Judicial Watch Obtains 695 Pages of Obama IRS Scandal Documents – Records Not Produced in Initial Congressional Investigation
APRIL 04, 2017
First Batch of Records from 7,000-Page Cache Uncovered Last Month
(Washington, DC) – Judicial Watch today released 695 pages of new documents from the Internal Revenue Service (IRS) that contain admissions by IRS officials that the agency used “inappropriate political labels” to screen the tax-exempt applications of conservative organizations. Other records reveal that the IRS was going to require 501(c)(4) nonprofit organizations to restrict their alleged political activities in exchange for “expedited consideration” of their tax-exempt applications.
The documents were produced after a revelation by the IRS that it had located “an additional 6,924 documents of potentially responsive records” relating to a 2015 Judicial Watch Freedom of Information Act (FOIA) lawsuit about the Obama IRS targeting scandal. The FOIA lawsuit seeks records about the IRS’ selection of individuals and organizations for audits based upon applications requesting nonprofit tax status filed by Tea Party and other 501(c)(4) tax-exempt organizations (Judicial Watch v. Internal Revenue Service (No. 1:15-cv-00220)).
Of the 695 pages of documents released by the IRS, 422 (61%) were withheld in their entirety. These newly identified records are not records that were contained in the “Congressional Database,” which the IRS created in 2013 to house records responsive to congressional inquiries into the IRS scandal.
Included among the newly released a material is a June 20, 2013, memo from Karen Schiller, then-Acting Director, EO Rulings and Agreement, suspending use of the controversial Be on the Lookout (BOLO) and Touch and Go (TAG) lists:
EO Rulings and Agreements is undertaking a comprehensive review of screening and identification of critical issues. We intend to develop proper procedures and uses for these types of documents. Until a more formal process for identification, approval and distribution of this type of data is established, Rulings and Agreements will not use this technique to elevate issues.
In an August 9, 2013, memo, Schiller admitted the IRS used political labels in targeting the groups for special scrutiny and possible audit and that, going forward, the agency would screen organizations based only on their activities, “not words” or “labels of any kind:”
As Acting Commissioner Danny Werfel has said, the IRS has taken decisive action to eliminate the use of inappropriate political labels in the screening of 501(c)(4) applications. IRS policy is now clear that screening is based on activity, not words in a name. The new steps and current policies were outlined in the June 24 report, which noted: “In the absence of BOLO lists, the Determinations Unit will continue to screen for information affecting the determination of applications for tax exempt status, including activity tied to political campaign intervention, but it [will] be done without regard to specific labels of any kind.” The 30-day report also reflects the June 20, 2013 memorandum, which was issued to officially suspend the use of the BOLO list in the screening process.
The documents also include a “Dear [Applicant]” letter which offers an “expedited process” for 501(c)(4)s in exchange for restriction on their activities:
This optional expedited process is currently available only to applicants for 501(c)(4) status with applications pending for more than 120 days as of May 28, 2013, that indicate the organization may be involved in political campaign intervention.
In this optional process, an organization will represent that it satisfies, and will continue to satisfy, set percentages with respect to the level of its social welfare activities and political campaign intervention activities (as defined in the specific instructions on pages 5-7). These percentage representations are not an interpretation of law but are a safe harbor for those organizations that choose to participate in the optional process.
On September 30, 2013, Acting Director, Exempt Organizations, Kenneth C. Corbin, sent a memo to IRS staff providing detailed guidance on classifying applications when “‘merit approval’ is not an option,” emphasizing that the determination is to be based on “facts and circumstances,” not “words and labels:”
Classifier reviews the application and determines if it should be routed to a specialty group. This determination is based upon facts and circumstances of the stated activities within Part II of the application rather than names or labels. This is consistent with Karen Schiller’s August 9, 2013 memorandum …
The Schiller and Corbin memos came on the heels of the May 14, 2013, Inspector General report revealing that the IRS had singled out groups using conservative-sounding terms such as “patriot” and “Tea Party” when applying for tax-exempt status. The IG probe determined that “Early in Calendar Year 2010, the IRS began using inappropriate criteria to identify organizations applying for tax-exempt status (e.g., lists of past and future donors)” and “delayed processing of targeted groups’ applications” in advance of the 2012 presidential election.
Of the 422 withheld pages, 98% (all but nine) cited the FOIA “deliberative process” provision under FOIA Exemption 5.
“No wonder the Obama IRS has been hiding these records. The new smoking-gun documents contain admissions by the Obama IRS that it inappropriately targeted conservative groups,” said Judicial Watch President, Tom Fitton. “But the records also show that the abuse continued – as the Obama IRS tried to force conservative applicants to give up their First Amendment rights in order to finally get their applications granted.”
Previously, Judicial Watch released IRS documents containing email correspondence dated April 2, 2013, from former IRS Director of Exempt Organizations, Lois Lerner, to internal IRS investigators revealing the inappropriate BOLO criteria used to select conservative organizations for screening and scrutiny:
The screening [Cincinnati field office] group manager asked his employees how they were applying the BOLO’s short-hand reference to “tea party.” His employees responded that they were including organizations meeting any of the following criteria as falling within the BOLO’s reference to “tea party” organizations: “1. ‘Tea Party’, ‘Patriots’ or ‘9/12 Project’ is referenced in the case file. 2. Issues include government spending, government debt and taxes. 3. Educate the public through advocacy/legislative activities to make America a better place to live. 4. Statements in the case file that are critical of the how the country is being run …”