Scandal erupted at the IRS mid-May when it was discovered that conservative groups applying for tax-exempt status were subjected to extra scrutiny. The official at the center of it all is now on administrative leave after refusing to resign.
Conservative Groups Were Subjected to Additional Scrutiny
The Cincinnati office of the IRS processes applications of groups who are seeking tax-exempt status, determining if they are eligible. They process applications from groups across the U.S. Groups seeking tax-exempt status as a 501(c)(4) entity should be “exclusively for the promotion of social welfare,” but for decades, the IRS has approved groups with a political interest as long as lobbying and campaigning were not their main activities.
It came to light that since March 2010, applications with certain words on the “Be On the Lookout For” (BOLO) list, such as “Patriot” and “Tea Party,” were put into a “bucket” and set aside. Other groups on this BOLO list indicating an interest in the Constitution, government spending, debt, “how the country is being run,” and similar topics were also held back for further scrutiny. That scrutiny included questions regarding affiliations and donors. Groups seeking tax-exempt status are not normally asked such questions.
For over two years, no “Tea Party” groups were approved, while similar groups using the words “progress” or “progressive” were. Groups dealing with a delay in the approval process, anywhere from several months to over three years, may have encountered difficulties fundraising and establishing legitimacy as a result. Director of Exempt Organizations in Cincinnati Lois Lerner said that ultimately, no applications were denied in the process.
The IRS’s Integrity Called Into Question
The main damage is not to the individual groups whose applications were held up, but to the reputation of the IRS. Lerner knew about the practice of sorting the applications into the “buckets” since at least spring 2011, and stated that it came from low-level employees and was not politically motivated. However, it appears that offices other than Cincinnati were involved, calling that statement into question.
On May 10th, Lerner responded to a question at a question at an American Bar Association conference, admitting that her department had held up and scrutinized applications. It was later revealed that the question was planted, allowing Lerner to apologize for the “inappropriate” targeting just days before the May 14th Treasury Inspector General for Tax Administration (TIGTA) released a report detailing its investigation into the matter. The TIGTA report stated that the IRS did use “inappropriate criteria” to single out groups based on their names or political leanings. Members of Congress requested the investigation as early as 2010 and learned about the extra scrutiny of chosen groups since 2012.
Lerner insists that she broke no laws. In front of the House Oversight Committee on May 22nd, she invoked the Fifth Amendment against self-incrimination. Lerner was asked to resign but refused; she has since been placed on administrative leave. Ken Corbin was appointed to replace her for the time being by the IRS’s new acting Commissioner, Danny Werfel. Werfel replaces acting Commissioner Steven Miller, who resigned on May 15th. Joseph Grant, Lerner’s supervisor, also resigned.
Obama Says He Didn’t Know About the Investigation
President Obama learned about the scandal from the media. After the TIGTA report came out, he released a statement expressing his reaction to the their findings, which he described as “intolerable and inexcusable.”
