New Information Emerges Regarding the IRS Tea Party Scandal
Tea Party Scandal Background
During May of 2013, the Treasury Inspector General for Tax Administration (“TIGTA”) released a report entitled “Inappropriate Criteria Were Used to Identify Tax-Exempt Applications for Review” which reflected on the IRS’ treatment of the tea party and other conservative groups seeking tax-exempt status under Internal Revenue Code (“IRC”) §501(c)(4).
The report found that, as of 2010, the IRS used inappropriate criteria to identify which organizations’ applications would be reviewed for indications of significant political campaign intervention. A majority of these applications would not be worked on for over 13 months as a result of the substantial delays stemming from the IRS review.
In May of 2013, Lois Lerner, IRS official and former IRS Director of Exempt Organizations, revealed that conservative groups seeking tax-exempt status with identifiers such as “tea party” or “patriot” in their name were being scrutinized. Ms. Lerner subsequently apologized for exercising poor judgment in this regard and invoked her Fifth Amendment rights, refusing to testify before the House Oversight Committee.
During this time, former U.S. President Barack Obama deemed the actions of the agency “inexcusable” and demanded the resignation of Steven T. Miller, the acting IRS commissioner.
Albuquerque Tea Party Granted Tax-Exempt Status
In July of 2017, the IRS granted Albuquerque Tea Party (“ATP”) tax-exempt status. Several months after ATP filed its application for tax-exemption in December of 2009, the IRS requested additional documentation regarding the organization’s activities. Despite complying with this request, ATP was required to provide additional documentation regarding its activities. ATP provided over 1,000 pages of documentation and eventually filed a lawsuit against the IRS.
In 2012, the American Center for Law and Justice (“ACLJ”) filed a lawsuit against the IRS on behalf of ATP and other conservative groups facing similar obstacles in connection with their requests for tax-exemption. After nearly eight years, ACLJ and the ATP were pleased to announce that the organization had finally received a favorable determination letter from the IRS granting it tax-exempt status under IRC §501(c)(4).
TIGTA Final Audit Report
Less than 3 months after ATP received its tax-exemption, TIGTA released a 122-page report entitled “Review of Selected Criteria Used to Identify Tax-Exempt Applications for Review”. According to a memorandum written by Michael E. McKenney, Deputy Inspector General for Audit, this report provides results based upon a review of selected criteria used to identify tax-exempt applications. “The overall objective of this audit was to provide a historical account of the IRS development and use of 17 select criteria from 259 criteria used to identify tax-exempt applications for further review.”
The TIGTA report, which examined cases between 2004 and 2013, revealed that in addition to unfairly targeting organizations’ names that included “Tea Party”, “Patriot” or “9/12”, the IRS was also inappropriately targeting certain “progressive leaning groups”. Specifically, those organizations containing title words such as “Progressive”, “Occupy”, “Green Energy” and “ACORN” (an acronym for the now defunct Association of Community Organizations for Reform Now) were similarly flagged.
Four Years Later: Was the Tea Party Scandal Actually a Scandal?
As a result of the Report’s findings, many now believe that the IRS scrutiny of political groups may not have been as biased or one-sided as previously reported. Craig Holman, a government affairs lobbyist for the consumer advocacy group Public Citizen recently stated: “This report shows the IRS deep scrutiny of political groups is in fact bipartisan, it is liberal and conservative groups that the IRS has been targeting”.
Additionally, Senator Ron Wyden of Oregon, the ranking Democrat on the Senate Finance Committee stated that “after years of baseless claims and false accusations it is my hope Republicans will finally put an end to this witch hunt and admit that their attacks on the IRS were nothing but political grandstanding on behalf of special interest at the expense of American Taxpayers”.
While many law makers and certain members of the general public are relatively pleased to find out that the IRS mismanagement was seemingly bipartisan, others are still skeptical. Cleta Mitchell, a conservative lawyer who represents eight organizations that received extra scrutiny while applying for tax-exemption stated that, even if progressive groups were targeted by the IRS, “they didn’t get subjected to the kinds of follow-up the Tea Party groups did”.
According to Representative Kevin Brady of Texas, Republican chairman of the Ways and Means Committee, “[t]his report reinforces what government watchdogs and congressional investigators have confirmed time and time again: Bureaucrats at the IRS, such as Lois Lerner, arbitrarily and haphazardly administered the tax code and targeted taxpayers based on political ideology. It’s no wonder the American people have lost faith in the IRS”.
Conclusion
The TIGTA report concluded that the IRS Determinations Unit developed a spreadsheet that included “political sounding” terms to check against those groups seeking tax-exempt status. Any group containing any of the listed terms in their title was reviewed to ensure that they were not political organizations seeking tax-exemption as social welfare organizations.
While certain government officials and members of the general public may still disagree regarding whether or not the IRS treatment of certain IRC §501(c)(4) applications for tax-exemption were treated in a bipartisan matter, they can certainly agree that the Determinations Unit of the IRS mishandled the treatment of various organizations’ applications seeking tax-exempt status.
Within the conclusion of its report TIGTA did not offer any recommendations because the procedures in place when the 17 criteria were apparently utilized by the IRS are no longer in effect.
For additional information, a complete copy of the Report can be accessed below.
Review of Selected Criteria Used to Identify Tax-Exempt Applications for Review
