The IRS has stuck by its story that tax-exempt applications by conservatives got slow-rolled because of bureaucratic bungling not because the groups opposed President Obama’s policies. Now the slow drip of email evidence to congressional investigators is casting further doubt on that tale.
In 2009 the Pennsylvania group Z Street applied for tax-exempt status for its mission of educating people about Israel-related issues. In 2010 an IRS agent told Z Street that its application was delayed because the tax agency’s Washington, D.C. office was giving special scrutiny to groups whose missions might conflict with Administration policies. The IRS’s “Be On the Lookout” list that November also included red flags for groups referring to “disputed territories.”
Z Street sued in August 2010 for viewpoint discrimination and its case is headed for discovery in federal court. Now emails uncovered by the House Ways and Means Committee show that the IRS and State Department were conferring in 2009 about pro-Israel groups like Z Street and considering arguments to deny their tax-exempt applications.
In an April 16, 2009 email, Treasury attache to the U.S. consulate in Jerusalem Katherine Bauer sent IRS and Treasury colleagues a 1997 JTA News article sent to her by State Department foreign service officer Breeann McCusker. The subject was whether 501(c) groups buying land in Israel’s disputed territories were engaged in “possible violations of U.S. tax laws.” The article chronicles the controversy and whether “ideological activity” can “legally be financed with the help of U.S. [tax] dollars.”
“Thought you might find the below article of interest – looks like we’ve been down this road before,” Ms. Bauer wrote. “Although I believe you’ve said you can’t speak to on-going investigations, I thought it was worth flagging the 1997 investigation mentioned below for you if it can be of any use internally when looking for precedence [sic] for the current cases.” A Treasury spokesman declined comment on Ms. Bauer’s behalf.
The “current cases” would have been applications like Z Street’s in which Israel-related activity was apparently being scrutinized for its ideological and policy content. The government says Z Street got special scrutiny because it was focused in a region with a higher risk of terrorism, which is hard to believe and in any case doesn’t explain all of the IRS’s behavior.
It doesn’t cover, for instance, why one questionnaire we’ve seen from the IRS to another Jewish group applying for tax-exempt status asked, “Does your organization support the existence of the land of Israel?” and “Describe your organization’s religious belief system toward the land of Israel.” No matter the answers, they should not affect the processing of an application for 501(c) status. The State-IRS emails reveal a political motivation for IRS scrutiny that gives Z Street powerful evidence for its suit charging IRS bias.
On Monday the IRS filed an appeal of the judge’s decision denying its motion to dismiss Z Street’s case. The government says the action stops all discovery while the appeal is pending, a process that could take months or even years. By filing the appeal on the last possible day, the Justice Department is running out the clock on discovery during the remainder of the Administration.
This is a whole lot of effort to prevent discovery in a case that is not even seeking damages. Ways and Means uncovered the email exchange between State and the IRS only after Treasury was forced to turn over documents it had previously withheld. What else did it lose in the ether?
I can confirm that the attack ads in Mississippi run by “All Citizens for Mississippi” were funded by Senate Republicans, including Senators Mitch McConnell, John Cornyn, Rob Portman, Bob Corker, and Roy Blunt. It appears our Senate Republican leaders are willing to risk losing a Senate majority so long as they can get their own re-elected. Yes folks, it is true. I can confirm what we all suspected.
The advertisements attacked Mississippi State Senator Chris McDaniel and painted conservative Republicans and tea party activists as racists. According to documents filed with the Federal Elections Commission, All Citizens for Mississippi received funding from a Haley Barbour backed group called Mississippi Conservatives.
Mississippi Conservatives, in turn, was funded in part by Sally Bradshaw of the RNC’s Growth and Opportunity Project, former RNC Chairman and Mississippi Governor Haley Barbour, the United States Chamber of Commerce, and the political action committees created for Senators Mitch McConnell ($50,000), John Cornyn ($50,000), Rob Portman ($25,000), Bob Corker ($25,000), and Roy Blunt ($5,000).
Interestingly, Sally Bradshaw and Henry Barbour (Haley Barbour’s nephew) worked on the autopsy of the 2012 GOP loss.
The Internal Revenue Service may have been caught violating federal tax law: In October 2010, the agency sent a database on 501(c)(4) social-welfare groups containing confidential taxpayer information to the Federal Bureau of Investigation, according to documents obtained by a House panel.
The information was transmitted in advance of former IRS official Lois Lerner’s meeting the same month with Justice Department officials about the possibility of using campaign-finance laws to prosecute certain nonprofit groups. E-mails between Lerner and Richard Pilger, the director of the Justice Department’s election-crimes branch, obtained through a subpoena to Attorney General Eric Holder, show Lerner asking about the format in which the FBI preferred the data to be sent.
“This revelation that the IRS sent 1.1 million pages of nonprofit tax-return data – including confidential taxpayer information – to the FBI confirms suspicions that the IRS worked with the Justice Department to facilitate the potential investigation of nonprofit groups engaged in lawful political speech,” Oversight Committee chairman Darrell Issa, a California Republican, and subcommittee chairman Jim Jordan wrote in a letter to IRS commissioner John Koskinen. The two lawmakers also raise questions about the timing of the meeting, just weeks before the 2010 midterm elections, when Republicans recaptured a majority in the House of Representatives.
The Justice Department never prosecuted social-welfare groups, and e-mails from IRS officials show their awareness that, as a result of the Supreme Court’s 2010 decision in the Citizens United case, which allowed unlimited amounts of money from nonprofit groups and labor unions to flow into the political process, the law did not favor a crackdown on anonymous donations to politically orientated nonprofits, which sprouted up on all sides in the wake of the ruling. “We don’t have the law to do something,” an IRS official responsible for tax-exempt organizations said in a September 2010 e-mail.
The documents were subpoenaed as a part of the Oversight Committee’s ongoing investigation into the IRS’ targeting of right-leaning groups, which took place against the backdrop of the Citizens United ruling. E-mails cited in a committee report released in March show that the decision caused a lot of angst for Lerner and her colleagues in the IRS’s Exempt Organizations division, and she noted in public remarks that the agency was under pressure to “fix the problem” created by the decision.
Though the Justice Department never took nonprofit groups to court, the committee has argued that Lerner attempted engaged in a politicized witch hunt against conservative groups by implementing a system where applications for tax exemption were inappropriately scrutinized and by jump-starting efforts to rewrite the rules by which 501(c)(4) social-welfare groups can qualify for tax exemption. Those rules prompted an outcry from groups on both sides of the political spectrum and the agency is currently rewriting them.
Issa and Jordan have requested from the IRS all documents relating to the transmittal of the database. “This revelation likely means that the IRS – including possibly Lois Lerner – violated federal tax law by transmitting this information to the Department of Justice in 2010,” they said.
On Monday the Center for Competitive Politics filed a complaint with the Senate Select Committee on Ethics against nine U.S. senators: for interfering with IRS tax proceedings; for misusing official resources for campaign purposes; and for improper conduct that reflects poorly upon the Senate. Attempting to use the IRS to advance a partisan, electoral agenda is a fundamental assault on good government. We believe these elected officials have staged such an assault.
The complaint documents how the senators improperly interfered with IRS adjudications to further their party’s electoral prospects. They pressured the IRS to undertake income-tax investigations of specific organizations, to find that specific organizations were in violation of the law, to reach predetermined results pertaining to pending applications by individual organizations for nonprofit status, and to adopt specific regulatory interpretations and policies to further their campaign goals.
A year ago in May it became public knowledge that the IRS had improperly targeted conservative organizations. Republicans have since attempted to find a “smoking gun” directly linking the scandal to the White House. That likely does not exist, because that’s not the way these things are done. Meanwhile, their quest has helped enable the press to ignore obvious abuses of power emanating from the Senate.
After the Supreme Court’s Citizens United decision on Jan. 21, 2010, Democrats adopted a campaign strategy of attempting to squelch the speech of conservative groups. Charles Schumer (D., N.Y.) – named in our complaint – introduced the so-called Disclose Act, saying on Feb. 11 that it would make targeted speakers “think twice” before speaking out. “The deterrent effect should not be underestimated,” he added.
At campaign fundraisers in the summer of 2010, President Obama repeatedly denounced conservative organizations for “running millions of dollars of attack ads against Democratic candidates,” identifying Americans for Prosperity by name. On Aug. 27 the Democratic Congressional Campaign Committee filed a complaint with the IRS against Americans for Prosperity.
Senate Democrats twice failed, on straight party-line votes, to end a filibuster of the Disclose Act. Mr. Obama told Democratic donors that they had “tried to fix” the problem but failed.
The attempt to silence opponents through legislation may be ugly, but such hardball politics are not a violation of Senate ethics rules. After failing to pass Disclose, however, the senators in our complaint began a pattern of improper conduct aimed at pressuring the IRS to harass and investigate their political opponents.
Senators may inquire about agency practices and operations. But they cross an ethical line when they interfere in pending tax exemption applications or pressure an agency to investigate or prosecute specific organizations.
Just days after the final defeat of the Disclose Act in October 2010, Sen. Richard Durbin (D., Ill.) – another senator in our complaint – wrote to IRS Commissioner Douglas Shulman on his official letterhead to demand that the IRS “quickly examine the tax status of Crossroads GPS,” a major conservative nonprofit.
Mr. Durbin accused Crossroads GPS of breaking the law. He later admitted to Chris Wallace on Fox News that he sought the investigation because “they were boastful about how much money they were going to raise and beat Democrats with.”
Pressure on the IRS increased after the 2010 midterm Republican landslide. Mr. Schumer stated in one speech, “It’s clear we’re not going to pass anything legislatively,” due to “Republican control” of the House. “But there are many things that can be done by the IRS… and we have to redouble our efforts. We have not worked hard enough on this.” In a letter to the IRS on March 12, 2012, Mr. Schumer urged the service to investigate various groups identified through reference to news articles.
Michigan Sen. Carl Levin wrote at least seven letters to the IRS, and demanded that it investigate specific nonprofits. The IRS’s failure to launch these investigations, he wrote in one, was “unacceptable.” Mr. Levin also sought confidential nonprofit tax return information from the IRS, even after being warned, repeatedly, by IRS Deputy Commissioner for Services and Enforcement Steven T. Miller, that such information could not be legally divulged.
These are just a few examples of abuse of power for electoral gain. The other six senators named in the complaint are Michael Bennet (D., Colo.), Sheldon Whitehouse (D., R.I.), Al Franken (D., Minn.), Jeanne Shaheen (D., N.H.), Jeff Merkley (D., Ore.) and Tom Udall (D., N.M.). Under the Senate Ethics Committee rules, when such a complaint is received – including by private individuals – “The Committee shall promptly commence a preliminary inquiry… of such duration and scope as is necessary” to find whether ethics rules were violated.
There is ample evidence that these efforts affected IRS policy, but the senators’ behavior is improper even if it did not. Senate rules require that the Ethics Committee take action. And we as citizens must make sure that the IRS is not abused by Democrats or Republicans for partisan electoral gain.