House Oversight and Government Reform Committee Chairman Darrell Issa, R-Calif., today released a new staff report, “The Internal Revenue Service’s Targeting of Conservative Tax-Exempt Applicants: Report of Findings for the 113th Congress.” 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.The report’s conclusion reads in part:
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.”
Highlights of the report:
“Org gives me an icky feeling” — IRS employees scheme to deny applicant for tax exempt status they find distasteful (p. 95):Employee 1: “It appears that the org is funneling money to other orgs for political purposes. However, 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). . . . Any thoughts or feedback would be greatly appreciated.”Employee 2: “I think there may be a number of ways to deny them. Let me talk to Sharon [Light] tomorrow about it and get some ideas from her as well. . . . This sounds like a bad org. :/ . . . This org gives me an icky feeling.”IRS employee on why he thought Tea Party organizations were different from other applicants (p.161):“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).”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.”Nearly a year before scandal broke, former IRS Acting Commissioner Stephen Miller considered telling Congress about targeting scandal before the election 2012 election – but never did (p. 122):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.”Committee faults 8 senior leaders at IRS for targeting and failure to appropriately respond (p. 111):
The Committee has identified eight senior leaders who were in a position to prevent or to stop the IRS’s targeting of conservative applicants. Each of these leaders could have and should have done more to prevent the IRS’s targeting of conservative tax-exempt applicants.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 is not a final report on the IRS Targeting scandal but it nonetheless draws on more documents and interviews than any other report released to date. IRS continues to produce responsive documents and other federal agencies have yet to fully comply with the Committee’s requests for information. The Committee presents these facts and understandings as the 113th Congress concludes to inform the public about what it has learned and what remains clouded in secrecy. Recent revelations that e-mails from officials like former Exempt Organizations Director Lois Lerner, which the IRS once said were lost forever, can now be recovered offers renewed hope that more answers may come in the next Congress.Click here for a link to the report, “The Internal Revenue Service’s Targeting of Conservative Tax-Exempt Applicants: Report of Findings for the 113th Congress”
