IRS: Mistakes Were Made

Judicial Watch has just released a new batch of documents forced out of the IRS that show the Obama administration’s scandalous misuse of the IRS to target Tea Party and other conservatives goes far deeper than realized.

Included in the new batch of documents is a February 2012 email from Lois Lerner, who was then head of the IRS’ Exempt Organizations Branch, asking that a special program be set up to “put together some training points to help [IRS staffers] understand the potential pitfalls” of revealing too much information to Congress. Amid the hundreds of released pages, Judicial Watch also found a remarkable Lerner email from 2013 in which she says she is willing to take the blame for not having provided sufficient direction to her underlings on how best to investigate the targeted groups, and then concedes that she “understands why the IRS criteria” leading to targeting of Tea Party groups and other opponents of President Obama “might raise questions.”

In May 2013, the Treasury Inspector General for Tax Administration (TIGTA) released an audit revealing the IRS had used “inappropriate criteria” to identify potential political cases. “Early in Calendar Year 2010,” TIGTA wrote, “the IRS began using inappropriate criteria to identify organizations applying for tax-exempt status to (e.g., lists of past and future donors).” The illegal IRS reviews continued for more than 18 months and, TIGTA reported, “delayed processing of targeted groups’ applications” preparing for the 2012 presidential election.”

Not so coincidentally, during this period of time, Lerner emailed former Director of the Office of Rulings and Agreements Holly Paz, attempting to limit information provided by the IRS to Congress about non-profit classifications. Here is the exchange:

Thursday, February 16, 2012 1:28 PM– Lois Lerner to Holly Paz:

Subject: Review of Classification Write -Ups

While you were gone, Judy [Kindell – former Lerner advisor] and Sharon [Light – Lerner advisor] had the opportunity to look at some of the write –up from the referral committee and classification folks on cases they had reviewed. We are all a bit concerned about the mention of specific Congress people, practitioners and political parties. Our filed folks are not as sensitive as we are to the fact that anything we write can be public–or at least be seen by Congress. We talked with Nan [Downing – Director of EO Examinations] and she thought it would be great if R & A could put together some training points to help them understand the potential pitfalls, as well as how to think about referrals. As a starting point, Nan has sent up a bunch of papers that I asked Tom Miller [EO technical advisor] to review to provide feedback to Sharon/Judy –or whomever we decide should draft the training.

The American people have been told repeatedly that the IRS has nothing to hide. This email, however, begs the question – if there is nothing to hide in these cases the IRS “reviewed,” then why the sensitivity training on how IRS employees could cover their tracks from Congress?

In addition to confirming Lerner’s role in making sure Congress had no clue about the IRS targeting effort, Judicial Watch also uncovered Lerner’s most extensive and detailed discussion to date regarding the scandal. Remember, Lerner choose contempt of Congress rather than testifying under oath about the scandal. Judicial Watch did what Congress couldn’t, or wouldn’t.

Lerner reveals much in a January 31, 2013, email to TIGTA investigator Troy Patterson:

We feel your folks are being too narrow in their view and have decided that because of the language on the earlier BOLO [Be On the Lookout] list regarding Tea Party, everything that followed was tainted…They also don’t seem to be taking a big picture look at what we have done… When we describe that process, they acknowledge that that approach sounds reasonable, but seem to be saying that reasonableness is overshadowed by the fact that the criteria look bad to folks on the outside, so there is no way we could cure the initial bad impression.

We understand why the criteria might raise questions….So, I’m not sure how they [TIGTA] investigators are looking at we were politically motivated, or what they are looking for with regard to targeting. They didn’t seem to understand the difference between IRS acting in a politically motivated manner and front line staff people using less than stellar judgment. I am willing to take the blame for not having provided sufficient direction initially, which may have resulted in front line staff doing things that appeared to be politically motivated, but I am not on board that anything that occurred here shows that the IRS was politically motivated in the actions taken.

What Judicial Watch has uncovered shows that the IRS scandal is far from over. The watchdog also has email records from Lerner herself in which she admits, and then denies, her culpability and that of the IRS in the scandal. There was a lot more going on here than “bonehead decisions in local offices,” as President Obama would have the American people believe.

The documents obtained by Judicial Watch also include the initial June 2011 email in which Lerner told associates that her computer had crashed and her Blackberry no longer worked. The IRS failed to inform Judicial Watch (and the federal court handling this FOIA litigation) that Lerner’s computer had crashed, and that critical Lerner emails may have been wiped out. Three years later, in June 2014, it buried the information on page 15 of a letter from the IRS to Senate Finance Committee Chairman Ron Wyden (D-OR) and Sen. Orrin Hatch (R-UT). The Lerner email contained:

Tuesday, June 14, 2011 8:54 AM– Lois Lerner to Williams Grant [IRS spokesman]; Kindell Judith E:

My computer crashed yesterday and my Blackberry doesn’t work in my office so I just saw this. Unfortunately, I am tied up until at least 12 and because Blackberry truncates, I can’t see bottom of email …

This email also discloses the IRS investigations extended beyond mere audits of Tea Party and other groups, and included a separate investigation arm of the IRS, the Review of Operations Unit:

Also, we often use the ROO [Review of Operations Unit] to do initial research (.) Before starting audits–they don’t touch taxpayers, but can look at publicly available info about orgs.

Ironically, it was this very Judicial Watch lawsuit that resulted in the disclosure of Lerner’s “lost and found” IRS emails. Indeed, the watchdog’s review of these documents is showing document gaps caused by the Obama IRS’ refusal to search for Lerner’s emails.

And the documents raise questions about the judgement of Sen. John McCain (R-AZ). A May 1, 2013, email exchange between Lois Lerner and other top IRS staffers revealed that she met with select top staffers from the Senate Governmental Affairs Committee in a “marathon” meeting to discuss concerns raised by both Sen. Carl Levin (D-MI) and McCain that the IRS was not reining in political advocacy groups in response to the Supreme Court’s Citizens United decision. This meeting occurred 11 days prior to Lerner’s admission, during an American Bar Association meeting, that the IRS had “inappropriately” targeted conservative groups. These emails show for the first time that those attending this pressure meeting were key aides to McCain, the ranking minority member of the committee:

Wednesday, May 1, 2013 10:26 AM — Lois Lerner to Nikole Flax [Chief of Staff to then-Commissioner Steven Miller] and others:

Yesterday’s marathon went well thanks to “the village.” Glad to have all of you as part of that village.

Wednesday, May 1, 2013 12:23 PM – Sinno Suzanne [IRS Legislative Counsel] to Lerner and others:

I also took notes so I can compare and make sure we captured everything.

The staffers are below.

Laura Stuber (Majority Senior Counsel)

Elise Bean (Majority Staff Director and Majority Chief Counsel)

Kaye Meier (Senior Counsel for Senator Levin)

Henry Kerner (Minority Staff Director and Minority Chief Counsel)

Stephanie Hall (Minority Counsel)

Scott Wittmann (Minority Research Assistant)

The IRS seems to have blacked out the notes of the meeting, and McCain and Levin said nothing about the meeting at the time. But, in a press release sent 24 days after the meeting – and 13 days after the IRS scandal had already broken – the two senators claimed to be shocked at the news of the IRS targeting. The press release contained a letter the two senators sent to then-Acting IRS Commissioner Danny Werfel claiming outrage that the subject had not even been broached in their committee staffers’ six-hour marathon meeting. But one is reminded of Shakespeare’s observation regarding Lady Gertrude’s transparently excessive claims of piety: “Methinks the lady doth protest too much,” because the letter also confirmed that Levin (now retired) and McCain put pressure on the IRS to control political speech:

On April 30, 2013, Ms. Lerner and seven IRS colleagues spent six-hours being interviewed, on a bipartisan basis, by Subcommittee staff. That interview covered, among other topics, how the IRS determines which groups to review, what actions are taken in connection with the IRS reviews, and how the laws and regulations are used to examine those groups. Ms. Lerner failed to disclose the internal controversy over the search terms used by the Cincinnati office to identify 501(c)(4) groups for further review, the actions taken by that office in reviewing the identified groups, the investigation and imminent findings by the Treasury Department Inspector General for Tax Administration (TIGTA); and TIGTA’s conclusion that the IRS had used inappropriate criteria to target Tea Party and other conservative groups. Ms. Lerner also failed to disclose that she was fully aware of these issues as early as June 2011, and, according to TIGTA, had been personally involved in reviewing questionable actions taken by the Cincinnati office.

Judicial Watch previously forced the release of IRS documents that indicate extensive pressure on the IRS by Levin to shut down conservative-leaning tax-exempt organizations, while McCain has been vociferous in his calls for reining in free and open political discussion. He was one of the chief sponsors of the McCain-Feingold Act, and called the Citizens United decision, which overturned portions of the Act, one of the “worst decisions I have ever seen.” One might conclude from these documents that McCain was happy to have Levin push the IRS to impose by regulation what the Supreme Court had already ruled to be out of bounds.

Ronald C. Machen, Jr., the Justice Department’s do-nothing, outgoing U.S. Attorney for the District of Columbia, has unsurprisingly announced the Justice Department would not prosecute Lerner for contempt of Congress. (The Obama Justice Department is a co-conspirator with the IRS – see a good summary on Obama Justice conflicts of interest here.) In doing so, Machen is ignoring a law requiring a contempt citation be brought before a grand jury, citing prosecutorial discretion as the reason for not prosecuting Lerner.

In the meantime, Sen. Mitch McConnell, the Senate majority leader from Kentucky, has to determine whether he will tie Obama’s nomination of Loretta Lynch, the president’s proposed successor to the disgraced Eric Holder, to getting justice for the American people in the Obama IRS scandal.

Judicial Watch has noted previously that this ought to be a major issue in the nomination fight over Lynch. Per Justice Department regulations:

The Attorney General, or in cases in which the Attorney General is recused, the Acting Attorney General, will appoint a Special Counsel when he or she determines that criminal investigation of a person or matter is warranted and–(a) That investigation or prosecution of that person or matter by a  United States Attorney’s Office or litigating Division of the Department of Justice would present a conflict of interest for the Department or other extraordinary circumstances; and (b) That under the circumstances, it would be in the public  interest to appoint an outside Special Counsel to assume responsibility for the matter.”

Should Mitch McConnell lead Republicans and Democrats in requiring the appointment of a special counsel for Lynch (or, preferably, a better nominee) to get a vote on the floor of the U.S. Senate? Concerned citizens should let McConnell and other Senate representatives know what they think. McConnell’s office can be reached at 202-224-3121.

In the meantime, Judicial Watch will keep on doing what Justice and Congress won’t. There is more to come. The watchdog currently has thousands more internal IRS documents under review, several other lawsuits and more leads that are keeping the organization working at full capacity. The fight for transparency and accountability is too important to let up now.