TRI In The News

Valley Tea Party Wrongfully Targeted by the IRS

May 13, 2013

The Shenandoah Valley Tea Party Patriots fell under the watchful eye of the Internal Revenue Service more than a year after filing for 501 (c) (4) nonprofit status, the group's leader said Friday.

"They wanted the names and addresses of all the leadership. They wanted a full list of our activities,'' said Bruce Richmond, referring to the 38 questions the IRS' Cincinnati office forwarded his group last year in response to an application filed in 2010.

Answering those questions required the conservative Staunton-based group to spend 235 volunteer hours over three weeks producing an 892-page, 10-pound document, Richmond said. He worked 85 hours himself, he said.

About 75 groups were singled out by the IRS for extra scrutiny because they included the words "tea party" or "patriot" in their applications for tax-exempt status, Lois Lerner, who heads the division that oversees tax-exempt groups, admitted Friday.

"That was wrong. That was absolutely incorrect, it was insensitive and it was inappropriate. That's not how we go about selecting cases for further review," Lerner said at a conference sponsored by the American Bar Association.

"The IRS would like to apologize for that," she added.

The Jefferson Area Tea Party, based in Charlottesville, was considering whether to seek tax-exempt status when word spread about trouble with the IRS, said the group's chairwoman, Carole Thorpe.

“We felt we might be opening ourselves up to undue scrutiny,” Thorpe said Friday.

The group opted against seeking 501 (c) (4) status, instead filing a simple tax form, Thorpe said. “Why raise your hand to draw attention to yourself or give them ammunition against you when you don’t have to?” she said.

White House officials condemned the targeting of tea partiers, and the Obama administration and House Republicans called for an investigation. House Majority Leader Eric I. Cantor, R-7th, vowed the chamber would follow up.

"The IRS cannot target or intimidate any individual or organization based on their political beliefs," he said in a statement.

Lerner said the decision to target the conservative anti-tax groups that began emerging during Obama's first year in office was made by low-level IRS employees in Cincinnati.

Tea partiers rejected that notion. Thorpe said she believes the IRS was used "as a tool of intimidation." Even groups opposed to the tea party movement should be concerned, she said, because they also could be targeted someday.

“Whether or not you like the tea party doesn’t matter. It’s big government wielding its power against those who would oppose it,” she said.

Under Section 501 (c) (4) of the federal tax code, organizations can acquire tax-exempt status as social welfare groups, which allows them to participate in political activities, although their primary activity must be social welfare. The IRS must approve the status.

Some groups singled out for additional review withdrew their applications, Lerner said. The Shenandoah Valley Tea Party considered simply allowing the organization's 19-page application to expire, Richmond said. Another option was to fight the IRS legally, Richmond said.

The Richmond Tea Party Patriots spent $10,000 on legal advice before ultimately responding to the IRS, he said. That group's struggles contributed to the Jefferson Area Tea Party's decision to forgo an application, the group said, citing "an atmosphere of intimidation."

"We became aware of the problem early last year after learning the IRS sent a letter to [the] Richmond Tea Party," the Jefferson Area Tea Party said. "In the letter were demands for substantial intrusive disclosures that are typically not required to process an application for 501 (c) (4) tax-exempt status."

Some groups were asked for lists of donors, which violates IRS policy in most cases, Lerner said. The IRS did not ask for such a list from the Shenandoah Valley group, Richmond said.

Virginia Tea Party Patriots Federation Chairman Mark Daugherty said he made numerous calls to the Cincinnati IRS office about the Shenandoah Valley group's application. He said he was told once that "an extra hard look'' was being given tea party applications.

"It was as if they were trying to look for red flags or problems as opposed to normal applications that would get a solid review,'' Daugherty said.

The state federation is made up of 46 Virginia tea party groups. Most rely on modest resources, Daugherty said. The 990-EZ tax form filed by the Shenandoah Valley Tea Party Patriots in 2011 listed revenues of $29,056. The Richmond Tea Party Patriots' form filed less than a year ago listed $39,046 in revenues.

When the Shenandoah Valley group finally heard from the IRS, the organization was given 10 days to respond, Richmond said. It took twice that long, he said.

Lerner said the scrutiny of tea partiers was not motivated by political bias, and no high-level IRS workers knew about the practice.

Many conservative groups complained during the 2012 election that they were being harassed by the IRS.

Former IRS Commissioner Douglas Shulman, an appointee of President George W. Bush, denied that charge in March 2012, nine months before his six-year term ended.

"There's absolutely no targeting. This is the kind of back and forth that happens to people" who apply for tax-exempt status, Shulman told a House Ways and Means subcommittee.

Lerner said the number of groups filing for tax-exempt status more than doubled from 2010 to 2012 to more than 3,400.

The IRS dealt with the influx of applications in its Cincinnati office to develop expertise among staffers and consistency in their reviews, Lerner said. As part of the review, staffers look for signs that groups are participating in political activity. If so, IRS agents take a closer look to make sure that politics isn't the group's primary activity, Lerner said.

As part of this process, agents in Cincinnati came up with a list of things to look for in an application. On that list, agents included the words "tea party" and "patriot," Lerner said.

"It's the line people that did it without talking to managers," Lerner said. "They're IRS workers, they're revenue agents."

In all, about 300 groups were singled out for additional review, Lerner said. Of those, about a fourth were singled out because they had "tea party" or "patriot" somewhere in their applications.

The IRS statement said that once applications were chosen for review, they all "received the same, even-handed treatment."

Lerner said no group had its tax-exempt status revoked.

"Mistakes were made initially, but they were in no way due to any political or partisan rationale," the IRS said in a statement. "We fixed the situation last year and have made significant progress in moving the centralized cases through our system."

Marcus S. Owens, who spent a decade leading the IRS division that oversees tax-exempt organizations, said Friday that it made sense that the problem arose among workers in Cincinnati because the agency "really has delegated a lot of authority" to local offices to make decisions about handling their workload.

Tea partiers weren't buying it.

"It is suspicious that the activity of these 'low-level workers' was unknown to IRS leadership at the time it occurred," said Jenny Beth Martin, national coordinator for Tea Party Patriots, which describes itself as the nation's largest tea party organization. "President Obama must also apologize for his administration ignoring repeated complaints by these broad grassroots organizations of harassment by the IRS in 2012, and make concrete and transparent steps today to ensure this never happens again."

Scrutiny of tea partiers is part of a broader pattern of government harassment, said John W. Whitehead, president of the Rutherford Institute, a civil liberties group based in Albemarle County.

“Basically, anybody they think disagrees with the government can be investigated,” Whitehead said.

He cited investigations of John Lennon and Martin Luther King Jr.

“In America, we have the First Amendment,” Whitehead said. “We can tell people to stick it if we want, but you get in trouble these days, you’ll be investigated.”