"Ineffective management" led to IRS tea party targeting

"Ineffective management" led to IRS tea party targeting

By

Lindsey Boerma, Steve Chaggaris /

CBS News/ May 14, 2013, 5:55 PM

"Ineffective management" allowed the Internal Revenue Service to single out conservative organizations for excessive review of their tax-exempt statuses, according to a report by a Treasury inspector general obtained by CBS News.

The IRS "used inappropriate criteria that identified the Tea Party and other organizations applying for tax-exempt status based upon their names or policy positions, instead of indications of potential political campaign intervention," a summary of the report read. "Ineffective management" allowed the inappropriate criteria to remain in place for more than a year and a half, delayed the processing of certain applications, and allowed requests to be issued for unnecessary, "burdensome" amounts of information, like past and future donors.

According to TIGTA - the Treasury Inspector General for Tax Administration - of the 296 total political campaign intervention applications reviewed as of December 17, 2012, 160 remained open for up to 1,138 calendar days; more than three years and spanning two election cycles.

TIGTA made nine recommendations to the IRS as to how it should correct its processing procedures, including that the agency "better document the reasons why applications potentially involving political campaign intervention are chosen for review, develop a process to track requests for assistance, develop and publish guidance, develop and provide training to employees before each election cycle, expeditiously resolve remaining political campaign intervention cases (some of which have been in process for three years), and request that social welfare activity guidance be developed by the Department of the Treasury."

IRS officials agreed with only seven of the recommendations, and proposed two alternate adjustments. TIGTA responded that it "does not agree that the alternative corrective actions will accomplish the intent of the recommendations and continues to believe that the IRS should better document the reasons why applications potentially involving political campaign intervention are chosen for review and develop and publish guidance."

In the IRS's response to the report, Joseph Grant, the acting commissioner for tax exempt and government entities said, "We recognize that some errors occurred in the handling of the influx of advocacy cases" and attempted to explain why the IRS centralized the approval process for organizations applying for 501(c)4 tax-exempt status.

Grant wrote that "centralization was warranted" because many of the applications the IRS began to receive in 2010 "were in many cases vague as to the activities the applicants planned to conduct.

"For example, a number of applications indicated that the organization did not plan to conduct political campaign activity, but elsewhere described activities that appeared in fact to be such activity."

501(c)4 organizations are limited in how much political activity they're allowed to take part in.

However, Grant admitted that "the manner in which we initially designated cases for centralization was inappropriate.

"We recognize that selection based on organization name was not appropriate for these cases," he wrote. Grant added that the IRS acknowledges there were delays and some requests for information "went overboard."

Nancy Cordes and Lucy Madison contributed

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