Levin: IRS official covered up key info during subcommittee investigation

In his letter to the IRS seeking the suspension of Lois Lerner, the woman in the cross-hairs who pleaded the Fifth Amendment at a congressional hearing, U.S. Sen. Carl Levin revealed that Lerner repeatedly withheld key information from his Permanent Subcommittee on Investigations.

Lerner, who has refused to resign and claims she has “done nothing wrong,” was placed on administrative leave on Thursday, the same day the Levin letter was sent to the acting IRS commissioner, Daniel Werfel. Sen. John McCain, the top-ranking Republican on the subcommittee, co-signed the letter.

The subcommittee has been investigating whether political groups are improperly receiving tax-exempt status from the IRS.

Here is the full text of the letter:

Dear Acting Commissioner Werfel:

We are writing to urge you to suspend immediately Lois Lerner from her office as Director of the Office of Exempt Organizations at the Internal Revenue Service (IRS). We believe that Ms. Lerner failed to disclose crucial information concerning the IRS’s inappropriate targeting of some conservative 501(c)(4) organizations during the course of a Subcommittee investigation into how the IRS enforces the 501(c)(4) law, leading to an incomplete account of the full operations of her unit.

Since March of last year, the Subcommittee has been examining whether the IRS adequately and appropriately enforces tax code provisions and implementing regulations regarding the extent to which tax-exempt 501(c)(4) groups may engage in political campaign activity. The Subcommittee asked the IRS why it was not enforcing the 501(c)(4) statute which states that social welfare organizations should be used “exclusively for the promotion of social welfare” and instead enforcing the more lenient IRS regulation which states that a social welfare organization may be used “primarily” for social welfare. It also asked the IRS about how they reviewed applications filed by certain Democratic and Republican leaning 501(c)(4)s. Our investigation has included a year’s worth of correspondence between the Subcommittee and the IRS, as well as document productions and repeated consultations with IRS staff.

On April 30, 2013, Ms. Lerner and seven IRS colleagues spent six-hours being interviewed, on a bipartisan basis, by Subcommittee staff. That interview covered, among other topics, how the IRS determines which groups to review, what actions are taken in connection with the IRS reviews, and how the laws and regulations are used to examine those groups. Ms. Lerner failed to disclose the internal controversy over the search terms used by the Cincinnati office to identify 501(c)(4) groups for further review, the actions taken by that office in reviewing the identified groups, the investigation and imminent findings by the Treasury Department Inspector General for Tax Administration (TIGTA); and TIGTA’s conclusion that the IRS had used inappropriate criteria to target Tea Party and other conservative groups. Ms. Lerner also failed to disclose that she was fully aware of these issues as early as June 2011, and, according to TIGTA, had been personally involved in reviewing questionable actions taken by the Cincinnati office.

Given the serious failure by Ms. Lerner to disclose to this Subcommittee key information on topics that the Subcommittee was investigating, we have lost confidence in her ability to fulfill her duties as Director of Exempt Organizations at the IRS. Ms. Lerner’s continued tenure in the office she holds, where she is responsible for overseeing 1.6 million tax-exempt organizations, would erode public trust and confidence in the IRS and its professional integrity. We believe that the immediate removal of Ms. Lerner from office would be a vital step in helping to restore public trust in the agency.

Sincerely,

John McCain
Carl Levin

According to a storyposted last week on the Fox News website, Levin last year requested information from the IRS on 12 organizations. 

"Organizations are using Internal Revenue Code section 501(c)(4) to gain tax exempt status while engaging in partisan political campaigns," wrote Levin in a letter to the IRS on July 27, 2012. "Making the problem worse is that the IRS knows there is a problem because of the public nature of the activity but has failed to address it." 

The subcommittee chairman’s list reportedly contained nine conservative groups, including Club for Growth, Americans for Tax Reform, and Americans for Prosperity. It also included two liberal groups and one centrist group. 

The National Review is reporting that Lerner signed cover letters to 15 conservative organizations currently represented by the American Center for Law and Justice (ACLJ) between March and April of 2012. The letters, such as this one sent to the Ohio Liberty Council on March 16, 2012, informed the groups applying for tax-exempt status that the IRS was “unable to make a final determination on your exempt status without additional information,” and included a list of detailed questions of the kind that a Treasury inspector general’s auditfound to be inappropriate, according to National Review Online. Some of the groups to which Lerner sent letters are still awaiting approval.