How the IRS Targeted Tea Party Groups for Abuse

The government agency apologizes, says "mistakes were made."


Did the Internal Revenue Service politically target conservative organizations when "front line" IRS employees stalled applications for tax-exempt status?

Absolutely not, said Lois Lerner, director of the IRS' exempt organizations unit. There was no political motivation at all.

Still, Lerner, during a press conference Friday afternoon, issued an IRS mea culpa for employees who inappropriately flagged organizations with the descriptors, "tea party" or "patriot," for further review.

"We had a shortcut in the process. It wasn't appropriate.  We learned about it and we fixed it," Lerner answered emphatically Wisconsin Reporter's question whether the delays were politically motivated.

But several conservative organizations cried foul during, and many Tea Party organizations filing for 501(c)(4) tax-exempt status said the IRS peppered them with excessive questions to prove they were eligible for the exemption.

Lerner confirmed that employees at a Cincinnati IRS office in 2012 flagged 300 applications for tax-exempt status, and a quarter of those were from the conservative groups. When asked for an exact number, and whether it was safe to assume that 75 applicants were Tea Party or patriot groups, Lerner said, "I'm not good at math."

"But you're with the IRS," a reporter shot back.

"I'm a lawyer," Lerner responded.

Apparently, there were no liberal-sounding organizations flagged.

A 501(c)(4) is designated for the promotion of social welfare and cannot include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office.

"However, a section 501(c)(4) social welfare organization may engage in some political activities, so long as that is not its primary activity. However, any expenditure it makes for political activities may be subject to tax under section 527(f)," according to the IRS.

Lerner claimed the problem was that low-level IRS agents saw a higher number of incomplete or questionable applications come in from "tea party" and "patriot" organizations — questions about the groups' political involvement. So, the employees began putting the "tea party" and "patriot" marked applications in a "bucket."

Earlier, the IRS released an apology — kind of.  It said between 2010 and 2012, the agency saw the number of applications for 501(c)(4) status double.

"As a result, local career employees in Cincinnati sought to centralize work and assign cases to designated employees in an effort to promote consistency and quality. This approach has worked in other areas.

"However, the IRS recognizes we should have done a better job of handling the influx of advocacy applications. While centralizing cases for consistency made sense, the way we initially centralized them did not. Mistakes were made initially, but they were in no way due to any political or partisan rationale."

Conservative groups call bull.

Tom Zawistowski, executive director of the Portage County TEA Party in Ohio and past president of the Ohio Liberty Coalition, said in a statement that the organization will accept Lerner's apology because "what the IRS did was wrong and we proved it was wrong."

"However, we cannot accept her statement that this attack on our organizations and our liberty was orchestrated by low-level IRS employees in the Cincinnati office. We have proof that the same questions were being asked of groups from Virginia to Hawaii. We have further proof that agents admitted that they were being told by 'higher ups' not to process applications from "TEA Party Groups."

Members of Congress began asking questions of the IRS last year. In Friday's press conference, Lerner said administrators did not know the extent of the problem at the time. Asked why the IRS hasn't issued an apology sooner, Lerner said the IRS was moving to correct the situation.

Asked by Wisconsin Reporter whether any Wisconsin conservative organizations were flagged, Lerner said she could not say.

It appears the Rock River Patriots were.

Marv Munyon, secretary/treasurer for the organization, told Watchdog.org he applied for 501(c)(4) for the group in April 2012. The organization has yet to be approved, although the IRS cashed the Rock River Patriots' application fee of $400 on May 2, 2012, according to Munyon.

He said all he's received for his trouble is the "runaround," that he was sent from one agent to the next, over and over again.

"Finally, a lady told me, 'Your application has been received but it hasn't been referred to anyone to look at yet.' I said, 'What does that mean?' She said, 'It hasn't been put into process at all yet,'" he said.

He said he received a letter on Jan. 29, 2013, informing him that, "the initial screening of the application of your case should be assigned to an exempt organizations specialist for technical review. We assign applications to specialists in the order that we receive them."

The letter further states, "Unfortunately, we are experiencing delays in working applications that require further development."

Although he has filed the organization's tax forms, noting the tax-exempt application was pending, Munyon said he still is awaiting word from the IRS.

"I just got a bunch of static out of the IRS," he said.

Lerner declined to say whether agents had been disciplined for flagging the applications from conservative groups. She said 130 of the 300 applications have been approved, 25 were withdrawn, and the rest still are in process. None has been rejected, Lerner said.

"It is important to recognize that all centralized applications received the same, even-handed treatment, and the majority of cases centralized were not based on a specific name. In addition, new procedures also were implemented last year to ensure that these mistakes won't be made in the future. The IRS also stresses that our employees — all career civil servants — will continue to be guided by tax law and not partisan issues," the IRS said in its statement.

This article originally appeared at Watchdog.org.