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IRS Employees Saw Concerns With Some Tea Party Groups

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May 15 (Bloomberg) -- The Internal Revenue Service said it started using “tea party” as a shorthand in examining non-profit groups because employees had specific concerns about some groups with that name.

“IRS employees had seen cases of organizations with the name Tea Party in which political activity was an issue that needed to be reviewed for compliance with legal requirements,” the agency said in a question-and-answer document sent to reporters today. “Because of the increased inventory of applications, this inappropriate criterion was used as a shortcut to centralize similar cases.”

The IRS’s use of tea party to screen applications for tax-exempt status is the subject of four congressional investigations and a criminal probe.

Advocacy and lobbying groups can receive exemptions under section 501(c)(4) of the U.S. tax code as long as their primary purpose isn’t to engage in politics. Groups receiving that status don’t have to disclose donors.

The IRS has acknowledged and apologized for using ideologically slanted criteria as it decided which groups should get tougher scrutiny. The agency said today that most of the groups identified because they included the name “tea party” would have received closer examination under politically neutral criteria.

The IRS said it has approved 175 of about 470 applications that were centralized under its process. It released a list of those groups today.

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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