Skip to comments.House Report: Lois Lerner's Involvement in the IRS Targeting of Tax-Exempt Organizations
Posted on 03/11/2014 7:49:34 AM PDT by kristinn
II. Executive Summary
In February 2012, the Committee on Oversight and Government Reform began investigating allegations that the Internal Revenue Service inappropriately scrutinized certain applicants seeking tax-exempt status. Section 501(c)(4) of the Internal Revenue Code permits incorporation of organizations that meet certain criteria and focus on advancing social welfare goals.1 With a 501(c)(4) designation, such organizations are not subject to federal income tax. Donations to these organizations are not tax deductible. Consistent with the Constitutionally protected right to free speech, these organizations commonly referred to as 501(c)(4)s may engage in campaign-related activities provided that these activities do not comprise a majority of the organizations efforts.2
On May 12, 2013, the Treasury Inspector General for Tax Administration (TIGTA) released a report that found that the Exempt Organizations (EO) division of the IRS inappropriately targeted Tea Party and other conservative applicants for tax-exempt status and subjected them to heightened scrutiny.3 This additional scrutiny resulted in extended delays that, in most cases, sidelined applicants during the 2012 election cycle, in spite of their Constitutional right to participate. Meanwhile, the majority of liberal and left-leaning 501(c)(4) applicants won approval.4
Documents and information obtained by the Committee since the release of the TIGTA report show that Lois G. Lerner, the now-retired Director of IRS Exempt Organizations (EO), was extensively involved in targeting conservative-oriented tax-exempt applicants for inappropriate scrutiny. This report details her role in the targeting of conservative-oriented organizations, which would later result in some level of increased scrutiny of applicants from across the political spectrum. It also outlines her obstruction of the Committees investigation.
Prior to joining the IRS, Lerner was the Associate General Counsel and Head of the Enforcement Office at the Federal Elections Commission (FEC).5 During her tenure at the FEC, she also engaged in questionable tactics to target conservative groups seeking to expand their political involvement, often subjecting them to heightened scrutiny.6 Her political ideology was evident to her FEC colleagues. She brazenly subjected Republican groups to rigorous investigations. Similar Democratic groups did not receive the same scrutiny.7
The Committees investigation of Lerners role in the IRSs targeting of tax-exempt organizations found that she led efforts to scrutinize conservative groups while working to maintain a veneer of objective enforcement. Following the Supreme Courts 2010 decision in Citizens United v. Federal Election Commission, the IRS faced pressure from voices on the left to heighten scrutiny of applicants for tax-exempt status. IRS EO employees in Cincinnati identified the first Tea Party applicants and promptly forwarded these applications to IRS headquarters in Washington, D.C. for further guidance. Officials in Washington, D.C. directed IRS employees in Cincinnati to isolate Tea Party applicants even though the IRS had not developed a process for approving their applications.
While IRS employees were screening applications, documents show that Lerner and other senior officials contemplated concerns about the hugely influential Koch brothers, and that Lerner advised her IRS colleagues that her unit should do a c4 project next year focusing on existing organizations.8 Lerner even showed her recognition that such an effort would approach dangerous ground and would have to be engineered as not a per se political project.9 Underscoring a political bias against the lawful activity of such groups, Lerner referenced the political pressure on the IRS to fix the problem of 501(c)(4) groups engaging in political speech at an event sponsored by Duke Universitys Sanford School of Public Policy.10
Lerner not only proposed ways for the IRS to scrutinize groups with 501(c)(4) status, but also helped implement and manage hurdles that hindered and delayed the approval of groups applying for 501(c)(4) status. In early 2011, Lerner directed the manager of the IRSs EO Technical Unit to subject Tea Party cases to a multi-tier review system.11 She characterized these Tea Party cases as very dangerous, and believed that the Chief Counsels office should be in on the review process.12 Lerner was extensively involved in handling the Tea Party casesfrom directing the review process to receiving periodic status updates.13 Other IRS employees would later testify that the level of scrutiny Lerner ordered for the Tea Party cases was unprecedented.14
Eventually, Lerner became uncomfortable with the burgeoning number of conservative organizations facing immensely heightened scrutiny from a purportedly apolitical agency. Consistent with her past concerns that scrutiny could not be per se political, she ordered the implementation of a new screening method. Without doing anything to inform applicants that they had been subject to inappropriate treatment, this sleight of hand added a level of deniability for the IRS that officials would eventually use to dismiss accusations of political motivations she broadened the spectrum of groups that would be scrutinized going forward.
When Congress asked Lerner about a shift in criteria, she flatly denied it along with allegations about disparate treatment.15 Even as targeting continued, Lerner engaged in a surreptitious discussion about an off-plan effort to restrict the right of existing 501(c)(4) applicants to participate in the political process through new regulations made outside established protocols for disclosing new regulatory action.16 E-mails obtained by the Committee show she and other seemingly like-minded IRS employees even discussed how, if an aggrieved Tea Party applicant were to file suit, the IRS might get the chance to showcase the scrutiny it had applied to conservative applicants.17 IRS officials seemed to envision a potential lawsuit as an expedient vehicle for bypassing federal laws that protect the anonymity of applicants denied tax exempt status.18 Lerner surmised that Tea Party groups would indeed opt for litigation because,in her mind, they were itching for a Constitutional challenge.19
Through e-mails, documents, and the testimony of other IRS officials, the Committee has learned a great deal about Lois Lerners role in the IRS targeting scandal since the Committee first issued a subpoena for her testimony. She was keenly aware of acute political pressure to crack down on conservative-leaning organizations. Not only did she seek to convey her agreement with this sentiment publicly, she went so far as to engage in a wholly inappropriate effort to circumvent federal prohibitions in order to publicize her efforts to crack down on a particular Tea Party applicant. She created unprecedented roadblocks for Tea Party organizations, worked surreptitiously to advance new Obama Administration regulations that curtail the activities of existing 501(c)(4) organizations all the while attempting to maintain an appearance that her efforts did not appear, in her own words, per se political.
Lerners testimony remains critical to the Committees investigation. E-mails dated shortly before the public disclosure of the targeting scandal show Lerner engaging with higher ranking officials behind the scenes in an attempt to spin the imminent release of the TIGTA report.20 Documents and testimony provided by the IRS point to her as the instigator of the IRSs efforts to crack down on 501(c)(4) organizations and the singularly most relevant official in the IRS targeting scandal. Her unwillingness to testify deprives Congress the opportunity to have her explain her conduct, hear her response to personal criticisms levied by her IRS coworkers, and provide vital context regarding the actions of other IRS officials. In a recent interview, President Obama broadly asserted that there is not even a smidgeon of corruption in the IRS targeting scandal.21 15 Briefing by IRS staff to Committee staff (Feb. 24, 2012); see Letter from Darrell Issa & Jim Jordan, H. Comm. on Oversight & Govt Reform, to Lois Lerner, IRS (May 14, 2013). If this is true, Lois Lerner should be willing to return to Congress to testify about her actions. The public needs a full accounting of what occurred and who was involved. Through its investigation, the Committee seeks to ensure that government officials are never in a position to abuse the public trust by depriving Americans of their Constitutional right to participate in our democracy, regardless of their political beliefs. This is the only way to restore confidence in the IRS.
1 I.R.C. § 501(c)(4).
2 I.R.C. § 501(c)(4); Treas. Reg. § 1.501(c)(4)-1(a)(2).
3 TREASURY INSPECTOR GEN. FOR TAX ADMIN., INAPPROPRIATE CRITERIA WERE USED TO IDENTIFY TAX-EXEMPT APPLICATIONS FOR REVIEW (May 14, 2013).
4 Gregory Korte, IRS Approved Liberal Groups while Tea Party in Limbo, USA Today, May 15, 2013.
5 Eliana Johnson, Lois Lerner at the FEC, NATL REVIEW (May 23, 2013) [hereinafter Lois Lerner at the FEC].
6 Id. 7 Id.; Rebekah Metzler, Lois Lerner: Career Govt Employee Under Fire, U.S. NEWS &WORLD REP. (May 30, 2013), available at http://www.usnews.com/news/articles/2013/05/30/lois-lerner-career-government-employeeunder- fire (last accessed Jan. 14, 2014).
8 E-mail from Paul Streckfus to Paul Streckfus (Sept. 15, 2010) (EO Tax Journal 2010-130); E-mail from Lois Lerner, IRS, to Cheryl Chasin et al., IRS (Sept. 15, 2010). [IRSR 191032-33].
9 E-mail from Lois Lerner, IRS, to Cheryl Chasin et al., IRS (Sept. 16, 2010). [IRSR 191030]
10 John Sexton, Lois Lerner Discusses Political Pressure on the IRS in 2010, BREITBART.COM, Aug. 6, 2013.
11 Transcribed Interview of Michael Seto, IRS, in Wash., D.C., at 34 (July 11, 2013).
12 E-mail from Lois Lerner, IRS, to Michael Seto, IRS (Feb. 1, 2011). [IRSR 161810-11]
13 Justin Lowe, IRS, Increase in (c)(3)/(c)(4) Advocacy Org. Applications (June 27, 2011). [IRSR 2735]; E-mail from Judith Kindell, IRS, to Lois Lerner, IRS (July 18, 2012). [IRSR 179406]
14 See, e.g., Transcribed interview of Carter Hull, IRS, in Wash., D.C. (June 14, 2013); Transcribed interview of Elizabeth Hofacre, IRS, in Wash., D.C. (May 31, 2013).
15 Briefing by IRS staff to Committee staff (Feb. 24, 2012); see Letter from Darrell Issa & Jim Jordan, H. Comm. on Oversight & Govt Reform, to Lois Lerner, IRS (May 14, 2013).
16 E-mail from Ruth Madrigal, Dept of the Treasury, to Victoria Judson et al., IRS (June 14, 2012). [IRSR 305906]
17 E-mail from Nancy Marks, IRS, to Lois Lerner, Holly Paz, & David Fish, IRS (Mar. 29, 2013). [IRSR 190611]
19 E-mail from Lois Lerner, IRS, to Nancy Marks, Holly Paz, & David Fish, IRS (Apr. 1. 2013). [IRSR 190611]
20 See, e.g., E-mail from Lois Lerner, IRS, to Michelle Eldridge et al., IRS (Apr. 23, 2013). [IRSR 196295]; E-mail from Nikole Flax, IRS, to Lois Lerner, IRS (Apr. 23, 2013). [IRSR 189013]
21 Not even a smidgeon of corruption: Obama downplays IRS, other scandals, FOX NEWS, Feb. 3, 2014.
Why isn’t this woman in a federal prison ?
Or does it say "The ugly lying bitch needs to be indicted"?
Because Eric Holder in charge of DoJ?
“This is the only way to restore confidence in the IRS.”
Two comments .....
1. As far as “restoring confidence” in the IRS, that horse has escaped the barn and is long gone. The IRS needs to be done away with by going to a tax system that doesn’t require it to exist. As long as it exists in its present form (enforcers/collectors, extensive tax code), it will be abused - either by using it to punish/harass perceived political ‘foes’ in a corrupt manner as by the Obama admin, or to provide loopholes for “friends” of Congress/political parties/president ... whatever (you get my point, I’m sure).
2. Lois Lerner needs to do JAIL time. Period.
More Issa BS. Form a House select committee and subpoena Lerner. Issa and Boehner are the problem. They are blocking any real investigation of IRS, Benghazi, or Fast and Furious. They can issue all the toothless reports they want.
Well, you have to admit: It’s sternly worded.
Don’t government officials have to sign some sort of agreement when they are hire that THEY will do their job with fairness to every american?
If so then we need to purge poilitical hacks next time we take over.
If there is NOT such an agreement when they are hired then we need to immediately impolement one - then purge them.
Mark Levin said the biggest obstacles Reagan faced were when he tried to implement conservative actions and they were stonewalled by carreer bureaucrats with left-wing bias.
For her crimes against the Republic, Lois Lerner should be tried and receive the death penalty
Because Issa is a incompetent fool. Hold her in contempt and jailed. She will talk after a few weeks in jail. And if King Obama interferes, get that lazy ass Bonehead to proceed for immediate impeachment. We cannot afford to delay any longer.
Lerner should be in jail. If she is ever convicted, she can lose her pension.
They are just playing games, they could have put her away a long time ago! It is now perfectly OK to use every single government agency to punish anyone who speaks out against the current Nazi’s in control of our government.
It’s stunning how fast things are changing, but then again I believe it only took Hitler about 6 years from being virtually unknown to putting people in ovens.
So who does anyone think has the power to put her in prison?
Does anyone think that Eric Holder would put her in prison?
His JD is the only one who could.
Even then, a JD prosecutor would try her in front of a judge and jury.
I don’t know where people get the idea that Issa or anyone in Congress can put her in jail.
If found in Contempt the person can be arrested under a warrant of the Speaker of the House of Representatives or President of the Senate, by the respective Sergeant at Arms.
Statutory criminal contempt is an alternative to inherent contempt.
Under the inherent contempt power Congress may imprison a person for a specific period of time or an indefinite period of time, except a person imprisoned by the House of Representatives may not be imprisoned beyond adjournment of a session of Congress.
Imprisonment may be coercive or punitive.
 Joseph Storys Commentaries on the Constitution, Volume 2, § 842
 Anderson v. Dunn - 19 U.S. 204 - And, as to the distance to which the process might reach, it is very clear that there exists no reason for confining its operation to the limits of the District of Columbia; after passing those limits, we know no bounds that can be prescribed to its range but those of the United States.
 Jurney v. MacCracken, 294 U.S. 125
73rd Cong., 78 Cong. Rec. 2410 (1934)
 McGrain v. Daugherty, 273 U.S. 135 - Under a warrant issued by the President of the Senate the Deputy to the Senate Sergeant at Arms arrested at Cincinnati, Ohio, Mally S. Daugherty, who had been twice subpoenaed by the Senate and twice failed to appear.
 Rules of the House of Representatives, Rule IV Duties of the Sergeant at Arms -  execute the commands of the House, and all processes issued by authority thereof, directed to him by the Speaker.
 An analysis of Congressional inquiry, subpoena, and enforcement
She was a Democrat crook abusing her authority over at the FEC. The Illinios thugs knew it and brought her into the IRS for that very reason.
She did exactly what they wanted her to do.
A sure sign that this is a MAJOR KABUKI THEATER production in Wash D.C. is the absence of ANY INDICTMENTS.