Spitfire List Web site and blog of anti-fascist researcher and radio personality Dave Emory.

News & Supplemental  

Who Headed the IRS while this So-Called “Scandal” Was Taking Place?

Bush-appointed IRS chief Donald Shulman surveying his charges

Dave Emory’s entire life­time of work is avail­able on a flash drive that can be obtained here. (The flash drive includes the anti-fascist books avail­able on this site.)

Updated on 5/28/2013

COMMENT: Dating to his election in 2008, we’ve forecast the impending de-stabilization of President Barack Obama or “Lee Harvey Obama,” as we call him.

With his second term barely underway, we are seeing “scandals” (note the quotation marks) derailing Obama’s political agenda.

In addition to seizing on the Benghazi incident as an “October Surprise,” as we predicted in the follow-up to the long For The Record series on the Arab Spring, the GOP is harping on the IRS targeting of Tea Party groups.

In addition to the fact that GOP administrations have a proven track record of using the IRS to bludgeon political opponents (rendering their caterwauling over this business spectacularly hypocritical), the IRS was headed by a Bush appointee during the time period in which the scrutiny of the Tea Party was taking place!

The Bush administration targeted groups that simply opposed his policies (see below.)

Note that Donald Shulman left his position in early November of 2012, right after the election!

In other words, a GOP fox was watching the IRS hen house.

The crack-whores of the working press have managed to ignore the central element in the Tea Party/IRS dynamic–the systematic abuse of tax exempt status by Ole 666 himself–Karl Rove (see below).

Many of the Tea Party groups were, indeed, engaged in questionable activities that warranted IRS scrutiny. (See the story excerpted  below.)

“Acting IRS Commissioner Steven Miller Resigns” by Nancy Marshall-Genzer; Marketplace.org; 5/15/2013.

EXCERPT: Acting IRS commissioner Steven Miller has resigned, President Barack Obama announced Wednesday.

“It’s inexcusable, and Americans are right to be angry about it, and I am angry about it. Obama said. “I will not tolerate this kind of behavior in any agency, but especially in the IRS.”

Given the controversy surrounding this audit, it’s important to institute good leadership, Obama said. . . .

. . . . Miller became acting commissioner in early November, after Commissioner Douglas Shulman completed his five-year term. Shulman had been appointed by President George W. Bush. . . .

“Inconsistent Enforcement: IRS Findings in NAACP and All Saints Church Cases”; Center for Effective Government; 2/14/2008.

EXCERPT: A comparison of two high profile IRS investigations into allegations of election intervention – the All Saints Church and NAACP cases -highlights the vagueness of the regulation and the inconsistency of IRS enforcement. According to OMB Watch’s analysis, the facts and circumstances of the All Saints Church and NAACP cases are very similar, but the IRS findings were very different. According to IRS Revenue Ruling 2007-41, the IRS decides whether a charity has violated the ban on election intervention using “all of the facts and circumstances of each case.” The IRS provides little information on how it evaluates these facts and circumstances, however, leaving the charitable community to wonder: Which facts and circumstances are most important? If one fact suggests a violation and another fact indicates compliance, how does the IRS reach a conclusion? How does the IRS ensure consistency in its enforcement of the ban across different and complex situations?

The IRS concluded that All Saints Church violated the ban, while the NAACP did not. In a warning letter to the church, the IRS wrote that All Saints had committed political intervention, but that no further action would be taken. Both organizations retain their nonprofit tax exempt status.

Similarities Between NAACP and All Saints:

The NAACP and All Saints Church cases have several characteristics in common. . . .

Criticism of the Bush administration. In both situations, speakers condemned the policies of the Bush administration during the lead up to the 2004 elections. . . . .

“Miss­ing the Big­ger IRS ‘Scan­dal’ ” by William Boardman; Consortium News; 5/16/2013.

EXCERPT: Karl Rove is the real poster boy for the so-called Inter­nal Rev­enue Ser­vice “scan­dal” of mid-level func­tionar­ies tak­ing a closer look at appli­ca­tions by polit­i­cal orga­ni­za­tions seek­ing a 501©(4) tax sta­tus that makes them not only tax-exempt but pro­tects their donors with anonymity.

That 501(c )(4) is one sweet deal: not only do these orga­ni­za­tions get untrace­able, tax-free money laun­der­ing for their polit­i­cal activ­i­ties, they get a tax­payer sub­sidy to do it. It was not always such: some of these activ­i­ties used to be illegal.

Peo­ple work­ing for the Com­mit­tee to Re-Elect the Pres­i­dent (CREEP) – Richard Nixon’s cam­paign orga­ni­za­tion in 1972 – were con­victed of law-breaking, as were some cor­po­rate donors. CREEP was “ille­gally haul­ing in many mil­lions of dol­lars from cor­po­ra­tions, many of which felt pres­sured into mak­ing con­tri­bu­tions,” wrote Jill Abram­son of the New York Times in a 2010 arti­cle about the rapidly chang­ing rules on polit­i­cal contributions.

“The fund-raising prac­tices that earned peo­ple con­vic­tions in Water­gate — giv­ing direct cor­po­rate money to a cam­paign and doing so secretly — are back in a dif­fer­ent form in 2010. This time around, the cor­po­ra­tions are still giv­ing secretly, but legally,” Abram­son wrote.

“This elec­tion year is the first since the Supreme Court’s Cit­i­zens United deci­sion, which allows cor­po­ra­tions for the first time to finance ads that directly sup­port or oppose polit­i­cal can­di­dates. And tax laws and loop­holes have per­mit­ted a shadow cam­paign net­work of Republican-leaning non­profit groups to col­lect a flood of anony­mous dona­tions and spend it widely.”

Indeed, Abram­son noted, “Some play­ers shak­ing the cor­po­rate money trees for non­profit groups this year cut their teeth in the Nixon re-election cam­paign. … There is Fred Malek, a founder of the Amer­i­can Action Net­work, [who] was the White House per­son­nel chief in 1972 and helped dis­pense patron­age for major Nixon donors as well as serv­ing as deputy direc­tor of Creep. … The Amer­i­can Action Net­work shares office space with Amer­i­can Cross­roads, led by Mr. Rove, who also was an active par­tic­i­pant in Nixon’s re-election as exec­u­tive direc­tor of the Col­lege Repub­li­can National Committee.”

Early in 2010, Rove founded Amer­i­can Cross­roads, a per­fectly legal, openly polit­i­cal, tax-exempt 527 orga­ni­za­tion, with no lim­its on the amount or source of their con­tri­bu­tions, and no spend­ing lim­its. Despite these free­doms, 527s were still pro­hib­ited from openly sup­port­ing par­tic­u­lar can­di­dates, and they had to reg­is­ter with the IRS, dis­close donors, and file reports.

The Prob­lem: Some Transparency

These 527 orga­ni­za­tions (a broad cat­e­gory that includes Super PACs) have been an open cha­rade in the demo­c­ra­tic process for years, avoid­ing direct sup­port of can­di­dates while pro­duc­ing mate­r­ial that could only sup­port their cho­sen can­di­dates. For exam­ple, the 527 orga­ni­za­tion Swift Boat Vet­er­ans for Truth attacked pres­i­den­tial can­di­date John Kerry dur­ing the 2004 elec­tion, with­out express­ing direct sup­port for Pres­i­dent George W. Bush.

In June 2010, Karl Rove and Amer­i­can Cross­roads founded Cross­roads GPS (Grass­roots Pol­icy Strate­gies) that, as a 501©(4), had even fewer con­straints. Amer­i­can Cross­roads was one of 1,500 appli­cants for 501©(4) sta­tus in 2010. In 2012 there were some 3,400 applications.

Accord­ing to the Inter­nal Rev­enue Code passed by Con­gress, 501©(4) sta­tus is reserved for “civic leagues or orga­ni­za­tions not orga­nized for profit but oper­ated exclu­sively for the pro­mo­tion of social wel­fare” [empha­sis added]. In 1959, dur­ing the Eisen­hower admin­is­tra­tion, the IRS decided to ignore the let­ter of the law, and wrote rules for 501©(4) orga­ni­za­tions requir­ing only that they be pri­mar­ily for the pro­mo­tion of social welfare.

The dif­fer­ence between “exclu­sively” and “pri­mar­ily” cre­ated a loop­hole even a non-lawyer could exploit, but it became most use­ful to $100 mil­lion out­fits like Amer­i­can Cross­roads only after the Supreme Court, with its Jan­u­ary 2010, 5–4 deci­sion in Cit­i­zens United (558 US 310), opened the Amer­i­can polit­i­cal process to vir­tu­ally any money from any source, with almost no duty to dis­close anything. . . .

“Groups Targeted by I.R.S. Tested Rules on Politics” by Nicholas Confessore and Michael Luo; The New York Times; 5/26/2013.

EXCERPT: When CVFC, a conservative veterans’ group in California, applied for tax-exempt status with the Internal Revenue Service, its biggest expenditure that year was several thousand dollars in radio ads backing a Republican candidate for Congress.

The Wetumpka Tea Party, from Alabama, sponsored training for a get-out-the-vote initiative dedicated to the “defeat of President Barack Obama” while the I.R.S. was weighing its application.

And the head of the Ohio Liberty Coalition, whose application languished with the I.R.S. for more than two years, sent out e-mails to members about Mitt Romney campaign events and organized members to distribute Mr. Romney’s presidential campaign literature.

Representatives of these organizations have cried foul in recent weeks about their treatment by the I.R.S., saying they were among dozens of conservative groups unfairly targeted by the agency, harassed with inappropriate questionnaires and put off for months or years as the agency delayed decisions on their applications.

But a close examination of these groups and others reveals an array of election activities that tax experts and former I.R.S. officials said would provide a legitimate basis for flagging them for closer review.

“Money is not the only thing that matters,” said Donald B. Tobin, a former lawyer with the Justice Department’s tax division who is a law professor at Ohio State University. “While some of the I.R.S. questions may have been overbroad, you can look at some of these groups and understand why these questions were being asked.” . . .

Discussion

8 comments for “Who Headed the IRS while this So-Called “Scandal” Was Taking Place?”

  1. In related news…:

    The New York Times
    Early E-Mails on Benghazi Show Internal Divisions

    By MARK LANDLER, ERIC SCHMITT and MICHAEL D. SHEAR
    Published: May 15, 2013

    WASHINGTON — E-mails released by the White House on Wednesday revealed a fierce internal jostling over the government’s official talking points in the aftermath of last September’s attack in Benghazi, Libya, not only between the State Department and the Central Intelligence Agency, but at the highest levels of the C.I.A.

    The 100 pages of e-mails showed a disagreement between David H. Petraeus, then the director of the C.I.A., and his deputy, Michael J. Morell, over how much to disclose in the talking points, which were used by Susan E. Rice, the ambassador to the United Nations, in television appearances days after the attack.

    Mr. Morell, administration officials said, deleted a reference in the draft version of the talking points to C.I.A. warnings of extremist threats in Libya, which State Department officials objected to because they feared it would reflect badly on them.

    Mr. Morell, officials said, acted on his own and not in response to pressure from the State Department. But when the final draft of the talking points was sent to Mr. Petraeus, he dismissed them, saying “Frankly, I’d just as soon not use this,” adding that the heavily scrubbed account would not satisfy the House Democrat who had requested it.

    “This is certainly not what Vice Chairman Ruppersberger was hoping to get,” Mr. Petraeus wrote, referring to Representative C. A. Dutch Ruppersberger of Maryland, the top Democrat on the House Intelligence Committee, which had asked Mr. Petraeus for talking points to use with reporters in discussing the attack on Benghazi.

    The White House released the e-mails to reporters after Republicans seized on snippets of the correspondence that became public on Friday to suggest that President Obama’s national security staff had been complicit in trying to alter the talking points for political reasons.

    While the e-mails portrayed White House officials as being sensitive to the concerns of the State Department, they suggest that Mr. Obama’s aides mostly mediated a bureaucratic tug of war between the State Department and the C.I.A. over how much to disclose — all under heavy time constraints because of the demands from Capitol Hill. The e-mails revealed no new details about the administration’s evolving account of the Sept. 11 attack, which killed four Americans, including Ambassador J. Christopher Stevens.

    “In recent days, these e-mails have been selectively and inaccurately read out to the media,” said a White House spokesman, Eric Schultz. By releasing them, he said, the White House had shown that the drafting process was “focused on providing the facts as we knew them, based on the best information available at the time and protecting an ongoing investigation.”

    Still, the final version of the talking points is stripped of material — including a reference to Libya being awash with weapons and fighters that made it a dangerous environment — which critics say would have raised questions about the State Department’s security posture.

    Republicans welcomed the release of the e-mails, saying they confirmed that the administration had airbrushed its account of the attack during an election campaign. They also said the e-mails belied the White House’s insistence that it had changed only one word in the talking points.

    “The seemingly political nature of the State Department’s concerns raises questions about the motivations behind these changes and who at the State Department was seeking them,” said Brendan Buck, a spokesman for Speaker John A. Boehner.

    Posted by Pterrafractyl | May 17, 2013, 2:13 am
  2. Note that current “IRS scandal” is also kind of mutually exclusive from the bigger, largely ignored “IRS scandal”:

    Consortium News
    Missing the Bigger IRS ‘Scandal’
    May 16, 2013

    The Washington press corps is in hot pursuit of “Obama scandals,” stampeding officials into various rushes to judgment while missing the bigger scandals underlying the excitement du jour, such as the systematic abuse of federal tax-exempt status for secret political donations, as William Boardman notes.

    By Willliam Boardman

    Karl Rove is the real poster boy for the so-called Internal Revenue Service “scandal” of mid-level functionaries taking a closer look at applications by political organizations seeking a 501(c)(4) tax status that makes them not only tax-exempt but protects their donors with anonymity.

    That 501(c )(4) is one sweet deal: not only do these organizations get untraceable, tax-free money laundering for their political activities, they get a taxpayer subsidy to do it. It was not always such: some of these activities used to be illegal.

    People working for the Committee to Re-Elect the President (CREEP) – Richard Nixon’s campaign organization in 1972 – were convicted of law-breaking, as were some corporate donors. CREEP was “illegally hauling in many millions of dollars from corporations, many of which felt pressured into making contributions,” wrote Jill Abramson of the New York Times in a 2010 article about the rapidly changing rules on political contributions.

    “The fund-raising practices that earned people convictions in Watergate — giving direct corporate money to a campaign and doing so secretly — are back in a different form in 2010. This time around, the corporations are still giving secretly, but legally,” Abramson wrote.

    “This election year is the first since the Supreme Court’s Citizens United decision, which allows corporations for the first time to finance ads that directly support or oppose political candidates. And tax laws and loopholes have permitted a shadow campaign network of Republican-leaning nonprofit groups to collect a flood of anonymous donations and spend it widely.”

    Indeed, Abramson noted, “Some players shaking the corporate money trees for nonprofit groups this year cut their teeth in the Nixon re-election campaign. … There is Fred Malek, a founder of the American Action Network, [who] was the White House personnel chief in 1972 and helped dispense patronage for major Nixon donors as well as serving as deputy director of Creep. … The American Action Network shares office space with American Crossroads, led by Mr. Rove, who also was an active participant in Nixon’s re-election as executive director of the College Republican National Committee.”

    Early in 2010, Rove founded American Crossroads, a perfectly legal, openly political, tax-exempt 527 organization, with no limits on the amount or source of their contributions, and no spending limits. Despite these freedoms, 527s were still prohibited from openly supporting particular candidates, and they had to register with the IRS, disclose donors, and file reports.

    The Problem: Some Transparency

    These 527 organizations (a broad category that includes Super PACs) have been an open charade in the democratic process for years, avoiding direct support of candidates while producing material that could only support their chosen candidates. For example, the 527 organization Swift Boat Veterans for Truth attacked presidential candidate John Kerry during the 2004 election, without expressing direct support for President George W. Bush.

    In June 2010, Karl Rove and American Crossroads founded Crossroads GPS (Grassroots Policy Strategies) that, as a 501(c)(4), had even fewer constraints. American Crossroads was one of 1,500 applicants for 501(c)(4) status in 2010. In 2012 there were some 3,400 applications.

    According to the Internal Revenue Code passed by Congress, 501(c)(4) status is reserved for “civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare” [emphasis added]. In 1959, during the Eisenhower administration, the IRS decided to ignore the letter of the law, and wrote rules for 501(c)(4) organizations requiring only that they be primarily for the promotion of social welfare.

    The difference between “exclusively” and “primarily” created a loophole even a non-lawyer could exploit, but it became most useful to $100 million outfits like American Crossroads only after the Supreme Court, with its January 2010, 5-4 decision in Citizens United (558 US 310), opened the American political process to virtually any money from any source, with almost no duty to disclose anything.

    Similarly, the emergence of 527 organizations derived from another Supreme Court decision, Buckley v Valeo (424 US 1) in January 1976, representing the court’s pushback against federal election laws passed by Congress to address some of the recent Watergate abuses. Issued as an anonymous decision “by the court” (with two, opposing dissents), Buckley effectively gave money the same legal standing as speech, complete with First Amendment protection, albeit with some restrictions. Citizens United effectively removed those restrictions.

    Since 2010, the IRS has faced an unexpected flood of applications for 501(c )(4) status from essentially political organizations of all stripes, but especially from conservative organizations. It’s hard to find anyone who argues that the IRS responded properly or effectively to this exigency, but it’s even harder to find anything but execrable reporting on it either, although there is some good work (by Chris Hayes, Lawrence O’Donnell, Jeffrey Toobin, among others).

    Early reporting by the Associated Press on May 11 took the story off the rails in the first sentence by claiming that IRS “agents were targeting tea party groups as early as 2011,” attributing the claim to a partial draft of a leaked report, and then repeating the claim in the next sentence. The New York Time story the same day started with a misleading reference to “overzealous audits.”

    The story got so distorted and detached from reality that even President Barack Obama in his May 13 remarks didn’t have much of a handle on it.

    The Reality of 501(c )(4) Scams

    The first step toward understanding this IRS story is to realize that the issue of 501(c )(4) organizations carrying out political activities – which should be illegal under federal law – is a real problem and is widely recognized.

    Senators Carl Levin, D-Michigan, and John McCain, R-Arizona, who co-chair an IRS oversight committee, released a statement on May 13, saying in part: “The Permanent Subcommittee on Investigations has been for several months examining on a bipartisan basis whether the IRS has adequately enforced rules regarding the extent to which tax exempt nonprofit 501(c)(4) groups engage in partisan politics. [emphasis added]

    “We had tentatively planned a hearing on that issue for June. After Friday’s announcement that the IRS, to the extent it has been enforcing the law, may have done so in ways that singled out some groups for special scrutiny, we have determined that the subcommittee should investigate that additional issue as well. As a result, we have decided to delay our hearing in order to examine this issue carefully.”

    In other words, the subcommittee’s concern was lax IRS enforcement against a perceived abuse of the tax code, and this concern is reality-based, even though McCain is quoted as talking about “audits” of tea party groups – which is not part of the reality of this issue. There were no audits. There was an evolving and almost comically ineffectual effort by the IRS to sort out 501(c)(4) applications to reduce the number of political organizations seeking tax shelter as “social welfare” organizations.

    By May 14, the basic reality of IRS behavior during 2010-2012, while it was still directed by a Bush appointee, still had not emerged. The director of the tax-exempt division of IRS said that about 300 applications for 501(c )(4) status were given special scrutiny, and of those about 75 were for “tea party” or similarly tagged organizations.

    The IRS has not indicated who made the other 225 applications that got special attention, but they were apparently not conservative or tea party-like groups. According to the IRS, not one of the applications was denied. According to the head of the Kentucky 9/12 Project, his group refused to answer IRS questions and was approved anyway.

    Posted by Pterrafractyl | May 21, 2013, 1:16 pm
  3. The current state of the IRS “scandal“:

    IRS Chief: Inappropriate Screening Included Search Terms ‘Progressive,’ ‘Occupy,’ ‘Israel’
    ALAN FRAM June 24, 2013, 3:19 PM

    WASHINGTON (AP) — The Internal Revenue Service’s screening of groups seeking tax-exempt status was broader and lasted longer than has been previously disclosed, the new head of the agency said Monday.

    An internal IRS document obtained by The Associated Press said that besides “tea party,” lists used by screeners to pick groups for close examination also included the terms “Israel,” ”Progressive” and “Occupy.” The document said an investigation into why specific terms were included was still underway.

    In a conference call with reporters, Danny Werfel said that after becoming acting IRS chief last month, he discovered wide-ranging and improper terms on the lists and said screeners were still using them. He did not specify what terms were on the lists, but said he suspended the use of all such lists immediately.

    “There was a wide-ranging set of categories and cases that spanned a broad spectrum” on the lists, Werfel said. He added that his aides found those lists contained “inappropriate criteria that was in use.”

    Werfel’s comments suggest the IRS may have been targeting groups other than tea party and other conservative organizations for tough examinations to see if they qualify. The agency has been under fire since last month for targeting those groups.

    His comments also indicate that the use of inappropriate terms on such lists lasted longer than has been revealed previously. A report last month by a Treasury Department inspector general said agency officials abolished targeting of conservative groups with those lists in May 2012.

    ..

    Posted by Pterrafractyl | June 25, 2013, 6:33 am
  4. Huh:

    Bloomberg
    IRS Inspector General Disturbed by Documents He Lacked
    By Richard Rubin – Jul 18, 2013 3:22 PM CT

    The Internal Revenue Service’s inspector general told Congress he’s “disturbed” that he didn’t receive until this month a July 2010 document that mentioned scrutiny of “progressive” nonprofit groups.

    “I am very disturbed that these documents were not provided to our auditors at the outset, and we are currently reviewing this issue,” J. Russell George told the House Oversight and Government Reform Committee. “I’m concerned that there may be additional pieces of information that we don’t have.”

    George’s May 14 audit, showing the IRS singled out Tea Party groups that sought tax-exempt status, sparked a controversy that has cost IRS executives their jobs and led to a criminal investigation. Democrats have criticized George for failing to disclose that Republican-leaning groups weren’t the only ones that received extra scrutiny.

    The inquiries into the IRS have become increasingly partisan as Republicans continue their pursuit of Washington-based IRS officials who were involved in the review process.

    ‘Unanswered Question’

    “The big unanswered question of all these hearings is why. Why were these groups targeted,” said Representative Scott DesJarlais, a Tennessee Republican. “There does seem to be somebody who doesn’t want the truth to come out.”

    Democrats have argued that the initial insinuations by Republicans of a political conspiracy have proved to be untrue.

    The documents that were the focus of George’s comments today include a presentation that lumped progressives with Tea Party groups and meeting minutes that said progressives weren’t Tea Party groups.

    George said he doesn’t have complete findings on how progressive groups were scrutinized.

    He said in his testimony that IRS officials were the ones who said they had focused on Tea Party groups for potential impermissible political involvement and not progressive groups identified in another part of a Be on the Lookout, or BOLO, document.

    “We focused our audit on the BOLO entries shown in this document precisely because the IRS represented that these were the criteria relevant to potential political cases,” George said.

    Pro-Democrat Groups

    George said he had known since May 20 that there were BOLO listings that had included Democratic-leaning groups. He said he would have written the audit differently if he had known about that beforehand.

    “You know people’s heads would explode if you talked about Tea Party BOLOs and you didn’t mention any other ones,” said Representative Matthew Cartwright, a Pennsylvania Democrat.

    George responded to criticism from Democrats that he had blocked the release of certain information about Democratic-leaning groups on the July 2010 document. He said the IRS changed its mind about whether that information is subject to taxpayer-privacy rules and that the inspector general’s lawyers are reviewing the issue.

    George also said that he had been told there was a “smoking gun” in e-mails showing the origins of the scrutiny. That’s why investigators looked at 5,500 e-mails and found no evidence of political motivation.

    Well it’s nice to see that cleared up…not that it will make it a difference:

    House GOP investigators say IRS treated conservative groups worse than progressive ones

    By Associated Press, Published: July 30

    WASHINGTON — Conservative groups seeking tax-exempt status were more closely scrutinized by the Internal Revenue Service than their progressive counterparts, according to a report Tuesday by House Republican investigators.

    Tea party and other conservative groups were, on average, asked three times as many questions as progressive groups, said the report by Republicans on the House Ways and Means Committee. Conservative groups were less likely to be approved for tax-exempt status and more likely to have their applications delayed, the report said.

    Congressional investigations have so far shown that IRS supervisors in Washington — including lawyers in the chief counsel’s office — oversaw the processing of tea party applications. But there has been no evidence that anyone outside the IRS directed the targeting or that agents were politically motivated.

    “The facts are very clear — not only were conservative groups targeted by the IRS, but they received much higher scrutiny than progressives,” said Rep. Dave Camp, R-Mich., chairman of the Ways and Means Committee.

    “However, this is just the tip of the iceberg,” Camp said. “We have received less than 3 percent of the documents responsive to the investigation. So, Congress will continue to investigate how the targeting began, why it was allowed to continue for so long and what the IRS is doing to resolve this. Americans deserve to know the full truth.”

    The IRS said in a statement that 70 agency lawyers are working full-time to review documents for congressional inquiries.

    “The IRS is aggressively responding to the numerous data requests we’ve received from Congress,” IRS spokeswoman Michelle Eldridge said. “We are doing everything we can to fully cooperate with the committees, and we strongly disagree with any suggestions to the contrary.”

    A report by the IRS inspector general said the agency gave extra scrutiny to 298 groups when they applied for tax exempt status from the spring of 2010 to the spring of 2012.

    A total of 104 applications included the labels “conservative,” ‘’tea party,” ‘’patriot” or “9-12” in their names, according to the Ways and Means report, which is consistent with the inspector general’s report. Seven included the words “progressive” or “progress.”

    While processing the applications, IRS agents asked the progressive groups an average of 4.7 questions and eventually approved all seven applications, according to the analysis by Ways and Means Republicans. Some progressive groups, however, complained about lengthy delays.

    The conservative groups were asked an average of 14.9 questions and, as of May 31, only 48 applications had been approved. The other 56 applications were either pending or withdrawn. None was denied.

    Rep. Sander Levin of Michigan, the top Democrat on the Ways and Means Committee, said the analysis omits other liberal or progressive groups that don’t have the word “progressive” in their names.

    “This is a recurring problem in this investigation — the release of incomplete information,” Levin said. “Indeed, that is exactly what led to fundamental flaws in the (inspector general’s) report.”

    During the 2010 and 2012 elections, IRS agents singled out groups that had “tea party,” ‘’patriots,” and “9-12” in their applications, according to a May report by IRS inspector general J. Russell George. George’s report determined that these groups received extra, sometimes burdensome scrutiny that delayed their applications for more than a year.

    George’s report did not mention progressive groups. He told a congressional committee this month that, despite a yearlong inquiry, the IRS just recently provided him documents suggesting that progressive groups may have been targeted.

    Posted by Pterrafractyl | August 1, 2013, 8:46 am
  5. Imagine that…

    The Wire
    New Documents Show the IRS Targeted ‘Progressive’ and ‘Tea Party’ Groups for Extra Scrutiny
    Abby Ohlheiser
    4/23/2014

    In an apparent contradiction with earlier comments made by House Oversight Committee chair Darrell Issa, new documents obtained through a FOIA request by ThinkProgress show that yes, the IRS targeted both conservative and liberal groups for extra scrutiny. According to ThinkProgress’s analysis of the heavily redacted “be on the lookout” lists, the IRS may have targeted a higher number of progressive groups than conservative groups overall.

    Basically, the documents support a long-held counterargument to Issa’s theory of the IRS scandal. While Issa has often emphasized that he believes the IRS exclusively targeted Tea Party groups “because of their political beliefs,” that argument relies heavily on the fact that the latest version of the so-called BOLO lists primarily contained conservative-sounding groups. In fact, the IRS also kept and circulated historical versions of that list for continued scrutiny, which were filled with progressive keywords, including medical marijuana groups and keywords designed to flag groups descended from the now-defunct ACORN. And just to be clear: everybody agrees that the IRS should not have targeted political groups for extra scrutiny in this way. What’s at issue are claims that the IRS uniquely treated conservative and Tea Party groups on the basis of political motivations.

    Arguably, ThinkProgress’s report implies, the IRS focused on giving extra scrutiny to groups on the left longer than it did to groups on the right, Issa’s colleagues across the aisle on the Oversight Committee have long noted that Issa has yet to produce evidence supporting his repeated claims that the IRS was acting as part of an anti-GOP political conspiracy. These documents, which ThinkProgress notes were also produced for “investigating congressional committees,” are certainly not that evidence. Here’s a list of some of the groups that show up on the full BOLO watch lists (viewable here):

    * “Progressive” groups, especially those with words like “blue” in the name
    * “Tea Party” groups
    * Not exclusively educational “medical marijuana” groups
    * Groups believed to be “successors to ACORN”
    * “Open source software” organizations
    * “Green energy” organizations
    * “Occupied territory” advocacy organizations

    On the “emerging” section on one of the distributed lists, the BOLO lists contains this downright bipartisan warning:

    Political action type organizations involved in limiting/expanding government, educating on the constitution and bill of rights, Social economic reform/movement

    Anyway, Issa already has a response to that non-specific language. The political watch list language was “changed to broader ‘political advocacy organizations,’” he wrote in a committee report, adding that he believes “the IRS still intended to identify and single out Tea Party applications for scrutiny.” Even though it looks like progressive groups may have ended up on the watch list before the Tea Party started popping up.

    Just imagine what would the response to this scandal would have been if any Tea Party groups had actually lost their tax-exempt status. Just imagine…

    Posted by Pterrafractyl | April 23, 2014, 6:41 pm
  6. Score one more for Team Dark Money: The IRS is just going to rubber-stamp applications for tax-exempt status:

    Time
    IRS to Rubber-Stamp Tax-Exempt Status for Most Charities After Scandal

    Massimo Calabresi @calabresim

    July 13, 2014

    IRS head touts “efficiencies,” but some groups fear fraud

    Amid ongoing controversy over its scrutiny of nonprofits, the Internal Revenue Service has decided it will no longer screen approximately 80% of the organizations seeking tax-exempt charitable status each year, a change that will ease the creation of small charities while doing away with a review intended to counter fraud and prevent political and other noncharitable groups from misusing the tax code.

    As of July 1, any group that pays a $400 fee and declares on a three-page online form that it has annual income of less than $50,000, total assets of less than $250,000 and is in compliance with the tax-code requirements of a charity will automatically be allowed to accept donations that are tax-deductible for the donors. Previously the groups had to fill out a detailed 26-page form, submit multiple supporting documents and provide a narrative description of their intended activities.

    In an interview with TIME, IRS commissioner John Koskinen said the change would result in “efficiencies [that] will translate into a faster and better review” of bigger nonprofits, while clearing a 66,000-application backlog that has resulted in yearlong waits for groups seeking to start a charity. He said the new short form comes with 20 pages of instructions that make clear the requirements and limitations of being a charitable organization. Koskinen said that on the new short form, “people certify that they’ve gone through the instructions” under penalty of perjury.

    The IRS rejected the idea of the new Form 1023-EZ in 2012, but using an expedited process this year, adopted the new procedure on the recommendation of a small team composed largely of frontline workers from the scandal-plagued division of exempt organizations, according to the IRS.

    Some charitable groups worry the IRS has opened the door to abuse of tax-exempt status that will undermine the credibility of legitimate nonprofits, which are allowed to accept deductible donations under section 501(c)(3) of the tax code. “The Form 1023-EZ will increase opportunity for fraud,” said Alissa Hecht Gardenswartz, president of the National Association of State Charity Officials, and will make it harder “to protect charitable assets from fraud and abuse and to ensure that charitable assets are used for the purposes represented to the public.”

    Others worry that charities, nominally barred from political activity, will come to serve the same purpose as the powerful nonprofit organizations known as 501(c)(4)s, whose donations cannot be deducted from taxes. This could give an added tax benefit to donors who have recently funneled hundreds of millions of dollars into independent political campaign spending. “What we’ll see is the so-called dark political money that flowed into the (c)(4) world is going to begin to flow into the (c)(3) world,” says Marcus Owens, who was the director of the exempt-organizations division at the IRS from 1990 to 2000, and is now in private practice at the law firm of Caplin & Drysdale.

    The change will result in approximately 40,000 to 50,000 fewer (c)(3) applications for the exempt-organizations division to review each year, Koskinen says. The division, whose main office is in Cincinnati, has been at the center of the IRS scandal over alleged political scrutiny of right-wing 501(c)(4) groups under then-head Lois Lerner. That scandal centers on shortcuts the office developed to identify (c)(4) groups for further screening, including screens for groups with the names that suggested an association with the Tea Party movement.

    The current legal interpretation of tax regulations allows so-called (c)(4)s to engage in political activities as long as they don’t spend more than 50% of their money on politics. In the 2010 Citizens United ruling by the Supreme Court, those same groups earned the ability to buy campaign ads in federal elections, and tax laws allowed them to conceal the identity of their donors. Since the ruling, the number of applications to become a (c)(4) has doubled, to around 1,000 per year, Koskinen says. In the 2012 campaign, (c)(4)s spent approximately $300 million dollars on politics, according to the Center for Responsive Politics.

    Much of that money was spent attempting to motivate voters by advertising positions on specific issues that divide candidates. Owens, the former IRS official, says such activity can be cast under the mission of a (c)(3) devoted to educational, religious or other permitted activities, opening the possibility of deductible dark money. “The candidate links to the issue, and then the tax-exempt organization’s job is to find the voters and make sure they know the message and hear it loud and clear up to election day,” says Owens. “That’s what the (c)(4)s were doing, but that kind of activity could be just as easily in a (c)(3), but it would have the added advantage of having tax deductibility attached to it,” Owens says.

    While charity groups agree the old process for receiving tax-exempt status was too cumbersome, they and others worry that now organizations with no true charitable purpose will seek to become charities. “It’s easier to get tax-exempt status under 1023-EZ than it is to get a library card,” says Tim Delaney, president and CEO of the Council of Nonprofits. As a result, Delaney says, bad actors “will be able to operate in the name of the charity, and the IRS will never be the wiser because they’re not looking at the underlying documentation.”

    Koskinen says such worries are overblown. “There’s a faith that if someone has been forced to do more paperwork they’re going to be less nefarious,” he says. He says that to prevent potential abuse, the IRS will take samples of applications to see what percentage are being filled out incorrectly, and will monitor the number of applications to see if it spikes suspiciously as a result of the new rules.

    Owens says the IRS may not be able to differentiate between truly small charities and those that knowingly plan to grow beyond $50,000 in annual income. “I haven’t seen any mechanism where the IRS would be legally able to go after an organization that applied within the EZ process but then fortune shined on them,” Owens says. He also says that because of outdated software, the IRS won’t be able to track active charities back from its master file to their originating documents. An IRS official speaking on background acknowledged the software problem.

    Charities complain that the change was made with little consultation from their representative lobbying organizations. The IRS sped its enactment this year by routing the change through the White House’s Office of Management and Budget for public comment under the Paperwork Reduction Act, rather than through the normal public-comment process at the IRS, nonprofit officials contend. “I just wish the IRS had used a more inclusive process from the beginning,” says Delaney of the Council of Nonprofits.

    The IRS studied a simplified tax-exempt form in 2012 but rejected the idea. The group that looked at the idea, made up of outside lawyers and experts in tax-exempt organizations, said that filling out the longer form forced groups to better understand the requirements of being a charity. The group said it “may also be easier to embezzle from a small charity,” so they should be subject to more, not less, oversight.

    When charities are concerned that you’re being a little too charitable in accepting the self-declared charitable status of any random group out there, you might actually be a little too charitable.

    Posted by Pterrafractyl | July 14, 2014, 7:50 am
  7. Better luck next time! Or not:

    GOPer Issa’s Probe Fails To Link IRS Scandal To White House
    By STEPHEN OHLEMACHER
    PublishedDecember 23, 2014, 1:17 PM EST

    WASHINGTON (AP) — A House Republican investigation faults senior IRS officials in the mistreatment of conservative groups that applied for tax-exempt status, but could find no link to the White House, according to a report released Tuesday.

    The probe isn’t over, although investigators have reviewed 1.3 million pages of documents and interviewed 52 officials. The report, however, marks the end of Rep. Darryl Issa’s tenure leading the investigation.

    Issa, a Republican from California, is stepping down as chairman of the House Oversight Committee because of term limits. Issa has repeatedly clashed with the White House and congressional Democrats over the way the IRS treated tea party and other conservative groups.

    Rep. Jason Chaffetz, R-Utah, will take over the committee in January. Chaffetz has said his approach to the committee will be less confrontational.

    The report does not absolve anyone from blame. Instead, it complains that the IRS and the White House have not fully cooperated with the investigation.

    “The White House’s obstruction not only violated the president’s promise of cooperation, but it affected the committee’s fact-finding obligations,” the report said.

    An IRS spokesman said the agency had no comment.

    Rep. Elijah Cummings of Maryland, the top Democrat on the Oversight Committee, said Issa did not share the report with Democrats before releasing it, “bypassing the normal congressional vetting process designed to distinguish fact from fiction.”

    “It is revealing that the Republicans, yet again, are leaking cherry-picked excerpts of documents to support their preconceived political narrative without allowing committee members to even see their conclusions or vote on them first,” Cummings said in a statement.

    The report says conservative groups were given improper scrutiny for more than two years from 2010 to 2012. It says senior IRS officials covered up the misconduct and misled Congress about it.

    The report specifically faults eight senior IRS leaders who “were in a position to prevent or to stop the IRS’s targeting of conservative applicants.”

    The eight include former Commissioner Douglas Shulman, former acting Commissioner Steven Miller, and Lois Lerner, who used to head the division that processes applications for tax-exempt status.

    “Each of these leaders could have and should have done more to prevent the IRS’s targeting of conservative tax-exempt applicants,” the report said.

    Both Shulman and Miller told Congress last year that they first learned that conservative groups were being singled out for additional scrutiny in the spring of 2012.

    They said they put a stop to it and cooperated with a review by the agency’s inspector general, who issued a report about a year later. During that year, Shulman and Miller were repeatedly asked by members of Congress about the treatment of conservative groups by the IRS. But at congressional hearings and in letters, they didn’t reveal anything.

    Shulman’s term as commissioner ended before the controversy came to light in May 2013. President Barack Obama forced Miller to resign shortly after Lerner publicly acknowledged that conservative groups had been mistreated.

    Lerner, who has become a central figure in several congressional investigations, was forced to retire about a year ago. She has refused to testify before Congress, though her lawyer said she has cooperated with an investigation by the Justice Department.

    In a brief statement to Issa’s committee, Lerner said she had done nothing wrong.

    The IRS told Congress in June that it had lost an unknown number of emails to and from Lerner when her computer hard drive crashed in 2011. The agency’s inspector general is trying to retrieve them from old computer tapes.

    The IG’s office told Congress in November that investigators have retrieved some data that may contain emails, but the agency released no details.

    Other Lerner emails produced by the IRS show that Lerner had discussions with Justice Department officials about concerns over tax-exempt groups getting involved in politics. But so far, investigators have not released any documents showing that anyone outside the IRS directed the agency to mistreat conservative groups or even knew it was going on.

    Congressional investigators were hoping Lerner’s lost emails would shed light on the matter.

    The scrutiny delayed several hundred applications for more than a year, with agents asking some groups inappropriate questions about donors, said the inspector general’s report from 2013.

    Congressional Democrats have maintained that some liberal groups were mistreated as well. Issa’s report says liberal groups were not subjected to the same level of scrutiny as conservative ones.

    “Issa’s report says liberal groups were not subjected to the same level of scrutiny as conservative ones.” That’s one way to put it.

    Posted by Pterrafractyl | December 24, 2014, 2:36 pm
  8. So, getting back to the IRS non-scandal, even if those Tea Party organizations the IRS was investigating really had been secretly planning on illegally engaging in partisan political activities, it wouldn’t have mattered. Because these Scam PACs would have just ended up spending almost all the the money on more fund-raising and legal fees instead:

    Politico
    The rise of ‘scam PACs’

    Conservatives sound alarms about self-dealing fundraisers.

    By Kenneth P. Vogel

    1/26/15 5:35 AM EST

    A few hours after a certain former Florida governor took to Facebook last month to announce he was going to “actively explore” a presidential run, a political action committee called the Conservative Action Fund blasted out an email to thousands of recipients urging them to “help us stop Jeb Bush today.”

    The email, signed by the PAC’s chairman, Shaun McCutcheon, pleaded, “If you are a conservative like me who is tired of the special interest, political elites like Jeb Bush running the GOP, then I need your immediate help to make it clear that American conservatives reject a Jeb Bush candidacy.”

    Note that Shaun McCutcheon is the McCutcheon from McCutcheon v FEC that successfully got the individual cap removed on direct donations to federal candidates and PACs lifted.

    Continuing…

    Bush could be persuaded to stay out of the race, McCutcheon’s email asserted, if “hundreds of thousands of conservative, grassroots activists” signed petitions by Dec. 19 to be “hand delivered to Jeb Bush in a very public way” that would presumably shame him out of the race. “And after you sign the petition, please make a donation of $5, $15, $25 or more to help us get even more signatures?” the email concluded in underlined bold text embedded with a hyperlink that took readers to a petition landing page that asked for their emails and then their cash.

    It was a slick and well-timed campaign, tapping into the angst of grass-roots conservatives who are as unhappy with GOP leaders like Senate Majority Leader Mitch McConnell and Speaker of the House John Boehner as they are with President Barack Obama and congressional Democrats.

    And while the PAC’s treasurer told POLITICO that the email got an “extremely positive” response in petition signatures and contributions, more than one month later the Conservative Action Fund had yet to deliver any signed petitions to Bush. It did, however, send out a similar email this month urging recipients to sign a petition to “TELL MITT ROMNEY: SIT 2016 OUT” and then to make a contribution of “at least $17.76 today” to “help keep our efforts funded.”

    The efforts bear some of the hallmarks of a phenomenon that watchdogs say is threatening the integrity of the campaign funding system, and that conservative leaders worry could seriously undermine their interests headed into 2016. Since the tea party burst onto the political landscape in 2009, the conservative movement has been plagued by an explosion of PACs that critics say exist mostly to pad the pockets of the consultants who run them. Combining sophisticated targeting techniques with fundraising appeals that resonate deeply among grass-roots activists, they collect large piles of small checks that, taken together, add up to enough money to potentially sway a Senate race. But the PACs plow most of their cash back into payments to consulting firms for additional fundraising efforts.

    A POLITICO analysis of reports filed with the Federal Election Commission covering the 2014 cycle found that 33 PACs that court small donors with tea party-oriented email and direct-mail appeals raised $43 million — 74 percent of which came from small donors. The PACs spent only $3 million on ads and contributions to boost the long-shot candidates often touted in the appeals, compared to $39.5 million on operating expenses, including $6 million to firms owned or managed by the operatives who run the PACs. POLITICO’s list is not all-inclusive, and some conservatives fret that it’s almost impossible to identify all the groups that are out there, let alone to rein them in.

    “These groups have the pulse of the crowd, and they recognize that they can make a profit off the angst of the conservative base voters who are looking for outsiders,” said the influential conservative pundit Erick Erickson, who has taken it upon himself to call out PAC operators and fundraisers he sees as scams. They are “completely a drain,” said Erickson, whose assessments of candidates and groups carry particular weight among tea party activists and the Republicans who court them. “The conservative activists feel like they’ve contributed to a cause greater than themselves, but the money goes to the consultants, and eventually the activists get burned out and stop giving money, including to the legitimate causes.”

    In the run-up to the 2014 midterm elections, McConnell and Boehner tried to marginalize out-of-favor PACs, and McConnell’s allies last week launched an unofficially endorsed super PAC to go along with one that Boehner’s confidants formed in 2011, partly to stem the flow of cash to competing PACs.

    That technique has worked well for Democrats, who have mostly avoided the problem, though they also benefit from the lack of tea party-style insurgency on their side. That could change if the 2016 Democratic presidential primary inflames deep ideological divisions within the party.

    But on the right, this industry appears only to be growing, according to conservatives who track it closely.

    A couple of days after receiving the anti-Bush email from the Conservative Action Fund, Erickson took to his Red State blog to lament the trend. “It is a terrible blight on the conservative movement and on the tea party in particular that the hucksters have come up to cash in,” he wrote. “From the groups claiming to represent Ben Carson to the groups raising money for Allen West to now a group claiming to raise money to ‘Stop Jeb Bush,’ I think more and more older conservatives are getting scammed by con men living well off other people’s money. I doubt very much that much, if any, of the money is going to support these causes.”

    Such efforts could be particularly damaging to Republican chances in 2016. In recent elections, the party’s nominees have sometimes struggled to raise the sort of small donations necessary to sustain their campaigns, particularly at the presidential level, where presumptive nominees can face a funding gap in the run-up to the convention after they’ve tapped all their major donors for the primary but before they’re legally allowed to start spending a second round of big checks for the general election.

    PACs like those that have drawn Erickson’s scorn don’t have to slog through a long campaign with repetitive fundraising appeals. They can, and do, quickly change focus to keep pace with the scandal of the moment — from Benghazi to Obamacare to liberal media bias to Islamic extremism. Old PACs associated with stale issues or politicians are shuttered, and new ones created to fill the void.

    Among the more consistent themes of the PACs — much to the dismay of the GOP establishment — is the targeting of RINOs (Republicans in Name Only) and the boosting of ideologically pure Republican candidates, including many who stand little chance of winning. A particular focus is on politicians who are military veterans, tea party activists, African-Americans — or all three. Questions about profiteering have swirled around PACs and operatives who have claimed to be supporting African-American conservatives, including former Rep. Allen West, 2012 presidential candidate Herman Cain, fringe 2016 hopeful Ben Carson and two-time unsuccessful House candidate Deborah Honeycutt of Georgia. And a PAC called the Black Republican PAC spent less than 1 percent of the $700,000 it raised in 2014 on contributions to candidates or ads supporting them, according to government filings.

    While operating expenses sometimes include travel or salaries for staff involved in get-out-the-vote or other political activities, most of the groups POLITICO examined do very little on-the-ground work, instead spending the majority of their cash on fundraising such as renting and soliciting from direct-mail and email lists. But defenders of the PACs contend that their fundraising efforts perform a valuable service for the conservative movement by mobilizing the grass-roots base, and that it costs money to raise money.

    “Direct mail is expensive. Phone campaigns are expensive,” said Dan Backer, who serves as a lawyer, treasurer and strategist for the Conservative Action Fund and 14 other PACs included in POLITICO’s analysis. “Email is not as free as people want to pretend like it is. It’s really expensive. … And there’s a lot of money that goes into making these things legal so — I hate to say it — you pay for lawyers,” he added.

    While various watchdog groups and government agencies evaluate the efficiency of apolitical charities — generally rewarding those that keep administrative costs at 25 percent or less — there is no similar oversight of political groups.

    The FEC, which is tasked with regulating PACs, last year essentially conceded there was nothing it could do to clamp down on profiteering PAC operators. It is “not a matter within the Commission’s jurisdiction,” the agency wrote in dismissing complaints by former Rep. West’s campaign against four PACs — including one run by Mackenzie and another by Goodwin and Kreep — that West accused of defrauding donors by raising money under the false pretense that it would be spent in support of his 2012 reelection campaign, which he lost narrowly.

    While the FEC cited Goodwin’s Republican Majority Campaign for “less-than-complete” disclaimers making clear it wasn’t associated with West’s campaign, the commission merely issued a warning. Goodwin told POLITICO his PAC did only one fundraising email mentioning West and “anyone could see that we were making a good-faith effort to comply with those [disclaimer] requirements.” More generally, FEC investigators concluded the four PACs, which raised a combined $14.3 million in 2012, “spent very little of the money they raised to support West. Rather, the funds appear to have been spent primarily on additional fundraising, much apparently to vendors in which some Respondents’ officers may have held personal financial interests. Also troubling are the accounts of donors who mistakenly contributed funds to some respondents while intending to contribute directly to West. Nonetheless, we cannot agree with Complainant that this conduct constitutes a fraud within the reach of the Act or Commission regulation.”

    FEC Chairwoman Ann Ravel called the case “frustrating,” explaining to POLITICO that “we looked very carefully at trying to find a way that we could do something about what seemed to be outright fraud, but it was not within our purview. … I think it’s a loophole.”

    In a little-noticed report to Congress, the FEC last month suggested that the relevant laws in the West case — which pertain to “fraudulent misrepresentation” — be strengthened and expanded.

    Ravel explained that “the goal is for there to be oversight on the Commission of matters where it is the campaigns themselves and by extension the donors that are being defrauded.”

    Such legislation seems unlikely, given that one of the few things Congress has been able to agree on recently is weakening campaign-finance restrictions.

    One of the obvious questions raised by this is whether or not all these Scam PACs could end up being such a serious drain to the GOP’s finances that it harms the GOP’s electoral chances, or if the the GOP is going to be so flooded with money from its major donors that the Scam PAC-drain won’t really matter, electorally, except to make the small grass-roots donors even more irrelevant and the party even more beholden to its big-money base? It’s an obvious question with an obvious answer.

    Posted by Pterrafractyl | January 28, 2015, 11:02 am

Post a comment