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Judicial Watch • Lerner Report1

Lerner Report1

Lerner Report1

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Category:IRS Scandal

Number of Pages:141

Date Created:March 10, 2014

Date Uploaded to the Library:July 29, 2014

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Table Contents Table Contents......................................................................................................................... 
II. Executive Summary ................................................................................................................... 
III. Background: IRS Targeting and Lois Lerners Involvement ................................................... Lerners False Statements the Committee ................................................................... The Events May 14, 2013 ............................................................................................ 
II. Lerners Failed Assertion her Fifth Amendment Privilege .................................................. Lerner Gave Voluntary Statement the May 22, 2013 Hearing ............................... Lerner Authenticated Document during the Hearing .................................................. Representative Gowdys Statement Regarding Lerners Waiver .................................. Committee Business Meeting Vote Whether Lerner Waived Her Fifth 
Amendment Privilege .................................................................................................... 
III. Lerners Testimony Critical the Committees Investigation ......................................... Lerners Post-Citizens United Rhetoric ......................................................................... Lerners Involvement the Delay and Scrutiny Tea Party Applicants .................... Multi-Tier Review System ...................................................................................... Lerners Briefing the Advocacy Cases .............................................................. The IRSs Internal Review ......................................................................................... Lerners Involvement Regulating 501(c)(4) groups off-plan ................................. IRS Discussions about Regulatory Reform ................................................................... Lerners Reckless Handling Section 6103 Information ................................................. The Aftermath the IRSs Scrutiny Tea Party Groups ........................................... Lerners Opinion Regarding Congressional Oversight .............................................. Tax Exempt Entities Divisions Contacts with TIGTA .............................................. Lerner Anticipates Issues with TIGTA Audit ............................................................ Lerner Contemplates Retirement ................................................................................ The IRSs Plans Make Application Denial Public ............................................ Lerners Role Downplaying the IRSs Scrutiny Tea Party Applications .............. Lerners Management Style ........................................................................................... Lerners Use Unofficial E-mail ................................................................................. 
IV. Conclusion ..............................................................................................................................

II. Executive Summary February 2012, the Committee Oversight and Government Reform began 
investigating allegations that the Internal Revenue Service inappropriately scrutinized certain 
applicants seeking tax-exempt status. Section 501(c)(4) the Internal Revenue Code permits 
incorporation organizations that meet certain criteria and focus advancing social welfare 
goals.1 With 501(c)(4) designation, such organizations are not subject federal income tax. 
Donations these organizations are not tax deductible. Consistent with the Constitutionally 
protected right free speech, these organizations  commonly referred 501(c)(4)s  may 
engage campaign-related activities provided that these activities not comprise majority 
the organizations efforts.2 I.R.C.  501(c)(4). I.R.C.  501(c)(4); Treas. Reg.  1.501(c)(4)-1(a)(2). TREASURY INSPECTOR GEN. FOR TAX ADMIN., INAPPROPRIATE CRITERIA WERE USED IDENTIFY TAX-EXEMPT 
APPLICATIONS FOR REVIEW (May 14, 2013). Gregory Korte, IRS Approved Liberal Groups while Tea Party Limbo, USA Today, May 15, 2013. Eliana Johnson, Lois Lerner the FEC, NATL REVIEW (May 23, 2013) [hereinafter Lois Lerner the FEC]. Id. Id.; Rebekah Metzler, Lois Lerner: Career Govt Employee Under Fire, U.S. NEWS WORLD REP. (May 30, 
2013), available http://www.usnews.com/news/articles/2013/05/30/lois-lerner-career-government-employeeunder-
fire (last accessed Jan. 14, 2014). May 12, 2013, the Treasury Inspector General for Tax Administration (TIGTA) 
released report that found that the Exempt Organizations (EO) division the IRS 
inappropriately targeted Tea Party and other conservative applicants for tax-exempt status and 
subjected them heightened scrutiny.3 This additional scrutiny resulted extended delays that, most cases, sidelined applicants during the 2012 election cycle, spite their Constitutional 
right participate. Meanwhile, the majority liberal and left-leaning 501(c)(4) applicants won 
approval.4 

 

Documents and information obtained the Committee since the release the TIGTA 
report show that Lois Lerner, the now-retired Director IRS Exempt Organizations (EO), 
was extensively involved targeting conservative-oriented tax-exempt applicants for 
inappropriate scrutiny. This report details her role the targeting conservative-oriented 
organizations, which would later result some level increased scrutiny applicants from 
across the political spectrum. also outlines her obstruction the Committees investigation. 

 

 Prior joining the IRS, Lerner was the Associate General Counsel and Head the 
Enforcement Office the Federal Elections Commission (FEC).5 During her tenure the FEC, 
she also engaged questionable tactics target conservative groups seeking expand their 
political involvement, often subjecting them heightened scrutiny.6 Her political ideology was 
evident her FEC colleagues. She brazenly subjected Republican groups rigorous 
investigations. Similar Democratic groups did not receive the same scrutiny.7 

 

The Committees investigation Lerners role the IRSs targeting tax-exempt 
organizations found that she led efforts scrutinize conservative groups while working 


maintain veneer objective enforcement. Following the Supreme Courts 2010 decision 
Citizens United Federal Election Commission, the IRS faced pressure from voices the left heighten scrutiny applicants for tax-exempt status. IRS employees Cincinnati 
identified the first Tea Party applicants and promptly forwarded these applications IRS 
headquarters Washington, D.C. for further guidance. Officials Washington, D.C. directed 
IRS employees Cincinnati isolate Tea Party applicants even though the IRS had not 
developed process for approving their applications. 

 

While IRS employees were screening applications, documents show that Lerner and other 
senior officials contemplated concerns about the hugely influential Koch brothers, and that 
Lerner advised her IRS colleagues that her unit should project next year focusing 
existing organizations.8 Lerner even showed her recognition that such effort would approach 
dangerous ground and would have engineered not per political project.9 
Underscoring political bias against the lawful activity such groups, Lerner referenced the 
political pressure the IRS fix the problem 501(c)(4) groups engaging political 
speech event sponsored Duke Universitys Sanford School Public Policy.10 E-mail from Paul Streckfus Paul Streckfus (Sept. 15, 2010) (EO Tax Journal 2010-130); E-mail from Lois 
Lerner, IRS, Cheryl Chasin al., IRS (Sept. 15, 2010). [IRSR 191032-33]. E-mail from Lois Lerner, IRS, Cheryl Chasin al., IRS (Sept. 16, 2010). [IRSR 191030] John Sexton, Lois Lerner Discusses Political Pressure the IRS 2010, BREITBART.COM, Aug. 2013. Transcribed Interview Michael Seto, IRS, Wash., D.C., (July 11, 2013). E-mail from Lois Lerner, IRS, Michael Seto, IRS (Feb. 2011). [IRSR 161810-11] Justin Lowe, IRS, Increase (c)(3)/(c)(4) Advocacy Org. Applications (June 27, 2011). [IRSR 2735]; E-mail 
from Judith Kindell, IRS, Lois Lerner, IRS (July 18, 2012). [IRSR 179406] See, e.g., Transcribed interview Carter Hull, IRS, Wash., D.C. (June 14, 2013); Transcribed interview 
Elizabeth Hofacre, IRS, Wash., D.C. (May 31, 2013). 

 

Lerner not only proposed ways for the IRS scrutinize groups with 501(c)(4) status, but 
also helped implement and manage hurdles that hindered and delayed the approval groups 
applying for 501(c)(4) status. early 2011, Lerner directed the manager the IRSs 
Technical Unit subject Tea Party cases multi-tier review system.11 She characterized 
these Tea Party cases very dangerous, and believed that the Chief Counsels office should the review process.12 Lerner was extensively involved handling the Tea Party 
casesfrom directing the review process receiving periodic status updates.13 Other IRS 
employees would later testify that the level scrutiny Lerner ordered for the Tea Party cases 
was unprecedented.14 

 

Eventually, Lerner became uncomfortable with the burgeoning number conservative 
organizations facing immensely heightened scrutiny from purportedly apolitical agency. 
Consistent with her past concerns that scrutiny could not per political, she ordered the 
implementation new screening method. Without doing anything inform applicants that 
they had been subject inappropriate treatment, this sleight hand added level deniability 
for the IRS that officials would eventually use dismiss accusations political motivations  
she broadened the spectrum groups that would scrutinized going forward. 

 


 When Congress asked Lerner about shift criteria, she flatly denied along with 
allegations about disparate treatment.15 Even targeting continued, Lerner engaged 
surreptitious discussion about off-plan effort restrict the right existing 501(c)(4) 
applicants participate the political process through new regulations made outside 
established protocols for disclosing new regulatory action.16 E-mails obtained the Committee 
show she and other seemingly like-minded IRS employees even discussed how, aggrieved 
Tea Party applicant were file suit, the IRS might get the chance showcase the scrutiny had 
applied conservative applicants.17 IRS officials seemed envision potential lawsuit 
expedient vehicle for bypassing federal laws that protect the anonymity applicants denied tax 
exempt status.18 Lerner surmised that Tea Party groups would indeed opt for litigation because, her mind, they were itching for Constitutional challenge.19 Briefing IRS staff Committee staff (Feb. 24, 2012); see Letter from Darrell Issa Jim Jordan, Comm. 
Oversight Govt Reform, Lois Lerner, IRS (May 14, 2013). E-mail from Ruth Madrigal, Dept the Treasury, Victoria Judson al., IRS (June 14, 2012). [IRSR 305906] E-mail from Nancy Marks, IRS, Lois Lerner, Holly Paz, David Fish, IRS (Mar. 29, 2013). [IRSR 190611] Id. E-mail from Lois Lerner, IRS, Nancy Marks, Holly Paz, David Fish, IRS (Apr. 2013). [IRSR 190611] See, e.g., E-mail from Lois Lerner, IRS, Michelle Eldridge al., IRS (Apr. 23, 2013). [IRSR 196295]; E-mail 
from Nikole Flax, IRS, Lois Lerner, IRS (Apr. 23, 2013). [IRSR 189013] Not even smidgeon corruption: Obama downplays IRS, other scandals, FOX NEWS, Feb. 2014. 

 

 Through e-mails, documents, and the testimony other IRS officials, the Committee has 
learned great deal about Lois Lerners role the IRS targeting scandal since the Committee 
first issued subpoena for her testimony. She was keenly aware acute political pressure 
crack down conservative-leaning organizations. Not only did she seek convey her 
agreement with this sentiment publicly, she went far engage wholly inappropriate 
effort circumvent federal prohibitions order publicize her efforts crack down 
particular Tea Party applicant. She created unprecedented roadblocks for Tea Party 
organizations, worked surreptitiously advance new Obama Administration regulations that 
curtail the activities existing 501(c)(4) organizations  all the while attempting maintain 
appearance that her efforts did not appear, her own words, per political. 

 

 Lerners testimony remains critical the Committees investigation. E-mails dated 
shortly before the public disclosure the targeting scandal show Lerner engaging with higher 
ranking officials behind the scenes attempt spin the imminent release the TIGTA 
report.20 Documents and testimony provided the IRS point her the instigator the 
IRSs efforts crack down 501(c)(4) organizations and the singularly most relevant official the IRS targeting scandal. Her unwillingness testify deprives Congress the opportunity 
have her explain her conduct, hear her response personal criticisms levied her IRS 
coworkers, and provide vital context regarding the actions other IRS officials. recent 
interview, President Obama broadly asserted that there not even smidgeon corruption 
the IRS targeting scandal.21 this true, Lois Lerner should willing return Congress 
testify about her actions. The public needs full accounting what occurred and who was 
involved. Through its investigation, the Committee seeks ensure that government officials are 
never position abuse the public trust depriving Americans their Constitutional right participate our democracy, regardless their political beliefs. This the only way 
restore confidence the IRS. 


III. Background: IRS Targeting and Lois Lerners Involvement February 2012, the Committee received complaints from several congressional offices 
alleging that the IRS was delaying the approval conservative-oriented organizations for taxexempt 
status. February 17, 2012, Committee staff requested briefing from the IRS about 
this matter. February 24, 2012, Lerner and other IRS officials provided the Committee staff 
with informal briefing. The Committee continued receive complaints disparate 
treatment the IRS office, and the matter continued garner media attention.22 March 
27, 2012, the Oversight and Government Reform Committee sent Lerner joint letter requesting 
information about development letters that the IRS sent several applicants for tax-exempt status. response, Lerner participated briefing with Committee staff April 2012. She also 
sent two letters the Committee, dated April 26, 2012, and May 2012, response the 
Committees March 27, 2012 letter. Lerners responses largely focused rules, regulations, 
and IRS processes for evaluating applications for tax-exempt status. the course responding the Committees request for information, Lerner made several false statements, which are 
discussed below greater detail. See, e.g., Janie Lorber, IRS Oversight Reignites Tea Party Ire: Agencys Already Controversial Role Dispute 
After Questionnaires Sent Conservative Groups, ROLL CALL, Mar. 2012, available 
http://www.rollcall.com/issues/57_106/IRS-Oversight-Reignites-Tea-Party-Ire-212969-1.html; Susan Jones, IRS 
Accused Intimidation Campaign Against Tea Party Groups, CNSNEWS.COM, Mar. 2012, 
http://cnsnews.com/news/article/irs-accused-intimidation-campaign-against-tea-party-groups; Perry Chiaramonte, 
Numerous Tea Party Chapters Claim IRS Attempts Sabotage Nonprofit Status, FOX NEWS, Feb. 28, 2012, 
http://www.foxnews.com/politics/2012/02/28/numerous-tea-party-chapters-claim-irs-attempting-to-sabotage-nonprofit-
status/. Briefing IRS staff Committee staff (May 13, 2013); Treasury Inspector Gen. for Tax Admin., Inappropriate 
Criteria Were Used Identify Tax-Exempt Applications for Review (May 2013) (2013-10-053), available 
http://www.treasury.gov/tigta/auditreports/2013reports/201310053fr.pdf [hereinafter TIGTA Audit Rpt.]. Lerners False Statements the Committee 

 

During the February 24, 2012, briefing, Committee staff asked Lerner whether the 
criteria for evaluating tax-exempt applications had changed any point. Lerner responded that 
the criteria had not changed. fact, they had. According the Treasury Inspector General for 
Tax Administration (TIGTA), late June 2011, Lerner directed that the criteria used identify 
applications changed.23 This was the first time Lerner made false misleading 
statement during the Committees investigation. March 2012, the Committee requested that TIGTA begin investigating the IRS 
process for evaluating tax-exempt applications. Committee staff and TIGTA met March 
2012 discuss the scope TIGTAs investigation. TIGTAs investigation commenced 
immediately and proceeded concurrently with the Committees investigation. 

 

 During another briefing April 2012, Lerner told Committee staff that the 
information the IRS was requesting follow-up letters conservative-leaning groupswhich, some cases, included complete list donors and their respective contributionswas not out the ordinary. Moreover, April 26, 2012, Lerners first written response the 
Committees request for information, Lerner wrote that the follow-up letters conservative 
applicants were the ordinary course the application process obtain the information the 
IRS deems necessary make determination whether the organization meets the legal 
requirements for tax-exempt status. Letter from Lois Lerner, Director, Exempt Orgs., IRS, Hon. Darrell Issa, Chairman, Comm. Oversight Govt Reform (Apr. 26, 2012). Letter from Lois Lerner, Director, Exempt Orgs., IRS, Hon. Darrell Issa, Chairman, Comm. Oversight Govt Reform (May 2012). Id. Hearing the IRS Targeting Conservative Groups: Hearing before the Comm. Ways Means, 113th 
Cong. (2013) (question and answer with Rep. Nunes); Bernie Becker, Question that Revealed IRS Scandal was 
Planted, Chief Admits, THE HILL, May 17, 2013, available http://thehill.com/blogs/on-the-money/domestictaxes/
150878-question-that-revealed-irs-scandal-was-planted-chief-admits; Abby Phillip, IRS Planted Question 
About Tax Exempt Groups, ABC NEWS, May 17, 2013, http://abcnews.go.com/blogs/politics/2013/05/irs-plantedquestion-
about-tax-exempt-groups/. John McKinnon Corey Boles, IRS Apologizes for Scrutiny Conservative Groups, WALL ST. J., May 10, 
2013, available http://online.wsj.com/news/articles/SB10001424127887323744604578474983310370360; 
Jonathan Weisman, IRS Apologizes Tea Party Groups Over Audits Applications for Tax Exemption, N.Y. 
TIMES, May 10, 2013; Abram Brown, IRS, Tea Party: Sorry Targeted You Your Tax Status, FORBES, May 
10, 2013, available http://www.forbes.com/sites/abrambrown/2013/05/10/irs-to-tea-party-were-sorry-wetargeted-
your-taxes/. fact, the scope the information that requested from conservative groups was 
extraordinary. briefing May 13, 2013, IRS officials, including Nikole Flax, the IRS 
Commissioners Chief Staff, could not identify any other instance the agencys history 
which the IRS asked groups for complete list donors with corresponding amounts. These 
marked the second and third times Lerner made false misleading statement during the 
Committees investigation. May 2012, her second written response the Committee, Lerner justified the 
extraordinary requests for additional information from conservative applicants for tax-exempt 
status.25 Among other things, Lerner stated, the requests for information are not beyond the 
scope Form 1024 [the application for recognition under section 501(c)(4)].26 

 

According TIGTA, however, some point May 2012, the IRS identified seven 
types information, including requests for donor information, which had inappropriately 
requested from conservative groups. fact, according the TIGTA report, Lerner had received list these unprecedented questions April 25, 2012more than one week before she sent 
response letter the Committee defending the additional scrutiny applied certain 
applicants. Lerners statement about the information requests was the fourth time she 
made false misleading statement during the Committees investigation. 

 

During the May 10, 2013, American Bar Association (ABA) tax conference, Lerner 
revealed, through question she planted with audience member,27 that the IRS knew that 
certain conservative groups had fact been targeted for additional scrutiny.28 She blamed the 
inappropriate actions the IRS line people Cincinnati. She stated: our line people Cincinnati who handled the applications did what 
call centralization these cases. They centralized work these one 
particular group. However, these cases, the way they did the 
centralization was not fine. Instead referring the cases advocacy 
cases, they actually used case names this list. They used names like Tea 
Party Patriots and they selected cases simply because the applications 
had those names the title. That was wrong, that was absolutely 
incorrect, insensitive, and inappropriate  thats not how 
about selecting cases for further review. dont select for review 
because they have particular name.29 Rick Hasen, Transcript Lois Lerners Remarks Tax Meeting Sparking IRS Controversy, ELECTION LAW 
BLOG (May 11, 2013, 7:37AM) http://electionlawblog.org/?p=50160 (emphasis added). Hearing the Oversight Tax-Exempt Orgs.: Hearing before the Comm. Ways Means, Subcomm. 
Oversight, 113th Cong. (2013). TIGTA Audit Rpt., supra note 23. Id. Id. 12. Id. Id. 14. Id. 18. 

 

This revelation occurred two days after members the House Ways and Means 
Oversight Subcommittee May 2013, had asked Lerner for update the IRSs internal 
investigation into allegations improper targeting hearing.30 During the hearing, she 
declined answer and directed Members questionnaires the IRS website. Lerners failure disclose relevant information the House Ways and Means Committeeopting instead 
leak the damaging information during obscure conferencewas the first series 
attempts obstruct the congressional investigation into targeting conservative groups. The Events May 14, 2013 

 

 Three significant events occurred May 14, 2013. First, TIGTA released its final audit 
report, finding that the IRS used inappropriate criteria and politicized the process evaluate 
organizations for 501(c)(4) tax-exempt status.31 Specifically, TIGTA found that beginning 
early 2010, the IRS used inappropriate criteria target certain groups based their names and 
political positions.32 According the report, ineffective management allowed the 
development and use inappropriate criteria for more than months.33 The IRSs actions also 
resulted substantial delays processing certain applications.34 TIGTA found that the IRS 
delayed beginning work majority targeted cases for months.35 The IRS also sent 
follow-up requests for additional information targeted organizations. During its audit, TIGTA 
determined [these follow-up requests] unnecessary for (58 percent) 170 
organizations that received the requests.36 

 

Second, the Department Justice announced that had launched FBI investigation 
into potential criminal violations connection with the targeting conservative tax-exempt 


organizations. Transcript: Holder IRS, AP, Civil Liberties, Boston, WALL STREET BLOG (May 14, 2013, 4:51PM), 
http://blogs.wsj.com/washwire/2013/05/14/transcript-holder-on-irs-ap-civil-liberties-boston/; Rachel Weiner, Holder 
Has Ordered IRS Investigation, WASH. POST, May 14, 2013, available 
http://www.washingtonpost.com/blogs/post-politics/wp/2013/05/14/holder-has-ordered-irs-investigation/ 
[hereinafter Weiner]. Hearing the Federal Bureau Investigation: Hearing before the Comm. the Judiciary, 113th Cong. 
(2013) (question and answer with Rep. Jordan). Weiner, supra note 37. Letter from Hon. Darrell Issa, Chairman, Comm. Oversight Govt Reform, Hon. Jim Jordan, 
Chairman, Subcomm. Econ. Growth, Job Creation Reg. Affairs, Hon. James Comey, Director, Federal 
Bureau Investigation (Sept. 2013). Letter from Hon. Darrell Issa, Chairman, Comm. Oversight Govt Reform, Hon. Jim Jordan, 
Chairman, Subcomm. Econ. Growth, Job Creation Reg. Affairs, Hon. James Comey, Director, Federal 
Bureau Investigation (Dec. 2013). See id. Letter from Hon. Darrell Issa, Chairman, Comm. Oversight Govt Reform, Hon. Jim Jordan, 
Chairman, Subcomm. Econ. Growth, Job Creation, Regulatory Affairs, Lois Lerner, Director, Exempt 
Orgs., IRS (May 14, 2013). 

 

 Third, Chairman Issa and Chairman Jordan sent letter Lerner outlining each instance 
that she provided false misleading information the Committee. The letter also pointed out 
Lerners failure candid and forthright regarding the IRSs internal review and subsequent 
findings related targeting conservative-oriented organizations. The Chairmens letter 
stated: 

 

Moreover, despite repeated questions from the Committee over year ago 
and despite your intimate knowledge the situation, you failed inform 
the Committee IRSs plan, developed early 2010, single out 
conservative groups and how that plan changed over time. You also failed inform the Committee that IRS launched its own internal review this 
matter late March 2012, that the internal review was completed 
May 2012, finding significant problems the review process and 
substantial bias against conservative groups. point did you 
anyone else IRS inform Congress the results these findings.43 

 


The letter requested additional documents and communications between Lerner and her 
colleagues, and urged the IRS and Lerner cooperate with the Committees efforts uncover 
the extent the targeting conservative groups. Lerner did not cooperate. 

 

II. Lerners Failed Assertion her Fifth Amendment Privilege advance May 22, 2013 hearing regarding TIGTAs report, the Committee 
formally invited Lerner testify. Other witnesses invited appear were Neal Wolin, Deputy 
Treasury Secretary, Douglas Shulman, former IRS Commissioner, and Russell George, the 
Treasury Inspector General for Tax Administration. Wolin, Schulman, and George all agreed 
appear voluntarily. Lerners testimony was necessary understand the rationale for and extent the IRSs practice targeting certain tax-exempt groups for heightened scrutiny. then, 
was well known that Lerner had extensive knowledge the scheme target conservative 
groups. addition the fact that she was director the Exempt Organizations Division, the 
Committee believed, set forth above, that Lerner made numerous misrepresentations fact 
related the targeting program. The Committees hearing intended answer important 
questions and set the record straight about the IRSs handling tax-exempt applications. 

 

However, prior the hearing, Lerners attorney informed Committee staff that she would 
assert her Fifth Amendment privilege44a refusal appear before the Committee voluntarily 
answer questions. result, the Chairman issued subpoena May 17, 2013, compel her 
testimony the Committee hearing May 22, 2013. May 20, 2013, William Taylor III, 
representing Lerner, sent the Chairman letter advising that Lerner intended invoke her Fifth 
Amendment privilege against self incrimination.45 For this reason, Taylor requested that Lerner excused from appearing.46 May 21, 2013, the Chairman responded Taylors letter, 
informing him that her attendance the hearing was necessary due the possibility that 
[Lerner] will waive choose not assert the privilege least certain questions interest the Committee.47 The subpoena that compelled her appearance remained place.48 Letter from Mr. William Taylor, Partner, Zuckerman Spaeder LLP, Hon. Darrell Issa, Chairman, 
Comm. Oversight Govt Reform (May 20, 2013). Id. Id. Letter from Hon. Darrell Issa, Chairman, Comm. Oversight Govt Reform Mr. William Taylor, III, 
Zuckerman Spaeder, May 21, 2013. Id. Lerner Gave Voluntary Statement the May 22, 2013 Hearing May 22, 2013, Lerner appeared with the other invited witnesses. The events that 
followed are now well known. Rather than properly asserting her Fifth Amendment privilege, 
Lerner, the opinion the Committee, the House General Counsel, and many legal scholars, 
waived her privilege making voluntary statement innocence. Instead remaining silent 
and declining answer questions, with the exception stating her name, Lerner read lengthy 
statement professing her innocence: 


 

Good morning, Mr. Chairman and members the Committee. name Lois Lerner, and the Director Exempt Organizations the 
Internal Revenue Service. have been government employee for over years. initially practiced 
law the Department Justice and later the Federal Election 
Commission. 2001, became moved the IRS work the 
Exempt Organizations office, and 2006, was promoted the 
Director that office. May 14th, the Treasury inspector general released report finding that 
the Exempt Organizations field office Cincinnati, Ohio, used 
inappropriate criteria identify for further review applications for 
organizations that planned engage political activity which may mean 
that they did not qualify for tax exemption. that same day, the 
Department Justice launched investigation into the matters described the inspector generals report. addition, members this committee 
have accused providing false information when responded 
questions about the IRS processing applications for tax exemption. have not done anything wrong. have not broken any laws. have 
not violated any IRS rules regulations, and have not provided 
false information this any other congressional committee. 

 

And while would very much like answer the Committees questions 
today, Ive been advised counsel assert constitutional right 
not testify answer questions related the subject matter this 
hearing. After very careful consideration, have decided follow 
counsels advice and not testify answer any the questions today. 

 

Because asserting right not testify, know that some people will 
assume that Ive done something wrong. have not. One the basic 
functions the Fifth Amendment protect innocent individuals, and 
that the protection invoking today. Thank you.49 Hearing the IRS: Targeting Americans for Their Political Beliefs: Hearing before the Comm. Oversight Govt Reform, 113th Cong. (2013) (H. Rept. 113-33) (statement Lois Lerner, Director, Exempt Orgs., IRS] 
[hereinafter May 22, 2013 IRS Hearing] (emphasis added). Lerner Authenticated Document during the Hearing 

 

Prior Lerners statement, Ranking Member Elijah Cummings sought introduce 
into the record document containing Lerners responses questions posed TIGTA. After 


her statement and the request the Chairman, Lerner reviewed and authenticated the 
document offered into the record the Ranking Member. Id. (statement Lois Lerner, Director, Exempt Orgs., IRS). Id. Id. Id. Id. 

 

Chairman Issa: Ms. Lerner, earlier the ranking member made aware response have that purported come from you regards 
questions that the asked during his investigation. Can have you 
authenticate simply the questions and answers previously given the 
inspector general? 

 

Ms. Lerner: dont know what that is. would have look it. 

 

Chairman Issa: Okay. Would you please make available the 
witness? 

 

Ms. Lerner: This appears response. 

 

Chairman Issa: its your testimony that far your recollection, 
that your response? 

 

Ms. Lerner: Thats correct.51 

 

Next, the Chairman asked Lerner reconsider her position testifying and stated that 
believed she had waived her Fifth Amendment privilege giving opening statement and 
authenticating document.52 Lerner responded: will not answer any questions testify about 
the subject matter this Committees meeting.53 Representative Gowdys Statement Regarding Lerners Waiver 

 

After Lerner refused answer any questions, Representative Trey Gowdy sought recognition 
the hearing. stated: 

 

Mr. Issa, Mr. Cummings just said should run this like courtroom, and agree with him. She just testified. She just waived her Fifth Amendment 
right privilege. You dont get tell your side the story and then not subjected cross examination. Thats not the way works. She 
waived her right Fifth Amendment privilege issuing opening 
statement. She ought stay here and answer our questions.54 

 


Shortly after Representative Gowdys comments, Chairman Issa excused Lerner, reserving the 
option recall her later date. Chairman Issa stated that Lerner was excused subject 
recall after seek specific counsel the questions whether not the constitutional right 
the Fifth Amendment has been properly waived.55 Rather than adjourning the hearing May 
22, 2013, the Chairman recessed it, order reconvene later date after thorough analysis Lerners actions. Id. 24. Business Meeting, Comm. Oversight Govt Reform (June 28, 2013). Id. Id. Id. Id. (emphasis added) Letter from William Taylor, III, Zuckerman Spaeder LLP, Hon. Darrell Issa, Chairman, Comm. 
Oversight Govt Reform (May 30, 2013) [hereinafter May 30, 2013 Letter]. Committee Business Meeting Vote Whether Lerner Waived Her 
Fifth Amendment Privilege June 28, 2013, the Chairman convened business meeting allow the Committee 
vote whether Lerner waived her Fifth Amendment privilege. The Chairman made clear that recessed the May 22, 2013 hearing not make quick uninformed decision.56 
took more than five weeks review the circumstances, facts, and legal arguments related 
Lerners voluntary statements.57 The Chairman reviewed advice from the Office General 
Counsel the U.S. House Representatives, arguments presented Lerners counsel, and the 
relevant legal precedent.58 After much deliberation, determined that Lerner waived her 
constitutional privilege when she made voluntary opening statement that involved several 
specific denials various allegations.59 Chairman Issa stated: 

 

Having now considered the facts and arguments, believe Lois Lerner 
waived her Fifth Amendment privileges. She did when she chose 
make voluntary opening statement. Ms. Lerners opening statement 
referenced the Treasury report, and the Department Justice 
investigation, and the assertions she previously had provided sorry 
and the assertions that she had previously provided false information 
the committee. She made four specific denials. Those denials are the 
core the committees investigation this matter. She stated that she 
had not done anything wrong, not broken any laws, not violated any IRS 
rules regulations, and not provided false information this any other 
congressional committee regarding areas about which committee members 
would have liked ask her questions. Indeed, committee members are 
still interested hearing from her. Her statement covers almost the entire 
range questions wanted ask when the hearing began May 22.60 

 

 Lerners counsel disagreed with the Chairmans assessment that his client waived her 
constitutional privilege.61 letter dated May 30, 2013, Lerners counsel argued that she had 


not waived the privilege. Id. Id. 256 F.2d 654, 656 (8th Cir. 1958). Id. 661. May 30, 2013 Letter, supra note 61. 142 Supp. 667-669 (D.D.C. 1956). Id. 671-72. 198 F.2d 200, 202 (2d Cir. 1952). Id. 202-03. U.S. CONST., amend. See Brown United States, 356 U.S. 148 (1958). Mitchell United States, 526 U.S. 314, 321 (1999) witness may not pick and choose what aspects 
particular subject discuss without casting doubt the trustworthiness the statements and diminishing the 
integrity the factual inquiry.). Id. Brown, 356 U.S. 154-55. 

 

Lerners lawyer further argued that the law different for witnesses who proclaim 
their innocence before congressional committee.66 United States Haag, witness 
subpoenaed appear before Senate committee investigating links the Communist Party 
testified that she had never engaged espionage, but invoked her Fifth Amendment privilege declining answer questions related her alleged involvement with the Communist Party.67 
The U.S. District Court for the District Columbia held that the witness did not waive her Fifth 
Amendment privilege.68 United States Costello, witness subpoenaed appear before 
Senate committee investigating his involvement major crime syndicate testified that had 
always upheld the Constitution and the laws and provided testimony his assets, but invoked 
his Fifth Amendment privilege declining answer questions related his net worth and 
indebtedness.69 The U.S. Court Appeals for the Second Circuit held that the witness did not 
waive his constitutional privilege.70 

 

The cases cited Lerners lawyer not apply the facts this matter. The Fifth 
Amendment provides that [n]o person shall compelled any criminal case 
witness against himself.71 choosing give opening statement, Lerner cannot then claim 
the Fifth Amendment privilege avoid answering questions the subject matter contained 
that statement.72 well established that witness may not testify voluntarily about subject 
and then invoke the privilege against self-incrimination when questioned about the details.73 
such case, [t]he privilege waived for the matters which the witness testifies. .74 

 

Furthermore, witness may waive the privilege voluntarily giving exculpatory 
testimony. Brown United States, for example, the Supreme Court held that denial any 
activities that might provide basis for prosecution waived the privilege.75 The Court 


analogized the situation one which criminal defendant takes the stand and testifies his 
own behalf, and then attempts invoke the Fifth Amendment cross-examination. Id. Business Meeting, Comm. Oversight Govt Reform (June 28, 2013). Id. 65-66. Letter from Hon. Darrell Issa, Chairman, Comm. Oversight Govt Reform William Taylor III, 
Zuckerman Spaeder LLP (Feb. 25, 2014). Id. 

 

Even though the Committees subpoena compelled her appear the hearing, Lerner 
made entirely voluntary statement. She denied breaking any laws, she denied breaking any 
IRS rules, she denied providing false information Congressin fact, she denied any 
wrongdoing whatsoever. Then she refused answer questions posed the Committee 
Members and exited the hearing. the morning June 28, 2013, the Committee convened business meeting 
consider resolution finding that Lois Lerner waived her Fifth Amendment privilege against 
self-incrimination when she made voluntary opening statement the Committees May 22, 
2013, hearing entitled The IRS: Targeting Americans for Their Political Beliefs.77 After 
lengthy debate, the Committee approved the resolution vote ayes nays.78 Lois Lerner Continues Defy the Committees Subpoena 

 

Following the Committees resolution that Lerner waived her Fifth Amendment 
privilege, Chairman Issa recalled her testify before the Committee. February 25, 2014, 
Chairman Issa sent letter Lerners attorney advising him that the May 22, 2013 hearing 
would reconvene March 2014.79 The letter also advised that the subpoena that compelled 
Lerner appear May 22, 2013 remained effect.80 

 

Because the possibility that she would choose answer some all the 
Committees questions, Chairman Issa required Lerner appear person March 2014. 
When the May 22, 2013 hearing, entitled The IRS: Targeting Americans for Their Political 
Beliefs, was reconvened, Chairman Issa noted that the Committee might hold Lois Lerner 
contempt Congress she continued refuse answer questions, based the fact that the 
Committee had resolved that Lerner waived her Fifth Amendment privilege. 

 

Despite the fact that Lerner was compelled duly issued subpoena and had been 
warned Chairman Issa the possibility contempt proceedings, and despite the Committee 
having previously voted that she waived her Fifth Amendment privilege, Lerner continued 
assert her Fifth Amendment privilege, and refused answer any questions posed Members 
the Committee. Chairman Issa subsequently adjourned the hearing and excused Lerner from the 
hearing room. that point, was clear Lerner would not comply with the Committees 
subpoena for testimony. 

 


 Following Lerners appearance before the Committee March 2014, her lawyer 
revealed during press conference that she had sat for interview with Department Justice 
prosecutors and TIGTA staff within the past six months.81 According the lawyer, the 
interview was unconditional and not under oath, and prosecutors did not grant her immunity.82 
This interview weakens the credibility her assertion the Fifth Amendment privilege before 
the Committee. More broadly, calls into question the basis for the assertion the first place. John McKinnon, Former IRS Official Lerner Gave Interview DOJ, WALL ST. J., Mar. 2014, 
http://blogs.wsj.com/washwire/2014/03/06/former-irs-official-lerner-gave-interview-to-doj/. Id. 

 

 III. Lerners Testimony Critical the Committees Investigation 

 

Prior Lerners attempted assertion her Fifth Amendment privilege, the Committee 
believed her testimony would advance the investigation the targeting tax-exempt 
conservative-oriented organizations. The following facts supported the Committees assessment the probative value Lerners testimony: 

 

 Lerner was head the IRS Exempt Organizations division, where the targeting conservative groups occurred. She managed the two IRS divisions most 
involved with the targeting  the Determinations Unit Cincinnati and the 
Technical Unit Washington, D.C. 

 

 Lerner has not provided any testimony since the release TIGTAs audit. 
Committee staff have conducted transcribed interviews numerous IRS officials 
Cincinnati and Washington. Without testimony from Lois Lerner, however, the 
Committee will never able fully understand the IRSs actions. Lerner has 
unique, first-hand knowledge how and why the IRS decided scrutinize 
conservative applicants. 

 

 Acting Commissioner Daniel Werfel did not interview Lerner part his 
ongoing internal review. finding intentional wrongdoing associated with the 
targeting conservative groups, Werfel never spoke Lois Lerner. Furthermore, 
Werfel lacks the power require Lerner provide answers. 

 

 Lerners signature appears harassing letters the IRS sent targeted groups. part the development the cases, the IRS sent harassing letters the 
targeted organizations, asking intrusive questions consistent with guidance from 
senior IRS officials Washington. Letters sent under Lois Lerners signature 
included inappropriate questions, including requests for donor information. 

 

 Lerner appears have edited the TIGTA report. According documents 
provided the IRS, Lerner was the custodian draft version the TIGTA report 
that contained tracked changes and written edits that became part the final report. addition, many Lerners voluntary statements from May 22, 2013, have been refuted evidence obtained the Committee. Contrary her statement that she did not anything 
wrong, the Committee knows that Lerner was intrinsically involved the IRSs inappropriate 
treatment tax-exempt applicants. Contrary Lerners plea that she has not violated any IRS 
rules regulations, the Committee has learned that Lerner transmitted sensitive taxpayer 
information her non-official e-mail account breach IRS rules. Contrary Lerners 
statement that she has not provided false information this any other congressional 
committee, the Committee has confirmed that Lerner made four false and misleading statements 
about the IRSs screening criteria and information requests for tax-exempt applicants. the months following the May 22, 2013 hearing, and after the receipt additional 
documents from IRS, clear that Lerners testimony essential understanding the truth 
regarding the targeting certain groups. Subsequent Lois Lerners Fifth Amendment waiver 
during hearing before the Committee May 22, 2013, Committee staff learned through both 
additional transcribed interviews and review additional documents that she had greater 
involvement targeting tax-exempt organizations than was previously understood. Lerners Post-Citizens United Rhetoric 

 

After the Supreme Court decided the Citizens United Federal Election Commission 
case, holding that government restrictions corporations and associations expenditures 
political activities was unconstitutional,83 the IRS faced mounting pressure from the public 
heighten scrutiny applications for tax-exempt status. IRS officials Washington played 
key role the disparate treatment conservative groups. E-mails obtained the Committee 
show that senior-level IRS officials Washington, including Lerner, were well aware the 
pressure the agency faced, and actively sought scrutinize applications from certain 
conservative-leaning groups response public pressure. Citizens United Federal Election Comm., 558 U.S. 310 (2010). The White House, Briefing White House Press Secretary Robert Gibbs and PERAB Chief Economist Austan 
Goolsbee (Jan. 21, 2010). The White House, Weekly Address: President Obama Vows Continue Standing the Special Interest 
Behalf the American People (Jan. 23, 2010). the same day the Citizens United decision, White House Press Secretary Robert 
Gibbs warned that Americans should worried that special interest groups that have already 
clouded the legislative process are soon going get involved even more active way 
doing the same thing electing men and women serve Congress.84 January 23, 2010, 
President Obama proclaimed that the Citizens United ruling strikes our democracy itself and 
opens the floodgates for unlimited amount special interest money into our democracy.85 
Less than week later, the President publicly criticized the decision during his State the Union 
address. The President declared: 

 

With all due deference separation powers, last week the Supreme 
Court reversed century law that believe will open the floodgates for 
special interests  including foreign corporations spend without limit our elections. dont think American elections should bankrolled 
Americas most powerful interests, worse foreign entities. They 
should decided the American people. The White House, Remarks the President the State the Union Address (Jan. 27, 2010). The White House, Remarks the President the DISCLOSE ACT (July 26, 2010). The White House, Remarks the President DNC Finance Event Austin, Texas (Aug. 2010). The White House, Remarks the President Finance Reception for Congressman Sestak (Sept. 20, 2010). E-mail from Paul Streckfus Paul Streckfus (Sept. 15, 2010) (EO Tax Journal 2010-130) [IRSR 191032-33]. 

 

Over the next several months, the President continued his public tirade against the 
decision, so-called secret money politics, and the emergence conservative grassroots 
groups. July 2010 White House Rose Garden speech, the President proclaimed: 

 

Because the Supreme Courts decision earlier this year the Citizens 
United case, big corporations can buy millions dollars worth 
ads  and worst all, they dont even have reveal whos actually 
paying for the ads. These shadow groups are already forming and 
building war chests tens millions dollars influence the fall 
elections.87 

 

During August 2010 campaign event, the President declared: 

 

Right now all around this country there are groups with harmless-sounding 
names like Americans for Prosperity, who are running millions dollars ads against Democratic candidates all across the country. And they 
dont have say who exactly the Americans for Prosperity are. You 
dont know its foreign-controlled corporation. You dont know its big oil company, big bank. You dont know its insurance [sic] 
company that wants see some the provisions health reform 
repealed because its good for their bottom line, even its not good for 
the American people.88 

 

Similarly, while speaking September 2010 campaign event, the President stated: 

 

Right now, all across this country, special interests are running millions 
dollars attack ads against Democratic candidates. And the reason for 
this last years Supreme Court decision Citizens United, which 
basically says that special interests can gather millions dollars  they 
are now allowed spend much they want without limit, and they 
dont have ever reveal whos paying for these ads.89 

 

These public statements criticizing conservative-leaning organizations the aftermath 
the Supreme Courts Citizens United opinion affected how the IRS identified and evaluated 
applications. September 2010, Tax Journal published article critical certain taxexempt 
organizations which purportedly engaged political activity.90 The articlepublished 
several months after the Citizens United opinion and during the Presidents tirade against the Lerners Involvement the Delay and Scrutiny Tea Party Applicants 

 

 Lerner, along with several senior officials, subjected applications from conservative 
leaning groups heightened scrutiny. She established multi-tier review system, which 
resulted long delays for certain applications.130 Furthermore, according testimony from 
Carter Hull, tax law specialist who retired the summer 2013, the IRS still has not 
approved certain applications.131 

130 Transcribed Interview Michael Seto, IRS, Wash., D.C., (July 11, 2013). 

131 Transcribed Interview Carter Hull, IRS, Wash., D.C., (June 14, 2013). 

132 Email from Steven Grodnitzky, IRS, Ronald Shoemaker Cindy Thomas, IRS (Apr. 2010). [Muthert 

133 Transcribed Interview Michael Seto, IRS, Wash., D.C., (July 11, 2013). 

134 Id. 

135 E-mail from Lois Lerner, IRS, Michael Seto, IRS (Feb. 2011). [IRSR 161810-11] 

136 Id. 

137 Id. 

138 Transcribed Interview Carter Hull, IRS, 44-45 (June 14, 2013). 

139 Id. Multi-Tier Review System 

 

Lerner and her senior advisors closely monitored and actively assisted evaluating Tea 
Party cases. April 2010, Steve Grodnitzky, then-acting manager Technical Group 
Washington, directed subordinates prepare sensitive case reports for the Tea Party cases.132 
These reports summarized the status and progress the Tea Party test cases, and were 
eventually presented Lerner and her senior advisors. early 2011, Lerner directed Michael Seto, manager Technical, place the Tea 
Party cases through multi-tier review.133 testified that Lerner sent [him an] e-mail 
saying that when these cases need through multi-tier review and they will eventually have [Judy Kindell, Lerners senior technical advisor] and the Chief Counsels office.134 February 2011, Lerner sent e-mail her staff advising them that cases involving 
Tea Party applicants were very dangerous, and something Counsel and Judy Kindell need on.135 Further, Lerner explained that Cincy should probably NOT have these cases.136 
Holly Paz, Director the Office Rulings and Agreements, also wrote Lerner stating that [Carter Hull] reviews info from TPs [taxpayers] correspondence TPs etc. decisions 
are going out Cincy until all the way through the process with the and cases 
here.137 transcribed interview with Committee staff, Carter Hull testified that during the 
winter 2010-2011, Lerners senior advisor told him the Chief Counsels office would need 
review the Tea Party applications.138 This review process was unusual departure from 
standard procedure.139 told Committee staff that during his years with the IRS, never 


 

The briefing paper prepared for Lerner further stated that the applicant for 501(c)(4) 
status stated will conduct advocacy and political campaign intervention, but political 
campaign intervention will account for 20% less activities. proposed favorable letter has 
been sent Counsel for review.153 Although the applicant planned engage minimal 
campaign activities, the IRS did not immediately approve the application. Despite the fact that 
Hull recommended the application for approval, June 2013, the application was still 
pending.154 

153 Id. 

154 Transcribed Interview Carter Hull, IRS, Wash., D.C., (June 14, 2013). 

155 E-mail from Holly Paz, IRS, Janine Cook, IRS (July 19, 2011). [IRSR 14372-73] 

156 Transcribed Interview Carter Hull, IRS, Wash., D.C., 47-49 (June 14, 2013). 

157 Id. 50-51. 

158 Id. 

159 Id. 51-52. 

160 Id. 50-51. 

161 E-mail from Lois Lerner, IRS, Steven Miller, IRS (May 2012). [IRSR 198685] 

162 Transcribed interview Steven Miller, IRS, Wash., D.C., 32-33 (Nov. 13, 2013). 

163 Id. July 2011, Holly Paz wrote attorney the IRS Chief Counsels office expressing 
her reluctance approve the Tea Party applications and noting Lerners involvement handling 
the cases. She wrote: Lois would like discuss our planned approach for dealing with these 
cases. suspect will have approve the majority the applications.155 August 2011, the Chief Counsels office held meeting with Carter Hull, Lerners 
senior advisor, and other Washington officials discuss the test cases.156 For the next few 
months, however, these test cases were still pending. Later, the Chief Counsels office told Hull 
that the office required updated information evaluate the applications.157 The request for 
updated information was unusual since the applications had been up-to-date few months 
earlier.158 addition, the Chief Counsels office discussed the possibility creating template 
letter for all Tea Party applications, including those which had remained Cincinnati.159 Hull 
testified that the template letter plan was impractical since each application was different.160 The IRSs Internal Review 

 

Despite Lerners substantial involvement delaying the approval Tea Party 
applications, IRS leadership excluded Lerner from internal review allegations 
inappropriate treatment the Tea Party applications.161 Steve Miller, then-Deputy 
Commissioner, testified during transcribed interview that asked Nan Marks, veteran IRS 
official, conduct the review because wanted someone independent examine the 
allegations.162 Lerner contacted Miller, expressing her confusion and lack direction the 
IRSs review. She asked, What are your expectations who implementing the plan?163 Lerners Involvement Regulating 501(c)(4) groups off-plan 

 

According information available the Committee, the IRS and the Treasury 
Department considered regulating political speech  501(c)(4) social welfare organizations 
well before 2013.172 The IRS and Treasury Department worked these regulations secret 
without noticing its work the IRSs Priority Guidance Plan. Lois Lerner played role the 
this off-plan regulation  501(c)(4) organizations. 

172 See Letter from Darrell Issa Jim Jordan, Comm. Oversight Govt Reform, John Koskinen, IRS 
(Feb. 2014). 

173 E-mail from Ruth Madrigal, Dept the Treasury, Victoria Judson al., IRS (June 14, 2012). [IRSR 
305906] 

174 Id. June 2012, Ruth Madrigal the Treasury Departments Office Tax Policy wrote 
Lerner and other IRS leaders about potential  501(c)(4) regulations. She wrote: Dont know 
who your organization keeping tabs c4s, but since mentioned potentially addressing 
them (off-plan) 2013, Ive got radar and this seemed interesting.173 Madrigal 
forwarded short article about court decision with potentially major ramifications for 
politically active section 501(c)(4) organizations.174 transcribed interview with Committee staff, Madrigal discussed her e-mail. She 
explained that the Department worked with Lerner and her IRS colleagues develop the  
501(c)(4) regulation off-plan. She testified: And maam, you wrote, potentially addressing them. you 
know what you meant by, quote, potentially addressing them? Well, this time, would have gotten the request guidance general applicability relating (c)(4)s. And while cant 
dont know exactly what was mind the time wrote this, 
the them seems refer back the (c)(4)s. And the 
communications between our offices would have had with 
guidance general applicability. So, sitting here today, you take the phrase, potentially addressing 
them mean issuing guidance general applicability 
501(c)(4)s? dont know exactly what was head the time when wrote 
this, but the extent that office collaborates with the IRS, its guidance general applicability. And the recipients this email, Ms. Judson and Ms. Cook are 
the Chief Counsels Office, that correct? Thats correct. And Ms. Lerner and Ms. Marks are from the Commissioner side 
the IRS? the time this email, believe that Nan Marks was the 
Commissioners side, and Ms. Lerner would have been well, 
yes. those are the two entities involved rulemaking process the 
guidance process for tax exempt organizations, that right? Correct. 

 

*** What did the term off plan mean your email? Again, dont have recollection doing writing this email the time. cant say with certainty what was meant the time. Sitting here today, what you take the term off plan mean? Generally speaking, off plan would refer guidance that not the plan that mentioned there would refer the priority 
guidance plan. And off plan would not the priority 
guidance plan. And had you had discussions with the IRS about issuing guidance 501(c)(4)s that was not placed the priority guidance plan? 2012,  yes, 2012, there were conversations between 
office, Office Tax Policy, and the IRS regarding guidance 
relating qualifications for tax exemption under (c)(4). And this guidance was response requests from outside parties issue guidance? Yes. Generally speaking, our priority guidance plan process starts 
with  includes gathering suggestions from the public and 
evaluating suggestions from the public regarding guidance, 
potential guidance topics, and this point, the best 
recollection, had had requests guidance this topic.175 

175 Transcribed interview Ruth Madrigal, U.S. Dept the Treasury, Wash., D.C. (Feb. 2014). 

176 Transcribed interview Janine Cook, IRS, Wash., D.C. (Aug. 23, 2013). 

177 Transcribed interview Victoria Ann Judson, IRS, Wash., D.C. (Aug. 29, 2013). 

178 E-mail from Nikole Flax, IRS, Lois Lerner, Holly Paz, Andy Megosh, Nalee Park, Joseph Urban, IRS (July 
24, 2012). [IRSR 179666] 

179 E-mail from Nikole Flax, IRS, Lois Lerner, IRS (July 24, 2012). [IRSR 179666] 

180 Id. 

 

Similarly, IRS attorney Janine Cook explained transcribed interview how the IRS 
and Treasury Department develop regulation off-plan. She testified that its coined term, 
the term means the idea spending some resources working it, getting legal issues together, 
things like that, but not listing the published plan item are working. Thats what 
the term off plan means.176 separate transcribed interview, IRS Division Counsel Victoria 
Judson explained that the IRS develops regulations off-plan when seeks stop behavior 
that feel inappropriate under the tax law. She testified: also have items work that are off-plan, and there are reasons 
dont want solicit comments. For example, they might relate 
desire stop behavior that feel inappropriate under the tax law, 
might not want publicize that are working that before come 
out with the guidance.177 

 

 Information available the Committee indicates that Lerner played some role the 
IRSs and the Treasury Departments secret off-plan work regulate  501(c)(4) groups. 
Because the Committee has not obtained Lerners testimony, unclear the nature and 
extent her role this off-plan regulatory work. IRS Discussions about Regulatory Reform 2012, the IRS received letters from Members Congress and certain public interest 
groups about regulatory reform for 501(c)(4) groups. The letters asked the IRS change the 
regulations regarding how much political activity permissible. IRS officials were 
contemplating the possibility changing the level permissible political activity for 501(c)(4) 
groups, the press picked their discussions. After learning that the press was aware the 
discussions, Nikole Flax, the Chief Staff then-Acting Commissioner Steve Miller, 
instructed IRS officials that she wanted delay sending any responses, and that all response 
letters would require her approval.178 Flax alerted Lerner that the letters created ton issues 
including from Treasury and [the] timing [is] not ideal.179 response, Lerner wrote Flax, 
explaining that she thought all the attention was stupid.180 

 


information. 

187 U.S.C.  6103 (2012). 

188 Id. 

189 E-mail from Lois Lerner, IRS, Steven Miller, IRS (July 25, 2012). [IRSR 179767] 

190 E-mail from Lois Lerner, IRS, Richard Daly, Sarah Hall Ingram, Dawn Marx, Joseph Urban, Nancy Marks, 
Holly Paz, David Fish, IRS (June 25, 2012). [IRSR 178166] 

191 E-mail from Lois Lerner, IRS, Nancy Marks, Holly Paz, David Fish, IRS (Apr. 2013). [IRSR 190611] 

192 Id. 

193 E-mail from Steven Miller, IRS, Justin Lowe, Joseph Urban, Christine Mistr, Nikole Flax, Catherine Barre, 
William Norton, Virginia Richardson, Richard Daly, Lois Lerner, Holly Paz, IRS (July 25, 2012) [IRSR 179767] 

194 E-mail from Lois Lerner, IRS, Steven Miller, IRS (July 25, 2012). [IRSR 179767] The Aftermath the IRSs Scrutiny Tea Party Groups congressional committees and TIGTA began examine more closely the IRSs 
treatment applications from certain Tea Party groups, top officials within the agency were 
reluctant disclose information. After Steve Miller, then Acting Commissioner the IRS, 
testified House Committee Ways and Means hearing July 2012, Lerner stated email sense relief that the hearing was more boring than anticipated.189 

 

 When Lerner learned about TIGTAs audit regarding the Tax Exempt Entities Divisions 
treatment applications from certain groups, she accepted the fact that the Division would 
subject critical analysis from TIGTA officials.190 Despite TIGTA and congressional 
scrutiny, Lerners approach the applications did not change. Documents show that, Lerner, 
along with several other IRS officials, were somehow emboldened and believed was necessary make their efforts known publicly, albeit not necessarily truthful manner. Specifically, 
they contemplated ways make their denial 501(c)(4) groups application public 
knowledge.191 The officials contemplated using the court system so.192 Lerners Opinion Regarding Congressional Oversight July 2012, Lerner received e-mail from Steve Miller soon after testified 
House Ways and Means Committee hearing charitable organizations.193 Miller thanked 
Lerner and other IRS officials Washington for their assistance preparing for the hearing. 
response, Lerner conveyed her relief that the hearing was less interesting than could have 
been.194 Because the Committee has not been able speak with Lerner, uncertain what she 
meant this e-mail. 

 


The e-mails above show Lerner and her colleagues unnecessarily delayed TIGTAs audit. 
Rather than simply providing the documents and information requested TIGTA, Paz, who 
reported Lerner directly, instructed TIGTA through the Chief Counsels office for 
certain information. Lerner Anticipates Issues with TIGTA Audit 

 

 Lerner anticipated blowback from TIGTA over the disparate treatment certain 
applications for tax-exempt status. June 2012, Lerner received e-mail from Richard Daly, 
technical executive assistant the Tax Exempt and Government Entities Division 
Commissioner, informing her that TIGTA would investigating how the tax-exempt division 
handles applications from  501(c)(4) groups.200 

200 E-mail from Richard Daly, IRS, Sarah Hall Ingram, Lois Lerner, Dawn Marx, IRS (June 22, 2012). [IRSR 
178167]. Lerners Management Style 

 

 During transcribed interviews with Committee staff, several IRS officials testified that 
Lerner bad manager who unpredictable214 and emotional.215 October 22, 2013, 
during transcribed interview, Nikole Flax, the former IRS Acting Commissioners Chief 
Staff, discussed the July 2012 House Ways and Means Committee hearing tax-exempt 
issues.216 Steve Miller, then-Deputy Commissioner the IRS, testified the hearing. Lerner 
did not.217 Committee staff asked Flax why the IRS did not choose Lerner witness.218 Flax 
testified: 

214 Transcribed Interview Nikole Flax, IRS, 153 (Oct. 22, 2013). 

215 Id. 

216 Id. 

217 Id. 

218 Id. 

219 Id. (emphasis added). 

220 E-mail from Cindy Thomas Lois Lerner, al. (May 10, 2013). [IRSR 366782] 

221 Id. (emphasis added). 

222 Transcribed Interview Lucinda Thomas, IRS, 210 (June 28, 2013). And you said before that [Acting Commissioner Tax Exempt 
and Government Entities Joseph] Grant wasnt the best witness the hearing. Was there any discussion about having Ms. Lerner witness for that hearing? No. Why not? Lois unpredictable. Shes emotional. have trouble talking 
negative about someone. think terms hearing witness, she 
was not the ideal selection.219 

 

Further, during interview with Cindy Thomas, the IRS official charge the 
Cincinnati office, Thomas stated that when she became aware Lerners comments about the 
IRSs treatment Tea Party applications the ABA event, she was extremely upset. Thomas 
wrote Lerner e-mail May 10, 2013, with Low Level workers thrown under the Bus the 
subject line.220 Thomas excoriated Lerner, noting that through Lerners remarks, Cincinnati 
wasnt publicly thrown under the bus (but) instead was hit convoy Mack 
trucks.221 Thomas explained Lerners statements the event were derogatory lower level 
employees working determinations cases.222 She testified: And what was your reaction hearing the news? was really, really mad. Why? feel though Cincinnati employees and Determinations 
was basically thrown under bus and that the Washington 
office wasnt taking any responsibility for knowing about these 
applications, having been involved them and being the ones basically delay processing the cases. 

223 Id. (emphasis added). 

224 Id. 211. 

225 Id. 

226 Id. 210 (emphasis added). 

227 Id. 213. 

228 Id. 

229 Id. 

 

Although Thomas admitted that the Cincinnati office made mistakes handling taxexempt 
applications, she explained that IRS officials Washington were primarily responsible 
for the delay.224 She stated: [Y]es, there were mistakes made folks Cincinnati well 
[as] D.C. but the D.C. office the one who delayed the processing the cases.225 

 

While Thomas found Lerners reference the culpability lower level workers for the 
delay the applications during her talk the ABA event was upsetting and misguided, Thomas 
also stated part: Its not the first time that she has used derogatory comments about the 
employees working determination cases and she has done before.226 

 

Thomas testified that Lerners statements about lower level employees Cincinnati were 
just one example offensive remarks she often made other IRS employees. She explained 
that Lerner referred backwater before.227 Thomas also noted the impact Lerners 
comments employee morale. She stated part: [I]ts frustrating like how supposed 
keep them motivated when our so-called leader referring people that direction.228 
Thomas also stated: She also makes comments like, well, youre not lawyer.229 

 

Lerners comments reflect startling attitude toward her subordinates. the director 
the Exempt Organizations Division, she was powerful figure IRS headquarters 
Washington. evident from testimony that Lerner brazenly shifted blame lower level 
employees for delaying the Tea Party applications. Instead taking responsibility for the major 
role she played the delay, she found fault with others, diminishing employee morale the 
process. Lerners Use Unofficial E-mail the Committee has continued investigate Lerners involvement targeting Tea 
Party groups, Committee staff has also learned that she improperly used non-official e-mail 
account conduct official business. several occasions, Lerner sent documents related her 
official duties from her official IRS e-mail account msn.com e-mail account labeled Lois 
Home. 

 


Lerners use non-official e-mail account conduct official business not only 
implicates federal records requirements, but also frustrates congressional oversight obligations. 
Use non-official e-mail account raises the concern that official government e-mail archiving 
systems did not capture the records, defined the Federal Records Act. 

230 U.S.C.  3101. 

231 Lois Lerner the FEC, supra note 

232 Treasury Inspector Gen. for Tax Admin, Memo Contact (Apr. 2012) (memorandum contact with Lois 
Lerner). 

233 E-mail from Lois Lerner, IRS, Sharon Light, IRS (July 10, 2010). [IRS 179093] 

 

IV. Conclusion 

 

Since Lois Lerner first publicly acknowledged the IRSs inappropriate treatment 
conservative tax-exempt applicants during American Bar Association speech May 10, 
2013, substantial debate has ensued over the nature the IRS misconduct. While bureaucratic 
bumbling played undeniable role some delays and inappropriate treatment, questions have 
persisted. Could someone with political agenda under instructions  and sophisticated 
understanding the IRS cause partisan delay for organizations seeking promote social 
welfare and exercise their Constitutionally guaranteed First Amendment right participate 
the political process? 

 

From her days the Federal Election Commission, Lerners left-leaning politics were 
known and recognized.231 Even supposedly apolitical agency like the IRS, her views should 
not have been obstacle fair and impartial judgment that would impair her job performance. 
But amidst scandal which her agency deprived Americans their Constitutional rights, 
relevant question whether the actions she took her job improperly reflected her political 
beliefs. Congressional investigators found evidence that this occurred. 

 

Lerners views the Citizens United Supreme Court ruling, which struck down certain 
restrictions election-related activities, showed keen awareness arguments that the Courts 
decision would detrimental Democratic Party candidates. she explained her own 
words her agencys Inspector General: 

 

The Citizens United decision allows corporations spend freely 
elections. Last year, there was lot press 501(c)(4)s being used 
funnel money elections and the IRS was urged something about 
it.232 

 

When colleague sent her article about allegations that unknown conservative donors were 
influencing U.S. Senate races, she responded hopefully: Perhaps the FEC will save the day.233 

 

Evidence indicates Lerner and her Exempt Organizations unit took three pronged 
approach something about fix the problem nonprofit political speech: Scrutiny new applicants for tax-exempt status (which began Tea Party targeting); Plans scrutinize organizations, like those supported the Koch Brothers, that 
were already acting 501(c)(4) organizations; and [O]ff plan efforts write new rules cracking down political activity replace 
those that had been place since 1959. 

 

Even without her full testimony, and despite the fact that the IRS has still not turned over 
many her e-mails, political agenda crack down tax-exempt organizations comes into 
focus. Lerner believed the political participation tax-exempt organizations harmed 
Democratic candidates, she believed something needed done, and she directed action from 
her unit the IRS. Compounding the egregiousness the inappropriate actions, Lerners own 
e-mails showed recognition that she would need cautious would not per 
political project.234 She was involved off-plan effort write new regulations 
manner that intentionally sought undermine existing framework for transparency.235 

234 E-mail from Lois Lerner, IRS, Cheryl Chasin al., IRS (Sept. 16, 2010). [IRSR 191030] 

235 See E-mail from Ruth Madrigal, Dept the Treasury, Victoria Judson al., IRS (June 14, 2012). [IRSR 
305906] 

 

Most damning all, even when she found that the actions subordinates had not 
adhered standard that could defended not per political, instead immediately 
reporting this conduct victims and appropriate authorities, Lerner engaged efforts cover 
up. She falsely denied Congress that criteria for scrutiny had changed and that disparate 
treatment had occurred. The actions she took broaden scrutiny non-conservative applicants 
were consistent with efforts create plausible deniability for what had happened defense 
that the Administration and its most hardcore supporters have repeated once unified outrage 
eroded over one the most divisive controversies American politics today. 

 

 Bureaucratic bumbling and IRS employees who sincerely believed they were following 
the directions superiors did occur. Even when Lerner directed what employees would 
characterize unprecedented levels scrutiny for Tea Party cases, they did not attribute this 
direction partisan agenda. Ironically, the bureaucratic bumbling that seems have been 
behind many inappropriate requests for information from applicants and screening criterion 
that could never pass not per political may have had silver lining. Without it, Lois 
Lerners agenda scrutinize tax-exempt organizations that exercised their First Amendment 
rights might not have ever been exposed. 

 

The Committee continues offer Lois Lerner the opportunity testify. Many questions 
remain, including the identities others the IRS and elsewhere who may have known about 
key events and decisions she undertook. Americans, and particularly those Americans who 
faced mistreatment the hands the IRS, deserve the full documented truth that both Lois 
Lerner and the IRS have withheld from them. 


From: 
Sent: 
To: 
Subject: 
Ken, 
Rosenbaum Monice 
Thursday, September 30, 2010 10:18 
Griffin Kenneth 
FW: Tax Journal 2010-139 
You may already subscriber Mr. Streckfus's journal, but below his brief summary the 
Bar lunch meeting. hopes transcript will available soon. Monice 
From: paul streckfus 
Sent: Thursday, September 30,2010 11:07 
To: paul streckfus 
Subject: Tax Journal 2010-139 
fvom;fhe,Vei!v ofpcu.w St'v~ 
EdM:orJ ou.,yJlUitl, 
Email Update 2010-139 (Thursday, September 30,2010) 
Copyright Paul Streckfus 
Two events occurred yesterday about the same time. One was the release letter (reprinted below) the Chairman the Senate 
Finance Committee, Senator Max Baucus. The other was panel discussion titled "Political Activities Exempt Organizations This 
Election Cycle" sponsored the D.C. Bar, from which hope have transcript the near future. 
After reading Senator Baucus' letter and accompanying news release, sense that Senator Baucus should have been the D.C. 
Bar discussion since concerned that political campaigns and individuals are manipulating 501 (c)(4), (5), and (6) organizations 
advance their own political agenda, and wants the IRS look into this situation. the D.C. Bar discussion, Marc Owens Caplin Drysdale, Washington, explained that there little that the IRS can 
current, real-time basis regulate (c)(4)s for two reasons. First, new (c)(4) does not have apply for recognition exemption. 
Second, new (c)( formed this year would not have file FOlID 990 until next year the earliest and the IRS would probably not substantive review the tiled Form 990 until 2012 the earliest. then, Owens joked, the winners are office, and the losers 
are another career. the same time that the IRS can little regulate new (c)( )s, not eyen looking existing (c)( )s. According Owens, the 
IRS has little interest regulating exempt organizations beyond )(3 )s. The IRS has "effectively abandoned the field" time 
heightened political activity all exempt organizations, including )(3)s. Owens added that "we seem have haphazard IRS 
enforcement system now breaking down completely." This results cOlTosiYe effect the integrity exempt organizations 
general and stimulus evasion their responsibilities organizations and their tax advisors. 
Karl Sandstrom Perkins Coie, Washington, was equally negative. According Sandstrom, the IRS poor vehicle regulate 
political activity," that this not their focus interest. defense the IRS, did say Congress was also guilty foisting upon 
the IRS regulation political activity, using section 527 example. the same time, Sandstrom did not see active IRS 
answer current concerns. Section 501 )(4) organizations are just the current vehicle jour. (c)( 4)s are shut down, Sandstrom 
said many other vehicles remain. guess: doubt we'll see much Owens' and Sandstrom's views the IRS' report Senator Baucus and the Finance 
Committee. 
Senate Committee Finance News Release 
IRSR0000015430 Immediate Release 
September 29, 2010 
Contact: Scott Mulhauser/Erin Shields 
Baucus Calls IRS Investigate Use Tax-Exempt Groups for Political Activity 
Finance Chairman works ensure special interests don't use tax-exempt groups influence communities, spend secret 
donations 
Washington, Senate Finance Committee Chairman Max Baucus CD-Mont.) today sent letter IRS Commissioner Doug 
Shulman requesting investigation into the use tax-exempt groups for political adyocacy. Baucus asked for the investigation after 
recent media reports uncovered instances political activity nonprofit organizations secretly backed individuals advancing 
personal interests and organizations supporting political campaigns. Under the tax code, political campaign activity cannot the main 
purpose tax-exempt organization and limits exist political campaign activities which these organizations can participate. 
Tax-exempt organizations also cannot serve priYate interests. Baucus expressed serious concern that political groups are able take 
advantage tax-exempt organizations, these groups could curtail transparency America's elections because nonprofit organizations not have disclose any information regarding their donors. 
"Political campaigns and powerful individuals should not able use tax-exempt organizations political pawns serve 
their own special interests. The tax exemption given nonprofit organizations comes with responsibility serve the public 
interest and Congress has obligation exercise the vigorous oversight necessary ensure they do," said Baucus. "When 
political campaigns and individuals manipulate tax-exempt organizations advance their own political agenda, they are able raise and spend money without disclosing dime, deceive the public and manipulate the entire political system. Special 
interests hiding behind the cloak independent nonprofits threatens the transparency our democracy deserves and does 
disservice fair, honest and open elections." 
Baucus asked Shulman review major 501 (c)( 4), )(5) and (c)( organizations involved political campaign activity. asked the 
Commissioner determine these organizations are operating for the organization's intended tax exempt purpose, ensure that 
political activity not the organization's primary activity and determine they are acting conduits for major donors advancing 
their own private interests regarding legislation political campaigns, are providing major donors with excess benefits. Baucus 
instructed Shulman produce report for the Committee the agency's findings quickly possible. Baucus' full letter 
Commissioner Shulman follows here. 
September 28, 2010 
The Honorable Douglas Shulman 
Commissioner 
Internal Revenue Service 
1111 Constitution Avenue, N.W. 
Washington, 20224 
Via Electronic Transmission 
Dear Commissioner Shulman: 
The Senate Finance Committee has jurisdiction over revenue matters, and the Committee responsible for conducting oversight 
the administration the federal tax system, including matters involving tax-exempt organizations. The Committee has focused 
extensively over the past decade whether tax-exempt groups have been used for lobbying other financial political gain. 
The central question examined the Committee has been whether certain charitable social welfare organizations qualify for the 
tax-exempt status provided under the Internal Revenue Code. 
Recent media reports various 501 (c)(4) organizations engaged political activity have raised serious questions about whether such 
organizations are operating compliance with the Internal Revenue Code. 
The law requires that political campaign activity 501 (c)(4), (c)(5) (c)(6) entity must not the primary purpose ofthe 
organization. 
IRSR0000015431 determined the primary purpose ofthe 501 (c)(4), (c)(5) and (c)(6) organization political campaign activity the tax exemption 
for that nonprofit can temlinated. 
Even ifpolitical campaign activity not the primary purpose 501 (c)(4), (c)(5), and (c)(6) organization, must notify its members the portion dues paid due political activity pay proxy tax under Section 6033( e). 
Also, tax-exempt organizations and their donors must not engage private inurement excess benefit transactions. These mles 
prevent private individuals groups from using tax-exempt organizations benefit their private interests profit from the taxexempt 
organization's activities. September New York Times article entitled "Hidden Under Tax-Exempt Cloak, Private Dollars Flow" described the activities 
ofthe organization Americans for Job Security. Alaska Public Office Commission investigation revealed that AJS, organized 
entity promote social welfare under 501 (c)(6), fought development Alaska the behest "local financier who paid for most 
the referendum campaign." The Commission report said that "Americans for Job Security has other purpose other than cover 
money trails all over the country." The aliicle also noted that "membership dues and assessments ... plunged zero before rising 
$12.2 million for the presidential race." September Time Magazine article examined the activities Washington D.C. based 501(c)(4) groups planning "$300 million 
... spending blitz" the 2010 elections. The article describes group transforming itself into nonprofit under 501(c)(4) the tax 
code, ensuring that they would not have "publically disclose any information about its donors." 
These media reports raise basic question: the tax code being used eliminate transparency the funding our elections -elections 
that are the constitutional bedrock our democracy? They also raise concerns about whether the tax benefits non profits 
are being used advance private interests. 
With hundreds millions dollars being spent election contests tax-exempt entities, time take fresh look current 
practices and how they comport with the Internal Revenue Code's rules for nonprofits. request that you and your agency survey major 501(c)(4), (c)(5) and (c)(6) organizations involved political campaign activity 
examine whether they are operated for the organization's intended tax-exempt purpose and ensure that political campaign activity 
not the organization's primary activity. Specifically you should examine these political activities reach primary purpose level-the 
standard imposed the federal tax code and ifthey not, whether the organization complying with the notice proxy tax 
requirements Section 6033( e). also request that you your agency survey major 501 )(4), (c)(5), and (c)(6) organizations 
determine whether they are acting conduits for major donors advancing their own private interests regarding legislation political 
campaigns, are providing major donors with excess benefits. 
Possible violation tax laws should identified you conduct this study. 
Please report back the Finance Committee soon possible with your findings and recommended actions regarding this matter. 
Based your report plan ask the Committee open its own investigation and/or take appropriate legislative action. 
Sincerely, 
Max Baucus, Chailman 
Senate Committee Finance 
219 Dirksen Senate Office Building 
Washington, 20510-6200 
IRSR0000015432 
From: Thomas Cndy 
SenE Monday, Aprif 05, 2010 12:26 
To: Mutheft Gary 
Cc: Shafer John Camarillo Sharon Shoemaker Ronald Grodnltzky Steven 
Subject: Tea Party Cases ACTION 
fmportance: Hlgh 
Gary, 
Since you are acting for John and believe the tea party cases are being held yoyr 9P!p, would you able gather 
informtion, requLsted the email below, and provide Ron Shoemaker that Technical can prepare 
Sensitive Case Report for these cases? Thanks advance, 
From Grodnilcy Steven 
Senft Monday, April 05, 2010 12:1l 
To: Thomas Cindy 
Cc: Shoemaker Ronald ShaferJohn 
Subject: RE: two cases 
Cindy, 
lnformation would the number cases and the code sections which they filed under, Also, there anything that 
makes one stand out over the other, like high profile Board member, etc.,, then that would helpful. Really thinkng 
about possible media attention particulai case. Just want make sure that Lois and Rob are aware that there are 
other cases out there, etc,.,,. think once the cases are assigned here EOT and have drafted development lett_er, should coordinate with you 
guys that you can least siart developing them, However, would still need let Rob know before resolve any inese cass this potential high media area and are including them SCR. 
Ron- once you assign the cases and have drafted development letter, please let know that can 
coordinate with Cindy's folks. 
Thanks. 
Steve 
From: Thomas Clndy 
Sen Monday, April05, 2010 11:59 
To: Grodnitzlcy Steven 
Gc: Shoemaker Ronald Shafer John 
Subject: RE: two cases 
What information would you like? are "holding" the cases pending guidance from Technicalbecause Holly Paz 
didn't want all the cases sent D.C, 
From: GrodniEky Steven 
Sent: Monday, April 05, 2010 11:56 
To: Shoemaker Ronald Thomas Clndy 
SubJect: RE: two cases 
Thanks, Can you assign the cases one person and start SCR for this month the cases? Also, need 
coordinate with Cincy they have number Tea Party cases well, 
MUTHERT 0006
Cindy Could someone provide information the Tea Party cases Cincy Ron that can include the SCR 
each month? Thanks. 
Fom Shoemaker Ronald 
Sent: Monday, Aprll 05, 2010 11:30 
To: Elllot-Moore Donna; GrodnlEky Steven 
SubJec RE: two cases 
One and one c3. 
From: Elllot-Moore Donna 
Sent: Friday, April 02, 2010 8:38 
To: GrodniEky Steven; Shoemaker Ronald 
SubJect: RE: two cases 
The Tea Party movement covered the Post almost daily. expect see more applications. 
Frum: Grodnitzky Steven 
Sent: Thursday, April 01, 2010 4:04 
To: Elliot-Moore Donna; Shoemaker Ronald 
Subject: RE: two cases 
These are high profile ceses they deal with the Tea Party there may media attention, May need SCR them. 
From: Elliot-Moore Donna 
Sent: Thursday, April 01, 2010 7:43 
To: GrodniEky Steven; Shoemaker Ronald 
Subject: RE: two cases looked briefly and looks more educational but with republican slant obviously. Since they're applying under (c)(4) 
they may qualify. 
From Grodnitzky Steven 
Sent: Wednesday, March 31, 2010 5:30 
To: Elliot-Moore Donna; Shoemaker Ronald 
Subject: RE: two cases 
Thanks, Just want clear what are the specific activities these organizations? Are they engaging political 
activities, education, what? 
Ron can you let know who getting these cases? 
Frcm: Elllot-Moore Donna 
Sent: Wednesday, March 31, 2010 10:30 
To: GrodniEky Steven 
Subject: two cases 
Steve: 
MUTHERT OOOT
Testimony Michael Seto 

Manager Technical Unit 

July 11, 2013 She sent email saying that when these cases need through 
multi-tier review and they will eventually have Miss Kindell 
and the chief counsels office. Miss Lerner told you this email? Thats recollection. 

 


Testimony Carter Hull 

Tax Law Specialist Technical Unit 

June 14, 2013 Have you ever sent case Ms. Kindell before? Not knowledge. This the only case you remember? Uh-huh. Correct? This the only case remember sending directly Judy. And did you send her the whole case file well? Yes. 

 

*** Did Ms. Kindell indicate you whether she agreed with your 
recommendations? She did not say whether she agreed not. She said should 
Chief Counsel. The IRS Chief Counsel? The IRS Chief Counsel. 

 


Testimony Elizabeth Hofacre 

Revenue Agent Determinations Unit 

May 31, 2013 Okay. you always need through Technical get 
assistance how draft these kind letters? No, was demeaning. What you mean demeaning? Well, might jumping ahead myself, but essentially typically, 
no. grade 13, one the criteria work independently and 
research and make decisions based your experience and 
education, whereas this case, had autonomy all through the 
process. was unusual for you have through Technical get 
these letters? Exactly. mean, exactly, because once provided with his 
letters used his letters and his questions basis for letters. 
didnt cut and paste cookie cut. then once developed 
letters from the information the application, would email him the 
letters. And the same time instructed fax copies the 
1024 could review letters make sure that they were 
consistent with the 1024 application. Was that practice consistent with any other Emerging Issue? never have done that before since then. even for other Emerging Issues difficult challenging 
applications, you would still have discretion terms how handle 
them? Yes. Typically, yes. 

 


Testimony Carter Hull 

Tax Law Specialist Technical Unit 

June 14, 2013 Sir, you sit here today, you know the status those two test 
cases? Only from hearsay, sir. What you know? That the (c)(3) dropped, they decided they didnt want any 
further, and the (c)(4) still open. Still open far today? far know. not know for certain. for years since they filed application? Yes, sir. 

 


Testimony Carter Hull 

Tax Law Specialist Technical Unit 

June 14, 2013 What did you understand the meeting about when you were 
invited the meeting? The one thing remember was Lois Lerner saying someone 
mentioned Tea Party, and she said no, are not referring Tea 
Parties anymore. They are all now advocacy organizations. Who called them Tea Party cases? not sure who mentioned Tea Party, but that point Lois 
remember breaking and saying no, no, dont refer those 
Tea Parties anymore. They are advocacy organizations. And what was her tone when saying that? Very firm. Did she explain why she wanted change the reference? She said that the Tea Party was just too pejorative. she felt the term Tea Party was pejorative term? Yes. Let put this way: may  the way she didnt say thats 
pejorative term that should not used. She said no, will use 
advocacy organizations. But pejorative more word than hers. 

 

 

 


Testimony Lucinda Thomas 

Manager Determinations Unit 

June 28, 2013 you think Lois Lerner political person? she apolitical person? space, political person? believe that she cares about power and that its important her 
maybe more involved with whats going politically and should focusing working the determination cases and 
closing the cases and shouldnt matter what type organization 
is. should looking the merits that case. And its 
understanding that the Washington office has made comments like 
they would like for  Cincinnati not politically sensitive they 
would like be, and frankly think that maybe they need not politically sensitive and focus the cases that have and 
working case based the merits those cases. 

 


Testimony Carter Hull 

Tax Law Specialist Technical Unit 

June 14, 2013 Did you meet with Ms. Franklin about the cases? met after she had made her determinations. After she reviewed the case files? Yes. And when was this meeting, you recall? No, not sure. Was still 2010? Probably 2011. Okay. some point 2011? Yes. you recall was early 2011, mid-2011? Early-mid. Okay. 

 

*** Maybe July. 2011. 2011. July August. 

 

*** Okay. And was this meeting just with you and Ms. Franklin? No, there were other people present. Others the counsels office? Two others from the counsels office. Anyone else present? Ms. Kastenberg was there. believe Ms. Goehausen was there. 
think there was another TLS there sorry, another Another tax law specialist. Okay. And cant recall other people that may have been there. Lois Lerner? dont think Lois was there. Holly Paz? dont think Holly was there. think Judy was there. Judy Kindell. Yes. you recall who the two others were from the Chief Counsels 
office? One was manager Ms. Franklin, and the other guy had been 
there for years and keep forgetting his name. dont know why. 


have block against his name. Yes, was there. There was 
another tax law specialist there, Justin Lowe. Justin Lowe. Technical? was representing the Commissioner, Assistant Commissioner. Who was the time Mr. Miller? think was Mr. Grant. Joseph Grant. Yes. 

 


Testimony Carter Hull 

Tax Law Specialist Technical Unit 

June 14, 2013 you know how long the Chief Counsels office had the case before made its recommendation? not sure the timeframe this point. Okay. Did they give you any feedback these two cases? Yes, they did. What did they say? needed more information. needed more current information. What you mean, more current information? They had for while and the information wasnt current 
should be. They wanted more current information. because the cases had been going this chain for the last year, 
they needed more current information? Yes, sir. And what does that mean practically for you? That means that probably should send out another development 
letter. second development letter? second development letter. think also that time there was 
discussion having template made that all the cases could worked the same manner. And reviewer and both said 
template makes absolutely difference because these 
organizations, all them are different. template would not work. You and Ms. Kastenberg agreed that template wouldnt help? But Mr. Justin Lowe said would prepare it, along with Don 
Spellman and whoever else was from Chief Counsel. never saw it. 

 


Testimony Steven Miller 

Acting Commissioner 

November 13, 2013 So, sir, just get the timeline right, you had meeting with Ms. 
Lerner and her staff around February 2012? One more meetings. One more meetings. Thank you. And then mid-March you sit 
down with your staff and decide that something more needs 
done? Wanted find out why the cases were there and what was going on. And did you bat around ideas with your staff about how find out 
that information? Yeah, talked about, okay, who should out, and the suggestions 
were, you know, they could have been from the deputys staff, they 
could have been from Josephs staff, they could have been from Lois 
staff, and how would that. see. And who were the candidates out there and the 
investigation? Really, came down Nan Marks, who had tremendous respect 
and comfort with. She was  she had been lawyer TEGE 
Counsel, and she knew the area well. She had wonderful way with 
talking people, and she was natural. And she was out 
Josephs shop, and thought that should outside Lois shop, 
and Nan was the perfect person lead that. And, sir, why did you think should outside Ms. Lerners shop? Just terms perception. didnt think she would whitewash it, but didnt want any thought that that could happen. you wanted have someone more independent Right. the review? Right. When you say you didnt want any thought that that would happen, 
who were you worried would think that was doesnt matter. Its just the way operated. 

 


Testimony Ruth Madrigal 

Attorney Advisor Treasury Department 

February 2014 And maam, you wrote, potentially addressing them. you know 
what you meant by, quote, potentially addressing them? Well, this time, would have gotten the request guidance 
general applicability relating (c)(4)s. And while cant dont 
know exactly what was mind the time wrote this, the them 
seems refer back the (c)(4)s. And the communications between 
our offices would have had with guidance general 
applicability. So, sitting here today, you take the phrase, potentially addressing 
them mean issuing guidance general applicability 501(c)(4)s? dont know exactly what was head the time when wrote 
this, but the extent that office collaborates with the IRS, its 
guidance general applicability. And the recipients this email, Ms. Judson and Ms. Cook are the 
Chief Counsels Office, that correct? Thats correct. And Ms. Lerner and Ms. Marks are from the Commissioner side 
the IRS? the time this email, believe that Nan Marks was the 
Commissioners side, and Ms. Lerner would have been well, yes. those are the two entities involved rulemaking process the 
guidance process for tax exempt organizations, that right? Correct. Did you review this document preparation for appearing here 
today? reviewed briefly, yes. What did the term off plan mean your email? Again, dont have recollection doing writing this email the 
time. cant say with certainty what was meant the time. Sitting here today, what you take the term off plan mean? Generally speaking, off plan would refer guidance that not the plan that mentioned there would refer the priority guidance 
plan. And off plan would not the priority guidance plan. And had you had discussions with the IRS about issuing guidance 
501(c)(4)s that was not placed the priority guidance plan? 2012,  yes, 2012, there were conversations between 
office, Office Tax Policy, and the IRS regarding guidance relating qualifications for tax exemption under (c)(4). And this guidance was response requests from outside parties 
issue guidance? Yes. Generally speaking, our priority guidance plan process starts 
with  includes gathering suggestions fro



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