Lazenby: IRS Scandal Expands … Again

Documents released this week revealed that the targeting of groups seeking a 501(c)(4) designation from the Internal Revenue Service (IRS) was more widespread than previously revealed – and also continued up until this month, which is more than a year later than previously disclosed.

The criteria used by the IRS to evaluate these groups, also known as “Be on the Lookout” (or BOLO) lists, used language that targeted liberal organizations, not just conservative “Tea Party” groups. This revelation comes after the audit that began the scandal and launched Congressional investigations, as reported by Treasury Inspector General, J. Russell George, failed to mention any increased scrutiny of liberal groups, giving the impression that this improper targeting was politically one-sided.

Acting IRS commissioner Daniel I. Werfel said “there was a wide-ranging set of categories and cases that spanned a broad spectrum.”

The documents show that IRS officials were using “key word” searches in an attempt to find both liberal and conservative political groups that were trying to obtain favorable tax status by saying they were social welfare organizations, when in fact the majority of their activities were political in nature. To qualify for 501(c)(4) status, no more than 40 percent of an organization’s expenditures and time may be used on campaigns for candidates seeking public office. At least 60 percent of the group’s time and expenses must be dedicated to social welfare activities, which is what gains them the tax-exempt status.

While “Tea Party” and “Patriots” were some of the BOLO key words used, so were “Progressive” and “Occupy,” which are certainly not terms that politically conservative groups use to self-identify.

Also on the IRS watch list were medical marijuana groups, organizations promoting Obamacare, “Israel,” and applications dealing with “with disputed territories in the Middle East.”

One lookout list included instructions to single out for scrutiny groups where a “common thread is the word ‘progressive.’ Activities appear to lean toward a new political party. Activities are partisan and appear as anti-Republican.”

According to the IRS documents, groups centered around “occupied territory advocacy” also received enhanced scrutiny. “Applications may be inflammatory, advocate a one-sided point of view, and promotional materials may signify propaganda,” according to instructions that accompanied one lookout list.

This paints a much broader picture than the one presented to Congress and the American public in May when it was first reported. While it is now clear that both conservative and liberal groups were improperly targeted, the use of some lists of conservative key words for further screening was supposed to have stopped in May 2012 when IRS officials were first notified of the practice, according to the Inspector General’s report.

However, acting IRS Commissioner Werfel was informed on June 12, 2013, that other BOLO lists were still in use by the IRS unit that handles tax exempt applications, at which point he immediately suspended the practice.

In addressing the situation, Werfel’s report said:

“Several key leaders, including some in the commissioner’s office, failed in multiple capacities to meet their managerial responsibilities at various points during the course of these events. Most notably, there was insufficient action by these leaders to identify, prevent, address, and disclose the problematic situation that materialized with the review of applications for tax exempt status.”

Five IRS managers have been replaced, from the previous acting commissioner whom Werfel succeeded to the head of the unit based in Cincinnati, OH that handles applications for tax-exempt status.

The White House ordered the review by Werfel when he assumed the role of acting IRS commissioner in late May after George’s audit revealed targeting of some conservative groups seeking tax-exempt status. Why George failed to include the information on targeting of liberal groups turned up by Werfel is a question many in Congress and the American public want answered. In fact, Democrats on the House Ways and Means Committee are calling for a second hearing with Treasury Inspector General George to address the omissions.

In the meantime, the House Ways and Means Committee has scheduled a hearing for Thursday on Werfel’s report.

Amy Lazenby is the associate opinion editor at FITSNews. She is a wife, mother of three and small business owner with her husband who splits her time between South Carolina and Georgia. Follow her on Twitter @Mrs_Laz or email her at amy@fitsnews.com.

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