Republicans Demand IRS End Targeting of Nonprofits

Republican legislators believe the IRS continues to screen applications for 501(c)(4) tax-exempt status based on the organizations’ name alone and are demanding an end to the practice.

In an August 12 letter  (opens in a new tab) to IRS Acting Commissioner Daniel Werfel, Ways and Means Committee Chairman Dave Camp (R-MI) and Oversight Subcommittee Chairman Charles Boustany Jr. (R-LA) said recent interviews with an IRS employee suggest that agency screeners still flag certain tax-exempt applications for secondary screening if they have “Tea Party” in their name.

The lawmakers demanded that Werfel immediately issue instructions to all IRS employees making it clear that applications for exempt status shouldn’t be subject to higher scrutiny based on the organization’s name or substantive beliefs.

“The [interview] transcript illustrates that there is remarkable similarity between the instructions given to screeners in 2010 and the direction IRS employees are currently receiving regarding the processing of applications bearing the name Tea Party,” Camp and Boustany wrote. “This revelation demonstrates a clear failure of the corrective action [Werfel] promised.”

Werfel, who has been at the helm of the IRS since May 22, was brought on shortly after a Treasury Inspector General for Tax Administration audit concluded that the agency used inappropriate criteria to target Tea Party and other conservative groups’ applications for tax-exempt status. He vowed to put in place new safeguards to make sure all applications for tax-exempt status are treated the same.

Werfel told Congress in June that there was insufficient action by IRS officials to identify, prevent, and address the mishandling of tax-exempt applications, but that he had found no evidence of intentional wrongdoing at the agency.

Separately, Boustany also called on the Government Accountability Office (GAO) to conduct a top-to-bottom assessment of how the IRS selects tax-exempt organizations for examination.

In a letter  (opens in a new tab) sent to the agency last week, Boustany asked GAO to review the standards the IRS has established for exempt organizations’ audit selection and whether the criteria are impartial and objective, as well as the IRS’s controls for ensuring that its standards for examination are plainly known to staff and carried out in practice by field agents.

“It is imperative that sunshine be brought to bear on the policies and practices the IRS uses in its Exempt Organizations (EO) examinations unit,” Boustany wrote.

President Obama announced earlier this month  (opens in a new tab) that he intends to nominate John Koskinen as IRS commissioner. Koskinen worked at the government-controlled mortgage group Freddie Mac after the organization came under fire for lending practices during the 2008 financial crisis. Koskinen will need to be confirmed by the Senate when Congress returns from the August recess.

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