Twenty-five conservative and Tea Party groups filed suit this week against the Internal Revenue Service, Attorney General Eric Holder and several other high-level officials on the grounds that the groups were unfairly and unlawfully targeted for scrutiny by the IRS.
The lawsuit is the latest step in the continuing drama unfolding as a result of the IRS’s targeting of conservative groups that applied for tax-exempt status.
“The IRS and the federal government are not going to get away with this unlawful targeting of conservative groups,” said Jay Sekulow, chief counsel of the American Center for Law and Justice, a conservative law firm that filed the federal lawsuit on behalf of the groups in Washington, D.C., on Wednesday. “The lawsuit sends a very powerful message to the IRS and the Obama Administration – including the White House: Americans are not going to be bullied and intimidated by our government.”
The lawsuit charges that the Obama administration “unlawfully delayed and obstructed” applications for tax-exempt status. The lawsuit seeks monetary damages, assurances that the plaintiffs will not be further targeted by the IRS, and tax-exempt status for the 10 groups with applications still outstanding.
Starting in 2009, an extraordinary number of organizations sought tax-exempt status through a designation as “social welfare organizations” by the IRS. Many of these groups, on closer examination, turned out to be political action committees and lobbying groups — such as Crossroads GPS, which is run by former George W. Bush adviser Karl Rove. Social welfare organizations are required to promote “some type of public or community benefit” rather than political causes.
However, social welfare organizations can engage in unlimited legislative lobbying and general advocacy. Many PACs saw the “social welfare” label as an easy way to attract large political donations without disclosing them publicly. One such example is the Republican Jewish Coalition, which anonymously funneled $6.5 million to efforts to support GOP presidential candidate Mitt Romney.
As disclosed by the report from the U.S. Treasury inspector general for tax administration, the IRS was correct to be suspicious of these applications and set them aside for special review. However, the IRS was wrong to use profiling criteria — such as “patriot,” “Tea Party,” and “9/12” — to automatically target potentially suspect applications, the report concluded. The federal government’s anti-discrimination laws make it illegal to “single out” a person or group on the basis of gender, ethnicity, nationality, race, sexual orientation, age, geography or political view and require explicit reasoning for any extraordinary treatment.
The inspector general concluded that due to a lack of leadership in the IRS office overseeing the applications, the targeting issue continued to proliferate — even after the problem was discovered and directions were issued to remove the offensive criteria. According to the inspector general report, IRS specialists reset the criteria several times to the questionable measure after supervisors ordered changes to make them more responsive to the potential “political, lobbying, or [general] advocacy” activities of the organization.
The IRS office “developed and implemented inappropriate criteria in part due to insufficient oversight provided by management. Specifically, only first-line management approved references to the Tea Party in the ‘Be On the Lookout’ (BOLO) listing criteria before it was implemented,” the report said.
Now some conservative groups suspect people at the highest levels of IRS management — and even the White House — knew about the targeting issue prior to the inspector general’s report.
“We’ve dealt with 15 agents, including tax law specialists — that’s lawyers — from four different offices, including (the) Treasury (Department) in Washington, D.C.,” Sekulow said. “So the idea that this is a couple of rogue agents in Cincinnati is not correct.”
NBC News obtained a March 16, 2012, letter from the IRS asking for more information to justify a social welfare application by the Ohio Liberty Council Corp. It bears the stamped signature of the director of the IRS’s Exempt Organizations office, Lois Lerner.
Lerner was reportedly asked to resign by Obama administration officials. Upon her refusal, she was placed on paid administrative leave last week. The acting commissioner of the IRS, Steven Miller, agreed to the White House’s request for him to resign.
Despite attacks from the right — including an op-ed from Senate Minority Leader Mitch McConnell (R-Ky.) insinuating that “the administration has been extremely creative in employing throughout the federal government the sorts of intimidation tactics that were used at the IRS” — the administration insists the incident amounts to “foolish mistakes …(and) trying to be more efficient.” However, this hasn’t stopped Republicans from seeking the bigger, hidden scandal.
“We’ve dealt with four separate analysts and their explanation for the way our case has been handled runs the gamut from their not having another organization like True the Vote to compare to – so they had to develop new questions and new criteria — all the way through to the fact that they were taking their orders from Washington and were waiting for Washington’s direction as to what steps to take next,” said Cleta Mitchell, attorney for several allegedly targeted conservative groups. “They were caught up in a process that seemed to be much bigger than Cincinnati and bigger than any single individual.”
This, however, leaves a very important question unanswered: What about the false claims to gain social welfare organization status? Is all of this forgotten? Is one crime being used to distract from another crime?
The fact that these groups requested tax-exempt status during an election cycle, the fact that the groups offered advertisement identifying a particular candidate by name, and the fact that these organizations have long-standing issue positions are all concerns the IRS must consider — by law — in granting tax-exempt status. The question of how the IRS chooses to address the applications is separate and secondary to the question of why there were inappropriate applications in the first place.