By Kevin Drawbaugh
WASHINGTON, May 20 (Reuters) – A controversy at the U.S.
Internal Revenue Service involving extra scrutiny in 2010-2012
of politically conservative groups is dominating the political
agenda in Washington, with congressional hearings set for
Tuesday and Wednesday.
Here are key events in the scandal, based on a report from
the Treasury Inspector General for Tax Administration (TIGTA),
IRS statements, news reports and interviews:
January 2010 – The Supreme Court’s “Citizens United” ruling
lifts government limits on independent political donations by
corporations and labor unions in federal elections, opening the
door to a surge of political spending.
Tax-exempt “social welfare” groups organized under Section
501(c)(4) of the U.S. tax code become an increasingly popular
conduit for increased spending on all parts of the political
spectrum, but especially by conservatives.
The number of applications sent to the IRS by groups seeking
501(c)(4) tax-exempt status begins to increase sharply, rising
to 3,400 in 2012 from 1,500 in 2010, according to the IRS.
501(c)(4) groups may be exempt from paying taxes and need
not disclose the identity of their donors, but only as long as
their primary activity is not political advocacy.
March 2010 – The IRS field office in Cincinnati, known as
the Determinations Unit, begins picking out applications for
tax-exempt status for closer scrutiny, using
conservative-sounding key words in groups’ names as a filter.
One of the unit’s main jobs is to determine whether applicants
obey the political activity limits and deserve tax-exempt
status.
The unit targets groups with names such as “We the People”
and “Take Back the Country.”
April 2010 – Determinations Unit managers and staff begin
assessing the results of the targeting effort, compiling a
“Sensitive Case Report” and summary chart. The chart is shared
with the director of the exempt organizations unit.
July 2010 – The Determinations Unit tells staffers to be on
the lookout for applications including the name of the Tea Party
movement, a loose affiliation of groups which oppose President
Barack Obama and agitate for lower taxes and smaller government.
October 2010 – Newly assigned IRS specialist in charge of
reviewing applications stops work on cases while awaiting
guidance from another unit. The TIGTA inspector general’s report
points to “a miscommunication about not working the cases while
waiting for guidance.”
November 2010 – In mid-term U.S. elections, Republicans win
control of the House of Representatives, partly on a wave of
support from Tea Party activists.
IRS managers enter a long period of uncertainty about who
should review tax-exempt applications for political involvement
and how it should be carried out, while reviews are on hold.
June 2011 – Lois Lerner, head of the IRS’s tax-exempt groups
unit in Washington, is briefed on the practice of applying extra
scrutiny to conservative groups. She instructs “that the
criteria be immediately revised,” according to TIGTA.
July 2011 – Determinations Unit filtering criteria for
tax-exempt applications are changed to more politically neutral
language for “organizations involved with political, lobbying or
advocacy for exemption under 501(c)(3) or 501(c)(4).”
August 2011 – A meeting is held between the IRS chief
counsel’s office and the office of rulings and agreements, which
oversees the Determinations Unit, “so that everyone would have
the latest information on the issue,” the TIGTA report said.
September 2011 – U.S. campaign finance watchdogs call for
greater IRS scrutiny of certain conservative 501(c)4 groups.
January 2012 – The Cincinnati office of the IRS resumes
using politically charged language to filter applications, such
as “Political action type organizations involved in
limiting/expanding government, educating on the constitution and
bill of rights, social economic/reform movement.”
March 2012 – After Tea Party groups complain about lengthy r
IRS tax-exempt application reviews, Republican members of
Congress question then-IRS commissioner Doug Shulman. In
hearings, Shulman denies the IRS is targeting groups based on
their politics.
House Republicans contact the U.S. Treasury Inspector
General for Tax Administration (TIGTA) with concerns about the
IRS.
May 2012 – The IRS again modifies and neutralizes its
filtering criteria, this time to “organizations with indicators
of significant amounts of political intervention (raising
questions as to exempt purpose and/or excess private benefit).
June 2012 – Republican Representative Darrell Issa formally
requests a TIGTA inquiry. TIGTA chief J. Russell George informs
Issa the following month that it has begun.
August 2012 – Ten Republican senators warn Shulman in a
letter not to buckle under to what they call pressure from
Democrats as the IRS decides what to do about 501(c)(4) groups.
By now, tax exempted groups are raking in money and spending
it on advertising as Obama campaigns for re-election. They
include one run by Republican political operative Karl Rove’s
Crossroads GPS organization. Obama has one such group under his
Priorities USA movement.
July 2012 – The IRS says it “will consider” changing the
rules for 501(c)(4) groups, responding to complaints that some
of the groups are becoming too politically active.
November 2012 – Obama wins reelection over Republican
challenger Mitt Romney.
Shulman steps down when his term as IRS commissioner ends.
He is replaced on an acting basis by IRS veteran Steven Miller.
April 2013 – White House General Counsel Kathryn Ruemmler is
told about the upcoming TIGTA report on April 24. She briefs
White House Chief of Staff Denis McDonough shortly thereafter.
May 2013 – The IRS’s Lerner publicly apologizes for
“inappropriate” targeting of conservative groups. Investigations
are launched by congressional panels. The White House issues a
statement of concern. TIGTA’s report comes out and finds
“inappropriate targeting” and poor management at the IRS. The
FBI launches a criminal investigation.
Obama fires Miller and names White House budget official
Danny Werfel to lead the agency. Joseph Grant, head of the IRS
division at the center of the scandal, announces he plans to
retire.
(Editing by Kevin Drawbaugh and David Storey)
