Investigation of the IRS FAQ
What are House Republicans doing to investigate the IRS’s targeting of Tea Party and other conservative tax exempt applicants?
The Republican Majority in the House of Representatives is using its oversight authority to investigate the IRS and its targeting of Tea Party and other conservative tax-exempt applicants. House Republicans have reviewed over 500,000 pages of documents produced by the IRS, the Treasury Department, the Treasury Inspector General for Tax Administration, the Federal Election Commission, the IRS Oversight Board, and individual IRS employees. Two House Committees have jurisdiction: the House Committee on Oversight and Government Reform and the House Committee on Ways and Means.
The House Committee on Oversight and Government Reform has conducted transcribed interviews of 33 IRS employees and 6 Treasury Department employees. The Oversight Committee has held 6 hearings and issued 3 reports on the targeting. On April 10, 2014, the House Committee on Oversight and Government Reform adopted a resolution recommending the House of Representatives find former IRS official Lois Lerner in contempt of Congress for refusal to comply with a subpoena.
The House Ways and Means Committee has conducted interviews of 24 officials from the IRS, Treasury Department, and Federal Election Commission. The Ways and Means Committee has held five hearings on the targeting, as well as a markup of H.R. 3865, which would prevent Treasury from implementing its misguided proposed rule for 501(c)(4) groups. H.R. 3865 passed the House on February 26, 2014.
On April 9, 2014, the Ways and Means Committee issued a letter referring former IRS official Lois Lerner to the Department of Justice for criminal prosecution. This letter is the basis for H. Res. 565 which calls upon Attorney General Eric Holder to appoint a Special Counsel.
In the coming weeks and months, House Republicans will continue to thoroughly investigate the IRS targeting to bring the truth to the American people and hold those wrongdoers accountable.
Who is Lois Lerner? And why is she a central figure in the investigation?
Lois Lerner is the former Director of Exempt Organizations at the IRS. As the head of Exempt Organizations, Lerner managed the two IRS units most closely involved in the targeting: the EO Technical Unit in Washington, DC, and the EO Determinations Unit in Cincinnati, Ohio.
Documents show that Lerner played a significant role in the targeting. In the Fall 2010, in the wake of the Supreme Court’s Citizens United decision, Lerner spoke of the pressure on the IRS to “fix the problem” of political speech by nonprofit groups. In an e-mail to IRS colleagues, she said she wanted to initiate a “c4 project,” and warned her colleagues, “we need to be cautious so it isn’t a per se political project.” In February 2011, Lerner ordered two Tea Party “test” cases, to be scrutinized by IRS official in Washington, D.C., including putting them through a “multi-tier” review and calling them “very dangerous.”
On May 10, 2013, Lerner broke the news of an upcoming Inspector General report and attempted to downplay the misconduct by publicly apologizing for the IRS targeting through a planted question at an obscure Friday morning tax-law panel.
When called to testify before the Oversight Committee on May 22, 2013, Lerner gave a lengthy opening statement professing her innocence before claiming her Fifth Amendment protection against self-incrimination as she refused to answer questions. The Committee later determined, by a 23 to 17 vote, that Lerner’s statements constituted a waiver of her Fifth Amendment right. At one point, Lerner’s attorney offered to have his client testify but withdrew the offer after seeing evidence that contradicted his client’s public statements. When recalled to testify on March 5, 2014, Lerner again refused to answer any questions.
On April 10, 2014, the House Committee on Oversight and Government Reform adopted a resolution recommending the House of Representatives find former IRS official Lois Lerner in contempt of Congress for refusal to comply with a subpoena.
Wasn’t it just rogue agents in Cincinnati responsible for this scandal?
No. Contrary to claims by the Administration that the IRS targeting was the work of “rogue employees” and “line” bureaucrats in the IRS’s Cincinnati office, the investigations have produced evidence showing that senior IRS officials in Washington were involved in the targeting from the beginning. Testimony provided to Congress shows that after the Cincinnati office identified the initial Tea Party applications, Washington ordered them to be elevated and directed Cincinnati to hold the remainder until further notice. Cincinnati employees testified that they had “no autonomy” to process the Tea Party applications without direction from the Washington IRS office.
I’ve heard that conservative groups were subjected to ‘inappropriate questions’ and long delays. What kinds of questions were asked and how long were the delays?
The IRS asked Tea Party and other conservative organizations applying for tax-exempt status intrusive and burdensome questions. The IRS asked these groups to provide lists of their donors, lists of all issues important to the groups, and their positions on each issue. They also asked about the political affiliations of the groups’ leaders, and whether the groups’ leaders have run or will run for public office. These questions went well beyond an objective review of an organization’s qualifications to act as a non-profit and IRS later admitted that they were inappropriate.
The IRS also subjected Tea Party and other conservative groups to lengthy and unnecessary delays. While the IRS normally processes tax-exempt applications in a matter of weeks, the IRS has delayed Tea Party applications for several years. These applications languished due to inaction by the IRS’s Washington office.
Weren’t progressives targeted too?
No. Documents and testimony provided to Congress show that the IRS treated Tea Party tax-exempt applicants differently than progressive applicants. While some progressive applications may have received additional attention for differing reasons, the IRS did not “target” progressive applicants in a systematic way because of their political beliefs like it did Tea Party applicants. IRS employees testified that progressive applications were not subject to the same systematic scrutiny and delay as Tea Party applications. In addition, several separate analyses confirmed that the IRS backlog of applications consisted overwhelmingly of conservative-oriented organizations.
What is TIGTA? And what role did it play in the investigation?
TIGTA, or the Treasury Inspector General for Tax Administration, is the independent inspector general for the IRS. At the request of House Republicans, TIGTA began an audit in spring 2012 to examine whether the IRS had inappropriately treated certain tax-exempt applicants. TIGTA’s audit found that the IRS used inappropriate criteria to screen conservative applications for tax-exempt status, subjected these applications to unnecessary delays, and asked burdensome and intrusive questions of the applicants. Lois Lerner leaked information about TIGTA’s audit during a tax-law panel on May 10, 2013, which spurred further investigation.
Aren’t the current 501(c)(4) rules ambiguous and difficult to apply?
No. There is no evidence the current rules for 501(c)(4) groups, which have been in place for over 50 years, are difficult to apply.
Treasury and the IRS claim the Tea Party targeting occurred because of IRS confusion about the 501(c)(4) rules. However, over the course of the investigation, no evidence has been uncovered that any IRS employee was confused about the current rules. The first Tea Party cases were flagged for potential media interest, not confusion, which internal IRS emails from Cincinnati-based screeners demonstrate.
The evidence shows the IRS was anything but confused about how to process these applications. Before Cincinnati flagged Tea Party cases for Washington, the Cincinnati-based IRS approved right leaning group applications within three short months of receiving them. The delays and intrusive questionnaires began only after officials in Washington – including Lois Lerner – became involved.
What do the new proposed 501(c)(4) rules do?
The proposed rule would fundamentally alter the existing rules for 501(c)(4) groups, which have been in place for over 50 years. The proposed rule seeks to broaden the definition of political activity for 501(c)(4) groups. Many activities considered “social welfare activity” under the current rules would be considered “political activity” under the proposed regulation. The result of this change would be that many groups organized under Section 501(c)(4) would be forced to give up their first Amendment rights to speak and assemble.
The IRS says the proposed 501(c)(4) rules were suggested by TIGTA in response to the investigation? Is that true?
No. In its May 14, 2013 report on the Tea Party targeting, TIGTA made several recommendations for ensuring such political targeting never happens again. Among them was a recommendation that Treasury and the IRS provide guidance on how to measure political activity. The proposed rule does not address the measurement of political activity, and instead changes the definition of political activity. TIGTA did not recommend a change in the definition of political activity.
Furthermore, congressional investigators have discovered internal IRS documents that show the proposed rule had been in development since at least 2011, well before the IRS’s targeting of conservative groups came to light and well before TIGTA made its recommendations.
What’s wrong with the IRS enforcing campaign finance law?
The IRS is charged with collecting federal revenue and administering our complicated, out-of-date tax code. ObamaCare has made this job more difficult by saddling the IRS with new responsibilities such as enforcement of the individual mandate and employer mandate taxes. The IRS should not also be given the responsibility and power to police campaign activity, which is the responsibility of the Federal Election Commission.
Why did the House Committee on Oversight and Government Reform hold former IRS official Lois Lerner in contempt?
The Oversight and Government Reform Committee held Lois Lerner in contempt because documents and testimony point to her as a senior IRS official responsible for conduct that deprived Americans of their rights to free speech and equal protection under the law. She waived her right not to testify by making declarative statements asserting she had done nothing wrong. By doing so, she created a legal obligation to answer questions. If she continues to refuse to truthfully testify about IRS targeting, House passage of this resolution would require the U.S. Attorney for the District of Columbia to empanel a Grand Jury and seek a criminal indictment for contempt of Congress.
But didn’t Lois Lerner assert her 5th Amendment privilege against self-incrimination validly?
No, she did not. Under the U.S. Constitution, the 5th Amendment privilege against self-incrimination can be waived by a person who chooses to begin to testify as a witness. Once the witness begins to testify and answers some questions, the witness is not allowed to then stop and assert the privilege. The privilege is considered waived and the witness must testify.
On May 22, 2013, Lois Lerner was a witness at an Oversight and Government Reform hearing. While accompanied by her lawyer, she was sworn under oath to testify to the truth about her involvement at the IRS targeting of conservative groups. After being sworn in, Ms. Lerner began to testify, making a voluntary and lengthy statement about an number of matters including (1) the fact that she is a lawyer and had practiced law in the Department of Justice and at the Federal Election Commission, (2) her experience with the Internal Revenue Service (IRS), including the Exempt Organizations Division that oversaw the targeted conservative groups, (3) a May 14th 2013 Treasury Inspectors General for Tax Administration (TIGTA) report which concerned issues similar to those that were the subject of the Committee’s hearing, being investigated by the Committee, and which criticized the Exempt Organization Division headed by Ms. Lerner, (4) a lengthy assertion of her innocence, and (5) authenticating a collection of her written responses to questions asked of her by TIGTA in the course of its investigation of her Division at the IRS.
After testifying to all these matters, she then refused to go further stating a 5th amendment privilege against self-incrimination. At this point, she had waived her privilege against self-incrimination, forcing the committee to hold her in contempt for refusing to testify to the questions asked of her.
When is an Attorney General required to appoint a Special Counsel?
The Attorney General is required to appoint a Special Counsel when he or she determines that (1) the criminal investigation of a person or matter is warranted; (2) the investigation or prosecution of that person or matter by a United States Attorney’s Office or litigating Division of the Department of Justice would present a conflict of interest for the Department or other extraordinary circumstances; and (3) it would be in the public interest to appoint an outside Special Counsel to assume responsibility for the matter.
Why is a Special Counsel needed in the Department of Justice’s IRS investigation?
Appointment of a special counsel is warranted because the three prongs of the test included in the regulations are met: (1) further criminal investigation of this matter is warranted; (2) there is clearly a conflict of interest in this case; and (3) appointing an outside Special Counsel to investigate this matter would be in the public interest.
First, further criminal investigation is warranted in this case. On April 9, 2014, the Ways and Means Committee issued a letter referring former IRS official Lois Lerner to the Department of Justice for criminal prosecution. The Committee uncovered three specific acts undertaken by Lerner that may have violated one or more criminal statutes. These violations include improperly influencing agency action against only conservative organizations, denying these groups due process and equal protection under law. They also include impeding official investigations by providing misleading statements in response to questions from the Treasury Inspector General for Tax Administration, and risking or possibly disclosing confidential taxpayer information by using personal email to conduct official business. If convicted of these crimes, Lerner could face up to 11 years in prison. Additionally, troubling information about this matter continues to come to light, including allegations that the Justice Department considered prosecuting conservative groups for engaging in activity that is legal under Federal law. It is clear that there is more to this story, and appointment of a special counsel would bolster public confidence in its government.
Second, the Obama Administration has continuously undermined the investigation, creating a conflict of interest for the Justice Department and Administration. For example, earlier this year, Attorney General Holder appointed a Justice Department attorney, Barbara Bosserman, who has donated thousands of dollars to President Obama’s election campaigns and the Democratic National Committee, to spearhead the investigation. The fact that Ms. Bosserman is a maxed-out Democratic donor undermines the credibility of the investigation. Additionally, in January 2014, unnamed Justice Department officials leaked information to the Wall Street Journal suggesting that the Department does not plan to file criminal charges over the IRS’s targeting of conservative groups. At a recent House Judiciary Committee oversight hearing on the Justice Department, the Attorney General was asked who leaked this information to the media and if the Department plans to prosecute the leaker once identified. Although Attorney General Holder has directed DOJ personnel in the past to aggressively pursue leaks of sensitive information to the media, he admitted that he has not looked into the leak. Furthermore, in an interview on Super Bowl Sunday, President Obama stated that there was “not even a smidgen of corruption” in connection with the IRS targeting. Although DOJ’s so-called investigation is ongoing, President Obama publically undermined the investigation by prematurely declaring the verdict himself.
Finally, as alluded to above, under the circumstances, appointment of a special counsel would be in the public interest. The American people have the right to know to what extent the IRS targeted law-abiding citizens solely on the basis of their political beliefs – as well as who ordered the targeting, when, and why. Polls have shown that a large percentage of the American public believes that the IRS’s targeting activity was directed by the highest levels of the Obama Administration. In order to restore the American people’s faith in their government, it is vital that the Attorney General appoint a special counsel to investigate this matter.