IRS’s Lerner Weighed Audit Involving Senator Grassley

June 26 (Bloomberg) -- Lois Lerner, the Internal Revenue Service official at the center of the controversy over scrutiny of Tea Party groups, once considered requesting an audit involving U.S. Senator Charles Grassley, an Iowa Republican.

The House Ways and Means Committee yesterday released a partial e-mail exchange from Dec. 4, 2012, in which Lerner said an organization that invited Grassley to an event may have been “inappropriately offering to pay for his wife.” Lerner retired from the agency last year.

“The fact that Lois Lerner attempted to initiate an apparently baseless IRS examination against a sitting Republican United States senator is shocking,” Representative Dave Camp, chairman of the Ways and Means Committee, said in a statement. “At every turn, Lerner was using the IRS as a tool for political purposes in defiance of taxpayer rights.”

The disclosure may bolster Republicans’ argument that Lerner was looking for ways to use her authority to hurt Republicans and benefit Democrats. Lerner, who was the IRS director of exempt organizations, oversaw employees who gave Tea Party groups extra scrutiny based solely on their names.

She has refused to testify to congressional committees, and House Republicans are now investigating the loss of two years’ worth of her e-mails in what IRS officials said was a computer hard-drive crash.

Invitation Mix-up

The release yesterday didn’t provide complete details about the invitation to Grassley, which the e-mails said had been mixed up with an invitation to Lerner. IRS employees who audit individuals are in a separate part of the agency.

A reply to Lerner within two hours of her e-mail suggested that an audit probably wasn’t warranted and didn’t occur. The partially redacted e-mails also didn’t make clear whether Lerner was suggesting an audit of Grassley or of the nonprofit organization.

In a statement yesterday, the Ways and Means Committee said Grassley and his wife, Barbara, waived their taxpayer privacy rights so the e-mails could be released. William Taylor, Lerner’s attorney, didn’t respond to an e-mailed request for comment.

The IRS said in a statement that it couldn’t comment about specific taxpayers.

“As a general matter, the IRS has checks and balances in place to ensure the fairness and integrity of the audit process,” according to the statement. “Audits cannot be initiated solely by personal requests or suggestions by any one individual inside the IRS.”

Senate Finance

Grassley, 80, is a former chairman of the Senate Finance Committee who has frequently called for tougher enforcement by the IRS of nonprofit groups, including universities and churches.

“This kind of thing fuels the deep concerns many people have about political targeting by the IRS and by officials at the highest levels,” Grassley said in an e-mailed statement. “It’s very troubling that a simple clerical mix-up could get a taxpayer immediately referred for an IRS exam without any due diligence from agency officials.”

Beth Levine, a spokeswoman for Grassley, said the senator wasn’t audited. The event in question was in 2013, she said, and Grassley didn’t attend.

The name of the group wasn’t released because the organization hasn’t waived its privacy rights, Levine said.

Lerner retired from the IRS last year after being placed on leave when the controversy became public. Following her refusal to testify, House Republicans voted to hold her in contempt and refer her for prosecution.

Also yesterday, Senate Finance Committee Republicans sought a hearing on the lost e-mails and requested assistance from the Federal Election Commission and the Departments of Justice and Treasury in reconstructing the e-mails of other employees who had hard-drive crashes.

The inspector general’s office overseeing the IRS knew about the hard drive crash as far back as October 2012, before it released its report, said Josh Drobnyk, a spokesman for Democrats on the Ways and Means Committee.

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

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