IRS’s Lerner Slowed Tea Party Review, Republicans Say

Lois Lerner, who oversaw tax-exempt organizations at the Internal Revenue Service, slowed the consideration of anti-tax Tea Party groups’ applications, House Republicans said in a letter today.

The Republicans, who want more information from the agency, cited statements made to congressional investigators by IRS employees.

Carter Hull, a recently retired IRS lawyer based in Washington, told investigators that Lerner’s office made an unusual request to delay decisions on applications when he thought he had enough information to decide whether the groups were impermissibly involved in political activities. Instead, Hull said, the IRS chief counsel’s office wanted to gather more information on what the groups did in the 2010 election cycle.

The chief counsel office’s “involvement and demands for information about political activity during the 2010 election cycle appears to have caused systematic delays in the processing of Tea Party applications,” said the lawmakers’ letter, whose signers include Representatives Darrell Issa of California, chairman of the Oversight and Government Reform Committee, and Dave Camp of Michigan, chairman of the Ways and Means Committee.

Congressional inquiries into the tax agency’s scrutiny of Tea Party organizations and other small-government groups have become increasingly partisan, with Republicans continuing to seek potential connections to the White House and Democrats arguing that the IRS was simply doing its job.

Democrats’ Response

Democrats countered the Issa letter by citing interviews with other agency employees who said that review by the chief counsel’s office -- essentially the IRS’s in-house attorneys -- was normal procedure.

“Although it may have appeared unusual to some IRS employees with limited information, you failed to disclose that other IRS employees with more information told committee staff during their interviews that it was ‘common,’ ‘typical,’ and ‘customary,’” Representative Elijah Cummings, the top Democrat on the oversight panel, said in a letter today to Issa.

Some groups encountered delays of more than three years in their requests for tax-exempt status. Republicans have begun focusing more on the delays caused by Washington-based IRS employees in the exempt organizations office than on the decisions made in a Cincinnati field office to look more closely at Tea Party groups.

Hull, who worked at the IRS for 48 years, will testify tomorrow at a hearing before Issa’s committee.

Campaign Activity

Scrutiny of campaign activity is at the center of the IRS’s job in looking at these applications. Groups applying for 501(c)(3) status as a charity can’t engage in electoral politics. Groups applying to become 501(c)(4) social-welfare groups can’t have politics as their primary activity.

The IRS apologized for its actions May 10. Since then, at least four executives, including Lerner, have been pushed out of their jobs. The Justice Department has begun a criminal probe.

Democrats released a memo yesterday citing 15 IRS employees who told investigators they had seen no evidence of political motivation or interference from outside the IRS. They said that self-described progressive groups were subject to some scrutiny, though it’s unclear how much or why.

Democrats have also criticized J. Russell George, the inspector general who oversees the IRS, for not disclosing information about Democratic-leaning groups. George is scheduled to testify tomorrow.

Inspector Criticized

Today, they said that George blocked the release of information about a “group of Democratic-leaning organizations” that were denied tax-exempt status. The IRS concluded that releasing the information wouldn’t violate taxpayer privacy. The inspector general objected, interim IRS chief Danny Werfel said, according to a hearing transcript from today provided by Cummings’ office.

The inspector general’s office said today that its lawyers and IRS attorneys had independently determined that some of the information at issue “referred to a specific taxpayer by name and should be redacted.” The IRS recently changed its interpretation, finding that the reference in question didn’t disclose data on the individual taxpayer, the inspector general’s office said in a statement.

Lerner was placed on paid leave in May. She has refused to testify before Congress, citing her constitutional rights against self-incrimination.

Her lawyer, William Taylor, didn’t respond immediately to an e-mailed request for comment.

Political Appointees

The Republicans’ letter notes that the head of the chief counsel’s office, William Wilkins, is one of two political appointees at the IRS. The term “chief counsel” at the IRS applies to Wilkins himself and is also commonly used to refer generically to anyone who works under him.

The IRS said May 15 that Wilkins himself wasn’t involved in an August 2011 meeting about the review of nonprofit groups and didn’t discuss the issue with the Treasury Department’s general counsel.

“Wilkins is not involved in the 501(c)(4) application process,” the IRS said in its statement.

To contact the reporter on this story: Richard Rubin in Washington at rrubin12@bloomberg.net

To contact the editor responsible for this story: Jodi Schneider at jschneider50@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.