IRS’ Former Tax Exempt Organizations Leader Re-Enters Spotlight

Lois Lerner testified before Congress in May. Lois Lerner testified before Congress in May. Carolyn Kaster/AP

Lois Lerner, the onetime head of the Internal Revenue Service’s Exempt Organizations division at the center of the political targeting controversy, has been subjected to renewed media scrutiny, ahead of another congressional hearing this week on the scandal.

Republicans on the Ways and Means Committee on Thursday released a new set of Lerner’s emails from 2011 and 2012 that they say “illustrate the specific motivation by Lerner and IRS employees to target conservative groups” that saw their applications for tax-exempt status delayed and subjected to extra paperwork demands.

The emails from Lerner, who is on administrative leave after invoking her Fifth Amendment rights not to answer lawmakers’ questions on the scandal, deal with possible help from the Federal Election Commission -- her former employer -- in resolving whether to grant tax-exempt status to certain applicants, as well as with tea party groups and with her frustration that the policy for consistent consideration of the groups’ applications was “off track.”

In a June 2012 email responding to an NPR story discussing the Democratic Senatorial Campaign Committee complaint with the FEC regarding some conservative groups, Lerner speculated to a colleague, “Perhaps the FEC will save the day.”

In a February 2011 email on the Cincinnati-based unit of the Exempt Organizations division assigned to handle tea party groups’ applications, Lerner wrote, “Tea Party Matter very dangerous….Counsel and Judy Kindell need to be in on this one….Cincy should probably NOT have these cases.”

That exchange also reveals the sensitivity of the difficult classification decisions between 501(c)3 and 501(c)4 nonprofit status. In a heavily redacted email, Lerner wrote, “Even if we go with a 4 on the tea party cases, they may want to argue that they should be 3s, so it would be great if we can get there without saying the only reason they don’t get a 3 is political activity.”

In a June 2012 exchange involving the in-progress audit on her division by the Treasury Inspector General for Tax Administration, Lerner wrote that “the original story isn’t as pretty as we’d like, once we learned this [sic] were off track, we have done what we can to change the process, better educate our staff and move the cases. So, we will get dinged, but we took steps before the ‘dinging’ to make things better and we have written procedures. So, it is what it is.”

Republicans releasing the partial exchanges say the statement about having changed the process is “untrue as the IRS continued the targeting for two years, IRS employees have stated they still have no direction on how to process these cases, and as of May 31, 2013, there are still 56 conservative groups who have outstanding cases.”

Ways and Means Chairman Rep. Dave Camp, R-Mich., said in a statement, “There is increasing and overwhelming evidence that Lois Lerner and high-level IRS employees in Washington were abusing their power to prevent conservative groups from organizing and carrying out their missions. There are still mountains of documents to go through, but it is clear the IRS is out of control and there will be consequences.”

In rebuttal, Ways and Means Ranking Member Rep. Sander Levin, D-Mich., said, “Lois Lerner was incompetent in her management of the IRS tax-exempt division and unprofessional in her conduct -- reasons why I immediately called for her to be relieved of her duties. Selective leaking by Republicans does not change the fact that tens of thousands of documents and dozens of interviews with IRS employees have revealed absolutely no evidence of political motivation, no evidence of outside influence and no evidence of White House involvement.”

Lerner’s attorney, William Taylor III, told The Wall Street Journal for Saturday’s edition, “The bureaucratic delay is extremely regrettable, and nobody regrets it more than Lois.”

The Ways and Means Oversight Subcommittee plans a Wednesday afternoon hearing to allow IRS officials to provide an update on the controversy in the Exempt Organizations division.

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