Evidence recently uncovered suggests that there is another layer to the scandal involving the Internal Revenue Service’s targeting of conservative groups. E-mails obtained by National Review Online indicate collusion between the Internal Revenue Service and the Federal Election Commission.
The IRS scandal involves the Tax Exempt and Government Entities Division of the IRS openly targeting Tea Party and other conservative groups that applied for tax-exempt 501(c)(4) “social welfare” organization status between 2010 and 2012. Those groups faced additional audits and scrutiny by the agency. The audits cost the organizations tens of thousands of dollars and thousands of employee hours, and ultimately delayed the groups from receiving tax-exempt status.
Treasury Inspector General J. Russell George has been conducting an investigation into the IRS being used as a tool to target groups over the course of two election cycles, and has determined that the IRS was using inappropriate criteria to identify tax-exempt applications for review by a team of specialists, including applications from organizations with “Tea Party,” “Patriots,” or “9/12” in their name.
Democrats had been defending the IRS by asserting that it was not simply conservative groups being targeted; however, George stated that his investigation found that there was no evidence the IRS has targeted liberal groups.
In a letter to Democrats, George wrote, “We found no indication in any of these materials that ‘Progressives’ was a term used to refer cases for scrutiny for political campaign intervention.”
George clarified that while 30 percent of the groups with the word “progressive” in their name received additional attention, 100 percent of the groups with “tea party,” or “patriot,” or “9/12” in their names received extra scrutiny.
But the e-mails obtained by National Review indicate that the IRS was not the only organization involved in the systematic and deliberate targeting of conservative groups.
According to National Review, IRS official Lois Lerner exchanged e-mails with an attorney at the Federal Election Commission’s general counsel on two separate occasions wherein Lerner influenced the record before the FEC’s vote in the case of a conservative non-profit organization.
The correspondence suggests the discrimination of conservative groups extended beyond the IRS and into the FEC, where an attorney from the agency’s enforcement division in at least one case sought and received tax information about the status of a conservative group, the American Future Fund, before recommending that the commission prosecute it for violations of campaign-finance law.
Lerner had been employed by the FEC from 1986 to 1995, and had developed a reputation for aggressively investigating conservative groups while there.
The FEC attorney wrote, “Several months ago ... I spoke with you about the American Future Fund, a 501(c)(4) organization that had submitted an exemption application to the IRS,” the FEC attorney wrote Lerner in February 2009. “When we spoke last July, you had told us that the American Future Fund had not received an exemption letter from the IRS."
As observed by the National Review, the e-mail seems to suggest that the IRS violated Rule 6103, which prohibits the agency from sharing confidential taxpayer information. In fact, the communication seems to indicate that the FEC attorney had pursued information from the IRS in order to influence an upcoming FEC commissioners’ vote on the conservative group the American Future Fund.
The Minnesota Democratic Farmer Labor Party had filed a complaint in March 2008 with the FEC against the American Future Fund, asserting that the AFF violated campaign finance laws by advocating political positions without registering as a political action committee.
In response, the American Future Fund reported in June 2008 that it had applied for tax exemption in March and was a “501(c)(4) social-welfare organization that was organized to provided Americans with a conservative and free-market viewpoint and mechanism to communicate and advocate on the issues that most interest and concern them.”
The timing of the e-mail from the IRS to the FEC general counsel’s office reveals that the FEC illegally began an investigation into the American Future Fund’s tax-exempt status without having first received the necessary vote from the FEC’s six commissioners to do so.
When issuing a recommendation on the case, the FEC general counsel’s office failed to mention how it had obtained the information about the American Future Fund’s tax-exempt status, though it was in fact received from Lerner, but went on to recommend that the commissioners prosecute the American Future Fund.
The general counsel’s office wrote, “According to its response, AFF submitted an application for tax-exempt status to the Internal Revenue Service ... on March 18, 2008.” The footnote to that sentence reads, “The IRS has not yet issued a determination letter regarding AFF’s application for exempt status. Based on the information from the response and the IRS website, it is likely that the application is still under review.”
It was not until February of 2009 that the six FEC commissioners voted on whether to prosecute the American Future Fund for violations of campaign-finance laws.
Furthermore, another e-mail sent just before the February vote shows the FEC lawyer requesting further information from Lerner for an update on the status of the American Future Fund’s application. “Could you please tell me whether the IRS has since issued an exemption letter to the American Future Fund? Also if the IRS has granted American Future Fund’s exemption, would it be possible for you to send me the publicly available information and documents related to American Future Fund?”
Despite all the efforts of the FEC general counsel and Lerner, however, the six commissioners voted unanimously to close the case.
National Review also reports that an FEC enforcement attorney inquired about the tax-exempt status of the conservative group American Issues Project.
The e-mails have prompted House Ways and Means Committee Chairman Dave Camp (R-Mich.) and Oversight-Subcommittee Chairman Charles Boustany (R-La.) to call on the IRS to turn over all its communications between the IRS and FEC between 2008 and 2012.
“The American public is entitled to know whether the IRS is inappropriately sharing their confidential tax information with other agencies,” Camp and Boustany wrote in a letter to acting IRS administrator Danny Werfel.
Lerner has been on administrative leave since May after having revealed that the IRS had been targeting conservative groups.