WASHINGTON – Congressional investigators believe they have found a number of startling new smoking guns showing political bias against conservatives by the IRS.
The report from the House Oversight Committee also found the administration colluded with the IRS on both the targeting of conservative groups and the subsequent cover-up.
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One email revealed in the report showed an effort within the IRS to deny a conservative organization tax-exempt status because the group gave an agency employee an "icky feeling."
Employee 1: "It appears that the org is funneling money to other orgs for political purposes. However, I’m not sure we can deny them because, technically, I don’t know that I can deny them simply for donating to another 501(c)(4). . . . Any thoughts or feedback would be greatly appreciated."
Employee 2: "I think there may be a number of ways to deny them. Let me talk to Sharon [Light] tomorrow about it and get some ideas from her as well. . . . This sounds like a bad org. :/ . . . This org gives me an icky feeling."
Evidence of such bias was found by the Oversight committee in a treasure trove of material, following a review of 1.3 million pages of documents and 52 transcribed interviews with IRS, Treasury, and Justice Department employees.
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This was the final IRS report under the chairmanship of Rep. Darrell Issa, R-Calif., but the committee will continue investigating the scandal in the next session of Congress under incoming chairman Rep. Jason Chaffetz, R-Utah.
The report concluded: "Conservative organizations were not just singled out because of their political beliefs — they were targeted by IRS officials and employees who expressed a general loathing toward them even while begrudgingly admitting that those organizations were in compliance with the only thing the IRS should care about: the federal tax code."
"Documents and interviews show IRS officials failed to limit their professional judgments to enforcing the tax code and instead inserted their own beliefs and judgments into federal matters to influence outcomes and decisions."
Another email from an IRS employee indicated discrimination against tea-party groups for their political beliefs, as they applied for 501(c)(4) tax exemptions:
“These [Tea Party] organizations mostly concentrate on their activities on the limiting government, limiting government role, or reducing government size, or paying less tax. I think it[‘]s different from the other social welfare organizations which are (c)(4).”
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Another employee apparently spotted, and flagged, the bias in an email from a top deputy to former IRS tax-exempt chief Lois Lerner, and appeared to complain the IRS would "have to" approve tax-exempt applications:
“This line in particular stood out: "We suspect we will have to approve the majority of c4 applications.’ That’s an interesting posture."
Investigators suspect the IRS targeted tea party groups before the 2012 elections because of the great success the grassroots organizations had in giving the GOP a landslide victory in the 2010 midterm elections. The IRS did not admit to the targeting until after the 2012 elections, as investigators began bearing down on them.
Lerner admitted and apologized for the targeting on May 10, 2013, in response to a planted question at a conference. She claimed high-level IRS employees did not know about the targeting, but that was contradicted in a report from the Treasury Department's inspector general.
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An email turned up by the Oversight committee showed former IRS acting Commissioner Stephen Miller considered informing Congress about the targeting scandal before the 2012 election. In an email to former IRS chief of staff Nikole Flax sent nearly a year before the scandal broke, Miller wrote:
"I am beginning to wonder whether I should do [Chairman] Boustany[’s hearing] and affirmatively use it to put a stake in politics and c4.” Flax responded: “[I]f the hearing is as generic as I recall, seems like you are too senior. Would be silly to think the c4 issues won’t come up – but I think Sarah [Hall Ingram] could handle it fine as well."
The Oversight committee stated it has now identified eight senior leaders at the IRS who could have prevented or stopped the targeting of conservatives:
Doug Shulman, Former Commissioner; Jonathan Davis, Chief of Staff to Shulman; Steven Miller, Former Acting Commissioner; Nikole Flax, Chief of Staff to Miller; William Wilkins, Chief Counsel; Joseph Grant, Former Acting Commissioner, Tax Exempt and Government Entities; Lois Lerner, Former Director, Exempt Organizations; Holly Paz, Director, Rulings and Agreements.
Key findings in the report:
- Administration involvement: The report stopped short of accusing President Obama of leading the cover-up of the scandal, but it did show extensive administration involvement in the targeting of conservative groups and the cover-up.
- Obama flip-flop: As part of the cover-up, the report showed how Obama's initial reaction of outrage to public news of the scandal changed to a complete denial of any wrongdoing by the IRS.
- Who's to blame: The report also demonstrated how Obama apparently initiated the IRS targeting by making a series of inflammatory statements against tea party groups, which set in motion the agency's effort to target conservative groups.
The report found senior IRS officials covered up the misconduct and misled Congress about the existence and nature of the targeting. It also found the IRS colluded with the administration on both the targeting and the cover-up.
As WND extensively documented, the report showed Justice Department officials met with Lerner and other IRS officials in 2010 to discuss the possible criminal prosecution of non-profit groups.
In emails, Lerner discussed the possibility with Nikole Flax, then-chief of staff to then-acting IRS Commissioner Steven Miller, and made plans to prosecute nonprofit groups she claimed had "lied" about political activities.
In testimony before the Oversight committee, director of the DOJ's Election Crimes Division Richard Pilger admitted Justice Department officials met with Lerner in October 2010.
Additionally, congressional investigators found a Lerner email that showed the IRS had sent the FBI and DOJ “1.1 million page database of information from 501(c)(4) tax exempt organizations” containing confidential taxpayer information.
The committee documented how, in tandem with the IRS, the Treasury Department also "secretly considered potential regulations on the political speech of 501(c)(4) non-profits."
The IRS’s independent inspector general discovered the Treasury Department’s senior leadership was informed of the IRS targeting before the 2012 presidential election.
The committee found further collusion in the cover-up between the administration and the IRS: "As the IRS considered how to leak information about the targeting before the TIGTA (Treasury Inspector General for Tax Administration) audit report’s release, it informed and coordinated with the Treasury Department. Senior Departmental leadership, after consulting with the White House, tacitly condoned the IRS’s ill-advised strategy of minimizing the fallout by apologizing for the targeting through a planted question at an obscure tax conference."
And, the report found, "before all the facts had been gathered," the Justice Department leaked word in January that no criminal charges would be filed.
The committee noted how, after Lerner's revelation of the scandal on May 10, 2013, Obama went from calling the targeting "inexcusable" and promising to work "hand in hand" with Congress, to taking part in a deliberate effort to minimize and obfuscate the misconduct, with the administration inaccurately blaming the scandal on rogue line-level agents in the IRS Cincinnati office.
The report highlighted a pair of completely contradictory quotes from the president, less than nine months apart.
President Barack Obama, May 15, 2013:
"I’ve reviewed the Treasury Department watchdog’s report, and the misconduct that it uncovered is inexcusable. It’s inexcusable, and Americans are right to be angry about it, and I am angry about it. I will not tolerate this kind of behavior in any agency, but especially in the IRS, given the power that it has and the reach that it has into all of our lives."
President Barack Obama, February 2, 2014:
"[T]here were some bone-headed decisions . . . out of a local office . . . Not even mass corruption, not even a smidgeon of corruption, I would say."
Who's to blame
The report traced the origins of the IRS targeting of conservative groups to a speech Obama gave on Oct. 14, 2010.
The president portrayed tea party groups not as grassroots organizations but as an extension of corporate interests, following the Supreme Court's "Citizens United" decision which, in part, allowed campaign donors to remain anonymous:
"[W]hat has happened is layered on top of some of that general frustration that has expressed itself through the Tea Party, there is an awful lot of corporate money that’s pouring into these elections right now."
The President continued, "But you have these innocuous-sounding names, and we don’t know where this money is coming from. I think that is a problem for our democracy. And it’s a direct result of a Supreme Court decision that said they didn’t have to disclose who their donors are."
Conservatives have contended Lerner and the IRS took that as an obvious hint and launched the targeting.
The report notes how Lerner echoed the president's sentiments just five days later in a speech at Duke University on the upcoming election:
"The Supreme Court dealt a huge blow ... overturning a 100-year old precedent that basically corporations couldn’t give directly to political campaigns. And everyone is up in arms because they don’t like it ... They want the IRS to fix the problem ... I won’t know until I look at their [tax return form] 990s next year whether they have done more than their primary activity as political or not."
The report said pressure mounted on the IRS regulate political speech after the Supreme Court decision, as Obama barnstormed the country deriding conservative tax-exempt groups as "shadowy," "phony," and even "a threat to our democracy."
The result, according to the committee, was that for 27 months, from February 2010 until May 2012, the IRS "systematically targeted conservative tax-exempt applicants for additional scrutiny and delay."
As part of that effort, Lerner initiated a "c4 project," but was careful to ensure that it was not "per se political," and characterized applications filed by tea party groups as “very dangerous” because, according to the report, she claimed to believe they could undo existing IRS limits on non-profit political speech.
The report descried how line-level IRS employees were trained to flag tea party applications for tax-exempt status. Their Washington superiors would then determine whether the groups were engaged in "good" non-profit activities or "emotional" propaganda with “little educational value.” The IRS then delayed numerous applications for years and caused the groups to endure intrusive and burdensome questioning. Relatively few liberal-oriented groups received such scrutiny.
The report also found the "IRS’s outsized role in implementing Obamacare ... has fundamentally transformed the tax agency. Evidence shows an IRS responsive to the partisan policy objectives of the White House and an IRS leadership that coordinates with political appointees of the Obama Administration."
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