House Oversight Report: IRS Agent Calls Conservative Group 'Icky'

By Ali Meyer | December 23, 2014 | 2:53pm EST

Lois Lerner, who served as director of the IRS Exempt Organizations Division. (AP Photo)

( - House Oversight and Government Reform Committee Chairman Darrell Issa (R-Calif) released a new report Tuesday, which reveals numerous cases of how the Internal Revenue Service (IRS) was purposely targeting conservative groups, with one IRS agent calling a conservative group “icky.”

The report, titled “The Internal Revenue Service’s Targeting of Conservative Tax-Exempt Applicants: Report of Findings for the 113th Congress,” reviewed 1.3 million pages and 52 transcribed interviews to find many examples of conservative targeting.

One example shows how “IRS officials failed to limit their professional judgments to enforcing the tax code and instead inserted their own beliefs and judgments into federal matters to influence outcomes and decisions,” even going so far as to call one group “icky.”

In discussing the 501(c)(4) status for a group that donated to other organizations that engaged in political activity, one IRS agent said, “I’m not sure we can deny them because, technically, I don’t know that I can deny them simply for donating to another 501(c)(4).” Another IRS agent responded, “This sounds like a bad org… This org gives me an icky feeling.”

Not only does the report show records of IRS employees purposely seeking out conservative groups, but it also found that IRS Acting Commissioner Steven Miller, who served from November 2012 to May 2013, knew of targeting but never came forward.

“Emails, however, show that Miller considered acknowledging the IRS targeting at the July 2012 hearing. In one email to Nikole Flax [Chief of Staff to Steve Miller], Miller wrote:  'I am beginning to wonder whether I should do [Chairman] Boustany[‘s hearing] and affirmatively use it to put a stake in politics and c4,'" according to the report.

"Flax responded: '[I]f the hearing is as generic as I recall, seems like you are too senior. Would be silly to think the c4 issues won’t come up – but I think Sarah [Hall Ingram] could handle it fine as well,'” the report said.

“It is not clear why Miller chose not to acknowledge targeting after considering using the hearing to affirmatively 'put a stake in politics and c4,'” stated the report. “But certainly when asked by Congressman Marchant about the issue, he should have acknowledged the misconduct then. Because he did not, he did a great disserve to the American taxpayers.”

The report also reveals that Lois Lerner, the person who reigned as director of Exempt Organizations throughout the entirety of the IRS targeting, as well as other IRS officials, looked to the “gift tax” as a way to crack down on non-profit groups.

“In late 2010 and early 2011, the IRS initiated audits of five individuals who had donated to 501(c)(4) organizations,” the report stated. “Although the IRS denied any broader attempt to tax gifts to 501(c)(4) groups, internal documents suggest otherwise.

"In May 2011, an attorney in the IRS Chief Counsel’s office wrote to his superiors that the 'plan is to elevate the issue of asserting gift tax on donors to 501(c)(4) organizations to the Chief Counsel and the Commissioner.' On July 2, 2011, IRS Associate Chief Counsel Curt Wilson issued a memorandum to Chief Counsel William Wilkins on the gift tax issue," it stated.

"Wilson concluded that '[b]ecause there is no specific exemption from the gift tax for a contribution to an organization exempt from income tax under 501(c)(4), a contribution to such an organization is subject to gift tax under §2501. Lerner, another email shows, supported this conclusion: '[T]o be clearer, the courts have said specifically that contributions to 527 political organizations are not subject to the gift tax – nothing that I am aware of about contributions to organizations that are not political organizations,'” the report added.

“Nearly five years after the IRS first began targeting conservative organizations for additional scrutiny due to political beliefs, the agency has still not escaped the shadow of its misdeeds and abuse of power," the report concludes. “Most American taxpayers find themselves at the mercy of the IRS – they must turn over sensitive information and even successful efforts to fight off erroneous agency actions can create life- altering turmoil.

“Nearly four years after the Committee began probing complaints about disparate treatment toward applicants for tax-exempt status, the Committee’s investigation is not closed,” stated the report.

“The IRS continues to produce responsive documents and other federal agencies have yet to fully comply with the Committee’s requests for information. The Committee presents these facts and understandings as the 113th Congress concludes to inform the public about what we know and what remains clouded in secrecy," the report stated.

"Certainly recent revelations that emails from officials like former Exempt Organizations Director Lois Lerner that the IRS said were lost forever can now be recovered, and other changes, including the departure of the Attorney General who refused to empanel an independent investigative team, offers renewed hope that more answers may come in the next Congress,” it added.

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