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TIGTA Oral Statement for House Ways and Means Committee

TIGTA Oral Statement for House Ways and Means Committee

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Published by Ed O'Keefe
TIGTA chief J. Russell George's opening statement to the House Ways and Means Committee hearing on the IRS tax-exempt office investigation, delivered on May 17, 2013.
TIGTA chief J. Russell George's opening statement to the House Ways and Means Committee hearing on the IRS tax-exempt office investigation, delivered on May 17, 2013.

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Published by: Ed O'Keefe on May 17, 2013
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Oral Statement – House Ways and MeansMay 17, 2013
Chairman Camp, Ranking Member Levin, and Members of theCommittee, thank you for the opportunity to discuss our report concerningoversight by the Internal Revenue Service of groups that apply for tax-exempt status. As you are aware, the organization that I lead, the TreasuryInspector General for Tax Administration, protects the integrity of theFederal system of tax administration. Our audit was initiated based onconcerns expressed by Members of Congress because of taxpayerallegations that they were subject to unfair treatment by the IRS.Our report, issued earlier this week, addresses three allegations:First, that the IRS targeted specific groups applying for tax-exempt status;second, that they delayed the processing of these groups’ applications; andthird, that the IRS requested unnecessary information from the groups itsubjected to special scrutiny. All three allegations were substantiated.
First, the IRS used inappropriate criteria to target for review TeaParty and other organizations based on their name and policy positions. This practice started in 2010 and continued to evolve until June of 2011.As the
shows, the IRS was following inappropriate criteria. Let meread to you these criteria from a briefing held by the IRS’s ExemptOrganizations function in June of 2011: The criteria included the words Tea Party,” Patriots,or 9/12Project.” Another listed criterion was that the group’s issues includedgovernment spending, government debt or taxes. Yet another listedcriterion appeared as education of the public by advocacy or lobbying to,quote, “Make America a better place to live,” unquote. Finally, the criterionconsisted of any statements in the case file criticizing how the country isbeing run. The reason that these criteria were inappropriate is that theyDID NOT focus on tax-exempt laws and Treasury Regulations. Forexample, 501(C)(3) organizations may not engage in political campaignintervention. 501(C)(4) organizations can, but it must not be their primaryactivity. Political campaign intervention is action taken on behalf of, oragainst, a particular candidate running for office.
Although these criteria appeared in the IRS’s own documentation asof June 2011, IRS employees actually began selecting Tea Party and otherorganizations for review in early 2010. From May of 2010 through May of 2012, a team of IRS specialists in Cincinnati, Ohio, referred to as theDeterminations Unit, selected 298 cases for additional scrutiny. Accordingto our findings, the first time that executives from Washington, D.C. becameaware of the use of these criteria was June 2011, with some executives notbecoming aware of the criteria until April or May 2012. The IRS’s inappropriate criteria remained in effect for a total of 18months. After learning of the inappropriate criteria, the Director of ExemptOrganizations changed the criteria in July of 2011 to remove references toorganization names and policy positions. However, Cincinnati staff changed the criteria back again to target organizations with specific policypositions, but this time they did not include Tea Party or other namedorganizations. Finally, in May of 2012, after learning that the criteria hadagain been changed, the EO Director of Rulings and Agreements changedthe criteria to be consistent with laws and regulations. The organizations selected for review for significant politicalcampaign intervention, again 298 in all, experienced substantial delays inthe processing of their applications.

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