IRS commissioner ousted over tea party targeting

WASHINGTON (AP) — Hurrying to check a growing controversy, President Barack Obama ousted the acting commissioner of the Internal Revenue Service late Wednesday amid an outcry over revelations that the agency had improperly targeted tea party groups for scrutiny when they filed for tax-exempt status.

Obama said Treasury Secretary Jacob Lew had asked for and accepted Steven T. Miller's resignation. Obama made no public criticism of Miller but spoke of inexcusable "misconduct" by IRS employees and said new leadership at the agency was critical.

"Americans are right to be angry about it, and I am angry about it," Obama said in a televised statement from the White House. "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."

Meanwhile, the FBI is investigating potential civil rights violations at the IRS, Attorney General Eric Holder said earlier Wednesday. Other potential crimes include making false statements to authorities and violating the Hatch Act, which prohibits federal employees from engaging in some partisan political activities, Holder said.

Miller, a 25-year IRS veteran, took over the agency in November, when the five-year term of Commissioner Douglas Shulman ended.

In an email to employees, Miller said, "This has been an incredibly difficult time for the IRS given the events of the past few days, and there is a strong and immediate need to restore public trust in the nation's tax agency. I believe the Service will benefit from having a new acting commissioner in place during this challenging period."

At the time when tea party groups were targeted, Miller was a deputy commissioner who oversaw the division that dealt with tax-exempt organizations.

An inspector general's report does not indicate that Miller knew conservative groups were being targeted until after the practice ended. But documents show that Miller repeatedly failed to tell Congress that tea party groups were being targeted, even after he had been briefed on the matter.

The IRS said Miller was first informed on May, 3, 2012, that applications for tax-exempt status by tea party groups were inappropriately singled out for extra, sometimes burdensome scrutiny.

At least twice after the briefing, Miller wrote letters to members of Congress to explain the process of reviewing applications for tax-exempt status without revealing that tea party groups had been targeted. On July 25, 2012, Miller testified before the House Ways and Means oversight subcommittee but again was not forthcoming on the issue — despite being asked about it.

Miller was scheduled to testify Friday at a Ways and Means hearing. It was not immediately clear whether he would still testify.

Holder announced Tuesday that the Justice department had opened a criminal investigation, joining three committees in Congress that are looking into the matter.

"I can assure you and the American people that we will take a dispassionate view of this," Holder told the House Judiciary Committee at a hearing Wednesday. "This will not be about parties, this will not be about ideological persuasions. Anybody who has broken the law will be held accountable."

But, Holder said, it will take time to determine if there was criminal wrongdoing.

Legal experts, however, said it could be difficult to prove that IRS officials or employees knowingly violated the civil rights of conservative groups. If there is a violation, the experts said, investigators can sometimes prove more easily that officials made false statements or obstructed justice in some other way.

"I think it's doubtful that any of these knuckleheads who engaged in the conduct that gave rise to this controversy knowingly believed that they were violating the law," said David H. Laufman, a former Justice Department lawyer. "But that remains to be seen. That's what investigations are for."

"It's more likely than not that," he said, "the conduct at issue here may constitute violations of IRS rules or standards or protocols or procedures but may fall short of what is necessary to constitute a criminal offense."

Even if IRS agents broke criminal laws in targeting conservative groups, investigators may have to prove they knowingly did it, a high standard, said Brian Galle, a former Justice Department lawyer who teaches law at Boston College.

"If the reason they were pursuing them was in order to punish them for their political activity, there might be a First Amendment concern there," Galle said. "On the other hand, if the reason that they were looking for tea party groups is because there had been press reports about this new group, the tea party, who was aimed primarily at getting more conservative people elected to office, then they were just responding to the evidence. It really depends on what their motives were."

Wednesday's hearing was the first of several in Congress that will focus on the issue.

The House Oversight Committee announced Wednesday that it would hold a hearing May 22, featuring Lois Lerner, the head of the IRS division that oversees tax exempt organizations, and former IRS Commissioner Douglas Shulman, whose five-year term ended in November.

The Senate Finance Committee announced a hearing for next Tuesday.

At Wednesday's hearing, Rep. Jim Jordan, R-Ohio, said Lerner misled him and his staff when they asked her about complaints from conservative groups that they were being harassed by the IRS.

"I know for a fact, Lois Lerner lied to me, she lied to our personal staff, she lied to committee staff, she lied in correspondence," Jordan said.

Lerner learned about the targeting on June 29, 2011, according to a report Tuesday by the inspector general.

The report said ineffective management at the IRS allowed agents to improperly target tea party and other conservative groups for more than 18 months.

The report said that while their applications for tax exempt status languished, tea party groups were asked a host of inappropriate questions, including: Who are your donors? What are the political affiliations of officers? What issues are important to the organization, and what are your positions on those issues? Will any officers in the group run for public office? Where do you work?

The IRS started targeting groups with "Tea Party," ''Patriots" or "9/12 Project" in their applications for tax exempt status in March 2010, the inspector general's report said. By August 2010, it was part of the written criteria used to flag groups for additional scrutiny.

Colleen M. Kelley, president of the National Treasury Employees Union, said Wednesday that no union employees had been disciplined, as far as she knew. She noted that the IG's report said agents were not motivated by political bias.

Kelley told The Associated Press that low-level workers could not have specifically targeted conservative groups for long without the approval of supervisors. However, she noted, there are many levels of supervisors at the IRS.

"No processes or procedures or anything like that would ever be done just by front-line employees without any management involvement," Kelley said. "That's just not how it operates."

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Associated Press reporter Andrew Miga contributed to this report.

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ACLJ: Resignation Of Acting IRS Commissioner "Does Not Solve Any Of The Problems" Of A Tainted And Politically-Driven IRS -- Independent Counsel Must Investigate

WASHINGTON, May 15, 2013 /PRNewswire-USNewswire/ -- The American Center for Law and Justice (ACLJ), which represents nearly 30 Tea Party organizations nationwide, said today's announcement by President Obama accepting the resignation of acting IRS Commissioner Steven Miller does not go far enough.

"President Obama continues to fail to show leadership as this IRS scandal continues to expand," said Jay Sekulow, Chief Counsel of the ACLJ. "The resignation of acting IRS Commissioner Steven Miller does not solve any of the problems of this tainted and politically-driven agency. The announcement comes just hours after the IRS attempted to blame this abhorrent conduct on a couple of rogue IRS agents out of the Cincinnati office. The American people and our clients deserve much more. There are many questions that President Obama failed to address including why his Attorney General is heading up this investigation. The fact is an independent counsel needs to be appointed - with no ties or allegiance to this president. The IRS scheme to target conservative groups because of their thoughts and ideological positions is both unconscionable and intolerable. It is also actionable. We continue to move forward in preparing a federal lawsuit on behalf of our clients - a complaint that could be filed as early as next week."

The ACLJ represents 27 Tea Party organizations targeted by the IRS. Fifteen have received tax-exempt status. Ten are still pending and the subject of a demand letter sent to the IRS – demanding that those clients by granted tax-exempt status immediately. Two other organizations withdrew because of frustration with the IRS.

The IRS contends this intimidation strategy was confined to "low-level" employees out of its office in Cincinnati.

The fact is that the ACLJ's clients have received letters from Cincinnati, but also from two offices in California, El Monte and Laguna Niguel as well as the national office in Washington, D.C. In fact, the Washington office sent a letter to one of our clients as recently as one month ago.

Led by Chief Counsel Jay Sekulow, the American Center for Law and Justice (ACLJ), focusing on constitutional law, is based in Washington, D.C. and is online at www.aclj.org.

MEDIA  CONTACTS: 
For Print: Gene Kapp  (757) 575-9520
For Broadcast:  Alison Geist or Chandler Epp (770) 813-0000

SOURCE American Center for Law and Justice

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IRS commissioner was grilled on targeting conservatives earlier than first thought

IRS Commissioner Douglas Shulmanis sworn in prior to testifying before the Senate Homeland Security and Governmental …

News reports about how the Internal Revenue Service applied heavier scrutiny on conservative political organizations applying for tax-exempt status have pointed to a March 22, 2012 House Ways and Means oversight subcommittee hearing in which IRS Commissioner Douglas Shulman denied any wrongdoing. But that wasn't the first time lawmakers grilled him about the IRS' practices.

During a Financial Services subcommittee hearing earlier that month, on March 7, 2012, Georgia Republican Rep. Tom Graves questioned Shulman about similar concerns. Shulman pushed back against allegations that the IRS was targeting groups that advocated for limited government, just as he did at the subsequent Ways and Means subcommittee hearing.

At the March 7 hearing, Graves pointed to concerns from tea party groups that the IRS had unfairly scrutinized them with burdensome questions because of their political ideology. Shulman, who was appointed to the post by President George W. Bush and whose five-year term as IRS commissioner ended in Nov. 2012, told Graves that the agency had followed standard protocol and said allegations that specific groups were being targeted were "off."

"Can you help put any of those concerns to rest today that these groups are specifically being targeted because of their political activities or their opposition to the administration’s policies?" Graves asked, according a transcript of the exchange.

"It is a good question. I am glad you asked it because I think there has been lots of information flying around in the press, and I think it is important that people put it in perspective," Shulman said, and went on to explain the agency's process for examining applications non-profit status. "When we decide to do an examination, we pride ourselves on being a non-political, non-partisan agency. We are given these complex rules that have things like political activity written into the tax code that does not allow you to do certain things or else you jeopardize your tax exemption. We have set up very clear safeguards, for determinate exams.

"This notion that we are targeting anyone, I think, is off," Shulman added, "because these people are going through an application process that they voluntarily decided to do. It is not required under the law."

The IRS on Friday apologized for singling out conservative organizations that applied for tax-exempt status between 2010 and 2012. A forthcoming audit of IRS procedures during that time will show that the agency was made aware of the practices as early as 2011, according to copy of the report obtained by the Associated Press.

The White House and several lawmakers have called for an investigation for more details.

Here's the full transcript of Graves' exchange with Schulman during the March 7 Financial Services subcommittee hearing:

Mr. GRAVES: Madam Chair, Commissioner. There has been a great deal of press in terms of the likelihood of your agency structure and form and funding of 501(c)(4) in terms of welfare organizations. This media attention specifically focused on our assets, examination of what are (c)(4) groups, who also engage in political activity, should be denied a release of their taxes. Two reasons I think that your activities are of so much interest to the press, and to everyone out there, certainly to us in Congress, first because of the timing of the inquiries, which make it appear a little bit linked to other actions, and second, is the focus, since the examinations seem to be centered on groups that are considered Tea Party groups, or those that openly oppose the Administration’s policies.

Can you help put any of those concerns to rest today that these groups are specifically being targeted because of their political activities or their opposition to the Administration’s policies?

Mr. SHULMAN: It is a good question. I am glad you asked it because I think there has been lots of information flying around in the press, and I think it is important that people put it in perspective. First, is for taxpayers to operate as a 501(c)(4) organization, they need to be primarily engaged in promoting the common good or general welfare. They are allowed to be involved in political campaign activity, but it cannot be the primary activity. Second, in order to be a (c)(4) organization, you do not need to apply to the IRS. You can hold yourself out as a 501(c)(4). You then file your 990 at the end of the year, and if we see something that either has to do with political activity or something else, we have the option to do an examination, and there is not a high chance of an examination; we run samples. Third, when we decide to do an examination, we pride ourselves on being a non-political, non-partisan agency. We are given these complex rules that have things like political activity written into the tax code that does not allow you to do certain things or else you jeopardize your tax exemption. We have set up very clear safeguards, for determinate exams. Our Chief Counsel and I are the only Presidential Appointees, and I have a five-year term, so that it goes past Presidential election cycles.

There is a committee of three career employees in our tax-exempt organization, not even based in Washington, who look at any political referrals or any allegations of political activity. Those three rotate, but they make decisions about farming out examinations to the field, so there are many safeguards built in. This work has nothing to do with election cycles and politics. And so that is, generally, what happens. But the important thing about what has been in the press in the last few weeks is not all of these organizations are being examined. They voluntarily came in and said, ‘‘I would like to apply for 501(c)(4) status, so I would like to engage the IRS in what my activities are,’’ and when you apply, you send in an application. We ask sets of questions. These people had a choice to not engage the IRS, to be 501(c)(4)s, hold themselves up as such, file a 990 after a year plus of operation, and then there would have been a much less of a chance that we would have discussions with them. So this notion that we are targeting anyone, I think, is off because these people are going through an application process that they voluntarily decided to do. It is not required under the law.

Mr. GRAVES: Has the IRS recently changed its policies with respect to these organization’s applications?

Mr. SHULMAN: No. No, when you apply as a 501(c)(3) or a 501(c)(4) you send in information. If we need more information, we do a back-and-forth with you. I think there have been press reports about the questions we ask. We also send out information that say, ‘‘If you think you can provide us information in other ways, please let’s have a conversation.’’ I think we are quite reasonable around those things.

Mr. GRAVES: The questions you ask today are the same questions you asked two, three years ago?

Mr. SHULMAN: It is facts and circumstances, and up to the examiner what they think they need to ask to get the information to determine what the activities of this organization are.

Mr. GRAVES: So back to the original question. So you did not deny that are increasing in exams or looking into these organizations, in fact you said engaging in political activities is not the primary focus, but you can come good after determining that does increase the opportunity for examination, so sounds to me like you confirmed the fact that the groups identified that the primary focus here is not the common good, but it is of a political nature.

Mr. SHULMAN: No, I think you have got that wrong. I was reciting the tax law and what are the standards we use when we look at 501(c)(4) organizations. We have been clear in our exam plan that we will look at these groups. When we see 501(c)(4)s not using their status right, we will look at it. That is our job, it is written into the tax code, and when people apply, we will make sure we try to do our best to understand what is happening.

Mr. GRAVES: What is your intention when somebody is not using it correctly?

Mr. SHULMAN: People file a 990, we get referrals from organizations about what is happening, and our examiners have a variety of ways it comes to their attention. A lot of it is on the application. They say, ‘‘Here are my activities,’’ and we will go out and do examinations.

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House panel to formally question IRS commissioner Friday

House Ways and Means Committee Chairman Rep. Dave Camp, R-Mich. (Pete Marovich/Getty Images)

The House Ways and Means Committee has scheduled a formal hearing Friday to probe the Internal Revenue Service for placing heavier scrutiny on conservative groups that applied for nonprofit status between 2010 and 2012.

IRS Commissioner Steve Miller and Treasury Inspector General for Tax Administration J. Russell George are expected to testify Friday morning during the hearing, which committee leaders said would examine the agency's "practice of targeting applicants for tax-exempt status based on political leanings."

The IRS last week apologized for targeting groups that advocate for limited government by requiring them to fulfill onerous requirements before receiving tax-exempt status. A report from the inspector general detailing the agency's practices is expected to be published later this week.

"News that the agency admits it targeted American taxpayers based on politics is both astounding and appalling," said Ways and Means Committee Chairman Dave Camp, a Michigan Republican, in a written statement. "The Committee on Ways and Means will get to the bottom of this practice and ensure it never takes place again.”

President Barack Obama addressed the IRS' behavior during a brief press conference Monday, calling it, if true, "outrageous."

"If, in fact, IRS personnel engaged in the kind of practices that have been reported on and were intentionally targeting conservative groups, then that's outrageous, and there is no place for it," Obama said. "You don't want the IRS ever being perceived to be biased and anything less than neutral in terms of how they operate."

In March 2012, former IRS Commissioner Douglas Shulman twice denied that the IRS had targeted conservative groups when pressed during hearings before the Financial Services and the Ways and Means Oversight subcommittees. Shulman's term ended in November 2012, when the current commissioner, Miller, was appointed. In an interview with the National Review's Robert Costa on Monday, Senate Minority Leader Mitch McConnell called on Miller to resign.

The hearing is scheduled to begin at 9 a.m. Friday on Capitol Hill. Miller and George are the panel's only two witnesses.

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