MoJo Author Feeds: Andy Kroll | Mother Jones

Former IRS Chief: "I Certainly Am Not Personally Responsible" for Tea Party Scandal

Andy Kroll — Tue, 21 May 2013 21:00:49 +0000

Former IRS Commissioner Douglas Shulman, a George W. Bush appointee who ran the tax agency when low-level employees wrongly singled out conservative groups for special scrutiny, testified on Tuesday before Congress for the first time since the scandal erupted on May 10. Senators hoping for new revelations or a mea culpa from Shulman, however, were left wanting. He said little about why IRS staffers targeted tea party groups and others for some 18 months, and he repeatedly downplayed his own role.

But one thing was clear from the hearing: The fallout from the IRS' tea party debacle isn't over, and its implications may spill over into campaign finance rules. J. Russell George, the Treasury Department inspector general who investigated the IRS' actions, said his office will be auditing how the IRS oversees politically active nonprofit groups and presumably how the agency determines which nonprofits are too political. That's potentially big news for the money-in-politics world: Nonprofits spent hundreds of millions of dollars during the 2012 campaign, and as the IRS scandal has further revealed, the agency's process for determining how much politicking by a group runs afoul of regulations is vague and confusing.

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White House Learned of IRS Tea Party Probe Early—But Didn't Tell Obama

Andy Kroll — Tue, 21 May 2013 14:23:51 +0000

President Obama's chief of staff and the White House's top lawyer got wind of an inspector general's investigation into the IRS' singling out of tea partiers and conservative groups several weeks before the report went public. But those officials, according to press secretary Jay Carney, did not tell Obama. The president says he learned about the IRS' screw-up only after an agency director apologized on Friday, May 10, for employees having targeted conservative groups—an apology that went viral.

Carney told reporters Monday it was "appropriate" that Obama wasn't told of the damning IG report beforehand. And the president, he said, wasn't angry to not have been given early notice. "He believes it's entirely appropriate that, you know, some matters are not appropriate to convey to him and this is one of them," Carney said.

As we've reported, a Treasury Department inspector general, at the behest of angry members of Congress, spent nine months probing whether IRS staffers targeted tea party groups and other right-leaning conservative outfits who had applied for tax-exempt status under the 501(c)(4) section of the tax code. Although staffers did in fact zero in on conservative groups, the IG's report concluded that political bias did not play a role. Instead, staffers used "inappropriate criteria"—catchwords such as "tea party," "patriot," or "9/12 Project" (the latter a creation of conservative talk show host Glenn Beck)—to look for groups that might've been too involved in politics. (Groups that file their taxes under 501(c)(4) can dabble in politics, but it can't be their "primary activity.") IRS employees got away with this due to "insufficient oversight" by the higher-ups in Washington, the report found.

Testifying before Congress last week, Steven Miller, the acting IRS commissioner who will soon resign as a result of the agency's tea party debacle, echoed the IG's findings. He said IRS employees made "foolish mistakes" and that the agency's behavior was "obnoxious." But those employees did not have a grudge against conservative groups. Their errors, Miller said, "were made by people trying to be more efficient in their workload selection."

"What did they know" and "when did they know it" are two big questions looming over the IRS scandal. Here's what we know right now: Almost a month before IG's report came out last Tuesday, a staffer in the office of White House counsel Kathryn Ruemmler learned of the report. Ruemmler herself was briefed on April 24. Soon after, she informed Denis McDonough, Obama's chief of staff. Carney said the president was not told of the investigation because there was nothing to be done about it. Also the White House did not want to appear to be interfering with an inspector general's report on such a sensitive issue. There is no evidence yet that Obama or his top aides knew about the investigation before this year.

Here is the IG's report:

Billionaires Now Own American Politics

Andy Kroll — Mon, 20 May 2013 10:00:06 +0000

This story first appeared on the TomDispatch website.

Billionaires with an ax to grind, now is your time. Not since the days before a bumbling crew of would-be break-in artists set into motion the fabled Watergate scandal, leading to the first far-reaching restrictions on money in American politics, have you been so free to meddle. There is no limit to the amount of money you can give to elect your friends and allies to political office, to defeat those with whom you disagree, to shape or stunt or kill policy, and above all to influence the tone and content of political discussion in this country.

Today, politics is a rich man's game. Look no further than the 2012 elections and that season's biggest donor, 79-year-old casino mogul Sheldon Adelson. He and his wife, Miriam, shocked the political class by first giving $16.5 million in an effort to make Newt Gingrich the Republican presidential nominee. Once Gingrich exited the race, the Adelsons invested more than $30 million in electing Mitt Romney. They donated millions more to support GOP candidates running for the House and Senate, to block a pro-union measure in Michigan, and to bankroll the US Chamber of Commerce and other conservative stalwarts (which waged their own campaigns mostly to help Republican candidates for Congress). All told, the Adelsons donated $94 million during the 2012 cycle—nearly four times the previous record set by liberal financier George Soros. And that's only the money we know about. When you add in so-called dark money, one estimate puts their total giving at closer to $150 million.

It was not one of Adelson's better bets. Romney went down in flames; the Republicans failed to retake the Senate and conceded seats in the House; and the majority of candidates backed by Adelson-funded groups lost, too. But Adelson, who oozes chutzpah as only a gambling tycoon worth $26.5 billion could, is undeterred. Politics, he told the Wall Street Journal in his first post-election interview, is like poker: "I don't cry when I lose. There's always a new hand coming up." He said he could double his 2012 giving in future elections. "I'll spend that much and more," he said. "Let's cut any ambiguity."

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IRS Speaks Out: We Messed Up, But We Would've Scrutinized Tea Partiers Anyway

Andy Kroll — Fri, 17 May 2013 18:35:55 +0000

Finally, the IRS is giving a full accounting of how and why its staffers singled out tea partiers and other conservative groups seeking tax-exempt status. The quick version: We had the right idea but went about it all wrong.

On Friday morning, Steven Miller, the acting IRS commissioner set to resign due to the scandal, appeared before the House ways and means committee and testified that several IRS employees made "foolish mistakes" by using catchwords like "tea party" and "patriots" as they picked through hundreds of nonprofit applications from groups that might be involved in politics. Miller described his agency's behavior as "obnoxious." Yet he denied that the IRS vetters who handled all those applications for groups wanting 501(c)(4) nonprofit status—who were working out of a field office in Cincinnati—acted out of political bias. Instead, he said the agency's errors "were made by people trying to be more efficient in their workload selection."

Prior to Miller's testimony, the IRS itself took the unusual step of posting on its website 14 questions related to the tea party debacle and the agency's official response to each one. It's an interesting and useful document.

The IRS insists that its staffers, as Miller emphasized, were wrong to target groups with "tea party" or "patriots" in their name. However, the agency says that it would've zeroed in on tea partiers and other conservative groups anyway, as it looked for applicants that might be getting too involved in politics. They sought out politically-inclined groups because 501(c)(4) nonprofits are allowed to dabble in politics but cannot make it their "primary activity." But as they looked for groups that might be too political, they used inappropriate shortcuts.

"IRS employees had seen cases of organizations with the name Tea Party in which political activity was an issue that needed to be reviewed for compliance with legal requirements," the agency says. "Because of the increased inventory of applications, this inappropriate criterion was used as a shortcut to centralize similar cases." In other words, as a booming number of tea party outfits across the country were filing for tax-exempt status, the folks in charge of reviewing such applications—and making sure applicants were not engaged in so much political action that they would not qualify for this tax status—found it convenient to flag groups with "tea party," "patriot," and "9/12 Project" in their name.

The agency also says on its website that it found "no indication of political bias"—echoing the Treasury Department inspector general who investigated the tea party mess. The IRS staffers in Cincinnati didn't have a grudge for the tea party; they felt, it seems, that tea partiers were simply more prone to get involved in politics.

The agency also offered a few basics on how it handles nonprofit applications. All applications go through Cincinnati, where there are less than 200 people who directly handle those files. Because the agency saw an increase in 501(c)(4) applications from potentially politically active groups, staffers there pooled all those applications together and gave a few selected employees the job of scrutinizing those applications.

Some more interesting nuggets in the Q-and-A:

Not only has the IRS seen an uptick in the number of 501(c)(4) applications, it says the number of groups applying that could become involved in politics has risen as well.
The IRS admits it mistakenly caused "inappropriate delays" for groups applying for tax-exempt status, and made "over-expansive information requests" of the groups it singled out for extra scrutiny. The IRS blamed this on "ineffective processes."
In 2010 and 2011, as we've reported, IRS staffers specifically looked for groups with "tea party" or "patriots" in their name. However, of the nearly 300 groups with applications flagged by IRS staffers, the vast majority did not have either of those words in their name.

The IRS Q-and-A links to a list of almost 170 nonprofit groups given special scrutiny by IRS staffers but later approved for 501(c)(4) status. The entities on that list run the political gamut and include local tea party groups, statewide progressive organizations such as Progress Texas and Progress Missouri Inc., former Sen. Russ Feingold's Progressives United outfit, and issue-based organizations such as Californians Against Higher Health Costs and Homeless But Not Powerless.

Here is the full list from the IRS' website:

How Congress Helped Create the IRS-Tea Party Mess

Andy Kroll — Fri, 17 May 2013 10:00:11 +0000

One of the biggest revelations in the Treasury Department inspector general report on the unfolding IRS-tea party debacle is this: The IRS staffers vetting hundreds of tea party groups and conservative outfits seeking nonprofit status for potential political activity weren't themselves sure what they were looking for. And who bears the ultimate responsibility for this? The very folks who are getting so worked up about the alleged abuses and the dark-money explosion that made them possible: Congress.

The IRS-tea party scandal revolves around 501(c)(4) nonprofits, also known as "social welfare" groups. They can dabble in politics, but it can't be their "primary activity." In other words, they can't be a political party, campaign committee, or a super-PAC in disguise. Yet as the IG report makes clear, the tax law and IRS regulations are foggy on how much politics is too much politics. Not only are activists, lawyers, and political operatives drawing their own conclusions here; even IRS staffers don't know exactly where the line is drawn. The IRS rules on political nonprofits are like a Jackson Pollock painting: Five people can look at them and arrive at five different conclusions about what they're seeing.

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5 Things You Need to Know in the Inspector General's IRS Tea Party Scandal Report

Andy Kroll — Wed, 15 May 2013 19:22:14 +0000

On Tuesday evening, the Treasury Department released a long-awaited investigative report on why IRS staffers gave special scrutiny to the applications of thousands of right-leaning groups seeking tax-exempt nonprofit status. Treasury's inspector general for tax administration conducted the probe from June 2012 to February 2013 in response to pressure from Congress, and the 54-page report sheds light on the whole debacle.

Here are five key takeaways from the report.

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Ex-IRS Director: Tea Party Groups Deserved Scrutiny, But IRS Bungled the Job

Andy Kroll — Wed, 15 May 2013 10:00:08 +0000

Among those in attendance last Friday when IRS official Lois Lerner admitted that agency staffers had systematically singled out tea partiers and other conservative groups for special scrutiny was a lawyer named Marcus Owens. Lerner's admission was shocking, and nobody realized that more than Owens. That's because he served as director of the Exempt Organizations Division from 1990 to 2000, prior to Lerner holding the job.

More MoJo coverage of the IRS tea party scandal

Actually, Tea Party Groups Gave the IRS Lots of Good Reasons to Be Interested

The IRS Tea Party Scandal, Explained

How Congress Helped Create the IRS-Tea Party Mess

5 Things You Need to Know in the Inspector General's IRS Tea Party Scandal Report

IRS Speaks Out: We Messed Up, But We Would've Scrutinized Tea Partiers Anyway

Owens, who has worked on tax law issues in private and public practice for almost 40 years, including 25 years at the IRS, says he has been getting a lot of calls about the scandal. The way he sees it, he told me in an interview on Tuesday, is that the IRS was right to take a close look at conservative groups applying for tax-exempt status during the 2010 and 2012 election cycles. Particularly in 2010, hundreds of new conservative groups were springing up across the country. "I think that it would be unreasonable to expect the IRS to ignore that, and to simply approve these 501(c)(4) applications from politically active organizations as if they were Scout troops or Little Leagues," he said. "That doesn't mean they should be denied exemption or that the evaluation should be overboard or overly intrusive, but there should be special evaluation."

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Did the Acting IRS Commissioner Mislead Congress?

Andy Kroll — Tue, 14 May 2013 17:50:15 +0000

When Lois Lerner, a top IRS official, revealed last Friday that agency staffers had singled out conservative nonprofit groups for extra scrutiny over their potential political activities, she blamed low-level, "frontline" staffers in the agency's Cincinnati office, a hub of activity that handles tens of thousands of applications for tax-exempt status. The IRS later said no high-level officials were aware of these controversial actions.

More MoJo coverage of the IRS tea party scandal

Actually, Tea Party Groups Gave the IRS Lots of Good Reasons to Be Interested

The IRS Tea Party Scandal, Explained

How Congress Helped Create the IRS-Tea Party Mess

5 Things You Need to Know in the Inspector General's IRS Tea Party Scandal Report

IRS Speaks Out: We Messed Up, But We Would've Scrutinized Tea Partiers Anyway

As it turns out, the current acting IRS commissioner knew that staffers were flagging applications from certain conservative groups a year before Congress and the public found out about it. And members of Congress are steaming mad that the IRS was aware of the questionable practices of some of its staffers and didn't speak up about it. Several Republicans claim that Congress was misled by the IRS and its top brass about these actions.

The IRS said that current acting commissioner Steven Miller learned on May 3, 2012, that staffers had been picking out conservative groups for greater scrutiny than is typical. (Miller was deputy commissioner at the time.)

Yet Republican lawmakers say Miller neglected to tell Congress about the systematic singling out of conservative groups in subsequent interactions. Miller wrote two letters to Congress after his May 2012 briefing about how the IRS reviews applications for tax-exempt status, but did not mention the scrutiny of tea party groups. On July 25, 2012, Miller testified before the House ways and means oversight subcommittee on the subject of "organizational and compliance issues related to public charities." During questioning, Miller was asked about tea party groups being harassed, but not about tea partiers specifically. He did not mention having been briefed on the IRS' actions.

"It is almost inconceivable to imagine that top officials at the IRS knew conservative groups were being targeted but chose to willfully mislead the Committee's investigation into this practice," Rep. Dave Camp, chair of the ways and means committee, said in a statement.

An IRS spokesman did not respond to a request for comment.

Miller wrote in an op-ed for USA Today on Tuesday that the IRS' singling out of conservative groups showed "a lack of sensitivity to the implications of some of the decisions that were made." He added that sifting through applications for tax-exempt status was "factually complex, and it's challenging to separate out political issues from those involving education or social welfare." He did not say why he didn't tell Congress about the tea party scrutiny when he learned of it in May 2012.

Other lawmakers say they corresponded with the IRS on the tea party issue and can't understand why the agency didn't share all of what it knew. "I wrote to the IRS three times last year after hearing concerns that conservative groups were being targeted," Sen. Orrin Hatch (R-Utah), said in a statement Monday. "Yet it didn't occur to anyone at the IRS to let us know that this targeting was in fact happening? Knowing what we know now, the IRS was at best being far from forthcoming, or at worst, being deliberately dishonest with Congress. These are the facts and the questions we need answered."

They could be answered soon. On Friday, the House ways and means committee will hold a hearing on the IRS' tea party controversy. Other House and Senate committees have pledged to investigate the matter, too.

The IRS Tea Party Scandal, Explained

Andy Kroll — Tue, 14 May 2013 10:00:14 +0000

On Friday, May 10, a top official with the Internal Revenue Service dropped a bombshell. IRS staffers had singled out conservative organizations with "tea party" or "patriots" in their name that were seeking tax-exempt nonprofit status, subjecting them to extra scrutiny to see if they were abusing the tax law as it relates to political activity. They grilled these conservative groups about their members, their donors, their public statements, and who they employed. And there is no evidence yet that the IRS systemically treated non-conservative groups with the same level of attention.

More MoJo coverage of the IRS tea party scandal

Actually, Tea Party Groups Gave the IRS Lots of Good Reasons to Be Interested

The IRS Tea Party Scandal, Explained

How Congress Helped Create the IRS-Tea Party Mess

5 Things You Need to Know in the Inspector General's IRS Tea Party Scandal Report

IRS Speaks Out: We Messed Up, But We Would've Scrutinized Tea Partiers Anyway

Speaking to a group of tax lawyers, the IRS official, Lois Lerner, who oversees the agency's exempt organizations division, publicly apologized for the IRS's actions. Ever since, Democratic and Republican politicians have been falling over themselves to condemn the IRS. President Obama said that, if the allegations are true, "there's no place" for such behavior. Members of Congress have pledged to investigate any potential wrongdoing and grill the agency's leaders. "Heads need to roll" if the IRS unfairly targeted tea partiers and other conservatives, said Rep. Adam Schiff (D-Calif.).

Here's a primer on what you need to know about the IRS scandal.

How did this get started? It began back in March 2010, when the tea party movement was all the rage. According to a leaked timeline (PDF) from a draft report by the Treasury inspector general for tax administration, IRS staffers began flagging applications from groups with politically themed names like "We the People" and "Take Back the Country." Staffers also targeted groups whose names included the words "tea party" and "patriots." Those flagged applications were then sent to specialists for a more rigorous review than is typical.

The IRS gave extra scrutiny to 298 groups applying for tax-exempt status, the Washington Post reported. Seventy-two of those groups had "tea party" in their title, 13 had "patriots," and 11 had "9/12," shorthand for the 9/12 movement started by conservative TV host Glenn Beck.

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Electric Car Guru Elon Musk Ditches Mark Zuckerberg's FWD.us Group

Andy Kroll — Mon, 13 May 2013 14:31:53 +0000

Elon Musk, the CEO of Tesla Motors and the private space travel company SpaceX, has parted ways with FWD.us, the tech-centric political group that Facebook cofounder Mark Zuckerberg launched last month. So, too, has investor and entrepreneur David Sacks, who created the social network Yammer and financed the satiric 2005 movie Thank You for Smoking. The tech news website AllThingsD first reported the departures of Musk and Sacks, and their names have been removed from the list of nearly two-dozen "major contributors" to FWD.us.

Zuckerberg and Facebook "Causes" creator Joe Green founded FWD.us to lobby on behalf of Silicon Valley firms in Washington. They quickly earned the endorsements of a host of other tech superstars. The group—which, as a 501(c)(4) nonprofit, does not have to disclose its donors—has reportedly raised more than $25 million so far. The group chose the ongoing fight over comprehensive immigration reform as its first foray into Congressional politics, seeking to expand the number of visas available to engineers and other high-skilled workers that tech companies would like to recruit. By all accounts, FWD.us' message has gotten a warm reception on Capitol Hill.

But the group caused a political firestorm recently when it ran TV advertisements praising Sen. Mark Begich (D-Alaska) for supporting more oil drilling in the Arctic National Wildlife Reserve. Another ad depicted Sen. Lindsey Graham (R-S.C.) criticizing Obamacare and President Obama's refusal (so far) to green-light the controversial Keystone XL pipeline. FWD.us ran the ads to give Begich and Graham some political cover on immigration reform, the theory being that by touting the senators' conservative bona fides, they could give them the space to take a moderate position on an immigration reform bill. The Begich and Graham ads ran for a week and are no longer on the air. Liberal and environmental groups reacted furiously to FWD.us' conservative and anti-environmental message, protesting at Facebook's headquarters in Menlo Park, California. And last week, nine progressive groups, including MoveOn.org, Progressives United, the Sierra Club, and Daily Kos, pledged to pull down their existing paid Facebook ads or cancel future ad buys for at least two weeks.

It's not surprising that Musk would break with FWD.us. Tesla Motors builds high-end electric cars; its entire business model is built around a clean-tech economy. Musk also sits on the board of SolarCity, a company that delivers, installs, and maintains solar panels powering homes, businesses, and government offices.

Musk sent this statement to AllThingsD: "I agreed to support Fwd.us because there is a genuine need to reform immigration. However, this should not be done at the expense of other important causes. I have spent a lot of time fighting far larger lobbying organizations in DC and believe that the right way to win on a cause is to argue the merits of that cause. This statement may surprise some people, but my experience is that most (not all) politicians and their staffs want to do the right thing and eventually do."

FWD.us spokeswoman Kate Hansen emailed this statement to Mother Jones: "We recognize that not everyone will always agree with or be pleased by our strategy—and we're grateful for the continued support of our dedicated founders and major contributors. FWD.us remains totally committed to supporting a bipartisan policy agenda that will boost the knowledge economy, including comprehensive immigration reform."