, the Internal Revenue Service systematically targeted conservative tax-exempt applicants for additional scrutiny and delay. The IRS’s targeting of conservative tax-exempt applications was just one symptom of the Administration’s broader response to perceived shortcomings of federal campaign-finance law and the Citizens United decision. As prominent Democratic politicians and the media condemned conservative non-profit groups, the IRS sought ways to rein in the groups’ political speech. Lois Lerner initiated a “c4 project” – careful to ensure that it was not “per se political” – and called applications filed by Tea Party groups “very dangerous” because she believed that they could undo existing IRS limits on non-profit political speech.

The report indicates more than a smidgen of corruption. Although not a final report, Issa did give some insight into why the IRS targeted Tea Party groups and found emails indicating a strong bias against conservative groups.

“These [Tea Party] organizations mostly concentrate on their activities on the limiting government, limiting government role, or reducing government size, or paying less tax. I think it[‘]s different from the other social welfare organizations which are (c)(4).”

Issa's report contained emails which seemed to indicate a visceral hatred of the Tea Party by IRS workers, a fact that is pointed out in the report's conclusion:

Conservative organizations were not just singled out because of their political beliefs—they were targeted by IRS officials and employees who expressed a general loathing toward them even while begrudgingly admitting that those organizations were in compliance with the only thing the IRS should care about: the federal tax code. Documents and interviews show IRS officials failed to limit their professional judgments to enforcing the tax code and instead inserted their own beliefs and judgments into federal matters to influence outcomes and decisions. One IRS agent wrote about an organization applying for 501(c)(4) status that donated to other organizations that engaged in political activity, “I’m not sure we can deny them because, technically, I don’t know that I can deny them simply for donating to another 501(c)(4).” Another agent responded, “This sounds like a bad org . . . This org gives me an icky feeling.

Also pertinent was that the committee found that acting head of the IRS, Stephen Miller, discussed spilling the beans about the targeting of conservative groups before the 2012 election but never did:

In one e-mail to Nikole Flax, Miller wrote: “I am beginning to wonder whether I should do [Chairman] Boustany[’s hearing] and affirmatively use it to put a stake in politics and c4.” Flax responded: “[I]f the hearing is as generic as I recall, seems like you are too senior. Would be silly to think the c4 issues won’t come up – but I think Sarah [Hall Ingram] could handle it fine as well.”

The targeting was finally revealed by Lois Lerner via a planted question during a speech she made in May 2013.

Other key points made by the committee include:

IRS employee flags bias of colleague (p. 161):

Quoting an e-mail from a top deputy to Lois Lerner: “This line in particular stood out: ‘We suspect we will have to approve the majority of c4 applications.’ That’s an interesting posture.” Emphasis of “have to” is employee’s own.

Lois Lerner and other IRS officials looked to “gift tax” to help crack down on politically active non-profits (p. 92):

In May 2011, an attorney in the IRS Chief Counsel’s office wrote to his superiors that the “plan is to elevate the issue of asserting gift tax on donors to 501(c)(4) organizations to the Chief Counsel and the Commissioner.” On July 1, 2011, IRS Associate Chief Counsel Curt Wilson issued a memorandum to Chief Counsel William Wilkins on the gift tax issue. Wilson concluded that “[b]ecause there is no specific exemption from the gift tax for a contribution to an organization exempt from income tax under § 501(c)(4), a contribution to such an organization is subject to gift tax under § 2501.” Lerner, another e-mail shows, supported this conclusion: “[T]o be clearer, the courts have said specifically that contributions to 527 political organizations are not subject to the gift tax – nothing that I am aware of about contributions to organizations that are not political organizations.”

In the end, the report singles out eight IRS senior managers who were in a position to stop the targeting of conservative groups but didn't. In some cases, they helped the targeting along.

The eight: Doug Shulman, Former Commissioner; Jonathan Davis, Chief of Staff to Shulman; Steven Miller, Former Acting Commissioner; Nikole Flax, Chief of Staff to Miller; William Wilkins, Chief Counsel; Joseph Grant, Former Acting Commissioner, Tax Exempt and Government Entities; Lois Lerner, Former Director, Exempt Organizations; Holly Paz, Director, Rulings and Agreements.

The report does not name anyone in the White House but it doesn't mean they are free and clear. Issa insists there will be an additional investigation once the committee begins to meet under new Chairman Jason Chaffetz in the next Congress.

Embedded below is the entire report, found in Targeting the Tea Party.

Targeting the Tea Party by Jeffrey Dunetz