WASHINGTON (AP) — The Justice Department is opening a criminal investigation of the Internal Revenue Service just as another probe concludes that lax management enabled agents to improperly target tea party groups for extra scrutiny when they applied for tax exempt status.
Attorney General Eric Holder said he ordered the FBI to investigate Friday — the day the IRS publicly acknowledged that it had singled out conservative groups.
“Those (actions) were, I think, as everyone can agree, if not criminal, they were certainly outrageous and unacceptable,” Holder said. “But we are examining the facts to see if there were criminal violations.”
Holder is scheduled to testify Wednesday before the House Judiciary Committee.
Three congressional committees already are investigating the IRS for singling out tea party and other conservative groups during the 2010 congressional elections and the 2012 presidential election. But Holder’s announcement would take the matter to another level if investigators are able to prove that laws were broken.
Ineffective management at the IRS allowed agents to improperly target tea party groups for more than 18 months, said a report released Tuesday by the Treasury inspector general for tax administration. The report lays much of the blame on IRS supervisors in Washington who oversaw a group of specialists in Cincinnati who screened applications for tax exempt status.
It does not indicate that Washington initiated the targeting of conservative groups. But it does say a top supervisor in Washington did not adequately supervise agents in the field even after she learned the agents were acting improperly.
“The report’s findings are intolerable and inexcusable,” President Barack Obama said in a statement. “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 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.”
The agency 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.
Lois Lerner, who heads the IRS division that oversees tax exempt organizations, had been briefed on the matter in June 2011. She ordered the initial tea party criteria to be scrapped, but it later evolved to include groups that promoted the Constitution and the Bill of Rights. The practice was ended in May 2012, the report said.
IRS agents were trying to determine whether the political activities of such groups disqualified them for tax exempt status. These groups were claiming tax exempt status as organizations promoting social welfare. Unlike other charitable groups, they can engage in political activity. But politics cannot be their primary mission.
It is up to the IRS to make the determination.
But by using improper criteria, the IRS targeted some groups, even though there were no indications that they engaged in significant political activities, the report said. Other non-tea party groups that had significant political activities were not screened, the report said.
“The criteria developed by the Determinations Unit gives the appearance that the IRS is not impartial in conducting its mission,” the report said.
The additional screening resulted in long delays as IRS agents asked intrusive, sometimes inappropriate questions, or merely let applications languish, the report said. Inappropriate questions included requests for lists of donors and the political affiliation of officers.
“Unfortunately, the report raises more questions than it answers,” said House Oversight Committee Chairman Darrell Issa, R-Calif. “What we do know for sure is that the IRS personnel responsible for granting tax exemptions systematically targeted conservative groups for extra scrutiny, and that officials in Washington, D.C., were aware of this practice, even while publicly claiming that it never happened.”
The IRS on Friday apologized for singling out tea party and other conservative groups.
On Tuesday, the agency said, “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.”
Acting IRS Commissioner Steven Miller is scheduled to testify before the House Ways and Means Committee at a hearing Friday. Miller became acting commissioner in November, after Commissioner Douglas Shulman completed his five-year term. Shulman had been appointed by President George W. Bush.
A timeline of the IRS’s scrutiny of the right
A look at events leading to the disclosure that the Internal Revenue Service placed conservative groups under special scrutiny for 18 months before the 2012 elections, a practice that has prompted congressional inquiries and a Justice Department criminal investigation:
March-April: IRS agents begin giving extra attention to tax-exempt applications from groups associated with the tea party or with a political sounding agenda in their names, such as “Patriots,” ”Take Back the Country” or “We the People,” according to the IRS inspector general.
August: The first IRS “BOLO” listing — meaning Be on the Lookout — is issued for “various local organizations in the Tea Party movement” that are seeking tax-exempt status.
June: Lawmakers send the first of at least eight letters asking the IRS to address complaints that conservative groups are being subjected to burdensome screening in their applications for tax-exempt status.
June 29: Lois G. Lerner, in charge of overseeing tax-exempt organizations at the IRS, learns at a meeting that groups are being targeted, according to the inspector general. Lerner is told that groups with “Tea Party,” ”Patriot” or “9/12 Project” in their names were being red-flagged. Statements in case files that are critical of the country’s leadership or that want to “make America a better place to live” also prompt examination. Lerner directs agents to change the criteria for flagging groups immediately, the inspector general says.
Dec. 16: Despite being briefed about the matter six months earlier, Lerner does not divulge the flagging of conservative groups when she and others from the IRS meet staff members of the House Ways and Means Committee to discuss the issue, according to the staff’s timeline of events.
January: The criteria for screening, altered after Lerner’s staff meeting six months earlier, is modified again. Now the IRS is on the lookout for references to the Constitution or Bill of Rights in the materials of organizations seeking tax-exempt status, for “political action type organizations involved in limiting/expanding government,” and more.
March 22: IRS Commissioner Douglas Shulman tells Congress there is “absolutely no targeting” of groups based on their political views.
May: Lerner does not divulge the flagging in 45-page letters to two lawmakers inquiring about the issue.
May 3: Deputy Commissioner Steven Miller is told by staff that that applications for tax-exempt status by tea party groups were inappropriately singled out for extra scrutiny, according to the agency. (Miller now is acting commissioner.)
June 15: Miller responds to a letter from Rep. Charles Boustany, R-La., who had raised concerns about possible harassment of tea party groups by the IRS. Miller does not concede conservatives had been singled out. He says generally that the IRS is seeing more tax-exempt applications from politically active groups and taking steps to “coordinate the handling of the case to ensure consistency.”
July 25: Miller testifies to the House Ways and Means oversight subcommittee but does not divulge what he was told in May about the screening of tea party groups.
Sept. 11: Millers writes a letter responding to Utah Sen. Orrin Hatch, the top Republican on the Senate Finance Committee but again does not own up to the scrutiny conservatives were placed under. Hatch had written three times to the IRS about the complaints.
Nov. 6: The presidential and congressional elections.
Nov. 15: Lerner and others from the IRS meet Ways and Means staff but again do not acknowledge the targeting.
Week of April 22: White House counsel learns that the inspector general is finishing a report about the IRS office in Cincinnati, which handles tax-exempt applications, according to White House spokesman Jay Carney.
May 10: Lerner apologizes on behalf of the IRS for “inappropriate” targeting of conservatives; White House counsel is said to receive inspector general’s report; President Barack Obama is said to have heard of the matter for the first time. Lerner says no high-level officials were aware of the targeting, a statement seemingly at odds with the timeline of events, and blamed low-level employees in Cincinnati.
May 13: Obama says if the IRS intentionally went after conservatives, that’s “outrageous.” The Democratic-controlled Senate Finance Committee joins Republican-led House committees in planning fresh investigations of the matter.
May 14: Miller, in a USA Today column, says his agency demonstrated “a lack of sensitivity to the implications of some of the decisions that were made.” Screening of advocacy groups is “factually complex, and it’s challenging to separate out political issues from those involving education or social welfare,” he says, without explaining why he didn’t tell lawmakers what he knew.
Rep. Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform Committee, describes the IRS behavior as “a targeting of the president’s political enemies, effectively, and lies about it during the election year so that it wasn’t discovered until afterwards.” The Justice Department says it will conduct a criminal investigation, the inspector general’s report is released, and Obama calls the findings “intolerable and inexcusable.”