Congressional Hearings Set for IRS Scrutiny of Tea Party Groups

May 13 (Bloomberg) -- Bloomberg chief Washington correspondent Peter Cook reports on the admission by the IRS that it singled out conservative groups in relation to their political stances as at least two congressional committees plan to hold hearings to investigate how far the scrutiny went in the service. He speaks on Bloomberg Television's "In The Loop."

At least two congressional committees plan to hold hearings on the U.S. Internal Revenue Service’s admission that it targeted for special attention groups promoting limited government.

The momentum for review by the House panels increased with disclosures over the weekend that a Treasury Department inspector general’s report found that top IRS officials knew of the targeting of the groups as early as June 2011, nine months before the agency’s head told lawmakers that it wasn’t occurring.

The extra IRS scrutiny was given to organizations seeking tax exempt status if they had “tea party” or “patriot” in their name.

An apology by Lois Lerner, the IRS official in charge of overseeing tax exempt groups who acknowledged the targeting in a speech to a lawyers group on May 10, is unpersuasive, said Representative Darrell Issa, chairman of the Oversight and Government Reform Committee.

“This mea culpa’s not an honest one,” Issa said yesterday on NBC’s “Meet the Press.”

Issa, a California Republican, said he’ll hold hearings on the report on the matter by the Treasury Inspector General for Tax Administration, which is due for release later this week.

“Let’s go through it,” Issa said. “Let’s see what the instituted changes need to be to make this not happen again.”

Photographer: Andrew Harrer/Bloomberg

Anti-tax Tea Party groups, formed shortly after President Barack Obama took office in January 2009, helped fuel gains by Republicans in the 2010 midterm election that gave the party control of the U.S. House. Close

Anti-tax Tea Party groups, formed shortly after President Barack Obama took office in... Read More

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Photographer: Andrew Harrer/Bloomberg

Anti-tax Tea Party groups, formed shortly after President Barack Obama took office in January 2009, helped fuel gains by Republicans in the 2010 midterm election that gave the party control of the U.S. House.

Additional Probe

The House Ways and Means Committee also “will soon hold a hearing to get to the bottom of this situation,” its chairman, Representative Dave Camp, a Michigan Republican, said in a May 10 statement.

Representative Charles Boustany, chairman of the Ways and Means oversight subcommittee, has sent a letter to Steve Miller, acting commissioner of the IRS, demanding by May 15 all agency communication containing the words “tea party”, “patriot” and “conservative”, as well as the names “of all individuals involved in this discrimination.”

Miller’s predecessor, former commissioner Douglas Shulman, told Boustany’s subcommittee in March 2012 that “there’s absolutely no targeting” of groups based on their political leanings.

A timeline on the written criteria for identifying cases given special review, though, show that the standards were changed in July 2011, based on concerns expressed the previous month by Lerner. She is identified by job title and not by name in the timeline in the inspector general’s report. A copy of the timeline was obtained yesterday by Bloomberg News from a congressional staff member who asked not to be identified.

Details of the report earlier were reported by the Associated Press.

2010 Midterm

Anti-tax Tea Party groups, some of which include the word “patriot” in their names, formed shortly after President Barack Obama took office in January 2009 and helped fuel gains by Republicans in the 2010 midterm election that gave the party control of the U.S. House.

In addition to groups with ’tea party’ and ’patriot’ in their names, other organizations selected for the additional IRS review included those in which “statements in the case file criticize how the country is being run,” according to a June 29, 2011, briefing given to Lerner, the timetable says.

Lerner “raised concerns over the language,” and instructed the criteria “be immediately revised,” according to the timeline.

“The timeline supports what the IRS acknowledged on Friday that mistakes were made,” Michelle Eldridge, an IRS spokeswoman, said in an e-mail statement yesterday. “There were not partisan reasons behind this.”

‘Not Aware’

“IRS senior leadership was not aware of this level of specific details at the time of the March 2012 hearing,” Eldridge said.

White House spokesman Jay Carney has called the IRS’s actions “inappropriate” and said the matter should be “thoroughly investigated.”

Senator Susan Collins, a Maine Republican, yesterday called for a more aggressive response from the administration, calling on Obama to personally condemn the IRS action.

“This is truly outrageous and it contributes to the profound distrust that the American people have in government,” Collins said on CNN’s “State of the Union.”

She termed it “absolutely chilling that the IRS was singling out conservative groups for extra review. And I think that it’s very disappointing that the president hasn’t personally condemned this and spoken out.”

“It’s evident that some senior officials did know about it and known about it for some time,” Collins said. “The allegations go back at least two years.”

Regulating Nonprofits

The IRS has been under pressure to regulate political spending by nonprofit groups, in particular those falling under Section 501(c)(4) of the U.S. tax code. Organizations qualifying for that status don’t have to disclose donors even when engaging in political activity.

The timeline suggests a continuing discussion on defining an appropriate standard for review of such groups.

A Jan. 25, 2012, timeline entry described a standard that included “political action type organizations involved in limiting/expanding government, educating on the Constitution and Bill of Rights, social economic reform/movement.”

In May 2012, the standard shifted to “organizations with indicators of significant amounts of political campaign intervention (raising questions as to exempt purpose and/or excess private benefit).”

Political Spending

Nonprofit groups spent $1 billion on the 2012 campaign, with more than two-thirds benefiting Republican candidates, according to the Center for Responsive Politics, a Washington-based research group that tracks campaign spending. That was triple the amount spent in the 2008 campaign.

Eldridge said mistakes in picking groups for review were made by “local career employees” at an IRS office in Cincinnati who were trying “to centralize work and assign cases designated employees in an effort to promote consistency and quality.”

Collins, on CNN, said she doesn’t believe “that this was a couple of rogue IRS employees. After all, groups with ‘progressive’ in their names were not targeted similarly.”

“If this had been just a small group of employees, then you would think that the high level IRS supervisors would have rushed to make this public, fired the employees involved, and apologized to the American people and informed Congress,” Collins said. “None of that happened in a timely way.”

A leader of a Tea Party group has rejected the apology Lerner offered when she acknowledged singling out certain groups based on their names.

“This deliberate targeting and harassment of Tea Party groups reaches a new low in illegal activity and overreach,” Jenny Beth Martin, national coordinator for the Tea Party Patriots, said in an e-mail statement on May 10.

To contact the reporter on this story: Andrew Zajac in Washington at azajac@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net; Steven Komarow at skomarow1@bloomberg.net

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