II. Executive Summary
In February 2012, the Committee on Oversight and Government Reform began investigating allegations that the Internal Revenue Service inappropriately scrutinized certain applicants seeking tax-exempt status. Section 501(c)(4) of the Internal Revenue Code permits incorporation of organizations that meet certain criteria and focus on advancing “social welfare” goals.
With a 501(c)(4) designation, such organizations are not subject to federal income tax. Donations to these organizations are not tax deductible. Consistent with the Constitutionally protected right to free speech, these organizations – commonly referred to as “501(c)(4)s” – may engage in campaign-related activities provided that these activities do not comprise a majority of the organizations’ efforts.
On May 12, 2013, the Treasury Inspector General for Tax Administration (TIGTA) released a report that found that the Exempt Organizations (EO) division of the IRS inappropriately targeted “Tea Party” and other conservative applicants for tax-exempt status and subjected them to heightened scrutiny.
This additional scrutiny resulted in extended delays that, in most cases, sidelined applicants during the 2012 election cycle, in spite of their Constitutional right to participate. Meanwhile, the majority of liberal and left-leaning 501(c)(4) applicants won approval.
Documents and information obtained by the Committee since the release of the TIGTA report show that Lois G. Lerner, the now-retired Director of IRS Exempt Organizations (EO), was extensively involved in targeting conservative-oriented tax-exempt applicants for inappropriate scrutiny. This report details her role in the targeting of conservative-oriented organizations, which would later result in some level of increased scrutiny of applicants from across the political spectrum. It also outlines her obstruction of the Committee’s investigation. Prior to joining the IRS, Lerner was the Associate General Counsel and Head of the Enforcement Office at the Federal Elections Commission (FEC).
During her tenure at the FEC, she also engaged in questionable tactics to target conservative grou ps seeking to expand their political involvement, often subjecting them to heightened scrutiny.
Her political ideology was evident to her FEC colleagues. She brazenly subjected Republican groups to r igorous investigations. Similar Democratic groups did not receive the same scrutiny.
The Committee’s investigation of Lerner’s role in the IRS’s targeting of tax-exempt organizations found that she led efforts to scrutinize conservative groups while working to
I.R.C. § 501(c)(4).
I.R.C. § 501(c)(4); Treas. Reg. § 1.501(c)(4)-1(a)(2).
(May 14, 2013).
IRS Approved Liberal Groups while Tea Party in Limbo
, USA Today, May 15, 2013.
Lois Lerner at the FEC
(May 23, 2013) [hereinafter
Lois Lerner at the FEC
; Rebekah Metzler,
Lois Lerner: Career Gov’t Employee Under Fire
. (May 30, 2013),
http://www.usnews.com/news/articles/2013/05/30/lois-lerner-career-government-employee-under-fire (last accessed Jan. 14, 2014).