IRS scandal

IRS higher-ups requested info on conservative groups, letters show

Lois Lerner, director of Exempt Organizations for the IRS, is surrounded by Capitol police as she boards an elevator after being excused from a House Oversight and Government Reform Committee hearing in Washington on Wednesday. Additional scrutiny of conservative organizations’ activities by the IRS did not solely originate in the agency’s Cincinnati office, with requests for information coming from other offices and often bearing the signatures of higher-ups at the agency, according to attorneys representing some of the targeted groups. At least one letter requesting information about one of the groups bears the signature of Lois Lerner, the suspended director of the IRS Exempt Organizations department in Washington.“We've dealt with 15 agents, including tax law specialists -- that's lawyers -- from four different offices, including (the) Treasury (Department) in Washington, D.C.,” Sekulow said. “So the idea that this is a couple of rogue agents in Cincinnati is not correct.”Among the letters were several that bore return IRS addresses other than Cincinnati, including "Department of the Treasury / Internal Revenue Service / Washington, D.C.," and the signatures of IRS officials higher up the chain. Two letters with "Department of the Treasury / Internal Revenue Service / Washington, D.C." letterhead were signed by "Tax Law Specialist(s)" from Exempt Organizations Technical Group 1 and Technical Group 2. Lerner’s signature, which appeared to be a stamp rather than an actual signature, appeared on a letter requesting additional information from the Ohio Liberty Council Corp.Lerner has become one of the public faces of the controversy after refusing to testify before the House Oversight and Government Reform Committee last Wednesday, citing her Constitutional Fifth Amendment rights after reading a brief statement: “I have not done anything wrong. I have not broken any laws, violated IRS regulations or provided false information to this or any other committee.”She was put on administrative leave at the end of last week after reportedly refusing to resign at Obama administration’s request. She is continuing to collect federal paychecks on her almost $180,000 annual salary, though at least one Republican senator, Sen. Charles Grassley of Iowa, a member of the Senate Finance Committee, is urging the agency to speed up the process and fire her.In the two weeks since the IRS acknowledged it targeted conservative organizations seeking status as tax-exempt "social welfare" organizations for additional scrutiny, many Republicans have sought to link the agency’s actions to the White House. In an Op-Ed piece in the Washington Post on May 22, Senate Minority Leader Mitch McConnell, R-Ky., wrote that “the administration has been extremely creative in employing throughout the federal government the sorts of intimidation tactics that were used at the IRS.”
Jay Sekulow, an attorney representing 27 conservative political advocacy organizations that applied to the Internal Revenue Service for tax-exempt status, provided some of the letters to NBC News.  He said the groups’ contacts with the IRS prove that the practices went beyond a few “front line” employees in the Cincinnati office, as the IRS has maintained.

The White House has dismissed suggestions it was aware of the targeting, saying President Barack Obama only learned of the issue when it broke in the news on May 10. White House spokesman Jay Carney has since deflected most questions about the scandal, saying it would be inappropriate to comment until an FBI inquiry into the agency’s actions – one of five separate government investigations -- is concluded.

For its part, the IRS has declined additional comment beyond its congressional testimony -- including former IRS Commissioner Steven Miller's testimony that IRS employees didn’t have partisan motives and only made "foolish mistakes ... trying to be more efficient” -- and other previously released public statements, including its response to a Treasury inspector general  (see pages 49-51) and a Q&A on 501 (c) groups it published on its website.

But attorneys for some of the targeted groups’ provided documentation and two IRS employees in the Cincinnati office made statements to NBC News that call into question parts of the official explanation Americans have heard from the IRS so far.

Sekulow, who worked with the office of the chief counsel of the IRS in the early 1980s as a trial lawyer representing the IRS on tax-exempt cases, said the number of groups he’s heard from, and the scope of the requests for information the IRS sent them, persuaded him “that this was not something that was just created at an agent level, that this was certainly higher up.”

After reviewing all the IRS communications his clients received, Sekulow said he believes the IRS was engaged in a coordinated and deliberate attempt to silence, or at least stifle conservative organizations, he told NBC News.

Sekulow also said the practices continued well after May 2012, when the IRS has claimed they had stopped. Sekulow said 10 of the organizations he represents still have not received determinations from the IRS on their applications for tax-exempt status as 501 C (1)(4) organizations. He provided NBC News with a letter the IRS sent to one of his clients on May 6 requesting more information.

'Decisions ... made in Washington'
Cleta Mitchell, another attorney representing conservative groups that allege they were targeted, said an IRS agent in Cincinnati told her a “task force” IRS office in Washington, D.C., was making the decisions about the processing of applications, and that she subsequently dealt with IRS representatives there.   

“(The IRS agent in Cincinnati) told me that in fact the case would be transferred to a special task force out of Washington, and that he was told – he was the originally assigned agent – that he wasn't allowed to make decisions, the decisions were all going to be made in Washington,” Mitchell said. “I know that this process was going on in Washington because I've dealt with those people.”

One of Mitchell’s clients, Catherine Engelbrecht, founder of True the Vote, a conservative elections monitoring organization, applied for tax-exempt status for the group in July 2010.  She said that when she asked the IRS two years later why it was taking so long to get a decision, agents told her Washington was to blame.   

“We’ve dealt with four separate analysts and their explanation for the way our case has been handled runs the gamut from their not having another organization like True the Vote to compare to – so they had to develop new questions and new criteria -- all the way through to the fact that they were taking their orders from Washington and were waiting for Washington’s direction as to what steps to take next,” she said. “They were caught up in a process that seemed to be much bigger than Cincinnati and bigger than any single individual.”

Mitchell, Engelbrecht’s attorney, said Engelbrecht’s case also raised questions about whether the IRS had subjected some applicants to other federal government scrutiny and action, beyond their IRS application.

Engelbrecht told NBC News that soon after she filed for tax-exempt status for True the Vote, the IRS audited her personal and business taxes for the first time, and her manufacturing business was visited by two other federal agencies, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and The Occupational Safety and Health Administration (OSHA). 

Her tax-exempt application still hasn't been approved after three years. She's now suing the IRS.

Sekulow said he also is preparing to sue the IRS in federal court this week, on behalf of the 16 groups he represents.

“The only way to get this resolved is to go to federal court,” Sekulow said, “because that's the only thing that's going to compel the IRS to comply with the law.”

Two IRS Cincinnati employees who have talked to NBC News dispute one part of the IRS’ explanation, saying that application of inappropriate selection criteria and the extra scrutiny for Tea Party and other conservative political advocacy organizations was not the work of a few low-level “rogue” employees.   

But they also have told NBC News that they believe there was no political or partisan motivation for the targeting or scrutiny.  

"We're outstanding public servants, dedicated to our craft and to the public we serve,” said one current IRS Cincinnati employee contacted at home over the weekend, who agreed to speak to NBC News on the condition of anonymity. “To suggest that we're 'rogue' should be considered slander.”

Asked about the motivations for the targeting, the employee said, “I trust my management team."

Bonnie Esrig, a 38-year IRS veteran and a manager in the Cincinnati office until she retired from the IRS in January, also has told NBC News that decisions about how to handle cases came from management, and that all employees were subjected to considerable oversight. She also said that she believes there was no political or partisan motivation for the added scrutiny.