Judicial Watch's IRS Investigation Leads Directly to Washington

Judicial Watch recently uncovered stunning new documents detailing the extent to which the Obama IRS improperly targeted conservative groups for extra scrutiny when they applied for tax-exempt status.

These documents reveal that, contrary to claims by Lois Lerner and other top IRS officials, the handling of Tea Party applications was directed out of the agency’s Washington, DC, headquarters, rather than out in the hinterlands. They show extensive pressure on the IRS by Senator Carl Levin (D-MI) to shut down conservative-leaning tax-exempt organizations. And they contain IRS emails that directly contradict Lerner’s misleading explanations, uncovered for the first time by JW, to investigators about the targeting of Tea Party organizations. 

On Fox News’ Special Report, syndicated columnist Charles Krauthammer said the emails revealed by Judicial Watch “give lie to the administration claim that this had nothing to do with the election, nothing to do with targeting opponents of the administration.” And panelist Kristen Powers, acknowledging that, once again, Judicial Watch had obtained information the Obama administration had withheld from Congress, suggested, “I think we are to the point now where Congress should just start doing FOIA requests.” 

The new IRS documents came in response to an October 2013 Judicial Watch Freedom of Information Act (FOIA) lawsuit filed after the agency refused to respond to four FOIA requests dating back to May 2013. They directly contradicted the story President Obama was peddling when he told Bill O’Reilly as late as February 2014 that the IRS targeting was entirely the fault of “bonehead decisions in local offices.” 

One key email string from July 2012 confirmed beyond a shadow of a doubt that IRS’ Tea Party scrutiny was directed from Washington, DC. On July 6, 2010, Holly Paz, the former Washington-based Director of the IRS Rulings and Agreements Division and current Manager of Exempt Organizations Guidance, asked IRS headquarters lawyer Steven Grodnitzky “to let Cindy and Sharon know how we have been handling Tea Party applications in the last few months.” Cindy Thomas is the former director of the IRS Exempt Organizations office in Cincinnati, and Sharon Camarillo was a senior manager in their Los Angeles office.

Grodnitzky, a top lawyer in the Exempt Organization Technical unit (EOT) in Washington, DC, responded: 

EOT is working the Tea party applications in coordination with Cincy. We are developing a few applications here in DC and providing copies of our development letters with the agent to use as examples in the development of their cases. Chip Hull [another lawyer in IRS headquarters] is working these cases in EOT and working with the agent in Cincy, so any communication should include him as well. Because the Tea party applications are the subject of an SCR [Sensitive Case Report], we cannot resolve any of the cases without coordinating with Rob. 

The reference to Rob is believed to be Rob Choi, then-director of Rulings and Agreements in IRS’s Washington, DC, headquarters. 

Another email string, from February – March 2010, includes a message from a California EO Determinations manager discussing a Tea Party application “currently being held in the Screening group.” It, too, confirmed the Washington IRS headquarters’ involvement in the targeting scandal. The manager urged, “Please let ‘Washington’ know about this potentially embarrassing political case involving a ‘Tea Party’ organization. Recent media attention to this type of organization indicates to me that this is a ‘high profile’ case.” A co-worker responded, “I think sending it up here [DC] is a good idea given the potential for media interest.” It’s worth noting that, just as with Ben Rhodes’ Benghazi-related talking points email, Judicial Watch obtained a more complete version of this IRS email chain than was provided to a congressional committee

The Judicial Watch documents also contain email correspondence to internal IRS investigators from Lerner, dated April 2, 2013, that tries to rationalize the “Be on the Lookout” (BOLO) criteria used to select organizations for screening and scrutiny: 

Because the BOLO only contained a brief reference to “Organizations involved with the Tea Party movement applying for exemption under 501(c)(3) and 501(c)(4)” in June 2011, the EO Determinations manager asked the manager of the screening group, John Shafer [IRS Cincinnati field office manager], what criteria were being used to label cases as “tea party” cases. (“Do the applications specify/state ‘tea party’? If not, how do we know applicant is involved with the tea party movement?”) The screening group manager asked his employees how they were applying the BOLO’s short–hand reference to “tea party.” His employees responded that they were including organizations meeting any of the following criteria as falling within the BOLO’s reference to “tea party” organizations: “1. ‘Tea Party,’ ‘Patriots,’ or ’9/12 Project’ is referenced in the case file. 2. Issues include government spending, government debt and taxes. 3. Educate the public through advocacy/legislative activities to make America a better place to live. 4. Statements in the case file that are critical of the how the country is being run." 

So we believe we have provided information that shows that no one in EO “developed” the criteria. Rather, staff used their own interpretations of the brief reference to “organizations involved with the Tea Party movement,” which is what was on the BOLO list. 

It is significant that Lerner omitted that her office was “developing” the applications for all Tea Party groups. Yet, in fact, the IRS documents we obtained also include a presentation entitled “Heightened Awareness Issues” with a red and orange “Alert” symbol identifying the “emerging issues” that trigger scrutiny for organizations seeking tax-exempt status. Page six of the presentation focuses on the Tea Party organizations, due, in part, to the fact that these groups had become a “Relevant Subject in Today’s Media.” 

The documents Judicial Watch obtained also include a chilling series of letters between Senator Levin (D-MI), chairman of the Subcommittee on Investigations, and top IRS officials throughout 2012 discuss how to target conservative groups the Senator claimed were “engaged in political activities.” In response to a March 30 Levin letter citing the “urgency of the issue,” then-Deputy Commissioner Steven Miller assured the Senator that IRS regulations were flexible enough to allow IRS agents to “prepare individualized questions and requests” for select 501(c)(4) organizations – that is, conservative groups. The “urgency” was clearly the upcoming Obama re-election campaign. 

The newly released IRS documents contain several letters and emails revealing an almost pathological obsession by Levin and IRS officials with determining what, if any, existing IRS policies could be used to revoke the nonprofit exemptions of active conservative groups and deny exemptions to new applicants. In a July 30, 2012, letter, Levin singled out 12 groups he wanted investigated for “political activity.” Of the groups – which included the Club for Growth, Americans for Tax Reform, the 60 Plus Association, and the Susan B. Anthony List – only one, Priorities USA, is notably left-leaning. 

As the 2012 presidential election drew nearer, Levin sent a series of letters to the IRS, intensifying his campaign against predominantly conservative nonprofit groups: 

  • September 27, 2012: Levin asked for copies of the answers to IRS exemption application question 15 – a question about planned political expenditures – from four specific groups: Crossroads Grassroots Policy Strategies, Priorities USA, Americans for Prosperity, and Patriot Majority USA.

  • October 17, 2012: Miller informed Levin, “As discussed in our previous responses dated June 4, 2012, and August 24, 2012, the IRS cannot legally disclose whether the organizations on your list have applied for tax exemptions unless and until such application is approved.” Miller, however, then informed Levin that Americans for Prosperity and Patriot Majority had been approved, but the IRS had no records for Crossroads and Priorities USA.
  • October 23, 2012: Levin wrote to again express his dissatisfaction with the IRS handling of “social welfare” (501(c)(4) organizations, insisting that IRS guidance “misinterprets the law” by allowing any political activity. He again demanded an answer to whether the four organizations he listed in his previous letter were primarily engaged in the promotion of social welfare. He also sought copies of tax exempt revocation letters sent due to c4 political activities, as well as statistics on how many c4s had been notified that they might be in violation due to political activities. 

In perhaps the most revealing letter from the IRS to Levin, Miller on June 4, 2012, took 16 pages to carefully outline for Levin what IRS regulations and policies may and may not be used to evaluate political groups – and assured him that the agency had considerable leeway in picking and choosing which groups the IRS could subject to additional scrutiny by tailoring its investigations: 

There is no standard questionnaire used to obtain information about political activities. Although there is a template development letter that describes the general information on the case development process, the letter does not specify the information to be requested from any particular organization. ... Consequently, revenue agents prepare individualized questions and requests for documents relevant to the application.

Let me make it clear: These new documents show conclusively that officials in the Washington IRS headquarters were responsible for the illegal delays of Tea Party applications. And they also confirm the unprecedented pressure from congressional Democrats to go after President Obama’s political opponents. So the IRS scandal has now ensnared Congress. In mid-April, you will recall, Judicial Watch released a batch of IRS documents (produced earlier in this litigation) revealing that Lerner had communicated with the Department of Justice about whether it was possible to criminally prosecute certain tax-exempt entities. 

As a result of the Judicial Watch revelations in the Benghazi scandal, House Speaker John Boehner (R-OH) has now convened a special select committee to investigate the matter. I would suggest that another select committee should be convened to get to the bottom of the Obama IRS abuse.


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