In September, Lerner launched herself in the public debate, agreeing to an interview for a front-page story by the New York Times that the IRS knew would be focused on the “large upswing in the money donated to 501(c)(4)s [and] that the IRS has too few resources to monitor and deal with compliance and enforcement issues in this area.” Ingram sent an e-mail the day the story appeared, praising it and the agency’s media team, and noting that the “‘secret donor’ theme will continue—see Obama salvo and today’s Diane Reehm [sic].” Diane Rehm, a liberal radio host, had that day aired an interview with Representative Chris Van Hollen, who was again banging on about the problems of Citizens United.
An adviser to Ingram, Joseph Urban, also kept the leadership team straight on congressional Democrats’ wishes. A September alert let everyone know about the Democratic Congressional Campaign Committee complaint about Americans for Prosperity. In October he passed around a press release from Illinois senator Dick Durbin demanding that the agency take aim at the conservative organization American Crossroads. Every senior IRS official later admitted to Congress that they were well aware of the raging (c)(4) debate. As were senior Treasury officials, who circulated e-mails at the time in which they worried to each other about “aggressive c4s” that can act with “impunity,” all fueled by “anonymous donors.” All this was happening as Hull’s and Hofacre’s cases sat in limbo.
* * *
No one in America has ever bought the fiction that the IRS is a politically immune agency. Most might nonetheless be surprised to hear that it isn’t even an “independent” agency, as the press likes to suggest. It is officially a bureau of the Treasury Department, which reports directly to the president. That bureau is tasked by law with carrying out “the responsibilities of the secretary of the Treasury” to enforce the tax code. The government itself doesn’t list it as an independent agency, and the law allows the president to remove IRS commissioners “at will”—something he can’t do at truly independent agencies like the Federal Reserve Board. Even the chief of the Federal Maritime Commission has more political insulation than the IRS head.
Plenty of presidents have co-opted the IRS for partisan aims, but Obama took this to new heights, tasking the agency with enforcing big parts of his partisan agenda, such as his health care law. That’s one reason why his first-term IRS commissioner, Doug Shulman, made so many visits to the White House in the first three years of the Obama administration. E-mails show an IRS top brass that increasingly worked as an arm of the administration, collaborating with congressional Democrats and the White House to thwart Republicans—on health care, and the contraception mandate, and sequestration.
This co-optation is an important part of the targeting scandal. An IRS that views itself as a neutral enforcer of tax law would have blocked out the (c)(4) noise. An IRS that viewed itself as an extension of the Obama team would have felt compelled to do something. As Cindy Thomas would later say about Lerner, when asked what she thought motivated the Exempt Organizations head, “I believe that she cares about power and that it’s important to her maybe to be more involved with what’s going on politically.” Thomas noted that Washington had started complaining that Cincinnati was not as “politically sensitive as they would like us to be.”
Back in Cincy, Elizabeth Hofacre became so disgusted by the micromanagement and Washington’s refusal to deal with the Tea Party cases on the merits that in July she requested a transfer. She got it in October. Her replacement, Ron Bell, inherited her lockdown, and was told to simply wait for “guidance” from D.C. As the days ticked down to the 2010 election, Cindy Thomas grew alarmed. In late October, she sent a blunt e-mail to Paz, who was now back from maternity leave: “I have a concern with the approach being used to develop the tea party cases we have here in Cincinnati.…Personally, I don’t know why [Carter Hull] needs to look at each and every additional information letter.” Her office, she wrote, was now sitting on at least forty-five applications. She wanted to schedule time to “come up with a process so we can get these moving.” Washington kept promising it would send instructions; instead, it kept pushing off the timeline.
* * *
Lerner wasn’t processing applications, but that doesn’t mean she wasn’t busy. In September, yet another federal agency noticed Obama’s anger with conservative operations. Jack Smith, the head of the Justice Department’s Public Integrity Unit, read the New York Times article that Lerner had assisted with and tipped off his bosses: “Check out [the Times article] regarding misuse of non-profits for indirectly funding campaigns. This seems egregious to me—could we ever charge a [conspiracy] to violate laws of the USA for misuse of such non profits to get around existing campaign finance laws + limits? I know 501s are legal but if they are knowingly using them beyond what they are allowed to use them for (and we could prove that factually)? IRS Commissioner sarah ingram oversees these groups.…[M]aybe we should try to set up a meeting this week.”
Smith’s idea was breathtaking. He was proposing that the most powerful law enforcement agency in the land begin prosecuting and jailing average Americans for exercising free speech in opposition to Obama. Yet he got the green light. Smith directed the head of his Election Crimes Branch, Richard Pilger, to meet with Lerner about being “more vigilant to the opportunities from more crime” from (c)(4)s.
Lerner knew Pilger from her days at the FEC, and happily arranged to meet him in early October. A memo summarizing the meeting showed that all the participants had taken to using President Obama’s favorite rhetoric about groups “posing” as nonprofits. The participants proposed a “three-way partnership” between the DOJ, the FEC, and the IRS. Lerner in the meantime also arranged for the IRS to transmit 1.1 million pages of nonprofit tax-return data to the FBI, so that G-men could start trolling through the database for potential crimes. This was a few days before the 2010 elections. The database contained confidential taxpayer information that is protected by federal law and that Justice should never have possessed.
The election came and went. The end of the year came and went. Lerner’s underlings increasingly started badgering her for answers, and in February 2011 she finally fully engaged in the stalled application process. In an e-mail to Michael Seto, who in January had replaced Paz as the head of Washington’s Technical unit, she declared, “Tea Party Matter, very dangerous.” She fretted that the cases could be a vehicle for nonprofits to go back to the Supreme Court and demand even more freedoms. Hull had early in 2011 made his recommendations for how the two test cases should be handled, but Lerner dismissed those findings and instead directed that the two groups be subject to an unprecedented multilayer review. They would first get a vetting by one of her own senior advisers, Judith Kindell, and then go through the wringer at the IRS chief counsel’s office. She finished, “Cincy should probably NOT have these cases.” Paz, who was still involved in the discussion, reassured her that Hull was nitpicking everything, and that nothing would move “out of Cincy” until Washington got through “its process.” Hull would testify later that he’d never in his fifty years seen anything like this approach.
Lerner’s review meant another ten months of torturous inaction, in which IRS attorneys strung out the process and Cincinnati continued to sit on hold. Lerner grew more and more enmeshed in the (c)(4) debate, taking actions that all looked aimed at shutting down the Tea Party movement. She and Kindell worked on ways that the agency might plausibly deny the groups both (c)(3) and (c)(4) status. She tightened Washington’s control—warning that Cincinnati must not “make a move” without D.C.’s say-so—explaining that “these could blow up like crazy if [Cincy] let[s] one out incorrectly.” She demanded more investigation and details into the test cases. In July, she requested and received a briefing on the status of the Tea Party cache, and was told there were now more than a hundred cases in the Cincy backlog.
At that event, Lerner decided to change the criteria by which screeners identified the cases. Using the term “Tea Party,” she explained, was
“pejorative” (read: politically dangerous). She ordered that the new BOLO language become “Organizations involved with political, lobbying, or advocacy for exemption under [(c)(3) and (c)(4) status].” This new, broader language had the perverse effect of sweeping significantly more Tea Party groups under the IRS radar.
She debated subjecting organizations to a new requirement—they would have to agree not to “politically intervene”—so as to “pin them down in the future.” She suggested that IRS employees start looking into whether individual Tea Party groups had registered with the FEC, and if so, to ask more questions. She talked to attorneys about proposals to create new IRS rules to crack down on (c)(4) groups. All of this was unprecedented.
And she became obsessed, along with every other Democrat, with the mack daddy of conservative (c)(4) groups: Crossroads GPS. All the way back in October 2010, one of the leading Senate Democrats, Dick Durbin, had written to Doug Shulman asking for an investigation into the group, which had been cofounded by Bush political guru Karl Rove. Democratic staffers in Congress also reached out to the IRS for information on the group, and at least two outside liberal groups complained about Crossroads to the IRS. Lerner forwarded e-mails to her bosses about the organization, lamenting that Crossroads would be able to take part in the election because of a “glitch in the law” and expressing her desire that Congress pass rules to stop such actions. By June 2011 she was looking into the group personally, having requested Cincinnati’s Cindy Thomas to send her the application. She supervised the case after that, and ultimately decided to deny Crossroads its tax-exempt status. In a later e-mail to a subordinate, she made clear that the decision came down to politics. “I don’t think your guys get it and the way they look at these cases is going to bite us some day. [Crossroads] is on the top of the list of c4 spenders in the last two elections. It is in the news regularly as an organization that is not really a c4, rather it is only doing political activity—taking in money from large contributors who wish to remain anonymous.…You should know that we are working on a denial of the application, which may solve the problem.” The “problem” was Crossroads’ existence. Lerner’s campaign to tank Crossroads was in stark contrast to efforts she’d take over the same years to expedite the approval of liberal nonprofit applications, including several done at the request of Democratic senators.
* * *
By the summer of 2011, Lerner was under growing pressure from below to do something about the backlog, and so her Technical unit finally decided to perform a “triage” of the now 150 languishing Tea Party applications. It became a new method of delay. Until now, the conservative universe had heard little or nothing from the IRS. The “triage” marked the official start of the harassment. Carter Hull, despite his fifty years of agency service, was inexplicably pulled off the cases. They were reassigned to Hilary Goehausen, an IRS rookie who had only been with the agency a few months. It was a curious appointment. IRS officials later claimed that Hull was going “too slow” on the applications and that the agency wanted to train up Goehausen. Most organizations don’t train newbies by tasking them with cases that their boss views as “dangerous.” More likely, Goehausen got the job because she’d prove to be easier about taking orders.
Goehausen in the fall started reviewing every application, making notes on each to send back to Cincinnati. Her notes reflect an agency that by this point had completely lost the plot. Goehausen explained in an e-mail to Cindy Thomas that her goal was to separate “good” groups from those that were “just making inflammatory, emotionally charged statements without any factual support” (in her view). She later told Congress she had combed them for “propaganda,” which she described as “a kind of inflammatory, emotionally charged statement” that tried to sell the public on an issue “by only being one-sided and not giving—not discussing both sides of an issue.” This was a remarkable new standard for an agency that had happily bestowed tax-exempt charitable status on Media Matters for America, an organization that has the stated mission of “comprehensively monitoring, analyzing and correcting conservative misinformation in the U.S. media.”
Goehausen went to town. Some applications, she noted, were “anti-Obama.” Some were “primarily emotional.” Some contained “apparent political campaign activities (ie negative Obama commentary).” In communications with colleagues, Goehausen debated ways of rejecting groups that gave her unpleasant sensations. “I think there may be a number of ways to deny them.…This sounds like a bad org :/…This org gives me an icky feeling.”
As Goehausen performed her “triage,” the insane pressure from liberal groups on the IRS to act against conservative nonprofits mounted. Independent groups flooded the agency with complaints. The media for its part trawled through 2010 midterm spending statistics, launching wild claims about tax-exempt abuse. Washington still hadn’t finished its test cases, but Goehausen sent along her comments as well as a “guide sheet” for Cincinnati to process its backlog. The sheet laid out the types of information Washington expected Cincinnati to elicit from Tea Party groups in the process of deciding on their applications. Thomas in January 2012 assembled a team of agents, who would use the guide sheet and comments to draft long letters demanding reams of information from each of the now 170 Tea Party groups sitting in the queue. Those letters went out in February. And that’s when all hell broke loose.
Chapter 8
Living the Lie
Karen Kenney sat staring at the IRS interrogatory she’d received in February 2012 and instantly decided to send it to Dawn Wildman, one of the founders of the California Tea Party movement, and a woman Kenney had been in contact with since she first revved up her own group. “Dear Dawn, this is a heads-up for an envelope I sent you tonight,” ran Kenney’s e-mail. She described the IRS questionnaire she’d received as “chilling, intrusive and very personal,” and posited that it likely “violates at least two First Amendment rights.” She asked if Wildman knew if “this level of questioning is standard practice.” Kenney cautioned that she was only sending her concerns to Wildman, and not to all the leadership groups, because she didn’t want to “terrify” anyone else “seeking non-profit, federal tax-exempt status.”
She needn’t have worried. Wildman was getting similar e-mails and calls from everyone, and not just from groups in California. By late February, in fact, the Tea Party network was alive from coast to coast with outrage and confusion over the IRS letter dump. Some particularly active Tea Party heads—Toby Marie Walker of Texas’s Waco Tea Party, and the heads of several Ohio liberty groups, like Tom Brown and Tom Zawistowski—threw together a conference call for February 28 so that groups could share stories. The invitation was classic grassroots, a mixture of outrage, helpfulness, and respect for the autonomy of local groups. “Dear Tea Party and/or Grassroots leader, Recently you may have read about the IRS sending outrageously intrusive and intimidating letters to Tea Party and other grassroots organizations.” They announced that group leaders across the country had realized they were under assault, and were organizing a conference call to serve as a “strategy and brainstorming session.” They cautioned, “We will not be giving legal advice, we are not attorneys, or accounting advice, we are not CPA’s.” And they reassured, “We are not looking to form an organization or create a top down group. We are simply trying to gauge the actual scope of the problem and formulate a coordinated and effective response to it.”
Tea Party leaders also immediately organized an effort to collect and collate all the IRS questionnaires. They sent out an e-mail form that requested the correspondence, noting that the goal was to put it in a “private repository with the only access being possibly attorneys, Congressmen and their staff and any other person or entity who may need to see the original documents. Since all documents received so far [have instructed] to send information to the same P.O. Box number this could be extremely relevant.” Already the groups had realized that this effort appeared to be centralized.
Kenney rearranged her clie
nt appointments so she could join the conference call. She almost didn’t make it on. Call organizers had made room for ninety-nine participants; they were maxed out within minutes. Outraged Tea Party leaders swapped stories and suggestions for an hour and a half. Several groups admitted they’d already responded to the IRS, on the advice of tax accountants and on fears that noncompliance might result in an audit. One participant had already mailed back a nine-hundred-page response. They broadly agreed to contact Congress, compile the repository of information, and go public to the media. And they decided they needed legal advice.
Kenney had already sent her questionnaire to radio host Mark Levin. Others reached out to Glenn Beck, and to Erick Erickson at the popular Red State website. Calls started to flood into House and Senate offices.
Kenney meanwhile faced a tough decision. Several groups in Ohio and Texas had declared on the call their intention to refuse to comply with IRS demands, on the grounds that they were being unfairly targeted. Others had recommended seeking out a lawyer to ask advice. Kenny resolved to put in a call to her own attorney. In the meantime, she wrote an e-mail to her leadership team, soliciting their thoughts: Should she write the IRS a refusal letter (in all my copious spare time)? Should she send a message to the government?
She didn’t have to make that decision in the end. She jumped on a second national call, the very next day—this one featuring Jay Sekulow. Sekulow is the longtime chief counsel of the American Center for Law and Justice (ACLJ), which was set up in 1990 by evangelical minister Pat Robertson as a conservative counterweight to the American Civil Liberties Union. It specializes in taking up conservative legal causes, with a particular focus on the First Amendment’s guarantees of religious liberty and free speech. Sekulow became chief counsel more than twenty-three years ago, and over those decades earned a reputation as a tough litigator, one who has had his share of trips to the Supreme Court.
The Intimidation Game Page 12
