Justice Department Investigating IRS' Targeting of Conservative Groups

By Jason Bramwell

Attorney General Eric Holder is scheduled to testify on May 15 before the House Judiciary Committee, one day after he announced the Justice Department has opened a criminal investigation of the IRS for improperly scrutinizing the tax-exempt status of groups with conservative titles, such as "tea party" or "patriot," in their applications.
 
Three congressional committees – the Senate Committee on Finance, the Committee on Ways and Means, and the Committee on Oversight and Government Reform – have already started their investigations into the IRS admitting it singled out tea party and other conservative groups during the 2010 congressional elections and the 2012 presidential election, according to a May 15 article in the Washington Post.
 
IRS Acting Commissioner Steven Miller is scheduled to testify before the Committee on Ways and Means at a hearing on May 17. 
 
During a press conference May 14, Holder said the Justice Department is working with the FBI to see if any laws were broken by the IRS.
 
"I think, as everyone can agree, if not criminal [the IRS actions] were certainly outrageous and unacceptable, but we are examining the facts to see if there were criminal violations," said Holder, who ordered the investigation on May 10.
 

Tea Party Scandal

Follow AccountingWEB's coverage of the Tea Party scandal here.
Last Friday, the IRS apologized for what it calls "inappropriate" targeting of the conservative groups to see if they were violating their tax-exempt status. The agency claims no high-level officials were aware and that the practice was initiated by "low-level" workers.
 
According to a report released May 14 by the Treasury Inspector General for Tax Administration (TIGTA), the IRS's Determinations Unit in Cincinnati – which is responsible for reviewing applications as they're received to determine whether an organization qualifies for tax-exempt status – developed and implemented inappropriate criteria, in part, due to insufficient oversight provided by management.
 
"As a result, inappropriate criteria remained in place for more than eighteen months," the report states. "Determinations Unit employees also did not consider the public perception of using politically sensitive criteria when identifying these cases." 
 
The report also states that a Determinations Unit specialist was asked to search for applications with "tea party," "patriots," or "9/12 Project" in the organization's name as well as other "political-sounding" names. The unit began developing a spreadsheet that would become known as the "Be On the Look Out" (BOLO) listing. 
 
"By July 2010, Determinations Unit management stated that it had requested its specialists to be on the lookout for tea party applications," the report states. "Determinations Unit specialists interpreted the general criteria in the BOLO listing and developed expanded criteria for identifying potential political cases. By June 2011, the expanded criteria included additional names (patriots and 9/12 Project), as well as policy positions espoused by organizations in their applications." 
 
In a statement made on May 14, President Barack Obama called the report's findings "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 IRS," the president said. "The IRS must apply the law in a fair and impartial way, and its employees must act with utmost integrity. This report shows that some of its employees failed that test."
 
In a May 14 statement, the IRS agreed that aspects of the original approach for handling the influx of tax-exempt applications were inappropriate, but adds that the group of centralized cases included organizations of all political views.
 
"The IRS is required by law to determine if organizations are engaging in a legally permissible level of political activity," the IRS states. "Centralizing these cases was necessary to achieve consistent treatment. After seeing issues with particular cases, inappropriate shortcuts were used to determine which cases may be engaging in political activities. It is important to note that the vast majority of these cases would still have been centralized based on the general criteria used for other cases. All centralized cases – including the minority of those with the specified names – received similar treatment in which the facts and circumstances of each case determined the ultimate outcome."
 
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