How the IRS seeded the clouds in 2010 for a political deluge three years later
In early 2010, an Internal Revenue Service team in Cincinnati began noticing a stream of applications from groups with political-sounding names, setting in motion a dragnet aimed at separating legitimate tax-exempt groups from those working to get candidates elected.
The IRS officials decided to single out one type of political group for particular scrutiny. “These cases involve various local organizations in the Tea Party movement,” read one internal IRS e-mail sent at the time.
A few hours north in Fremont, Ohio, the owners of a drainage supply shop, Tom and Marion Bower, were wondering why it was taking so long to get a tax exemption for their new tea party group.
“I didn’t think any of us thought we’d be targeted,” said Marion Bower, of American Patriots Against Government Excess. “We started the group because we wanted to learn about our country and educate people. Now I’m becoming a little paranoid. If they can do this, what else can they do?”
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According to the inspector general’s report, as IRS officials in Cincinnati tried to decide what to do about the groups — political advocacy organizations seeking what is known as 501 (c)(4) status — they sent out intrusive questionnaires seeking donor lists, copies of meeting minutes and reams of other documents. Applications sat around for months, sometimes years; some organizations ended up folding while awaiting answers that never came.
IRS officials in Cincinnati were ignorant of the law and did not recognize that they should not scrutinize groups solely based on terms such as “tea party,” “patriots” and other conservative-sounding descriptions in their names, the inspector general’s report said. Many liberal-leaning and nonpolitical groups were also caught up in the effort.
At the same time, the IRS faced growing criticism from the outside that it was not doing enough to examine an increasing number of politically active groups seeking tax-exempt status.
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The desire by the Bowers to form a nonprofit group reflected two broader trends in American politics. First was the rise of the tea party movement — hundreds of local organizations, frustrated by spending in Washington and the growing national debt, whose power would soon be seen in local, state and, in 2010, congressional elections.
Second, campaign finance laws were changing. In January 2010, the Supreme Court ruled in Citizens United v. Federal Elections Commission that corporations and unions could spend unlimited funds on elections, setting off a tidal wave of political spending that would wash over the next two election cycles.
Nonprofit groups that do not have to pay taxes are supposed to ensure that political activity is not their primary purpose, so evidence that some of the new organizations seeking tax-exempt status were fronts for campaign organizations drew bipartisan interest. Good-government groups started pressuring the IRS to more closely scrutinize applicants. One such group, Democracy 21, wrote a series of letters to the IRS arguing that many of the groups should not receive favored tax status.
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By late summer 2010, the IRS officials in Cincinnati, part of what was called a “determinations unit,” decided they needed a better way to track the influx of advocacy groups. It had been an informal process before — just e-mails sent out among the team highlighting groups that might need closer scrutiny.
They created a spreadsheet of group names and activities to watch, called a “be on the lookout” list, or BOLO, borrowing jargon used by police. The list soon included 40 groups, including 22 with “tea party” in their names.
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The Bowers were frustrated, too. In 2010, they had called the IRS to see what was happening with their application. “They said they were behind but they were getting to it,” Marion Bower said. The same thing happened in the spring of 2011.
It took two years from when they applied to get a response. In a letter, the IRS said it wanted copies and recordings of all speeches given at their group’s meetings. They wanted notes and copies of every handout or brochure distributed at all events they organized or participated in. It took three weeks to gather the materials, which amounted to about 80 pages, the Bowers said.
Marion Bower told them about films they showed, including the “American Heritage Series,” consisting of 10 DVDs about the early history of the United States recounted by evangelical minister David Barton, and a book the group read about the Founding Fathers, “The 5000 Year Leap.”
“They wanted a lot of information, and they wanted it quickly,” Bower said. “Each set of questions had a subset of questions. And none of them were yes or no. But the questions themselves did not seem that outrageous with the first letter.”
A second letter came with dozens of additional questions. The IRS wanted a synopsis of films the group may have shown or books the group may have read. Bower was outraged.
“I’m a 68-year-old woman. I don’t do book reports anymore, and I certainly don’t do them for the IRS,” she said. “I sent them copies of everything, including the book. It’s not a very thick book, and it’s not ‘Mein Kampf,’ for Pete’s sake. They can read it if they want.”
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Throughout 2012, Lerner and other officials were quietly trying to come up with new policies for examining nonprofits. Higher-level officials, including then-IRS Commissioner Douglas H. Shulman, a George W. Bush appointee, and his deputy, career employee Steven T. Miller, became aware of the problems. They instituted new internal rules in an effort to make sure the issues did not recur.
But the IRS did not tell the public or Congress about what was going on. On May 9 of this year, knowing that the inspector general’s report was imminent, Lerner called a member of the IRS’s tax-exempt advisory council. Lerner requested that the council member ask her at a conference the next day about the status of tax-exempt organizations that were facing additional scrutiny.
The next morning, Lerner responded to the planted question, acknowledging that the IRS had improperly scrutinized conservative groups. She apologized. She held a conference call later that day in which she struggled to answer a fusillade of questions from reporters, at one point exclaiming in response to a query about the specific number of groups targeted, “I’m not good at math.”
full: http://www.washingtonpost.com/politics/how-the-irs-seeded-the-clouds-in-2010-for-a-political-deluge-three-years-later/2013/05/19/b707d940-bf10-11e2-97d4-a479289a31f9_singlePage.html
this article does acknowledge " Many liberal-leaning and nonpolitical groups were also caught up in the effort."
= new reply since forum marked as read
