IRS mismanaged Tea Party groups, Senate report finds

Greg Nash

The IRS severely mismanaged the applications of Tea Party groups seeking tax-exempt status, a long-awaited and bipartisan Senate report said Wednesday.

But Republicans and Democrats on the Senate Finance Committee couldn't find common ground on perhaps the central IRS issues of the last 27 months: whether the agency intentionally targeted conservative groups because of their politics, and whether there was White House or Treasury involvement.

The new report did find that Lois Lerner, the central figure in the controversy, "failed to adequately manage" her staff that were processing the tax-exempt applications. 

ADVERTISEMENT
More broadly, the committee, led by Sens. Orrin Hatch (R-Utah) and Ron Wyden (D-Ore.), found that the IRS division overseeing tax-exempt groups showed little to no regard for the groups who in some cases faced years of delay on their applications. 

"Not only did those organizations have to withstand delays measured in years, but many also were forced to bear a withering barrage of burdensome and inappropriate 'development letters' aimed at extracting information the IRS wrongly concluded was necessary to properly process the applications," the report said.

Lerner launched the IRS controversy in May 2013, by apologizing for the IRS's treatment of Tea Party groups through a planted question at a law conference. A Treasury inspector general subsequently found the IRS had selected groups with “Tea Party” and “patriots” in their name for extra scrutiny.

Republicans and Democrats have long agreed that Lerner and her division mishandled Tea Party groups' applications, but have quarreled from almost the start over whether conservative groups were singled out intentionally.

The controversy intensified last year after the IRS said it couldn't find an untold number of Lerner's emails because of a computer crash, something that also delayed the Senate Finance report. A Treasury inspector general only recently concluded an inquiry that found that the IRS lost as many as 24,000 of Lerner’s emails.

Hatch said Wednesday that "the administration’s political agenda guided the IRS’s actions with respect to their treatment of conservative groups," and that Lerner's own personal views "impacted how the IRS conducted its business."

Wyden, on the other hand, told reporters that "my judgment is this report points to vast bureaucratic bumbling."

"There is not a single shred of political interference," he added.

The Finance Committee's findings are unlikely to relieve any of the partisan tensions surrounding the IRS, which has seen its budget slashed even further in the wake of the congressional investigations.

House Republicans have raised the specter of impeaching the IRS commissioner, John Koskinen, over his handling of the missing Lerner emails. Koskinen himself has said that it was up to the Finance panel to decide whether the IRS singled out conservative groups for political reasons. 

In a statement, the IRS said that it appreciated the Finance Committee's efforts and that the agency would study the report's recommendations.

"The IRS is fully committed to making further improvements, and we want to do everything we can to help taxpayers have confidence in the fairness and integrity of the tax system," the statement added.

Koskinen has also said the IRS will hold off on releasing new proposed rules that would more clearly define political activity for the 501(c)(4) groups at the center of the controversy, to keep from overly influencing the 2016 campaign.

Democrats have said confusion between tax law and current IRS rules helped fuel the improper scrutiny of tax-exempt applications, an idea dismissed by Republicans.

The findings and recommendations that the Republicans and Democrats agreed upon in the new bipartisan report are broad and, in many cases, likely noncontroversial.

The report, for instance, notes that the extra scrutiny given to tax-exempt applicants reduced taxpayer trust in the IRS, that the exempt organizations unit needed a more centralized command structure and that many staffers in that division didn’t have enough training to do their jobs correctly.

Its recommendations include that the IRS do a better job managing the backlog of tax-exempt cases.

But in their own section, Republicans said the IRS did not hold up liberal groups just because of their name, as some Democrats have said.

GOP senators also criticized what they called an overly political culture within the IRS, in which an employee union has so much influence that it “makes it difficult for the agency to remain apolitical.”

And Republicans blasted not only Lerner but the agency’s senior-most officials — including former Commissioner Doug Shulman and former interim Commissioner Steven Miller — for concealing what they knew from Congress for months.

“The report clearly shows that conservative groups were singled out because of their political beliefs, and gross mismanagement at the IRS allowed this practice to continue for years,” Hatch said on the Senate floor Wednesday.

But Wyden said that wasn’t so in his own floor speech Wednesday. The Oregon Democrat said the Finance panel found no documents showing any link between the improper scrutiny and either the White House or Treasury.

On top of that, Wyden said none of the IRS staffers interviewed by the committee talked of any political bias, and that Republicans were unfairly hyping Lerner’s own political views to make their case that the agency targeted Tea Party groups.

Democrats, Wyden said, found no proof that Lerner’s liberal views influenced how she did her job.

“So, Ms. Lerner’s husband voted for socialists, she is a Democrat, she supports same-sex marriage, and she apparently doesn’t have a lot of Republican supporters among her family or friends,” Wyden said. “What is all of this supposed to prove?”

- This story was updated at 9:03 p.m.