WASHINGTON — The storm over the Internal Revenue Service’s dealings with groups seeking tax-exempt status is now nearly a month old, and virtually no organizations perceived to be liberal or nonpartisan have come forward to say they were unfairly targeted since then.
Some have been rejected for special status, but groups both denied and given exemptions contacted by McClatchy said they thought the scrutiny they got was fair.
“During the Bush administration we often thought the IRS was not doing enough, so the scrutiny we got was fair,” said Liz Wally, the executive director of Clean Elections Texas. The nonpartisan group and its education fund, which promote public financing of elections, received tax-exempt status within months of applying in 2010.
When the House Ways and Means Committee heard testimony Tuesday from aggrieved organizations, all were conservative. Democrats were invited to have witnesses but declined.
“In the end, it doesn’t matter if it’s Democrat, Republican, conservative or liberal, it happens to all Americans,” explained Rep. Joseph Crowley of New York, the vice chairman of the House of Representatives Democratic Caucus.
The IRS’s targeting of conservative-leaning groups is the subject of investigations by the Treasury Department’s inspector general, the FBI and at least four congressional panels.
The controversy dogging the IRS is the most explosive for the agency since President Richard Nixon targeted his political enemies with a special unit created in the agency more than 40 years ago. After Nixon’s 1974 resignation in disgrace, the laws were changed to limit the ability of the executive and legislative branches to influence IRS audits and reviews.
Experts insist that the IRS strives to be fair, and they point out that it’s not unusual for those who don’t share the White House’s political views to think that they’re being targeted. And the IRS routinely watches closely groups that may have political ties.
IRS officials have contended that they didn’t single out conservative groups for special attention. “Organizations from all walks and all persuasions were pulled in,” then-acting Commissioner Steven Miller told a congressional hearing last month.
Martin Sullivan, chief economist at Tax Analysts, a group of specialty publications, tried to ascertain the accuracy of that statement. But, he found, “because the IRS is prohibited by law from releasing information on applications either denied or not yet approved, we will probably never know.”
Of the 176 cases chosen for extra scrutiny before they were approved, 46 had “tea party,” “patriot” or “912” in their names, 76 others were conservative, 48 were non-conservative and the political leanings of six couldn’t be determined, according to Sullivan.
The experiences of two Texas-based groups that sought exemptions raise questions as to whether the IRS at least bent to political winds.
Progress Texas, which bills itself as “communicating progressive values,” is based in the capital city of Austin. Eleven months after it applied for tax exempt status in March 2011, it received a nine-page, 21-question letter from Lois Lerner, the IRS executive who was placed on administrative leave recently after she refused to answer questions from Congress.
Among the questions asked were whether the group, which won tax-exempt status last June, held candidate forums, the names and issues discussed and what material was provided to citizens.
“If you’re going to be asking for these exemptions you should expect scrutiny,” said Ed Espinoza, the group’s executive director. Asked whether he thought the process was politicized, he responded, “Not at all.”
His group wasn’t asked all the same questions that were asked of True the Vote, which has close ties to conservatives and, like Progress Texas, a mission to keep an eye out for voter irregularities. In February 2012, the IRS sought data on “all of your activity on Facebook and Twitter,” as well as detailed questions about whom the group recruits.
There are key differences. True the Vote is seeking a somewhat different kind of tax exemption. It aims to train 1 million poll workers nationwide and shares an office and founder with King Street Patriots, which has fought charges that it’s partisan. King Street Patriots is challenging in the Texas Court of Appeals the constitutionality of the Texas Democratic Party’s claims of partisan activity. Neither the patriots group nor True the Vote has received a tax exemption, and True the Vote has sued in federal court.
Most liberal or clearly nonpartisan organizations McClatchy contacted say they were subjected to scrutiny but accepted it as part of the process.
Wally, of the Clean Elections Texas group, filed applications for two kinds of requests for tax-exempt status in early 2010. One was approved in three months and required only that she fill out an application. The other took until August of that year and involved back-and-forth dialogue with IRS officials, which resulted in changes to the website.
She found the scrutiny justifiable. “We were asking for a privilege,” she said.
Some complained about crushing indifference from the IRS to their applications. Global Action to Prevent War, based in New York City, applied for tax-exempt status in late 2011. It waited more than nine months, and had trouble getting calls returned.
When the IRS finally responded, it sent a list of questions about how the group funds overseas workshops, and asked for a representative sample of its publications. The group got tax-exempt status in January.
Any argument that only conservatives got tough scrutiny, though, is countered somewhat by the saga of Emerge America. It always was upfront about its mission – to train Democratic women to run for office – but it says it doesn’t get involved directly in the election process.
Emerge America got tax exemptions for the national group and for affiliates in California, New Mexico and Arizona during the Bush administration. Groups routinely were asked about their brochures, websites and other material explaining Emerge America’s purpose.
“We knew we were in an interesting place,” since the group was obviously Democratic-leaning, group co-founder Dana Kennedy said.
She saw no political bias in her dealings with the IRS, but in 2011 “we started getting more and more questions.” Three new state applications were rejected, and the tax-exempt status of the other four organizations was revoked.
Holly Paz, who was then the acting IRS director for exempt organizations, rules and regulations, explained why in a letter: “You are not operated primarily to promote social welfare because your activities are conducted primarily for the benefit of a political party and a private group of individuals, rather than the community as a whole.”