IRS Scandal More About Political Bias Than “Incompetence”
What happened at the IRS looks a lot more like deliberate political bias than simple incompetence.
The Internal Revenue Service’s Inspector General released his report late yesterday on the political targeting of conservative and libertarian organizations by the division of the agency responsible for evaluating applications for tax-exempt status, and it seems clear that senior IRS officials had permitted a culture of partisan bias to take hold in an agency that is supposed to be non-partisan:
WASHINGTON — An inspector general’s report issued Tuesday blamed ineffective Internal Revenue Service management in the failure to stop employees from singling out conservative groups for added scrutiny. Congressional aides, meanwhile, sought to determine whether the Obama administration’s knowledge of the effort extended beyond the I.R.S.
House and Senate aides said they were focusing on an Aug. 4, 2011, meeting in which the I.R.S.’s chief counsel appears to have conferred with agency officials to discuss the activities of a team in the Cincinnati field office that had been subjecting applications for tax-exempt status from Tea Party and other conservative groups to a greater degree of review than those from other organizations.
Under I.R.S. rules, the agency’s chief counsel, William J. Wilkins, reports to the Treasury Department’s general counsel, and investigators want to determine if Mr. Wilkins took the issue out of the independent I.R.S. to other parts of the Obama administration.
If the inquiry determines any new link to the administration, it could change the political equation for the White House, which has stressed the I.R.S.’s independence even as President Obama has castigated the agency over the allegations of political bias. A bipartisan investigation by the Senate Finance Committee built steam on Tuesday, and the House Ways and Means Committee prepared for the first hearing on the matter on Friday with an extensive request for documents from the I.R.S. The House Oversight Committee formally accused one I.R.S. official of misleading lawmakers on four occasions.
“What we don’t know at this point is whether it jumped the fence from the I.R.S. to the White House,” said Senator Mitch McConnell of Kentucky, the Republican leader. “But we do know this: we can’t count on the administration to be forthcoming about the details of this scandal, because so far they’ve been anything but.”
Late Tuesday, Mr. Obama said in a statement that “the report’s findings are intolerable and inexcusable.”
“The federal government must conduct itself in a way that’s worthy of the public’s trust, and that’s especially true for the I.R.S.,” he said, adding, “This report shows that some of its employees failed that test.”
He said he was asking Jacob J. Lew, the Treasury secretary, “to hold those responsible for these failures accountable, and to make sure that each of the inspector general’s recommendations are implemented quickly.”
[A] matter portrayed by the I.R.S. on Friday as a little-known operation conducted in Cincinnati, largely out of the sight of Washington officials, continued to sprawl. The report by the Treasury inspector general for tax administration offered new details on the scope and duration of the I.R.S. targeting effort.
Mismanagement at the agency allowed “inappropriate criteria” for the singling out of conservative groups to be developed and stay in place for more than 18 months, starting in 2010, the report said. That resulted in “substantial delays” for groups applying for tax-exempt status, either as 501(c)(4) or 501(c)(3) organizations, and it allowed unnecessary and intrusive information like donor lists to be gathered. I.R.S. officials told the inspector general that all donor information received was later destroyed.
Of the 296 applications the inspector general reviewed, 108 were approved, 28 were withdrawn by the applicants and 160 were still open, some pending for up to 1,138 days.
In a statement Tuesday night, the I.R.S. acknowledged that “inappropriate shortcuts were used to determine which cases may be engaging in political activities.” But it said the agency had a responsibility to make sure that such organizations did not engage in impermissible political actions, and that not just conservative groups were singled out. It also said that “there was no intent to hide this issue,” but that the agency had been awaiting the inspector general’s report.
The report said that senior I.R.S. officials told inspectors that no individual or organization outside the agency influenced the criteria used to single out Tea Party or other conservative groups.
But Congressional aides looking into the matter are not convinced. One notation in a 12-page timeline of events prepared by the inspector general stood out for exploration. On Aug. 4, 2011, officials at the I.R.S.’s rulings and agreement office met with the I.R.S.’s chief counsel “so that everyone would have the latest information on the issue,” according to the inspector general.
That was interpreted as an invitation to bring the matter up the chain of command, to the Treasury general counsel, George W. Madison, who left the department in June 2012. Treasury officials declined to comment Tuesday.
No doubt, the question of whether or not anyone outside the IRS was involved in this targeting is going to be a serious focus of the Congressional investigations that will start later this week and, no doubt, the criminal investigation that the FBI has opened up into the matter. At this point, however, it still appears as though the program was limited to people inside the IRS and was, for whatever reason, allowed to continue even after supervisors in the Washington, DC headquarters found out about. What’s also clear is that the initial statement from the IRS that the targeting was not motivated by political bias simply is not believable. If that were the case, we would expected to find that politically oriented groups applying for 501(c)(4) status would be treated relatively the same regardless of which side of the political aisle they happen to lie on. USA Today has an analysis which clearly shows that 501(c)(4) applications by obviously liberal organizations were treated far differently from those that were obviously from the conservative side of the aisle:
As applications from conservative groups sat in limbo, groups with liberal-sounding names had their applications approved in as little as nine months. With names including words like “Progress” or “Progressive,” the liberal groups applied for the same tax status and were engaged in the same kinds of activities as the conservative groups. They included:
• Bus for Progress, a New Jersey non-profit that uses a red, white and blue bus to “drive the progressive change.” According to its website, its mission includes “support (for) progressive politicians with the courage to serve the people’s interests and make tough choices.” It got an IRS approval as a social welfare group in April 2011.
• Missourians Organizing for Reform and Empowerment says it fights against corporate welfare and for increasing the minimum wage. “It would be fair to say we’re on the progressive end of the spectrum,” said executive director Jeff Ordower. He said the group got tax-exempt status in September 2011 in just nine months after “a pretty simple, straightforward process.”
• Progress Florida, granted tax-exempt status in January 2011, is lobbying the Florida Legislature to expand Medicaid under a provision of the Affordable Care Act, one of President Obama’s signature accomplishments. The group did not return phone calls. “We’re busy fighting to build a more progressive Florida and cannot take your call right now,” the group’s voice mail said.
Like the Tea Party groups, the liberal groups sought recognition as social welfare groups under Section 501(c)(4) of the tax code, based on activities like “citizen participation” or “voter education and registration.”
ABC News, meanwhile, lists some of the more bizarre and intrusive questions that IRS investigators were sending to conservative 501(c)(4) applicants:
- “Provide a list of all issues that are important to your organization. Indicate your position regarding each issue.”
- “Please explain in detail the derivation of your organization’s name.” (in a letter to the Ohio-based 1851 Center for Constitutional Law)
- “Please explain in detail your organization’s involvement with the Tea Party.”
- “Provide details regarding your relationship with Justin Binik-Thomas.” (a Cincinnati-area Tea-Party activist)
- “Provide information regarding the Butler County Teen Age Republicans and your relationship.”
- “Submit the following information relating to your past and present directors, officers, and key employees: a) Provide a resume for each.”
- “The names of the donors, contributors, and grantors. … The amounts of each of the donations, contributions, and grants and the dates you received them.”
- “The names of persons from your organization and the amount of time they spent on the event or program.” (for events)
- “Provide copies of the handbills you distributed at your monthly meetings.”
- “Fully describe your youth outreach program with the local school.”
- “Please provide copies of all your current web pages, including your Blog posts. Please provide copies of all of your newsletters, bulletins, flyers, newsletters or any other media or literature you have disseminated to your members or others. Please provide copies of stories and articles that have been published about you.”
- “Are you on Facebook or other social networking sites? If yes, provide copies of these pages.”
- “Provide copies of the agendas and minutes of your Board meetings and, if applicable, members ship meetings, including a description of legislative and electoral issues discussed, and whether candidates for political office were invited to address the meeting.”
Now, for organizations that are organized by people in their spare time and run out of people’s houses, this is a fairly obtuse and intrusive list of information to request. It looks more like a strategy designed to bury these groups in paper rather than a legitimate search for the truth. The fact that such requests for information were sent only to conservative and libertarian applicants suggests that there was, indeed, a selective bias being applied to the scrutiny that IRS agents were giving to these 501(c)(4) applicants. At the very least, that’s highly improper and may indeed have been illegal. Of all the “scandal” stories currently gripping Washington this seems to me to be the one that’s likely to have the most political impact and, if it does turn out that it goes beyond the IRS itself, then it could end up being a bigger story than it seems at the moment. This much is clear, Congress must investigate this matter thoroughly and, quite probably, consider changes to the law that would address this type of problem in the future, because using the IRS as a tool of political gamesmanship is the last thing we need to see.