The Intimidation Game

by Kimberley Strassel

  The targeting was hardest on the small groups, but it also hurt the big (c)(4)s—even the ones that could afford sophisticated lawyers. Steven Law, the president of Crossroads GPS (which Lerner was especially determined to bring down), explained to me that the hit to his own group was financial. Among the many reasons groups like Crossroads pursue tax-exempt status is to qualify for special mailing rates that nonprofits receive. And Crossroads does a bucketload of issue-related mail. Yet the group had to wait five years to finally get its nonprofit status, costing it a small additional fortune every time it went to the post office.

  Obama won in that regard. Then again, his IRS couldn’t have chosen a more ornery or knowledgeable group of people to pick on. The Constitution is the Tea Party’s bread and butter. And that Constitution had been violated. So as congressional investigators set to interviewing and issuing subpoenas, conservative groups set to documenting the horrors and seeking justice.

  At the epicenter of that movement was Jenny Beth Martin, the charismatic leader of Tea Party Patriots (TPP), a national umbrella group for the movement. Martin served double duty during the scandal. She had to cope with the IRS interrogatory of TPP (it was on the targeting list), but she also became the go-to organization for other groups under assault.

  “Our own accountant got our first IRS letter, and it was at just the same time as everybody else. But we were the only national organization targeted—the other groups, they were small, they were local—and so we started doing everything we could to help them out,” says Martin. She started weekly webinars, where people could tune in and get general advice from an attorney about how to approach the interrogatories. Sometimes the local groups would find their own counsel, sometimes Tea Party Patriots helped arrange for counsel—and paid the legal bills. Martin remembers through all that crazy time—before the targeting was revealed—that she felt the need to be very careful about what she said, to not make accusations. “That was another whole part of this. We all knew something was going on. But if you went to a major donor and said you thought the IRS was targeting you, they would think you were crazy. ‘Look at all those Tea Party people, out with signs and conspiracy theories.’ And also, the IRS still held the cards, nothing had yet been revealed. And none of us wanted to say anything that might derail our approval. So we did our best, and found counsel, and answered many of the questions.”

  After the targeting was revealed, all bets were off. Martin also had Cleta Mitchell as counsel, and when the Lerner news broke, they were ready to go live to the nation with the stories of what had happened to groups across the country. She also reached out to her network and within days had arranged and paid for a group of dozens of local Tea Party members to come to Washington and tell about their experiences.

  TPP arranged the meetings and made introductions to legislators. It arranged for video crews to document their stories. And it arranged press conferences.

  It also started going back to groups, collecting information, making a record of the abuse. Martin remembers the Albuquerque Tea Party sending her a photo of the “stacks and stacks” of boxes of information they had sent to the IRS. “That image will always be burned into my memory,” she says. TPP started demanding that government departments hand over documents. Her organization also funneled local parties over to Jay Sekulow, who was preparing a lawsuit. Tea Party Patriots ended up doing a documentary about the IRS that featured many of the stories of average Americans who had been harassed into silence.

  Martin appeared in front of Congress in July 2015, to sum up everything her group had done to record and unravel the IRS dishonor. “Two people on our support team made over one thousand phone calls in the spring and summer of 2013 to make sure we had the details necessary to provide various congressional committees with the information and evidence they needed,” she told Congress.

  “We arranged town hall meetings to discuss the issues, and we coordinated and paid for travel for our local coordinators to come to Washington to testify and/or talk to committee staff.

  “We filed FOIA requests, and we paid for smart lawyers to help understand the gibberish and thousands of redacted pages of paper we got in response.

  “And, of course, we had to spend precious man-hours filling out all those crazy questionnaires from the IRS in the first place.”

  Martin overall estimated that her group spent at least forty-five hundred man-hours working on IRS targeting–related issues. As she explained, “Think about that for a minute: forty-five hundred man-hours. That’s the equivalent of one employee working two and a half years on this issue alone—just since 2013.”

  Karen Kenney was among representatives from twenty groups whom the Tea Party Patriots underwrote to come to Washington to tell their stories and meet with congressmen in late May 2013. She was happy to join, though less than impressed by the city and its occupants. She spent one day talking to staffers, and has good memories of meeting with California representative Tom McClintock, who personally came to hear the stories of abuse. Mostly what she remembers, though, is a lot of staffers, and few informed members. And also that she wasn’t allowed to use the drinking fountains because of lead in D.C. pipes. (Where’s the damn EPA when you need them?) She got dehydrated and missed meetings, sick in her hotel room.

  Kenney took a second trip to D.C. in June, funded by the grassroots organization FreedomWorks, when she testified. That was when she had her adventure finding the bathroom. (I felt like a Christian in the coliseum in Rome.) Even years later, she looks nervous recounting the moment, and that look is a vivid reminder that most Americans are not called upon to tell their ugly tales to millions of TV critics, to face the withering questions of haughty congressional members. Starting a Tea Party organization was, in Kenney’s mind, an act of civic duty. Testifying in front of Congress was, in Kenney’s fluttering heart, a supreme act of bravery.

  Kenney remembers sending a silent thank-you to Michigan representative Dave Camp, who introduced her by noting that she worked with veterans. She believed he’d deliberately included that fact in an effort to shield her from nastier Democratic questions. She remembers Wisconsin representative Paul Ryan genuinely welcoming the witnesses to Washington. She remembers that every Republican member sat fixed in their seat for the duration of the hearing. She remembers that every Democratic member got up and left at some point and didn’t bother to come back until it was their time to ask questions. She remembers looking down the line at the four other Tea Party witnesses and thinking, “I’m not alone.”

  Kenney might have been nervous, but didn’t look it come showtime. Her five minutes on the stage were a ringing retelling of her experience and a condemnation of government power. It was rebroadcast from coast to coast.

  * * *

  Within a few weeks of Lerner’s admission, Sekulow had filed a lawsuit against the IRS that would grow to represent thirty-eight groups in twenty-two states. It accused the Obama administration of violating the First and Fifth Amendments, as well as the Administrative Procedures Act (which lays out how government must produce regulations) and the IRS’s own rules. Mitchell filed litigation. Individual Tea Party groups filed litigation. Kenney’s group to this day remains active in the Sekulow suit, even though she is no longer seeking tax-exempt permission. “The people need to know what happened,” she explains. “And that suit gives a reason for discovery.”

  Several of the lawsuits are still winding their way through the courts, but they have in the near term served an important purpose: They’ve pressured the IRS to get applications approved. Mitchell sued on behalf of True the Vote, and on the day the federal government was supposed to respond to her lawsuit—in September 2013—it conveniently explained to the court that the IRS had just granted (c)(3) status to the group and was therefore moving to dismiss the suit.

  Mitchell says congressional pressure also helped. The House in February 2014 publicly announced that Jenny Beth Martin of the Tea Party Patriots would soon testify about her own still-lan
guishing (c)(4) application. Mitchell remembers telling Martin (who is also her client), “Wait for it. You will have it before you testify.” Sure enough, the day before that testimony, the IRS called to say it had granted the Tea Party Patriots tax-exempt status. “Coincidence?” asks Mitchell. “Hardly.”

  Sekulow witnessed the same behavior. Only after he launched a lawsuit did his groups begin getting approval. As of the end of 2015, he had only two clients that had yet to receive tax-exempt status. “The reality is that without that litigation, we’d still be fighting for all those exemptions. They didn’t want to give anything,” he says.

  The Tea Party movement also jumped to hold lawmakers accountable. Obama was beyond their reach; he’d encouraged the IRS in every way possible, but he’d been careful never to outright call for action. And executive privilege keeps most White House documents beyond the reach of FOIA requests or congressional subpoenas.

  Congressional Democrats never felt such constraint, however, and were on record vigorously and openly demanding that a federal agency go after their political enemies. How that pressure is any different than that exerted by the Keating Five against the federal bank regulator (and which cost senators their jobs) is hard to fathom. Conservative groups didn’t miss the comparison. Since May 2013 they’ve filed dozens of ethics complaints against Democrats involved in the targeting. Congress is still an old boys’ club, and reluctant to take aim at any of its own. So nothing has come of any complaint.

  Nothing likely will.

  * * *

  It took Cleta Mitchell very little time to figure out that the Obama administration had no intention of stopping its campaign to silence its opponents. It had been caught unofficially targeting conservatives, in secret. That would clearly have to stop. It instead moved swiftly to a new phase of the operation: officially targeting conservatives, in the open.

  Werfel debuted the first piece of this on June 25, briefing reporters about his thirty-day report on the scandal, which included his new “plan of action” for dealing with the conservative application backlog. One highlight was a new optional “expedited” process for obtaining 501(c)(4) status. Werfel’s “fast track” deal boiled down to this: The IRS would finally, begrudgingly, do what it should have done from the start and quickly grant tax-exempt status. The hook? Groups would have to agree to give up their freedom of speech.

  Those organizations taking the deal had to agree to limit to 40 percent the amount of money and time (calculated by employee and volunteer hours) they would spend on future political activity. The official legal amount was 49 percent, and the IRS had never before used time as a component of that calculation (it had always just been based on spending). By including the new time measure in the calculation, the IRS could significantly lower the amount of real political work that groups could engage in.

  Mitchell spotted the scam immediately. “It was just a new way to screw the same groups they’d been screwing,” she says. “And all under the guise of being ‘helpful’ and ‘solving the problem.’ It was so blatant, so in-your-face.”

  Unfortunately, few in the movement saw what Mitchell so quickly did. Her phone started ringing, clients wondering if this “fast track” deal was their ticket to legitimacy. Mitchell cautioned that the IRS had purposely chosen not to define anywhere how it would calculate “volunteer” time. “If Mitchell volunteers, and a high school student volunteers, does our time count equally? Or do you factor in my hourly lawyer rate? Who is a volunteer? What kind of services count? It was vague on purpose, so that they could define you down to zero politics, with the right criteria,” was how Mitchell explained it to callers.

  Some groups took the deal, not knowing any better. Some took it because they didn’t do politics anyway and just wanted out of IRS purgatory. But many, groups like Jenny Beth Martin’s, outright refused to be assaulted twice. It wasn’t right, Martin told me in 2014, that “every other 501(c)(4) [including liberal groups] would get to live under a different standard than those of us who had been targeted and had been waiting for a determination for years.” She let the deadline for using “fast track” pass.

  Her reward: Later that summer, Tea Party Patriots received another round of interrogatives from the IRS, with demands for information Martin had already supplied, as well as new details—such as her fund-raising letters from 2012. She wasn’t alone. It is a little-known fact that many groups that declined fast track continued to get hit with IRS question letters, long after the agency targeting had been exposed, and well after Werfel was supposedly “fixing” the problem.

  The fast-track idea meanwhile didn’t spring out of nowhere. The nation would find that out later in the year, in a bit of news dumped in the quiet of the Thanksgiving Day weekend. (The Obama administration has always made a specialty of slipping out controversial news at times when it hopes nobody is watching.) By that November 2013 day, Democrats were already hip deep into their argument that the IRS mess was nothing more than an unfortunate mistake, brought about by confusion over a complicated law. That groundwork laid, the IRS and Treasury on November 29 announced a new regulation for (c)(4)s.

  It wasn’t so much a regulation as the full expression of everything Democrats had been hoping to do since Van Hollen and Schumer first dreamed up the DISCLOSE Act. It essentially barred social-welfare groups from participating in any politics. The regulation prohibited candidate-related election activity—banning even the names of active politicians or political parties on an organization’s website. It prohibited the use of words such as “oppose,” “support,” “vote,” “defeat,” and “reject.” It prohibited voter registration drives and voter guides. It prohibited hosting candidates at events, even nonpartisan ones. It restricted the leaders of social welfare groups from talking about judicial nominations. It declared political activity as contrary to the promotion of social welfare. (Apparently a well-faring state is one in which nobody talks about politics, and that receives all its political information from the government.) It formalized the use of volunteer hours in calculating political activity. And, of course, it applied all this only to (c)(4) groups. Labor unions were exempt. They would still be able to support Democrats politically to the full extent of biased IRS law.

  The particular insult was that Werfel presented the new regulations as the fix to the IRS targeting. The prior regulation had been unclear and had confused IRS agents, went his argument; the new regulations would provide clarity. The administration went so far as to claim that it was resolving problems identified in TIGTA’s report. It was a brilliant strategy: Use the unsanctioned silencing of the IRS as an excuse to create a system of sanctioned silencing. Obama meanwhile rushed out the rule in November 2013 to ensure that conservative groups would be out of action prior to the 2014 midterms.

  Only TIGTA hadn’t recommended that the answer to the IRS’s stifling of speech of those opposed to Obama should be a rule that would stifle the speech of those opposed to Obama. And the IRS hadn’t just started working on those rules after Lerner spilled the beans. As congressional investigators kept digging, they found that IRS and Treasury officials, spearheaded by Lerner, had first started this legal shutdown strategy in 2011. That strategy was far enough along that by 2012, Treasury tax official Ruth Madrigal was asking an IRS lawyer about the agency’s “off-plan” work on a (c)(4) regulation. “Off-plan” means the IRS hid the effort, not publishing it on the public schedule of upcoming rules and actions. Around the same time, IRS chief counsel (and Obama appointee) Wilkins met with the staff of Democratic senators to talk about the regulations. By 2013, IRS officials considered such a rule change the agency’s top priority.

  In short, the Obama administration had been planning this for ages, and one question is whether Lerner wasn’t sitting on those (c)(4) applications as a way of keeping them quiet until the administration could get the rule in place. Whatever the motivation, Werfel’s claim that the regulation was in response to IRS misbehavior goes down as one of the bigger lies in the IRS aff
air.

  That planning was why Werfel had been able to roll out his fast-track proposal so quickly. The agency already had in place the outline of counting “volunteer” hours and caps. Mitchell goes so far as to note from documents produced in a FOIA case that the IRS had been preparing to issue the rules on Labor Day weekend 2013, only it got derailed by the Lerner confession. “We have a FOIA lawsuit, which is another way of saying I now have binder upon binder of pieces of paper that the IRS has blacked out before it sent them to me. But the one thing I have been able to ascertain is that those regulations were already set to roll in the early fall,” she says.

  The proposed rule caused another Washington explosion. Only this time it wasn’t just conservatives howling. Obama wanted conservative (c)(4)s shut down; he accepted that the collateral damage would be liberal (c)(4)s, which would also be restricted in their activity. The administration soothed itself with the knowledge that a turbocharged labor movement would still be on its side.

  The liberal nonprofit community didn’t take it quite so well. Comments poured into the IRS, mounting by the minute. Everyone hated the regulation. Conservative groups like Americans for Prosperity and Crossroads and Tea Party Patriots and True the Vote and the Heritage Foundation hated it. Hobby and special interest groups like the American Motorcyclist Association and the Home School Legal Defense Association hated it. Trade groups like the National Association of Manufacturers and the Solar Energy Industries Association hated it. Liberal groups like the Sierra Club and the NAACP and the Alliance for Justice hated it.