Tempest in a Tea Party: The IRS Scandal at a Glance

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IRS building Washington DC
Susan Walsh/AP
By CALVIN WOODWARD

WASHINGTON -- The Internal Revenue Service is feeling the sort of heat that targeted taxpayers feel from the tax agency. It's the sense that a powerful someone is breathing down your neck.

Republicans in Congress are livid with the IRS over its systematic scrutiny of conservative groups during the 2010 and 2012 elections. Democrats agree that something must be done. President Barack Obama also isn't at all happy with the tax collectors.

That kind of commonality in Washington is about as rare as a budget surplus. So expect a bumpy ride for the IRS, unloved in the best of times, as a Justice Department criminal investigation and multiple congressional inquiries try to get to the bottom of it all.

A look at the matter:

In Brief

The central issue is whether IRS agents who determine whether nonprofit organizations have to pay federal income taxes played political favorites or even broke the law when they subjected tea party groups and other conservative organizations to special scrutiny.

Also foremost in the concerns of Congress: Why senior IRS officials, for many months, did not disclose what they had learned about the actions of lower-level employees despite persistent questions from Republican lawmakers and howls from aggrieved organizations.

Why It Matters

The IRS is expected to be pesky, even intimidating, to miscreants, but at all times politically neutral. Nonpartisanship is the coin of its realm, perhaps more so than in any other part of government.

"I will not tolerate this kind of behavior in any agency but especially in the IRS, given the power that it has and the reach that it has into all of our lives," Obama said in ousting the agency's acting chief, Steven T. Miller.

On Thursday, on the eve of House hearings at which Miller has been called to testify, the president named Daniel Werfel, a senior White House budget official, to take charge of the agency temporarily.

IRS actions in the period covering the 2010 congressional elections and the early going of the 2012 presidential campaign have tattered the perception that the agency is clean of political leanings. Whether that was also the reality remains to be discovered.

A report by the Treasury Department's top investigator for tax matters found no evidence that sheer partisanship drove the targeting. But the watchdog disclosed Friday that he is still investigating. His report faulted lax management for not stopping it sooner.

It's a sensitive time for the agency's professionalism to be in doubt because the IRS soon will loom even larger in people's lives. It's to be the enforcer of the individual mandate to carry insurance under Obama's health care law, itself an object of suspicion for many conservatives. To the right, that's insult upon injury from the left.

What Would Make It Matter Even More

Any effort from top levels of the administration or political operatives to manipulate the IRS for campaign purposes would put the scandal in the realm of Nixonian skullduggery.

The public record as it is known does not show interference.

No ties to anyone outside the IRS have been discovered. At the same time, early IRS assurances that high-level people inside the agency did not know what was going on have been contradicted by evidence that the head of the agency's tax-exemption operation and later its deputy commissioner were briefed about it and did not tell Congress.

Red-Flag Words

To qualify for exemption from federal income taxes, organizations must show they are not too political in nature to meet the standard. In the cases in question, applications that raised eyebrows were referred to a team of specialists who took a much closer look at a group's operations. That's normal.

But in early 2010, IRS agents in the Determinations Unit began paying special attention to tax-exempt applications from groups associated with the tea party or with certain words or phrases in their materials, according to the IRS inspector general's report. That's not normal.

The red-flag keywords came to include "Patriots," ''Take Back the Country" and "We the People."

That August, agents were given an explicit "be on the lookout" directive for "various local organizations in the Tea Party movement" that are seeking tax-exempt status. Such organizations saw their applications languish except when they were hit with lots of questions, some of which the IRS was not entitled to ask, such as the names of donors.

In June 2011, after the congressional elections, Lois G. Lerner, in charge of overseeing tax-exempt organizations, learned of the flagging and ordered the criteria to be changed right away, the inspector general said. The new guidance was more generic and stripped of any explicit partisan freight. But it did not last.

In January 2012, the screening was modified again, this time to watch for references to the Constitution or Bill of Rights, and for "political action type organizations involved in limiting/expanding government."

The Constitution and Bill of Rights are touchstones for liberals, too. But in modern politics, they've been appropriated as rallying cries of conservatives and libertarians. Finally, that May, such flagging ended.

Altogether, specialists reviewed a variety of potentially too-political applications, presumably covering the liberal-conservative spectrum. But fully one-third of the cases were of the tea party-patriot variety. During the height of the flagging, the inspector general says, all applications fitting the conservative-focused criteria went to the specialists while others that should have stirred concern did not.

In short, if you were with the tea party, you were guaranteed a close second look and almost certainly months more of delay. If you were leading a liberal activist group, maybe yes, maybe no.

On the Receiving End

"Dealing with this was like dealing with tax day every day for 2½ years," says Laurence Nordvig, executive director of the Richmond Tea Party in Virginia. "Like your worst audit nightmare."

His group applied for tax-exempt status in December 2009 and finally got it in July 2012.

Tom Zawistowski applied for the tax exemption for his group, the Ohio Liberty Coalition, in June 2010 when the flagging was gathering steam. He got it in December 2012, after the presidential election.

The IRS asked him for the identity of the group's members, times and location of group activities, printouts of its website and Facebook pages, contents of speeches and the names and credentials of speakers at forums. He said the IRS also audited his personal finances and his wife's.

"The intent of this was to hurt the ability of tea party groups to function in an election year," he said.

An Associated Press analysis of 93 "tea party" or "patriot" groups found that most were shoestring operations, with only two dozen raising more than $20,000 a year.

Five-Oh What?

If the IRS merely rolled over and played dead when it got an application for a tax exemption, the government would be even more broke than it is and big money would have an even more pernicious grip on campaigns.

The IRS knows better than most that politically driven organizations, out to elect and defeat candidates, can masquerade as "social welfare" or other charitable entities under the tax-exempting articles of Section 501 (c) of the tax code.

Or they can align themselves with one, allowing unlimited donations to be raised and the identities of the contributors to stay secret as long as the nonprofit entities don't go too far in overt politicking.

In recent years, advocacy groups have paired their nonprofit arms with "super" political action committees, moves that took hold after a series of court rulings - including the Supreme Court's 2010 Citizens United decision - loosened the rules on money in politics.

The rulings gave rise to such pairings as the American Crossroads super PAC with its Crossroads GPS nonprofit on behalf of Republicans in the 2012 campaign, and the Priorities USA Action super PAC with its own nonprofit arm, for Obama's benefit.

Section 501 (c) (3) can be the most lucrative financially for organizations because in addition to conferring tax-exempt status, it allows donations to qualifying groups to be tax deductible.

Section 501 (c) (4) doesn't permit tax-deductible donations but gives groups more latitude to lobby and to dabble more directly in political campaigns as long as "social welfare" remains their primary mission. They can also keep their donors secret, a big benefit over more blatantly political super PACs.

It's all complex, squishy and in some ways subjective, so it might not come as a shock that the IRS would look for shortcuts such as political buzzwords and slogans when deciding what a group is really up to. But the record as yet known does not show that the scrutiny cut both ways.

In congressional testimony about the discredited IRS actions, Attorney General Eric Holder said there is good reason to take a skeptical look at some Section 501 applications but "it has to be done in a way that does not depend on the political persuasion of the group."

By the Numbers

The inspector general's office reviewed 296 tax-exempt applications that had been flagged as potentially too political. Of them, 108 were ultimately approved, 28 were withdrawn by the applicant, none had been rejected and 160 were still open in December 2012, some languishing for more than three years.

Stonewalling?

Hearing complaints of IRS harassment from constituents, lawmakers began asking a lot of questions of the agency starting in mid-2011. They got a lot of answers - just not answers revealing what was going on.

In multiple letters, some as long as 45 pages, as well as in meetings and congressional hearings, senior IRS officials laid out in painstaking detail the process of checking tax-exempt applications but did not disclose what they had come to learn of the flagging.

Miller, for example, was told by staff in May 2012 about the inappropriate screening but did not pass that on in communications with inquiring members of Congress or in his appearance two months later with the House panel most concerned about the reports.

Lois G. Lerner, in charge of overseeing tax-exempt organizations at the IRS, was briefed about the screening a year earlier and ordered an end to explicit tea party-type flagging. But she did not tell lawmakers about that when asked about the constituent complaints.

About that Skullduggery

A number of presidents or their operatives have tried to twist the IRS against "dissidents" or political opponents. Presidents Franklin Roosevelt, Dwight Eisenhower and John Kennedy are among them.

President Richard Nixon, though, surely takes the cake here.

The Senate Judiciary Committee cited his IRS manipulations, including his pursuit of those on his "enemies list," in the articles of impeachment accusing the president of high crimes and misdemeanors in the Watergate scandal and of actions "subversive of constitutional government."

Article 2, Abuse of Power, said: "He has, acting personally and through his subordinates and agents, endeavored to obtain from the Internal Revenue Service, in violation of the constitutional rights of citizens, confidential information contained in income tax returns for purposes not authorized by law, and to cause, in violation of the constitutional rights of citizens, income tax audits or other income tax investigations to be initiated or conducted in a discriminatory manner."

Nixon resigned after it became clear that a Senate impeachment trial would drive him from office.

Associated Press writers Stephen Braun and Stephen Ohlemacher contributed to this report.

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84 Comments

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Henry ptnm

I was watching History Channel and there was a topic which President first used the IRS to go against his enemies? The answer was vey surprising. It was JFK. He used it against the executives of the steel companies that they lower prices.

May 22 2013 at 6:20 AM Report abuse rate up rate down Reply
janeswizzle

Mr. Obama is just hurting himself by using the IRS to target conservative groups.

May 20 2013 at 2:36 PM Report abuse rate up rate down Reply
1 reply to janeswizzle's comment
janeswizzle

This president is just like Nixon, except without the Muslim upbringing. Scandal is running rampant through capitol hill ever since he's been in office.

May 20 2013 at 2:45 PM Report abuse -1 rate up rate down Reply
whackobachmann

Michele Wackobachmann Presidential Campaign Investigation Joined By FBI

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The FBI has jumped into a multi-pronged investigation of alleged misconduct by the failed presidential campaign of Rep. Michele Bachmann (R-Minn.), the Minneapolis Star Tribune reported on Sunday.

While the FBI wouldn't confirm or deny any involvement in the probe, sources with knowledge of the campaign and the investigation told the Star Tribune that the FBI had made inquiries about former Bachmann chief of staff Andy Parrish, as well as other former staffers.

News that Bachmann's campaign had drawn an ethics investigation first broke in March, and the extent of alleged violations has only expanded since then. Newer claims include allegations of secret payments to campaign aide and Iowa state Sen. Kent Sorenson (R), as well as improper use of Bachmann's leadership PAC funds to pay a political director for the campaign.

Parrish said in a sworn affidavit in April that Bachmann "knew and approved" of payments to Sorenson. Peter Waldron, Bachmann's former national field coordinator, has also filed a complaint alleging that Bachmann's campaign funneled leadership PAC money through a fundraising group to pay Sorenson, a claim that has also reportedly drawn the attention of the FBI, according to the Star Tribune. Sorenson has denied these allegations.

As the Iowa Republican website points out, the FBI becomes the latest in a long line of agencies now involved in the probe of Bachmann's campaign. The Federal Election Commission, the Office of Congressional Ethics, the Iowa Senate Ethics Committee and the Urbandale Police Department have all mounted their own investigations into various aspects of the numerous claims.

Bachmann has meanwhile maintained her innocence and expressed optimism that she'll be cleared of any wrongdoing. Others are more skeptical, however, considering the expansive nature of the charges against her campaign.

Craig Holman, a government ethics lobbyist at liberal-leaning watchdog group Public Citizen, told Salon in May that Bachmann could face serious repercussions

May 20 2013 at 12:34 PM Report abuse +1 rate up rate down Reply
whackobachmann

yup. it's just that white-hating muslim attacking good tea party christians....christians who hate everybody but themselves; tea partiers who scream for smaller government, while bachmann's and her wife's whole professional life has blossomed thanks to government largess

May 20 2013 at 12:11 PM Report abuse +1 rate up rate down Reply
whackobachmann

I feel really bad that my whacko conservative friends were fired in the 2012 elections. Poor Joe Walsh and Allen West. I almost lost my seat to, oh dear.

May 20 2013 at 12:07 PM Report abuse +1 rate up rate down Reply
whackobachmann

I thought Americans loved the tea party yet I was the first to go in the Three Ring Circus GOP primaries. Oh dear, the queen of the tea party is MELTING, MELTING!!!!!!!!!

May 20 2013 at 11:57 AM Report abuse +2 rate up rate down Reply
TJ

None of this would even be in the main stream media if they hadn't started getting reporters phone records illegally. The media loves Obama and his goons but they just stepped on their toes this time so they made it known what they can do to cause trouble when they want to. When Obama make it right to them they will go and scrub this and all evidence of wrong doing. Then the media will make it appear some low level bum was to blame and that the big dogs never knew anything. Come to think of it this president knows absolutely nothing that happens in any of his departments. He must be the most ignorant educated man alive.

May 20 2013 at 11:48 AM Report abuse rate up rate down Reply
whackobachmann

WOW!!!!.......just look at all of my whacko conservative friends. They have taken up the whole page. Glad to see my whacko conservative friends have a big mouths.

May 20 2013 at 11:42 AM Report abuse rate up rate down Reply
patrpatti

EVERY citizen should be horrified that the IRS claims TARGETING specific groups is NOT illegal. So, if they target a minority group, or a muslim group that would be OK too? You bet! All of you weirdos out there who are fine that conservatives groups got TARGETED better just understand that you are next! The IRS has just admitted that it is completely above all US laws.

May 20 2013 at 11:41 AM Report abuse +2 rate up rate down Reply
composerr

ATTENTION: AOL MEMBERS.

The IRS has run Amock in supporting this Administration. It has not helped that Obama has
been arogatnt and distant from not only the people, but many in the Democratic party.

Obama seems to be emulating Chavez in his intimidation and Most Partisan Rhetoric
of a President in the History of our Nation. Think about this. He has always left most
of the legislation up to the Liberal left, and never really tried to get the GOP help. He is content
to blame Pres Bush or the GOP for everything. It is getting Old.

I suggest this President has never been competent or even that smart. BUT HE IS THE
MOST ACCOMPLISED CON ARTIST that I have ever seen. YOU CAN NEVER GET
CLOSE TO A CON ARTIST!!!

HE, HILLARY, AND SUSAN LIED AND ATTEMPTED TO DECEIVE ON THE BENGHAZI
ATTACK. He had said that Bin Ladin was dead and the Al Qaeda demolished, and did not
dare want to send help and get into a fire fight with Islamic terrorist, just a short while before
the election. IT WAS OUTRAGEOUS.

BENGHAZI: OBAMA AND HILLARY LIED AND PEOPLE DIED!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

an army combat veteran

May 20 2013 at 10:38 AM Report abuse +1 rate up rate down Reply