Internal Revenue Service Under Fire for Picking Winners and Losers

The IRS enjoys the status of an independent and impartial entity. As revelations emerge, which calls into question its screening of tax-exempt groups, it is clear this agency faces a turbulent future.

The IRS has been accused by Republican lawmakers – as well as by Tea Party and other groups – of targeting Conservative organizations for extra scrutiny, when they apply for tax-exempt 501 (c) 4 statuses. Extensive details are expected as the Treasury Inspector General for Tax Administration (TIGTA) releases its report on the matter.

This report was requested by Darrell Issa (R-CA), chairman of the committee on House Oversight and Government Reform. Expected sometime within the next week, the report is the result of accusations – going back to 2010 – that the IRS singled out certain organizations, based on words and phrases used by the groups. According to the report obtained by the Reuters news agency, the wording that triggered increased attention included “Tea Party” or “Patriot” in a group’s name.

Additionally, references to making “America a better place to live” or statements that expressed concern over government spending were also used as criteria for closer attention by IRS agents.

Adding to the storm of criticism now bearing down on the agency is its failure to come clean on the issue until long after the facts were known. The head of the IRS unit that oversees tax-exempt groups, Lois Lerner, was made aware of the practice in early 2011, according to the report.

Although Lerner gave instructions that the criteria for increasing the scrutiny of tax-exempt groups should be immediately changed, top IRS officials – in response to numerous inquiries from members of Congress – repeatedly failed to reveal that Conservative groups were being singled out.

Steven Miller, who became acting head of the agency at the end of 2012, was briefed on the situation in May, according to an IRS statement released Monday. At the time, Miller was the agency’s deputy commissioner. Miller had not mentioned the agency’s targeting of Tea Party and “9/12 Project” groups in his responses to questions from members of Congress.

The impression of partisanship that this ongoing inquiry has thrown up, adds fuel to a fire that has burned in the nation’s capital for some years now.

In a 2009 Department of Homeland Security report, entitled “Rightwing Extremism: Current Economic and Political Climate Fueling Resurgence in Radicalization and Recruitment”, vague language and terminology was used to imply that right-leaning individuals and groups were potential domestic terrorists.

The IRS has pointed out that tax-exempt status was not denied to any of the groups in question and, indeed, there is no evidence to the contrary. In light of the agency’s delay in revealing the specific targets of its scrutiny, however, it will be difficult to elude the implication that such targeting was politically motivated.

Written By: Graham J Noble