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IRS Scandal

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Lois Lerner, the Internal Revenue Service’s director of exempt organizations, has been placed on administrative leave, according to a source in the agency’s Cincinnati office.

Lerner on Thursday afternoon sent an e-mail to employees in the exempt-organizations division she oversees stating, “Due to the events of recent days, I am on administrative leave starting today. An announcement will be made shortly informing you who will be acting while I am on administrative leave. I know all of you will continue to support EO’s mission during these difficult times.” She concluded, “I thank you for all your hard work and dedication,” adding, “The work you do is important.”

At a House oversight-committee hearing on Wednesday, Lerner invoked her Fifth Amendment right and refused to answer questions posed to her by lawmakers, stating only, “I did nothing wrong.” She has been at the center of the scandal roiling the IRS and the Obama administration since she clumsily planted the question that allowed her to reveal — and apologize for — the agency’s improper targeting of tea-party and other conservative groups.

 

For the first time in years, the IRS was knocked down a peg or two.

In a hearing that escalated into a boisterous public shaming of one of the country’s most-feared government agencies, lawmakers took turns Friday calling outgoing IRS Commissioner Steven Miller on the carpet for his department’s scandalous practice of targeting conservative groups.

Read more here.

A second top Internal Revenue Service official announces plans to leave the agency amid the controversy over the targeting of tea party and other conservative groups.

Read more here.

Washington (CNN) – President Barack Obama named Danny Werfel, an official in his budget office, as the acting commissioner of the Internal Revenue Service, the White House announced Thursday.

Obama demanded the previous acting commissioner resign Wednesday after revelations the tax agency was applying extra scrutiny to conservative groups asking the government for tax exempt status.

Werfel, who serves as the controller of the Office of Management and Budget, will “lead efforts to ensure the IRS implements new safeguards to restore public trust and administers the tax code with fairness and integrity,” the White House said.

He’ll serve through the end of the fiscal year, and since he’s being tapped to become acting commissioner won’t be subject to Senate confirmation.

“Throughout his career working in both Democratic and Republican administrations, Danny has proven an effective leader who serves with professionalism, integrity and skill,” Obama wrote in a statement. “The American people deserve to have the utmost confidence and trust in their government, and as we work to get to the bottom of what happened and restore confidence in the IRS, Danny has the experience and management ability necessary to lead the agency at this important time.”

At the White House budget office, Werfel, 42, was responsible for enacting programs designed to enhance the federal government’s integrity in financial management, reporting and accounting. He also helped Obama’s administration implement and manage the forced spending cuts that went into effect March 1.

Previously he served in other roles at the OMB, and also acted as an attorney in the civil rights division of the Department of Justice.

He has a law degree from the University of North Carolina-Chapel Hill and a master’s in public policy from Duke, the White House said, and received his bachelor’s degree from Cornell.

He’ll join the IRS as the tax agency weathers its largest scandal in years. Republicans, including House Speaker John Boehner, have called for criminal charges against those employees responsible for the targeting of conservative groups, and the Federal Bureau of Investigation has launched an investigation into the matter.

Obama again expressed outrage at the IRS’s practices at a press conference Thursday.

“We will be putting in new leadership that will be able to make sure that – following up on the [inspector general's] audit – that we gather up all the facts, that we hold accountable those who have taken these outrageous actions,” Obama said. “As I said last night, it is just simply unacceptable for there to be even a hint of partisanship or ideology when it comes to the application of our tax laws.”

Local News
05/15/13

IRS scandal: who should be tax-exempt?

The scandal at the Internal Revenue Service over its targeting of conservative groups seeking tax-exempt status has some critics asking what the service is doing to ensure people and organizations aren’t abusing the system.

Eric Epstein runs “Rock the Capital,” a nonprofit focused on voter education. He said a nonprofit he ran was targeted by the IRS a few years ago.

“In the case of our own non-profit, and I think in the case of some of the Tea Party groups, they’re going after people for political reasons and not fiscal, responsible issues,” said Epstein.

In this latest scandal, the focus was on conservative groups seeking 501(c)(4) nonprofit status. That would make them tax-exempt and also allow them to keep their donors anonymous. Under IRS rules, an organization seeking this status is supposed to focus primarily on “social welfare” as opposed to focusing primarily on politics.

“There are individuals, there are corporations that are using nonprofits as a shill and a shell not to pay their fair share. That’s what we ought to be going after, not Americans that are simply dissatisfied with their government and registering a complaint,” said Epstein.

Following the Citizens United Supreme Court ruling in 2010, officials at the IRS said the number of applications for 501(c)(4)s spiked. According to the Huffington Post, Lois Lerner, who heads up the agency’s exempt organizations division, told a group of Washington tax attorneys the applications more than doubled. They increased from 1,500 in 2010 to 3,400 in 2012.

Two of the more famous 501(c)(4)s are Crossroads GPS and Priorities USA, each of which spent millions on TV ads during the 2012 presidential race.

Critics say those groups are not engaged primarily in social welfare. To read an opinion piece about the issue on cnn.com, click here.

But, experts say there’s gray area in terms of defining how much a group should be focused on social welfare versus political activities and what kinds of questions IRS staff should be able to ask to figure out who truly deserves that status and who’s gaming the system.

The Tea Party Patriots of Central Pennsylvania are seeking 501(c)(4) status. A groups spokesman said when the organization formed, leaders thought they would do more in terms of endorsing and advancing certain political candidates. But, he said the mission has changed.

“We’re not an overt political group. What we do is, we try to educate people as well as we can about our issues,” said Allen McCormack, who’s on the group’s steering committee. “As our group has evolved, we’ve really focused in on issues. What our group stands for is: constitutionally limited government, fiscal responsibility and free markets.”

He said the scandal could have a “chilling effect” on groups across the political spectrum. He described his group’s conversations with the IRS as “strange” saying employees used a lot of “stilted language.” But, he doesn’t feel his group has been unduly targeted.

Epstein said the focus on smaller organizations was misplaced.

“It’s not that the IRS is off track in general. It’s that the IRS has lost focus,” he said. “I think people need to distinguish the forest from the trees. There is an issue out there, and that issue is that there’s a lot of corporations using non-profits as a shell.”

Fox43 Legal Analyst Brandon Lenoir discusses the recent developments in Washington, D.C.

 

Local Conservative Groups Deal With IRS Scandal

U.S. Senator Pat Toomey joined Republican Leader Mitch McConnell in calling for the White House to fully cooperate with Congress as it investigates charges that the Internal Revenue Service (IRS) unfairly targeted conservative groups for additional scrutiny based on their political views.

 

In a letter to President Obama, Sens. Toomey and McConnell and all 43 of their Republican colleagues demand that the Administration “comply with all requests related to Congressional inquiries without any delay, including making available all IRS employees involved…”

 

“Whether you are conservative, liberal, libertarian, or any other political persuasion, you should be concerned that the IRS was targeting specific groups for extra scrutiny and intimidation based on political motivations.  The IRS’s actions are akin to an enemies list and further contribute to the deep cynicism that many Americans have about the government.  It is important that the Obama Administration be transparent and fully cooperates with Congressional inquiries.”

 

The full text of Sen. Toomey’s letter to the President is below.

 

Dear Mr. President:

 

We are writing to express our grave concerns and deep disappointment about the revelations in a report by the Treasury Inspector General for Tax Administration (TIGTA) that the Internal Revenue Service (IRS) had specifically targeted certain organizations for extra scrutiny as part of their approval review of applications for tax-exempt 501(c)(4) status.  This appears to be a wholly inappropriate action that threatens to silence political dissent and brings partisan politics into what used to be a nonpartisan, unbiased and fact-based review process.  The public’s confidence in the IRS relies on fair and apolitical application of the law. Actions such as these undermine taxpayers’ ability to trust its government to fairly implement the law.

 

According to information given to Congress in a timeline provided by the Treasury Inspector General for Tax Administration (TIGTA), in early 2010 “specialists had been asked to be on the lookout for Tea Party applications, and the IRS Determinations Unit had begun searching its database for applications with ‘Tea Party,’ ‘Patriots,’ or ‘9/12′ in the organization’s name.”  The report goes on to state that “By June 2011, some IRS specialists were probing applications using the following criteria to identify tea-party cases, according to the Treasury inspector general findings: “‘Tea Party,’ ‘Patriots’ or ‘9/12 Project’ is referenced in the case file; issues include government spending, government debt or taxes; education of the public by advocacy/lobbying to ‘make America a better place to live'; statements in the case file criticize how the country is being run.”

 

We are deeply disturbed that agents of the government were directed to give greater scrutiny to groups engaged in conduct questioning the actions of their government. This type of purely political scrutiny being conducted by an Executive Branch Agency is yet another completely inexcusable attempt to chill the speech of political opponents and those who would question their government, consistent with a broader pattern of intimidation by arms of your administration to silence political dissent.

 

These disclosures are even more unsettling as they contradict prior statements made by representatives of the Administration on this matter. In response to questions raised in 2012 on this issue by Republican Senators, Steven T. Miller, the Deputy Commissioner for Services and Enforcement at the IRS, specifically (and falsely) stated that there was an unbiased, technical screening process used to determine which applications for 501(c)(4) organizations merited further review.  In two separate letters to Finance Committee Ranking Member Orin Hatch, Mr. Miller failed to note that explicitly political screens were used in reviewing applications, despite the fact the practice was apparently well known within the IRS as early as 2010.

 

Given these strong and clear statements by the Administration in 2012 that no such targeted review or specified politically motivated criteria existed, these revelations raise serious questions about the entire application review process, and the controls in place at the IRS to stop this sort of political interference once and for all. According to TIGTA these actions took place more than two years ago, yet without this information becoming public, there is no evidence that your administration would have done anything to make sure these abuses were brought to light and dealt with in a transparent way.

 

The American people deserve to know what actions will be taken to ensure those who made these policy decisions at the IRS are being held fully accountable and more importantly what is being done to ensure that this kind of raw partisanship is fully eliminated from these critically important non-partisan government functions. As such, we demand that your Administration comply with all requests related to Congressional inquiries without any delay, including making available all IRS employees involved in designing and implementing these prohibited political screening, so that the public has a full accounting of these actions.  It is imperative that the Administration be fully forthcoming to ensure that we begin to restore the confidence of our fellow citizens after this blatant violation of their trust. We look forward to working on this critical issue with the Administration’s full cooperation.

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