Despite assurances to the contrary, the IRS didn’t destroy all of the donor lists scooped up in its tea party targeting — and a check of those lists reveals that the tax agency audited 10 percent of those donors, much higher than the audit rate for average Americans, House Republicans revealed Wednesday.
Republicans argue that the Internal Revenue Service still hasn’t come clean about the full extent of its targeting, which swept up dozens of conservative groups.
“The committee uncovered new information indicating that after groups provided the information to the IRS, nearly one in 10 donors were subject to audit,” Rep. Charles W. Boustany Jr., Louisiana Republican and chairman of the Ways and Means Committee’s oversight panel, told IRS Commissioner John Koskinen at a hearing Wednesday.
“The abuse of discretion and audit selection must be identified and stopped,” he said.
The revelation was made on the same day that the House voted on a nonbinding resolution asking the Justice Department to appoint a special prosecutor to investigate the IRS targeting.
Investigators last year reported that the IRS singled out tea party and other conservative groups applying for tax-exempt status and gave them special scrutiny, including asking inappropriate questions about their activities and membership. The request for donor lists was among the inappropriate activities.
The IRS initially denied to Congress that it was singling out tea party groups, despite vocal complaints from groups that had their applications delayed for years. But faced with the internal audit, the agency admitted it had been subjecting these groups to special scrutiny.
Still, Obama administration officials deny that the targeting was politically motivated, blaming confusion and a flood of applications from conservative groups after a 2010 Supreme Court ruling opened the door to broader political activity from outside interest groups.
Republicans said 24 conservative groups were asked for their donor lists. The IRS initially told Congress that those lists were destroyed, but when they went through their files they discovered three lists that weren’t destroyed.
Rep. Dave Camp, Michigan Republican and chairman of the House Ways and Means Committee, asked the IRS to review the names on those lists to see whether any had been audited. The IRS reported back that 10 percent were audited — substantially higher than the average rate of 1 percent of average Americans who are audited each year.
Mr. Boustany said he has asked the Government Accountability Office, Congress‘ chief watchdog, to look at how the IRS Exempt Organizations Division decided whom to audit. He said the GAO review is underway and demanded that Mr. Koskinen offer investigators full cooperation.
“IRS has long insisted that Americans should not worry about political targeting at your agency because the IRS has layers of internal protections to guard against it. But in the course of our investigation, however, we found that Lois Lerner acted in defiance of these internal protections,” Mr. Boustany said.
Ms. Lerner ran the division overseeing nonprofit groups. She has since retired from the IRS but has refused to testify to Congress about her role in the targeting, citing her Fifth Amendment right against self-incrimination.
The House voted Wednesday to hold her in contempt of Congress for refusing to talk.
Mr. Koskinen acknowledged that the agency needs to take steps to assure taxpayers that audits are fair and said they look forward to the GAO review. He said the IRS has “significant controls” in place to try to make sure audits are fair.
“Every taxpayer deserves the right to assume that they will be treated fairly no matter what their political beliefs, what organization they belong to, who they voted for in the last election,” he said.
Mr. Koskinen said a “handful” of tea party groups caught up in the targeting are still awaiting approval.
On another matter, the commissioner told the panel that he is taking steps to be able to deny agency bonuses to IRS employees who hadn’t paid their taxes. The agency’s inspector general last month reported that more than 1,000 employees received bonuses within a year of having tax problems.
“Going forward, if someone has been disciplined for failure to comply with the tax code, they will be ineligible for a performance award,” he said.
He also said the agency would try to fire employees who cheat on their taxes.
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