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Judicial Watch • Ways and Means Letter 01559

Ways and Means Letter 01559

Ways and Means Letter 01559

Page 1: Ways and Means Letter 01559

Category:IRS Scandal

Number of Pages:14

Date Created:August 25, 2015

Date Uploaded to the Library:August 25, 2015

Tags:Lois Lerner email, Lois Lerner


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DAVE CAMP, MICHIGAN,
CHAIRMAN
SAM JOHNSON, TEXAS
KEVIN BRAOY, TEXAS
PAUL RYAN, WISCONSIN
OEVIN NUNES, CALIFORNIA
PATRICK TIBERI, OHIO
OAVID REICHERT, WASHINGTON
CHARLES BOUSTANY, JR. LOUISIANA
PETER ROSKAM. ILLINOIS
JIM GERLACH, PENNSYLVANIA
TOM PRICE, GEORGIA
VERN BUCHANAN, FLORIDA
ADRIAN SMITH, NEBRASKA
AARON SCHOCK, ILLINOIS
LYNN JENKINS, KANSAS
ERIK PAULSEN, MINNESOTA
KENNY MARCHANT, TEXAS
DIANE BLACK, TENNESSEE
TOM REED, NEW YORK
TODD YOUNG, INDIANA
MIKE KELLY, PENNSYLVANIA
TIM GRIFFIN, ARKANSAS
JIM RENACCI, OHIO
O:ongrrss thr tinitrd ~tatrs
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COMMITTEE WAYS AND MEANS
1102
LONGWORTH OUSE OFFICE UILDING
(202) 225-3625
Washingto Bl.t 20515-6318
SANDER LEVIN, MICHIGAN, RANKING MEMBER
CHARLES RANGEL. NEW YORK
JIM MCDERMOTT, WASHINGTON
JOHN LEWIS, GEORGIA
RICHARD NEAL, MASSACHUSETTS
XAVIER BECERRA, CALIFORNIA
LLOYD DOGGETT, TEXAS
MIKE THOMPSON, CALIFORNIA
JOHN LARSON, CONNECTICUT
EARL BLUME NAUER, OREGON
RON KIND, WISCONSIN
BILL PASCRELL, JR., NEW JERSEY
JOSEPH CROWLEY, NEW YORK
ALLYSON SCHWARTZ, PENNSYLVANIA
DANNY DAVIS, ILLINOIS
LINDA SANCHEZ. CALIFORNIA
http://waysandmeans.house.gov
JANICE MAYS,
MINORITY CHIEF COUNSEL
JENNIFER SAFAVIAN,
STAFF DIRECTOR
April 2014
The Honorable Eric Holder, Jr.
Attorney General
U.S. Department Justice
950 Pennsylvania Avenue,
Washington, 20530-0001
Dear Attorney General Holder:
The Committee Ways and Means (Committee) ofthe U.S. House ofRepresentatives
has discovered information the course its ongoing investigation the targeting
the Internal Revenue Service (IRS) taxpayers the basis their political views. This
information suggests willful misconduct IRS official, and also suggests that she
may have violated multiple federal criminal statutes.
Rule X.l (t) the Rules the House Representatives for the 113th Congress
delegates the Committee legislative jurisdiction over ]evenue measures generally,
including the Internal Revenue Code (IRC Code) and the Department Treasury
(Treasury), which includes the IRS. result, the Committee responsible for
considering all legislation that raises the revenue required finance the federal
government. The raising such revenue depends voluntary compliance with the
IRC, which undermined when taxpayers and exempt organizations perceive that the
administration the IRC unfair or, worse, biased against them. Oversight the
IRS and particularly investigation IRS activity that could undermine voluntary
compliance with the IRC, thus fundamental obligation the Committee.
pursuant this authority and discharge this obligation that the Committee has
investigated allegations that the IRS mistreated certain taxpayers and exempt
organizations the basis their politi cal beliefs.
See also Rule X.2(b)( I), Rules the House Representatives, 13th Congress (vesting Committee with authority
oversee and evaluate whether laws written Committee are being administered consistent with congressional intent
and whether such laws should changed); IRC 103 (expressly authorizing Committee review certain
material
During the course its investigation, the Committee has obtained information that
reveals that former IRS Exempt Organizations Division (EO) Director Lois Lerner,
while acting her official capacity, may have violated one more criminal statutes.
Specifically, the Committees investigation has uncovered conduct Lerner that
includes the following:
Lerner used her position improperly influence agency action against only
conservative organizations, denying these groups due process and equal
protection rights under the law guaranteed the U.S Constitution,
apparent violation U.S.C. 242;
Lerner impeded official investigations providing misleading statements
response questions from the Treasury Inspector General for Tax Administration
(TIGTA), apparent violation U.S.C. 1001 and
Lerner risked exposing, and may actually have disclosed, confidential taxpayer
information, apparent violation IRC using her personal email
conduct official business.
These findings, supported the evidence described below, suggest that Lerner may have
violated multiple criminal statutes. The Committee asks that you pursue this evidence
and ensure that the victims IRS abuse not also suffer neglect from the criminal
justice system.
Lerner Showed Extreme Bias and Prejudice Exercising Her Power and
Influence Over the Non-Profit Sector Director, Lerner had authority act behalf the IRS? Lerner willfully
used her authority subject specific organizations adverse treatment defiance
IRS controls. Lerner directed subordinates subj ect specific right-leaning groups
increased scrutiny and audits, and even the denial exempt status. Lerners Targeting ofCrossroads GPS Blind Eye Priorities USA October 19,2010, Lerner explained group ofDuke University students that
501(c)(4) organizations were spending money campaign activity the wake the
Citizens United decision. She said, [E]verybody screaming us, fix now before
the election .... the same time, Assistant Senate Majority Leader Dick Durbin, wrote
then IRS Commissioner Doug Shulman demand investigation Crossroads GPS.5
Lerner explained the students, won know until look their 990s next year
See IRC 7803 (setting out the authorities the IRS Commissioner), see also Internal Revenue Manual (IRM)
1.1.23.5 (providing that Director reports directly Deputy Commissioner ofTE/GE and, among other duties,
superv ises and responsible for the activities ... Ruli ngs and Agreements and Examinations functions).
See generally, Citizens United Fed. Elec. Comm 558 U.S. (20 I0).
Transcribcd from http:l/www.youtube.com/watch?feature=player embeddedv=El-1 IZRyg- 1iM, Exhibit
See Letter from Assistant Majority Leader Dick Durbin IRS Commissioner Doug Shulman October 12, 10.
Avaitable at: http:l/www.durbin.senate.gov/publ ic/i ndex.cfm/pressreleases? ID=833d8fl e-bbdb-4a5b-93ec706fficb9cb99.
whether they have done more than their primary activity political not, cant
anything right now. While Lerners public comments seemingly cast wide, unbiased
net across the entire 501 (c)( spectrum, her private actions were different.
Documents produced the Committee further link Lerners actions with complaints
from Democracy 21. Those complaints chiefly focused Crossroads Grassroots Policy
Strategies (Crossroads) and other right-leaning groups, but also cite left-leaning groups
such Priorities USA. October 2010,just two weeks before her remarks Duke
University, Fred Wertheimer Democracy and Gerald Hebert the Campaign Legal
Center (CLC) wrote then-Commissioner Shulman and Lerner to, Request for IRS
investigation determine whether Crossroads GPS operating violation tax
status. Later, July 27, 2011, Democracy and CLC sent the IRS self-styled,
Petition for Rulemaking Campaign Activities Section 501(c)(4) organizations,
which they raised concerns about the political campaign activities 501(c)(4) exempt
organizations, including Crossroads and Priorities USA. Finally, December 14,
2012, Democracy requested meeting with Lerner discuss its July 27, 2011
petition.
Lerner quickly organized meeting for Democracy not only with herself, but also
with the Office Chief Counsel and the Office Tax Policy the Department the
Treasury for January 2013. preparation for the meeting, Lerner asked David Fish,
then acting Director EOs Rulings and Agreement Division, and Andy Megosh with Guidance, for all letters these orgs sent asking for guidance .... While
Democracy 21s petition raised concerns about groups across the political spectrum,
documents IRS produced the Committee show aggressive and improper pmsuit
Crossroads Lerner, but evidence she directed reviews similarly situated left14
leaning groups.
For example, January 2013, the IRSs Chief for Media Relations circulated
ProPublica article Lerner and Nikole Flax, then chief staff Acting Commissioner
Steve Miller, among others, FYI- Here the latest inbound for ProPublica.
Following was article titled: Watchdog Groups Again Call IRS Deny TaxExempt Status Karl Roves Crossroads GPS, Cite $70 Million Campaign
Exhibit
Democracy describes itself nonprofit, nonpartisan organization that. promotes campaign finance rm,
lobbying and ethics reforms ... and other government integrity measures. See Petition for Rulemaking Campaign
Activities Section (c)(4) Organizations at~ 10. Available at:
http://www.democracy2 1.org/uploads/D2 and CLC Petition IRS II. pdf.
See Democracy Letters the IRS. Available at: http://www.democracy2 1.org/wpcontent/uploads/20 13/0S!Letters-to-IRS.pdf.
See http://www.democracy21.org/wp-content/uploads/20 13/0S!Letters-to-IRS.pdf.
See
IRSOOOOO 122502-122505, Exhibit See for Petition for Rulemaking.
See id.
See id.
See Letter from House Ways and Means Committee Chairman Dave Camp IRS Acting Commissioner Daniel
Werfel September 20, (requesting returns and return information right-leaning American Crossroads,
Crossroads GPS, and Americans for Prosperity, well left-leaning Priorities USA, Priorities USA Action, and
Organiz ing for Action), Exhibit The documents show special scrutiny the left-leaning groups.
IRSOOOO 122515-6, Exhib
Expenditures Prima Facie Evidence Group Campaign Operation, not Social
Welfare Group. The watchdog groups which the article refers are Democracy
and Campaign Legal Center (CLC). This email prompted Lerner give notice Flax
and others about the meeting scheduled for January with these groups:
Just FYI for everyones information- received the incoming and will refer
Exam with any complaint. Ruth Madrigal, Vickie Judson and are
meeting with Democracy and some others regarding their request for guidance c4. This has been set for some time. plan have David Fish there and
begin the meeting telling them cannot discuss specific taxpayers ... will very cautwus.
Notwithstanding Lerners apparent careful adherence the rule against discussing
specific cases with people outside the IRS, emails with her subordinates show
focused interest Crossroads immediately following the meeting. Again, these emails
show apparent interest left-leaning groups.
Lerners calendar shows the Januaty meeting with Democracy blocked off for :00 AM-Noon and, based Lerners subsequent actions, clear that the meeting
went forward planned. Before soon after the meeting, Lerner apparently contacted
Tom Miller (EO Technical) ask about the status Crossroads (whether the group had
been audited selected for audit) because replied email 1:55 the same day
that the group had twice been before the Political Action Review Committee (PARC),
November and June 2011 but was not selected for audit.
Following Tom Millers response, Lerner sent email Nanette Downing, the Director the Examinations Unit Dallas, TX, demanding know why Crossroads had not
been audited.
Avai lable at: http://www.propublica.org/article/watchdogs-to-irs-re ject-rove-groups-tax-application. (The article
updates earlier ProPublica story from December 14, that was based IRS-leaked copy Crossroads
application for exempt status.)
Exhibit referral is, lay terms, complaint; pursuant the IRM means: document other communication, including electron communication, received
Classification-Re ferrals from source outside the Internal Revenue Service, which alleges possible
noncompliance with tax law the part exempt organization, political organization, taxable entity,
individual. internal document (referral) prepared Internal Revenue Service employee and forwarded
Classification-Referrals, which identi fies current potential noncompliance discovered during either the
processing assigned case, any other time the performance official duties.
IRM 4.75.5.2 (05-1 3-2005).
IRS0000378449 (displaying calendar entry), Exhibit See also, Complaint Van Hollen al. IRS (D.D.C.
August 13) (noting that January 13, representatives Democracy and the Campaign Legal
Center met with Ms. Lerner and other IRS officials regarding the petition for rulemaking.). Available at:
http://www. democracy2 1.org/wp-contentluploads/20 13/08/Complaint -August-20-fi nal-for- til ing.pdf.
JRSOOOO 122549- 12255 Exhibit The PARC responsible determining whether allegations improper
political activity exempt organization merit audit. See IRS0000378444 -378446, IRS Memorandum
Congress, IRS Exempt Organizations Processes with Respect Examinations, Exhibit the direction Lois
Lerner, Nanetle Downing created spec ial process for reviewing complaints political activity exempt
organizations followi the Cilizens United decision. See Subcommittee Oversight, Committee Ways and Means,
U.S. House Representatives, Interv iew of: Nanette Downing, December 201 33-37, Exhibit had meeting today with organization that was asking consider guidance
the issue. get ready for the meeting, asked for every document that (sic) had
sent over the last several years because knew they had sent several referrals.
reviewed the information last night and thought the allegations the documents were
really damning, wondered why hadnt done something with the org. The first
complaint came and there were additional ones 201 and 12... The
organization issue Crossroads GPS... know the org now the ROO--based allegations sent this year, but this org that was prime candidate for exam
when the referrals and 990s first came in.20
***
You should know that are working denial the application, which may
solve the problem because probably will say isnt exempt. Please make sure
all moves regarding the org are coordinated here before anything? the following Monday, January 2013, Lerner sent follow-up email Downing
which states, said, are working the denial for the [Crossroads] 1024,
need think about whether open exam. think yes, but let cogitate bit
it. Interviews IRS personnel and review Crossroad file shows that Lerner was fact actively seeking ensure denial the group. transcribed interview Victoria Judson, Associate Chief Counsel (Tax Exempt
Government Entities), Committee staff asked Judson about Lerners interest
Crossroads: think you said that was the spring of20 that you discussed with Ms.
Lerner Crossroads GPS case and she gave you advance notice that that might denial. that correct? Thats the best recollection. And dont know would characterize discuss opposed she told that ...
Lerner plan deny the Crossroad application evident from the work log for the
Cincinnati-based revenue agent assigned the case, after her January meeting
with Democracy the agent sprung into action. the seven business days following
her meeting, the revenue agent Joseph Hen, logged more time the application than the
entire year preceding?4 But more, the log shows that Herr was directed reach
particular result with Crossroads. Hens log shows, pmt:
Exhibit
See id.
See id.
Subcom mittee Oversight, Committee Ways and Means, U.S. House Representatives, Interview of: Victoria
Ann Judson, Wednesday, September 2013 (quotation marks added), hibit
See IRS0007 1224-71 226, Exhibit January 2013, Herr notes conference call with EOT [Exempt
Organizations Technical Division] where specific guidance given him how best proceed with the [Crossroads] case. January this guidance from EOT was memorialized Herrs time sheet, ]ased conference begin reviewing case information, tax law, and
draft/template advocacy denial letter, all think about how best compose the
denial letter. the next journal entry from Herr, notes,[w]rite-up summary idea how plan make denial argument and share with Sharon Light, the Special Advisor
Director Washington DC, for her opinion whether the idea seems valid.26 Nowhere his 2012 log entries there any discussion denial. fact, analysis the
Crossroads application November 2011 among many others, Technical lawyer
Hillary Goehausen makes recommendation for denial.
The Committee subsequently learned that the agency was the process denying
Crossroads application for exempt status and selecting them for audit. Judson informed
staff the organization would receiving proposed denialletter. IRS
representative separately told staff that Crossroads had also been selected for audit.
The evidence shows that without Lerners intervention, neither adverse action would
have been taken against Crossroads. Again, the Committee has found record
Lerner pursuing similarly situated left-leaning groups, despite receiving similar public
complaints. fact, during the same time period Lerner was engineering denial and audit
Crossroads, documents show Lerner had favorable disposition toward left-leaning
groups, including considering future employment with one. response news story
about the formation Organizing For Action, 501(c)(4), Lerner remarked Senior
Technical Advisor Sharon Light, Oh- maybe can get the office job! Light then
forwarded Lerners comment Holly Paz wondering Lerner was considering
retirement pursue potential job opportunity this left-leaning group.
See id.
See id. S0000063029, Exhibit
Exhibit
Telephone briefing IRS staff Overs ight Subcommittee staff September 2013.
See http://www.democracy2 .org/wp-content/uploads/20 13/05/Letters-to-IRS.pdf.
See Email from Lois Lerner Sharon Lig January 24, 13, IRSC007 157-60, Exh ibit 12. N.b. Democracy
hig hly critical Organizing For Action. See, e.g., Statement Fred Wertheimer January 22, 2013 (stating with
reference the formation Organizing For Action that, taking this step, the President has opted for the ends
justi the means approach that fraught with danger. opens the door opportunities for governme corruption.)
Available at: http://www.democracy2 1.org/money-in-po litics/press-releases-money-in-politics/statement-by-fredwertheimer-president-obama-opts-for-the-ends-justify-the-means; see also, Organ izi for Action Too Close
The White House? National Public Radio (March 19, 14)(quoting Democracy Fred Wertheimer, The best
thing the president the United States could shut [Organi zing Action] down. This danger the integrity
and credibility his presidency.) Available at: http://www.npr.org/20 14/03119129 I2006/is-organizing-for-acti ontoo-close-to-the-white-house.
See Exhibit Evidence Suggests Lerner Targeted Other Right-Leaning Groups
Evidence discovered the Committee also suggests that Lerner targeted other rightleaning groups. January 13, ProPublica separately published article titled,
Controversial Dark Money Group Among Five That Told IRS They Would Stay Out
Politics, Then Didnt that was circulated within the IRS. Forwarding the ProPublica
article, Lerner asked Holly Paz, David Fish and Sharon Light meet the status
these applications please. Can talk Friday? The five groups named the article
are:
Americans for Responsible Leadership
Freedom Path
Rightchange.com
America Not Stupid Better America.
Inf01mation later provided the Committee regarding IRS examinations processes
showed that four the five groups were subject extra-scrutiny; two the groups were
placed the IRS surveillance program, called Review Operations, and two were
selected put before the Political Activity Review Committee, which determines
whether group will audited. ltimately three the groups were selected for
audit. Lerners Defiance Internal Controls and Abuse ofAuthority
The evidence demonstrates Lerner acted defiance IRS internal controls. Internal
IRS policies and procedures, which would well known Lerner, deter any one person
from deciding the disposition group based political personal animus. Joseph
Grant, former Commissioner the Tax Exempt and Government Entities Division, and
former boss Lerner, told the Committee transcribed interview that would
completely inappropriate for manager target specific organization for exam
adverse determination. The IRS put place these safeguards the 1990s ensure
See http://www. propubl ica.org/artic le/controversial-dark-money-group-among-five-that-told-irs-they-would-stayout.
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