AuditingIRS targets non-profits perceived to be critical of the government

In the wake of the Supreme Court’s Citizens United ruling, the number of groups applying to the IRS for a tax-exempt status has more than doubled. The IRS inspector general, doing an audit of agency documents relating to such applications, discovered the agency was paying extra attention to  groups with the words “tea party” or “patriot” in their names, and to groups which appeared to be critical of the government.

The Washington Post acquired a copy the audit from a congressional aide, and it shows that the IRS office evaluating applications for tax-exempt status focused on organizations that made statements which “criticize how the country is being run” and those that were involved in educating Americans “on the Constitution and Bill of Rights.”

According to the congressional aide, of the 298 organizations receiving special attention, seventy-two had “tea-party” in their titles, thirteen had “patriot,” and eleven had “9/11.”

Marcus Owens, who supervised tax-exempt groups for the IRS from 1990 to 1999, said that the Cincinnati field office, which makes the decision on whether to make a group tax exempt, “isn’t as plugged into what’s [politically] sensitive as Washington.”

According to Owens, the agency, before its most recent reorganization, had precautions that could catch unfair targeting of groups..

“There’s no longer that safety valve, and as a result, the IRS has been rolling the dice ever since,” Owens, who worked at the agency for nearly a quarter-century and now represents some organizations seeking tax-exempt status told the Post.

The Supreme Court’s decision on Citizens United v. Federal Election Commission allowed corporations and labor unions to raise and spend as much money as they want on elections, and register for tax-exempt status, as long as their “primary purpose” was not targeting electoral candidates.

That decision has led to a significant increase in the number of political groups that now have tax-exempt status. The increase in the number of groups applying for the status has forced the IRS to make quick decisions on may applications, without ascertaining the groups’ full intentions.

Campaign reform groups have tried to press the IRS to focus more attention on the oversight of nonprofit organizations because of the increased involvement of such groups in elections, “But this isn’t the type of enforcement we want,” Paul Ryan, a senior counsel at the Campaign Legal Center told the Post. “We want nonpartisan, non-biased enforcement.”

Loyola Law School professor Ellen April, who specializes in tax law, did not completely blame the agency, saying that any organization that applies for tax-exempt status has “opened themselves up to scrutiny” by the IRS. “It’s part of their job to look for organizations that may be more likely to have too much campaign intervention,” Aprill told the Post. “But it is important to try to make these criteria as politically neutral as possible.”

Lois Lerner, the head of the IRS exempt organization division, apologized for the agency’s mishandling of issue, calling it a misguided effort to deal with a significant number of applications. Republican lawmakers, however, were not satisfied with Lerner and the agency.

The inspector general shows that between June 2011 and May 2012, the IRS tweaked the language of the criterion used by agency employees to determine whether to pay more attention to certain applications.

Senator Susan Collins (R-Maine) called the situation “absolutely chilling” and said Obama needs to stop the practice.

“This is truly outrageous,” she said on CNN’s State of the Union, adding that even though White House spokesman Jay Carney has said the matter deserves an investigation, “the president needs to make crystal clear that this is totally unacceptable in America.”

“There has to be accountability for the people who did it,” House Oversight and Government Reform Committee Chairman Darrell Issa (R-California) said on NBC’s Meet the Press. “And, quite frankly, up until a few days ago, there’s got to be accountability for people who were telling lies about it being done.”

Sal Russo, chief strategist for the Tea Party Express, said that even though the agency’s actions intimidated tea party adherents, he gives the IRS “credit for standing up and admitting” it targeted them. “The culture is set at the top,” Russo told the Post. “Obviously you can’t control what every employee does. But you have to set a standard, particularly with the IRS, to be squeaky clean.”