Lerner’s Retirement From IRS Leaves Republicans Wanting

Photographer: Pete Marovich/Bloomberg

Under Lois Lerner, the director of the Internal Revenue Service's (IRS) exempt organizations office, the IRS gave extra attention to some Tea Party groups solely because of their names. Those groups, and others, encountered delays and were asked questions that the agency’s inspector general deemed inappropriate. Close

Under Lois Lerner, the director of the Internal Revenue Service's (IRS) exempt... Read More

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Photographer: Pete Marovich/Bloomberg

Under Lois Lerner, the director of the Internal Revenue Service's (IRS) exempt organizations office, the IRS gave extra attention to some Tea Party groups solely because of their names. Those groups, and others, encountered delays and were asked questions that the agency’s inspector general deemed inappropriate.

Lois Lerner has left the Internal Revenue Service, retiring just as an agency board was about to propose her firing. That isn’t enough for congressional Republicans.

Lerner, the former director of exempt organizations, retired yesterday, exactly four months after she was placed on paid administrative leave. She has denied wrongdoing in the agency’s scrutiny of Tea Party groups and refused to answer questions from congressional panels.

Republicans, led by Representative Darrell Issa of California, vowed to press on with investigating the agency and say they’ll seek answers from Lerner.

“Lois Lerner’s exit from the IRS does not alter the Oversight Committee’s interest in understanding why applicants for tax-exempt status were targeted and inappropriately treated because of their political beliefs,” said Issa, chairman of the House Oversight and Government Reform Committee.

Lerner is the central figure in the investigation surrounding the IRS’s attention to Tea Party groups applying for tax-exempt status. She has been the object of bipartisan scorn since she acknowledged her office’s errors and apologized for them on May 10, in response to a planted question at a tax conference.

As the investigation unfolded, Republicans have criticized the slow release of documents from the IRS and emphasized the involvement of IRS lawyers in Washington. Democrats have focused on the lack of clear rules governing the tax agency’s oversight of political groups.

Extra Attention

Under Lerner, the IRS gave extra attention to some Tea Party groups solely because of their names. Those groups, and others, encountered delays and were asked questions that the agency’s inspector general deemed inappropriate.

Congressional panels opened investigations and the Justice Department started a criminal probe. President Barack Obama forced out the acting IRS commissioner, Steven Miller. Lerner and other agency executives were removed from their jobs.

Federal law empowers the IRS to police groups’ nonprofit status. Many of the Tea Party-backed groups are set up under section 501(c)(4) of the Internal Revenue Code, which requires them to operate exclusively for the benefit of social welfare and allows them to keep their donors secret.

IRS rules interpret that to mean that social welfare groups can’t be primarily political. That requires the tax agency to look at the groups’ activities and campaign involvement.

Since May, congressional investigators have found that IRS officials working for Lerner and Chief Counsel William Wilkins were involved in handling the Tea Party cases since 2010.

Democratic-Leaning Groups

They also have shown that some Democratic-leaning groups received extra scrutiny, though it remains unknown whether and how they differed from Republican-leaning organizations.

Those investigations and the internal review of Lerner found no evidence of political bias or involvement from outside the IRS, said Representative Sander Levin of Michigan, the top Democrat on the House Ways and Means Committee.

“The basic overreaching premise of the Republicans that the IRS had an ‘enemies list’ and was being influenced from the outside has been proven wrong again, as it has again and again,” he said in a statement.

The IRS said Lerner retired and declined further comment, citing privacy concerns. William Taylor, Lerner’s attorney, didn’t respond to a request for comment.

At a May 22 congressional hearing, Lerner defended her work with the government.

‘Very Proud’

“I am very proud of the work that I have done,” she said at the hearing before she refused to answer questions. “I have not done anything wrong. I have not broken any laws.”

The House Oversight and Government Reform Committee voted in June to determine that Lerner waived her right against self-incrimination by making that statement. The panel hasn’t called her back to testify.

Whether she was fired or retired, Lerner would get the same benefits, said John Palguta, a former executive at the Merit Systems Protection Board, a federal agency that hears government employees’ appeals of firings and other actions.

Lerner, an attorney, has been a federal employee since at least 1981, meaning that she may be covered under an older retirement system that probably would let her receive a larger annual pension than more recent hires receive. She would also get subsidized medical benefits.

Before she started at the IRS, Lerner worked for the Federal Election Commission and the Department of Justice.

Federal Pensions

Employees with more than 40 years of federal work can receive an annual pension worth 80 percent of their highest three years of salary, not including bonuses.

Most federal employees in that older system receive between 50 percent and 60 percent of their final salaries, said Palguta, now vice president for policy at the Partnership for Public Service, a Washington-based nonprofit group that promotes government work.

“Just because Lois Lerner is retiring from the IRS does not mean the investigation is over,” Orrin Hatch of Utah, the top Republican on the Senate Finance Committee, said in a statement. “Far from it. In fact, there are many serious unanswered questions that must be addressed so we can get to the truth.”

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

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