IRS Employees Ordered to Send Tea Party Cases to IRS's Only Obama Political Appointee

July 17, 2013 - 2:31 PM

tea party

(AP Photo)

(CNSNews.com) – IRS employees were ordered by their superiors--including Lois Lerner who pleaded the 5th Amendment against self-incrimination rather than testify in Congress--to send certain Tea Party tax-exemption applications to the office of the IRS's Chief Counsel, which was headed by William Wilkins, who at that time was the only Obama political appointee at the IRS, according to a letter released today by the House Committee on Oversight and Government Reform.

“As a part of this ongoing investigation, the Committees have learned that the IRS Chief Counsel’s office in Washington, D.C. has been closely involved in some of the applications,” reads a letter released today by the House committees on Oversight and Government and Ways and Means.  “Its involvement and demands for information about political activity during the 2010 election cycle appear to have caused systematic delays in the processing of Tea Party applications.”

It further states, “[B]ased on his decades of experience, [career IRS official Carter Hull] determined he had enough facts to make recommendations whether to approve or deny the applications. … However, Mr. Hull’s recommendations were not carried out. Instead, according to Michael Seto, the head of Mr. Hull’s unit in Washington, Lois Lerner instructed that the Tea Party applications go through a multi-layer review that included her senior advisor and the Chief Counsel’s office.”

Wilkins, the IRS chief counsel, had been appointed by President Obama to his position in 2009, and was one of only two politically appointed officials at the IRS. The other employee was IRS Commissioner Douglas Shulman, a Bush appointee. Shulman was commissioner from March 2008 to November 2012. He was followed Steve Miller, who was appointed acting commissioner by Obama and served until May 2013. The current acting commissioner is Daniel Werfel, appointed by Obama in May.

Lois Lerner

IRS official Lois Lerner is sworn in on Capitol Hill on May 22, 2013, before a House Oversight Committee hearing, where she pleaded the 5th Amendment against self-incrimination.  (AP Photo/Carolyn Kaster)

The nine-page letter was sent to IRS Principal Deputy Commissioner Daniel Werfel and was signed by House Oversight Committee Chairman Darrel Issa (R-Calif.), Ways and Means Chairman Dave Camp (R-Mich.), Regulatory Affairs Subcommittee Chairman Jim Jordan (R-Ohio) and Way and Means Oversight Subcommittee Chairman Charles Boustany Jr. (R-La.).

The letter is based upon interviews by the Committees of several long-term  IRS employees, including Carter Hull, a tax-law specialist and 501c(4) expert with 48 years of experience at the IRS, according to the letter.  From his interview, “the Committees were informed that Tea Party applications under his review were, in an unusual turn of events, referred to the Chief Counsel’s office for further review at the direction of Lois Lerner, the head of the Exempt Organizations division. The IRS Chief Counsel is one of two politically appointed officials in the agency.”

Hull is scheduled to testify before the House Oversight and Reform Committee on Thursday, July 18, along with several other IRS employees cited in today's letter.

Back in April 2010, according to the letter, Hull was instructed by his superiors to analyze several Tea Party tax-exemption applications as “test” cases to determine the best way for the IRS, as Hull explained,  to “approach these organizations, and how [the IRS] should handle them.”

Hull sent development letters to the Tea Party groups requesting additional information, gathered and analyzed the data, and then concluded he had enough facts to make a decision on whether the groups had engaged in a permissible amount of political activity.

wilkins

IRS Chief Counsel William Wilkens. (Photo: IRS)

“However, Mr. Hull’s recommendations were not carried,” states the letter. Instead, as the head of Hull’s unit in Washington, D.C.,  Michael Seto, related, Lois Lerner “sent me an email saying that when these cases need to go through multi-tire review and they will eventually have to go [through her staff] and the chief counsel’s office.”

Hull also told the committees that Lerner’s senior adviser instructed him in the winter of 2010-2011 that the IRS Chief Counsel’s office would have to review the applications. Hull stated this was the first time in his career he had been told to send applications to Lerner’s senior adviser.  As the committee reported:

Q: “Have you ever sent a case to [the senior adviser to Ms. Lerner] before?”

Hull: “Not to my knowledge.”

Q: “This is the only case you remember?”

Hull: “Uh-huh.”

Q: “Correct?”

Hull: “This is the only case I remember sending directly to [ the senior adviser to Ms. Lerner].”

Q: “Did [the senior adviser to Ms. Lerner] indicate to you whether she agreed with your recommendations?”

Hull: “She did not say whether she agreed or not. She said it should go through the Chief Counsel.”

Q: “The IRS Chief Counsel?”

Hull: “The IRS Chief Counsel.”

The letter from the Committees to Werfel goes on to state that after a “substantial delay,” the Chief Counsel’s office finally met with Hull, with Lerner’s senior adviser, and with other Washington officials “to discuss these test case applications.”

Daniel Werfel

Acting IRS Commisioner Daniel Werfel (AP Photo)

“During the intervening months, these applications lingered,” states the letter. Three years after Hull had been instructed to review the Tea Party applications, he told the Committees that he did not know whether those applications were still open or closed.

Hull’s superviser, Ronald Shoemaker, also was interviewed by the Committees. He stated that from that August 2011 meeting, the Chief Counsel’s office was still seeking more information about the Tea Party applicants’ political activities, specifically activities “leading up to the 2010 election.”

In that election, the Democrats lost control of the House of Representatives and a Republican, John Boehner of Ohio, became the new Speaker.

As Shoemaker recounted to the Committees’ staff, the Chief Counsel’s office “indicated that they wanted more development of possible political activity or political intervention right before the election period; that that had not occurred and that that’s what was missing. … [R]ight before the election period. In other words, immediately before.”

The letter to Werfel says, “the lengthy and unusual review of the test applications in Washington created a bottleneck and caused the delay of other Tea Party applications in Cincinnati. Indeed, multiple IRS employees in Cincinnati have told the Committee they were waiting on guidance from Washington on how to move the applications forward.”

Cindy Thomas, head of the IRS Cincinnati office, repeatedly asked officials in Washington, D.C. for guidance on the applications but did not receive definitive responses.

As the Committees’ interview reports:

Q: “So the cases that [Cincinnati employee] was working from October 2010 through September 2011 were still in kind of a holding pattern awaiting guidance from Washington? Is that right?”

Thomas: “That’s correct.”

Q: “And were there additional applications that were coming at this time?”

Thomas: “To my knowledge, yes.”

Q: “And those were also in a holding pattern?”

Thomas: “that’s correct.”

Q: “Pending guidance from Washington?”

Thomas: “That’s correct.”

In conclusion, the letter from the Committees to the IRS’s Werfel requests further documents and communications between or among employees of the IRS’s Chief Counsel’s office, the Treasury Department’s General Counsel’s office, and the Executive Office of the President between Feb. 1, 2010 and the present concerning all tax-exempt applications.