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Fallout from IRS targeting Tea Party

By Kay Bell · Bankrate.com
Monday, May 13, 2013
Posted: 9 am ET

The Internal Revenue Service was wrong in its processing of tax-exempt organization applications to single out conservative groups for special attention.

But everyone needs to take a deep breath.

In case you were more focused on Mom this past Mother's Day weekend than on political and tax matters, here's a quick refresher.

The brouhaha began May 10 when Lois Lerner, director of exempt organizations in the agency's Tax Exempt and Government Entities Division, was speaking at a conference sponsored by the American Bar Association. As part of her remarks, Lerner apologized on behalf of the IRS for employees in her section who targeted groups based on political affiliation.

Specifically, these workers gave extra attention to groups seeking the special 501(c)(4) tax-exempt designation if they had the words "Tea Party" or "patriot" in their names.

Lerner said the questionable actions were by a handful of "low-level" IRS workers in the agency's Cincinnati office where applications were processed. The ill-advised actions reportedly were discovered in the summer of 2011. By the following January, changes such as removing explicit references to the Tea Party were made to the official criteria for flagging incoming tax-exempt applications.

Lerner said about 300 groups were inappropriately targeted for additional review, with around 75 picked because of terms used in their applications. However, said Lerner, the effort wasn't political. Rather, it was a way to short-cut through the crush of applications the IRS had received after the Citizens United court ruling approved the creation of "super PACs," or tax-exempt political action committees that can accept unlimited contributions.

Apology was just the beginning

If Lerner had hoped her apology would be the end of the matter, she hasn't been paying attention to the supercharged political atmosphere in Washington, D.C.

Her agency mea culpa appeared to be a calculated preemptive strike to soften the findings of a Treasury Inspector General for Tax Administration report on the issue expected to be released this week. Leaked portions of the report helped shift Republican calls for an investigation into the IRS actions and possible connections to the White House into high gear.

GOP lawmakers and conservative pundits made the rounds of the Sunday morning political programs, where they tossed about references to Richard Nixon, Watergate and impeachment like partisan footballs. And they have plenty of players to catch those Hail Marys and keep the issue moving down the political playing field.

The chair of the Ways and Means Oversight Subcommittee shot off a letter to the IRS demanding details. House and Senate Republican leaders are calling for hearings.

The White House also has expressed concern about the IRS actions. So have some Democrats and the American Civil Liberties Union.

Investigation, not political posturing, needed

They're all right in their varying degrees of outrage. The IRS must fully and publicly explain its employees' actions.

The agency is the federal office with which the most Americans have direct contact. And because it collects our most private financial data, every taxpayer needs to be assured and confident that the IRS conducts itself ethically and safeguards our information.

But we also all need to let this process play out, thoroughly and fairly.

Yes, it's easy to pick your side and dig in your heels, pointing to any action by the opposition as evidence of its penchant for breaking, or at least bending, the rules. Worse, many see anything that's the least bit askew as an example of a grand conspiracy reaching to the highest level of our government.

As I said earlier, take a deep, cleansing breath.

The contention by some Tea Party darlings that the IRS effort to stall their tax-exempt groups was a key reason for President Barack Obama's reelection is a stretch.

Conspiracies take a lot of cooperation between like-minded individuals. There are only two politically appointed IRS officials, the commissioner and the chief legal counsel. And Doug Shulman, the commissioner at the time of the IRS' bungling of ostensible political tax-exempt applications, got his job thanks to the previous Republican occupant of the White House.

Also, they require that a lot of people keep quiet. The ability to maintain secrets isn't something that Americans seem to be very good at doing, especially not in this Internet age and especially not in Washington, D.C.

So let's wait for the full report from the IRS watchdog office. And let's see what the hearings reveal about which groups, possibly some progressive and liberal ones, too, were targeted.

Until we get all the information, I'm going to go with the assessment of one of history's most famous world leaders and a renowned military mind.

"Never ascribe to malice that which is adequately explained by incompetence," said Napoleon Bonaparte.

Or in this case, don't go searching for a political scandal when the more likely reason is nonpartisan ineptitude.

***

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You also can follow me on Twitter @taxtweet.

Veteran contributing editor Kay Bell is the author of the book "The Truth About Paying Fewer Taxes" and a co-author of the e-book "Future Millionaires' Guidebook."

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3 Comments
Tim
May 15, 2013 at 8:14 am

My apologies for jumping to conclusions about the author being liberal. I see from her bio that she is actually employed by the IRS, so this is more than likely a case of "Don't bite the hand that feeds you."

Tim
May 15, 2013 at 8:10 am

This entire article serves no other purpose than to redirect attention away from the IRS singling out conservative groups applications. If it was a simple as rooting our super pacs then why weren't liberal group buzz words included as well? Let's let an investigation take place prior to making excuses shall we? I would love to see bank rate employ some journalists of the conservative variety at some point.