WASHINGTON — The Internal Revenue Service’s special scrutiny of small-government groups applying for tax-exempt status went beyond keyword hunts for organizations with “Tea Party” or “patriot” in their names, to a more overtly ideological search for applicants seeking to “make America a better place to live” or “criticize how the country is being run,” according to a part of an inspector general’s report that was given to Congress.
The head of the division on tax-exempt organizations, Lois Lerner, was briefed on the effort in June 2011, seemingly contradicting her assertion on Friday that she learned of the effort from the press. But she seemed to work hard to rein in the focus on conservatives and change it to a look at any political advocacy group of any stripe seeking tax exemptions.
The new information will only add to the criticism that has emerged since Lerner apologized to Tea Party and other conservative groups on Friday for unwarranted scrutiny. A lengthy audit from the Treasury Department’s Inspector General for Tax Administration is set to be released this week.
House Republicans have vowed to begin their own hearings and investigations.
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Sen. Susan Collins, R-Maine and a prominent moderate, said Sunday on CNN that the singling out of conservative groups was “absolutely chilling.”
The IRS has been under pressure from Democrats and campaign-finance watchdogs for some time to crack down on abuse of the 501(c)4 tax exemption, which is supposed to go to organizations primarily promoting “social welfare” but which is routinely granted to overt political advocacy groups.
The appendix of the inspector general’s report — which was requested by the House Oversight and Government Reform Committee and has yet to be publicly released — chronicles the extent to which the IRS’s exempt organizations division kept redefining what sort of “social welfare” groups it should single out for extra attention since the 2010 Supreme Court ruling Citizens United v. Federal Election Commission. That decision allowed corporations and labor unions to raise and spend unlimited sums on elections as well as register for tax-exempt status under section 501(c)4 of the tax code, as long as their “primary purpose” did not consist of targeting electoral candidates.
The number of political groups applying for tax-exempt status more than doubled in the wake of the Supreme Court’s decision in the Citizens United case, forcing agency officials to make a slew of determinations despite uncertainty about the category’s ambiguous definition.
On June 29, 2011, according to the documents, IRS staffers held a briefing with Lerner in which they described giving special attention to instances where “statements in the case file criticize how the country is being run.” She raised an objection and the agency adopted a more general set of standards. Lerner, who is a Democrat, is not a political appointee.
But the inspector general’s timeline showed the effort to single out Tea Party groups goes back to March 2010 when a special Determinations Unit in the Cincinnati office of the IRS began searching tax-exemption applications from groups using the names “Tea Party,” “patriots” or “9/12,” a movement begun by Glenn Beck. The unit was also looking for “applications involving political sounding names” like “We the People” or “Take Back the Country,” according to the document.
That time frame brought the “Be On the Lookout” list back to the Tea Party movement’s early months, well before the November 2010 congressional elections, when the movement helped fuel a historic Republican landslide.
On June 29, 2011, the document states, Lerner was briefed on the effort, and by then the search appeared even more refined to conservative organizations. Beyond “Tea Party,” “Patriots” and “9/12 Project,” the Cincinnati team was looking at issues of government spending, debt and taxes; education efforts to “make America a better place to live”; and statements in the case file that “criticize how the country is being run.”
Lerner said Friday that the terms “Tea Party” and “patriots” were used as a “shortcut” by the unit, not as a tool to single out any one political outlook. But the timeline suggests that the search went well beyond a few keywords. More than 100 applications had been identified by that briefing, using criteria with distinctly conservative undertones.
Just days later, on July 5, a conference call involving Lerner, a manager of the Determinations Unit and others substantially broadened the search to take out its overt conservative bias. Instead, the lookout list was changed to “organizations involved with political, lobbying or advocacy for exemptions under 501(c)3 or 501(c)4,” a criteria much more in line with concerns that overt political advocates were receiving special tax protection.
But repeated revisions of the lookout list kept lapsing back to the original search. In January 2012, for instance, the search parameters were again revised to “political action-type organizations involved in limiting/expanding Government, educating on the Constitution and Bill of Rights, social economic reform/movement,” criteria broad enough to ensnare liberal organizations as well but seemingly still homed in on the Tea Party’s outspoken views.
On Feb. 29, 2012, just as a rash of news articles began publicizing complaints of harassment from Tea Party applicants, Lerner ordered a stop to the issuance of any additional information request letters by the Cincinnati unit, the beginning of an extended process of pulling back the scrutiny.
The accusations of IRS abuse are sure to fuel an effort that appears to be uniting dispirited Republicans and their conservative political base: investigating Obama and his administration. Republicans are pushing a portrayal of an administration overreaching its authority and punishing its enemies.
“The bottom line is they used keywords to go after conservatives,” Rep. Darrell Issa, R-Calif., the chairman of the House Oversight and Government Reform Committee, said Sunday on the NBC News program “Meet the Press.” He requested the inspector general’s audit along with another Republican, Rep. Jim Jordan of Ohio.
Republicans got little political traction last year when they highlighted the “Fast and Furious” operation by the Bureau of Alcohol, Tobacco, Firearms and Explosives, in which guns that were supposedly being tracked by the agency were instead lost to drug cartels in Mexico.
But the Republican focus on attacks on U.S. officials in Benghazi, Libya, got new life last week when Gregory Hicks, a State Department critic of the military’s response, told a House committee that he had been effectively demoted after lodging his criticism.
Rep. Eric Cantor of Virginia, the House majority leader, has promised a broad investigation, and Rep. Dave Camp of Michigan, the chairman of the House Ways and Means Committee, said on Friday that he would hold hearings soon.