Diagnosis for Democracy
Insights into the State of Our Union
A Blog by Rob Tenery, MD

August 11, 2014: A 'Fox' in the IRS's Henhouse

By Rob Tenery, MD on August 11, 2014

When President Nixon waved goodbye to his staff on the steps of the Marine One helicopter that would carry him off the White House lawn for the final time, it was the culmination of the Watergate scandal. A break-in at the Democratic National Committee headquarters, orchestrated by individuals in the Nixon administration (G. Gordon Liddy, Jeb Magruder, John Mitchell, E. Howard Hunt, John Dean and James McCord), and the attempted cover-up by the President and his staff that resulted in the President’s resignation from office, rather than face almost certain impeachment. One piece of evidence that was central to the case against the President was an 181/2minute gap in a tape recording from the Oval Office, allegedly between Nixon and his Chief of Staff H. R. Haldeman. According to the President’s secretary, Rose Mary Woods, she made ‘a terrible mistake’ during her transcription, resulting in the gap in the recording. It wasn’t what was in the recording, but what was not, that raised the country’s suspicion that Nixon was complicit in the operation and the cover-up--- a level of distrust and doubt that ultimately forced him out of office.

In 2013, the Internal Revenue Service (IRS) made public that it had targeted ‘selected’ political action groups applying for tax-exempt status between 2010 and 2012 for ‘intensive’ scrutiny, based on their names or political themes. Appearing before the Congressional House Ways and Means Committee, acting IRS commissioner, Danny Werfel, testified that IRS officials inappropriately flagged progressive groups seeking tax-exempt status, in addition to tea party and conservative groups.

In a letter to Representative Sandy Levin, the top Democrat on the Ways and Means Committee, from J. Russell George, the Treasury inspector general for tax administration (TIGTA), George revealed that there were 298 political groups brought up for a closer review between May 2010 and May 2012. Of the six that had the words progress or progressive in their name, one-third were singled out for further scrutiny. He continued by pointing out “in comparison, our audit found that 100% of the tax-exempt applications with Tea Party, Patriots, or 9/12 in their names were processed during that timeframe.”1

The impetus for this investigation appeared to have had its roots when the U.S. Supreme Court handed down a ruling in Citizens United v. Federal Election Commission on January 21, 2010. It overturned most previous restrictions on political campaign spending and permitted nearly unlimited and usually anonymous spending by corporations and other groups that often influenced election outcomes.

The New York Times reported: Almost all of the biggest players among third-party groups in terms of buying television time in House and Senate races in August, have been 501 (c) organizations, and their purchases have heavily favored Republicans…2

Shortly after the New York Times article was published, Senator Max Baucus, Democratic chair of the Senate Finance Committee, asked the IRS to look at nonprofit organizations’ compliance with IRS rules.

During the review period, the IRS did not deny any applications of organizations with Tea Party, patriots or 9/12 in their names, but only 4 were approved.  During about that same period, several dozen organizations whose name included progressive, progress, liberal or equality were approved. For many of the conservative or Tea party leaning organizations, their applications were placed in an ‘Emerging Issues’ category by the IRS, which was flagged for additional questioning and months, even years, of further delay on their final disposition.

Steven Miller, the IRS’s acting commissioner, and Lois Lerner, director of the agency’s exempt-organization division have claimed that the IRS officials began the scrutiny of these politically leaning groups after they found a surge in the number of applications for status as 501(c) ‘social welfare’ organizations. Both officials claimed there was an increase from 1,500 applications in 2010 to almost 3,500 in 2012. Several points appear to contradict their assertion: First, Lerner originally attributed the increase in reviews to low-level workers in the Cincinnati IRS office, but those workers told Congressional investigators that they “were acting on orders from Washington.” Second, the increased reviews, starting March 2010, began before any significant increase in filings by these ‘social welfare’ groups could have been detected. Finally, the actual number of 501(c) applications was less in 2010 than in 2009.3

Chairman Darrell Issa and his fellow Congressmen on the Oversight and Government Reform Committee are trying to determine exactly who gave the orders for IRS agents to target these groups. Lois Lerner, who retired from the IRS in September 2013, has ended up at the center of focus in the IRS scrutiny scandal. “(Lerner) was in a powerful position and could have been acting alone,” quotes Issa. He further explains that Congressional documents suggest that she was under political pressure to ‘orchestrate’ the targeting.

Lerner admitted, at a legal conference the previous year, that the agency improperly targeted groups to added scrutiny only because they had the words tea party or patriots in their names. In May 2013, Lerner appeared before the House committee and invoked the Fifth Amendment when questioned, but not before giving an opening statement that she “broke no laws.”  In a follow up to the request by the committee for further testimony, Lerner’s attorney, William Taylor said his client would testify on Capitol Hill only if compelled by a federal court, or if given immunity for her testimony. Subsequently, Lerner was issued a Congressional subpoena to reappear before the committee, but, when she failed to comply, was found to be in contempt. Attorney General Eric Holder and the U.S. attorney for Washington will now be asked to refer Lerner to the Justice Department for disposition of her subpoena.

In the spring of 2014, IRS Commissioner, John Koskinen, promised to turn over Lerner’s emails to the committee for their investigation into her involvement. Then came the bombshell early this summer when Lerner’s attorney, revealed to the House Ways and Means Committee, that a ‘trove’ of Lerner’s emails, including those she sent to other federal agencies, were lost when her computer crashed in 2011. Lerner’s losses were not the only ones, when it was reported that six other employees in that department encountered similar problems. Although the extent of their losses was not reported, the revelation, which raises even more questions, was that one of those employees was Nicole Flax, who was chief of staff for the acting IRS commissioner at the time, and a frequent visitor to the White House and the Eisenhower Executive Office Building, The lost emails, reportedly covering from 2009 through mid-2011, closely coincided with the May 2010 to May 2012 increased IRS review period.

Tempers, on both sides, have risen to a fever pitch. The Republicans on the Congressional Oversight and Government Reform Committee feel the IRS Commissioner, John Koskinen, has not been forthcoming with Congress, because it took more than a year after the investigation had begun for the IRS to reveal the loss of Lerner’s emails. They also question Koskinen’s objectivity because it has been reported he donated nearly $100,000 to Democratic candidates and the party’s organizations over the last forty years.4

Representative Issa has made his reservations clear that someone (Lerner), with 30 years of working experience in the federal government, would not know to follow the guidelines that require emails to be printed. “We will probably never know what really happened since the IRS destroyed the hard drive,” he said.

According to Lerner in 2011, communication from the field director for the IRS headquarters’ Customer Support center, as well as, a forensic lab, confirmed that the lost data could not be recovered. “It does seem quite suspicious that these employees engaged in the controversial activities here had computer crashes, as opposed to there being a systemic crash,” said Daniel J. Metcalf, the founding director of the Justice Department’s Office of Information and Privacy. “And it is awfully suspicious that the agency has been unable to reconstruct, through a back-up system, what it says it lost.”

It is clear that Lois Lerner broke the law by not making hard copies of her emails as backup. The IRS leadership also broke the law when it failed to report Ms. Lerner’s broken hard drive and lost emails. “Any agency is required to notify us when they realize they have a problem that could be destruction or disposal,” reported David S. Ferriero, head of the National Archives and Records Administration, when he testified before the House Oversight and Government Reform Committee.

By their own admission, the IRS employees in the Cincinnati office overstepped their authority. The consequences of their illicit activities may have changed many outcomes of the 2012 elections, all the way up the line from the city, county and state house races, to the office of the Presidency itself. Impeding the voices in the electoral process should be held to the same standards as stuffing ballot boxes, or not counting votes, which are Federal crimes.5

It’s hard to imagine that the ‘intensive’ scrutiny and the ‘lost’ emails were not part of an orchestrated effort! There is a fox somewhere in the IRS henhouse, maybe several more, which gave the go-ahead for the agents in the Cincinnati office to proceed with the selective review process. And, like Watergate, possibly a skulk in the White House that was in on it too!





1. http://www.cbsnews.com/news/irs-progressive-groups-flagged-but-tea-party-bigger-target/

2. Luo, Michael; Strom, Stephanie, Donor names remain secret as rules shift, The New York Times, September 20, 2010.

3. http://philanthropy.com/article/IRS-Rationale-for-Tea-Party/1392771

4. http://www.newsmax.com/Newsfront/attorney-lois-lerner-missing-emails/2014/06/27/id/579767/

5. http://soundpolitics.com/archives/008248.html

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