IRS Maneuvering to Regulate Tea Party Groups ‘Hidden From the Public’

By Michael W. Chapman | February 5, 2014 | 5:02 PM EST


House Ways & Means Committee Chairman Dave Camp (R-Mich.) (AP)

( – Documents obtained by the House Ways and Means Committee show that IRS officials first started flagging Tea Party applications for tax-exempt status in February 2010 because of “media attention,” and that Treasury and IRS officials had discussed potentially addressing the tax-exemption rules for such groups “off-plan,” meaning “hidden from the public,” said Committee Chariman Dave Camp (R-Mich.).

In a hearing on the IRS-Tea Party scandal on Wednesday, Chairman Camp questioned IRS Commissioner John Koskinen about the Treasury Department apparently crafting rules to limit the ability of conservative and Tea Party groups to get 501(c)4 exemptions to engage in public debate.

Camp highlighted a June 14, 2012 e-mail from Treasury Department attorney and tax adviser Ruth Madrigal to Lois Lerner, then the IRS official in charge of determining the tax-exempt status of non-profit organizations, and other IRS personnel.  (Lerner pleaded the Fifth against self-incrimination before Congress in May 2013 and then retired from the agency.) (See Off-Plan (1).pdf)

The first sentence of that e-mail reads: “Don’t know who in your organization is keeping tabs on c4s, but since we mentioned potentially addressing them (off-plan) in 2013, I’ve got my radar up and this seemed interesting.” The e-mail then discusses a court ruling on determining political committees from PACs, or Political Action Committees.

Camp asked Koskinen, “Do you know what off-plan means?”  Koskinen replied, “I do not know what that would have meant in 2012.”

Camp then said, “Well, I’m pretty sure that means hidden from the public.” The chairman went on to comment that if Treasury and IRS officials had fabricated a rationale for a rule change on tax-exemption status, it would raise questions about “the integrity of the rule-making process.”

In his questioning of Koskinen, Camp also noted that e-mails showed that IRS officials in Cinncinati, Ohio first started flagging Tea Party applications in February 2010 because of “media attention” and apparently not because there was any confusion over the application rules for a 501(c)3 or (c)4 group.

In an e-mail from Feb. 25, 2010 from Cincinnati IRS official Jack Koester to his boss, Screening Group Manager John Shafer, Koester says, “John, Here is the case number for the ‘Tea Party’ application for 501c(4) exemption that we discussed this morning. Recent media attaention to this type of organization indicates to me that this is a ‘high profile case'.”  Then part of the e-mail is blacked out, redacted.

Shafer then contacted Los Angeles-based IRS official Sharon L. Camarillo by e-mail that same day, saying, “Sharon, this case will be sent to inventory for further development. … I will hold this case for a decision concerning this type of organization may be considered a ‘High Profile Case'.” (See Emails.pdf)

Following that, on the same day, Feb. 25, Camarillo e-mailed Cindy Thomas, then in charge of the exempt organization office in Cincinnati, saying, “Cindy: Please let ‘Washington’ know about this potentially politically embarrassing case involving a ‘Tea Party’ organization. … Shown below are excerpts from the application describing its legislative and possible future political activities. The case is currently being held in the Screening group, pending a response from EOT.”

Another e-mail on March 17, 2010 from the IRS’s Cindy Thomas in Cincinnati to Holly O. Paz, then the director of IRS Rulings and Agreements Office in Washington, D.C., states: “Holly, Did you know about these additional 10 tea party cases? Do you want them or do you only want a few and then give us advice on what to do with the remaining?”

Paz responded to Thomas that day: “Thanks for the heads up. … I think we should take a few more cases (I’d say 2) and would ask that you hold the rest until we get a sense of what the issues may be. Then when we will work with Determs in working the other cases.”

In a press release after today’s hearing, Chariman Camp said, “Before February 2010, Tea Party cases were being processed and approved within three months without Washington, DC intervention. Tea Party cases were flagged due to “media attention” in February 2010, not as a result of any confusion as to how to interpret 501(c)(4) law. … In November 2013, Treasury released proposed regulations drafted in a manner that would shut down conservative groups, and marketed them to the American people as a response to ‘confusion’ over the application of 501(c)(4) law.”

Camp continued, “I want to be perfectly clear – this Committee will fight any and all efforts to restrict the rights of groups to organize, speak-out and educate the public, just as unions are allowed to do so.  We will get to the bottom of this, and I expect the IRS to produce – quickly – the outstanding documents the Committee has requested.”

Michael W. Chapman
Michael W. Chapman
Michael W. Chapman