Whoa: IRS illegally sent 1.1 million confidential records of tax-exempt groups to the FBI


We may now know why the FBI had predetermined that there wouldn’t be any charges filed in the IRS scandal. It turns out that the nation’s leading law enforcement agency may have been involved in the targeting of conservative groups.

House Oversight and Government Reform Committee Chairman Darrell Issa (R-CA) and Rep. Jim Jordan (R-OH) have uncovered new information indicating that the IRS sent 21 disks containing some 1.1 million confidential documents of tax-exempt groups to the FBI in October 2010, just weeks before the mid-term election:

Issa, who heads the oversight committee and Jordan, who chairs a subcommittee, said in a statement on Monday they sent a new letter to the IRS, demanding more information about the data sent to the FBI.

“At the very least, this information suggests that the IRS considered the political speech activities of nonprofits to be worthy of investigation by federal law-enforcement officials,” the letter states.

According to Issa and Jordan, the IRS apparently realizes it should not have sent the information to the FBI.

Emails reveal IRS, Justice Department sought to prosecute tax-exempt groups

The IRS scandal just got a little bigger. The powerful tax agency and the Justice Department sought to prosecute tax-exempt groups that were suspected of engaging in political activity, according to emails obtained by Judicial Watch, a conservative watchdog group.

The emails released by Judicial Watch reveal that Lois Lerner, the former IRS official at the center of congressional inquiries into the scandal, received a phone call from a Justice Department official who wanted to look into prosecuting tax-exempt groups for making “false statements.” That idea, they note, was floated by Sen. Sheldon Whitehouse (D-RI).

The email exchange took place between May 8 and May 9, 2013. Lerner revealed that the IRS had scrutinized groups seeking nonprofit status on May 10, setting off a political firestorm for the Obama administration and the IRS, one that continues today.

This is only the tip of the iceberg. Judicial Watch obtained emails dating back to March and April 2013. In an email dated March, 27, 2013, for example, Lerner explains that “several groups of folks from the FEC world” were looking to shutdown groups with tax-exempt status, adding that ”[o]ne IRS prosecution would make an impact.”

IRS to revisit rules for tax-exempt groups

It may be too early to declare a victory in the war against overreaching bureaucrats, but the Internal Revenue Service has decided to scrap proposed rules that would have had a chilling effect on political speech and legitimized the agency’s targeting of conservative groups:

The Internal Revenue Service is prepared to rewrite a proposed rule regulating the political activities of non-profit groups to address complaints from the right and left that it goes too far, IRS Commissioner John Koskinen said Monday.

“In all likelihood we will re-propose a redefined rule and ask for more public comment,” Koskinen told USA TODAY’s Capital Download. It’s a process he predicts will take “until the end of the year and beyond” to complete. The proposed regulation of groups known as 501(c)(4)s drew a record 150,000 comments before the deadline in late February.

He said the new rule would take into account backlash from conservative Tea Party groups as well as some liberal advocacy organizations that the agency’s proposal – intended to address concerns that the tax-exempt groups were engaged in partisan warfare – would bar, even voter education and registration programs.

The IRS had already postponed implementation of the rules due to the record response the powerful tax agency received. More than 150,000 comments were submitted, with opposition coming from both the political right and left.

House Oversight Committee to bring Lois Lerner back to testify on IRS scandal

House Oversight Committee Chairman Darrell Issa (R-CA) has put Lois Lerner, a disgraced former IRS official, on notice that she’ll be called back to testify about the powerful tax agency’s targeting of conservative and Tea Party groups.

“Ms Lerner’s testimony remains critical to the Committee’s investigation,” wrote Issa in a letter to William Taylor, Lerner’s attorney. “Documents and testimony obtained by the Committee show that she played a significant role in scrutinizing applications for tax exempt status from conservative organizations.”

Issa also noted that the committee has obtained information that Lerner ”participated in ‘off plan’ work to develop rules that would allow the IRS to stifle constitutionally protected political speech by non-profit groups.” These proposed rules — which would codify the targeting of conservative groups — are currently being considered by the IRS

Vulnerable Senate Dems look to IRS to save their pathetic careers

Vulnerable Senate Democrats hope the Internal Revenue Service will speed up implementing proposed rules that would legitimatize and institutionalize the power agency’s targeting of conservative groups, or, at least, that’s the conclusion one can draw from this report via The Hill:

Senate Democrats facing tough elections this year want the Internal Revenue Service to play a more aggressive role in regulating outside groups expected to spend millions of dollars on their races.

In the wake of the IRS targeting scandal, the Democrats are publicly prodding the agency instead of lobbying them directly. They are also careful to say the IRS should treat conservative and liberal groups equally, but they’re concerned about an impending tidal wave of attack ads funded by GOP-allied organizations. Much of the funding for those groups is secret, in contrast to the donations lawmakers collect, which must be reported publicly.
“If they’re claiming the tax relief, the tax benefit to be a nonprofit for social relief or social justice, then that’s what they should be doing,” said Sen. Mark Begich (D), who faces a competitive race in Alaska. “If it’s to give them cover so they can do political activity, that’s abusing the tax code. And either side.”

Asked if the IRS should play a more active role policing political advocacy by groups that claim to be focused on social welfare, Sen. Jeanne Shaheen (D-N.H.) responded, “Absolutely.”

“Both on the left and the right,” she said. “As taxpayers, we should not be providing a write-off to groups to do political activity, and that’s exactly what we’re doing.”

Coincidence? I don’t think so

Gerry Connolly

At a recent Congressional hearing, Rep. Gerry Connolly (D-egenerate, VA) dismissed out of hand a TEA Party leader’s concerns about being targeted by the federal government after her group filed an application for tax-exempt status.

During a hearing of the House Oversight and Government Reform Committee that took place Thursday to examine the alleged targeting of conservative groups applying for tax-exempt status by the IRS, Catherine Engelbrecht, founder of the King Street Patriots, testified about the increased scrutiny she, her family and her business faced from multiple federal agencies soon after she applied for a tax-exempt status for her conservative group.

The Occupational Safety and Health Administration (OSHA), ATF, IRS audits, FBI visits… According to Engelbrecht, during the 20 years her business has been in existence, not once did she get the scrutiny she received after filing paperwork with the IRS to grant her King Street Patriots tax-exempt status.

Not once.

Obama reverses position on IRS targeting of conservative groups

Shortly after Lois Lerner, a senior IRS official who has since retired, and an internal watchdog report confirmed that the tax agency had targeted conservatives and Tea Party groups seeking tax-exempt status, President Barack Obama slammed the actions as “outrageous” and “inexcusable.”

But since those initial comments, President Obama has, noticeably, tried to dismiss the scandal, one of many that his administration has faced this year and led the American public to question his honesty and trustworthiness. In July, for example, he complained that Republicans in Congress investigating the IRS’s targeting of conservatives organizations were engaging in an “endless parade of distractions and political posturing and phony scandals.”

But President Obama and leftist pundits have continued to downplay the IRS scandal, despite evidence that showing that the agency disproportionately targeted conservative organizations.

The latest example came in an interview last week with MSNBC’s Chris Matthews, in which President Obama complained that the media doesn’t report on about the things government does right compared to the focus on the IRS scandal.

Chris Matthews continues to dismiss the IRS scandal

Chris Matthews

Chris Matthews, host of MSNBC’s Hardball, said on Thursday night that the IRS’s targeting of Tea Party and conservative groups is a “phony,” using the issue rail against non-profit groups that engage in politics and the Citizens United ruling, which overturned campaign finance laws that suppressed political speech.

Matthews made the comments during a segment with Rep. Chris Van Hollen (D-MD), who alleges that leftist groups have been targeted in the same manner as conservative organizations and has filed a lawsuit against the IRS seeking to clarify tax-exempt laws, and Nia-Malika Henderson.

“[T]o this point [House Oversight Committee Chairman Darrell Issa’s] witchhunt has found no witches, not in the White House, of course. In fact, the entire narrative — this so-called ‘scandal,’ this repeated scandal — has gotten pretty hard to follow,” said Matthews in the lead into the segment.

“In fact, is it a scandal? Well, yesterday House Democrats released new evidence that the IRS was also targeting liberal groups in addition to flagging groups with names like ‘progressive.’ They also flagged applicants with terms like ‘emerge’ and, of course, ACORN, a group on the left which would associate with liberal causes,” he added before introducing Van Hollen. “Issa’s camp have dismissed those reports, of course, which could be evidence that he’s using the issue to score political points instead of actually trying to solve whatever problems there are at the IRS.”

IRS targeted conservative groups until last month

There are new revelations that have been uncovered in the IRS scandal. While the initial audit by the Treasury Department’s Inspector General indicated that the criteria used to target Tea Party and conservative groups was changed in May 2012, The Hill reported yesterday that new acting-IRS Commissioner Danny Werfel admitted that the agency was still inappropriately scrutinizing these groups until just last month:

The acting head of the IRS said Monday that the agency was still giving improper scrutiny to groups seeking tax-exempt status when he arrived in May, suggesting that the probe into the IRS’s treatment of conservative groups could widen.

Danny Werfel, the acting chief, said that the IRS division overseeing tax-exempt applications used other “be on the lookout” lists as they tried to flag cases that needed more attention.
The disclosure came as Werfel and the IRS were rolling out a broad review of the agency’s handling of tax-exempt applications and its targeting of Tea Party groups – an appraisal that Werfel termed critical to the agency’s efforts to regain the trust of the taxpayers.

As part of that review, Werfel said he was suspending the use of any BOLO lists as part of the tax-exempt application process.

“We believe there continued to be inappropriate or questionable criteria,” Werfel, who took the helm at the IRS on May 22, told reporters.  “Once we came to that conclusion, we took immediate action.”

IRS Tax Exempt Division in DC was Alerted of Tea Party Targeting in 2010

The audit released last month by the Treasury Department’s Inspector General indicated that senior IRS officials were notified of the targeting of Tea Party and conservative groups in June 2011. However, Reuters reported on Friday that an IRS official in the agency’s embattled Cincinatti office accidentally alerted the entire Tax Exempt Division office in Washington of the targeting nearly a full year earlier:

A misfired email from a U.S. Internal Revenue Service employee in Cincinnati in July 2010 alerted a broad group of Washington IRS officials to the heightened scrutiny being given conservative groups, according to an interview the IRS worker gave congressional investigators.

The interview transcripts, reviewed by Reuters on Thursday, provide new details about Washington IRS officials’ awareness of the scrutiny given to groups seeking tax-exempt status using terms like “Tea Party” or “patriot” to flag applications.
The transcripts show that in July 2010, Elizabeth Hofacre, an IRS official in Cincinnati who was coordinating “emerging issues” for the agency’s tax-exempt unit, was corresponding with Washington-based IRS tax attorney Carter Hull.

She was asked to summarize her findings in a spreadsheet and notify a small group of colleagues, including some staff in the Washington tax-exempt unit. She sent an email that month to a larger number of people in Washington by accident.

“Everybody in D.C. got it by mistake,” Hofacre said in the transcripts. She later clarified that she did not mean all officials but those in the IRS Exempt Organizations Rulings and Agreements unit.

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