Politics

Lerner was in contact with DOJ about prosecuting tax-exempt groups

Former head of the IRS tax-exempt division Lois Lerner communicated with the Justice Department about the possibility of criminally prosecuting certain tax-exempt groups, new documents reveal.

According to the conservative government accountability group Judicial Watch, email exchanges between Lerner and Nikole C. Flax, the Chief of Staff to then-Acting IRS Commissioner Steven T. Miller, reveal there were discussions about possible prosecution of tax-exempt groups that were believed to have “lied” about political activities.

I got a call today from Richard Pilger Director Elections Crimes Branch at DOJ … He wanted to know who at IRS the DOJ folks could talk to about [Rhode Island Democratic Sen. Sheldon] Whitehouse idea at the hearing that DOJ could piece together false statement cases about applicants who “lied” on their 1024s — saying they weren’t planning on doing political activity, and then turning around and making large visible political expenditures. DOJ is feeling like it needs to respond, but want to talk to the right folks at IRS to see whether there are impediments from our side and what, if any damage this might do to IRS programs.

I told him that sounded like we might need several folks from IRS …

I think we should do it — also need to include CI [Criminal Investigation Division], which we can help coordinate. Also, we need to reach out to FEC. Does it make sense to consider including them in this or keep it separate? 

Judicial Watch, which obtained the documents as a result of a Freedom of Information Act lawsuit initiated after the IRS failed to respond to their inquiry, reports Lerner then had IRS senior technical adviser Nancy Marks deal with the scheduling.

On May 9, 2013, Whitehouse held a hearing on the enforcement of campaign finance laws and noted the possibility of prosecuting such tax-exempt groups that were believed to have been deceitful on their tax filings.

The documents obtained by Judicial Watch show that on March 27, 2013, Lerner offered some background about the hearing in an email to top IRS staff:

As I mentioned yesterday — there are several groups of folks from the FEC world that are pushing tax fraud prosecution for c4s who report they are not conducting political activity when they are (or these folks think they are). One is my ex-boss Larry Noble (former General Counsel at the FEC), who is now president of Americans for Campaign Reform. This is their latest push to shut these down. One IRS prosecution would make an impact and they wouldn’t feel so comfortable doing the stuff.

So, don’t be fooled about how this is being articulated — it is ALL about 501(c)(4) orgs and political activity

Lerner noted in a follow-up email that such alleged activity would be difficult to prosecute under current law.

Whether there was a false statement or fraud regarding an [sic] description of an alleged political expenditure that doesn’t say vote for or vote against is not realistic under current law. Everyone is looking for a magic bullet or scapegoat — there isn’t one. The law in this area is just hard.


Judicial Watch also reports the documents show Lerner and IRS officials looking for tactful ways to approach the targeting issue days before Lerner revealed that conservative groups had been improperly scrutinized in an apology before the American Bar Association on May 10.

  • May 1, 2013: After receiving an email from an assistant showing that 501(c)(4) applications had increased from 1591 in 2010 to 3398 in 2012 , Lerner wrote back, “Looks to me like 2010-2012 doubled too. Oh well — thanks.”

•     May 2, 2013: Discussing an upcoming conference call with approximately 100 congressional staffers on May 22, Lerner cautioned aides, “Need to be careful not to mention sequester/furlough unless asked although can allude to budget and resources restraints.” 

  • May 2, 2013: In response to an email reminding her about the upcoming conference call with congressional staffers, Lerner responded, “Arrgh — I just saw it. Sharon [White] could skate, but Cindy [Thomas] is the person who could answer that stuff. We need to give them some type of language in the event that type of question comes up” [apparently in reference to earlier email referencing “sensitive issues”]. 

Finally, Judicial Watch reports that in emails after Lerner’s May 10 speech, a former Cincinnati program manager emailed Lerner livid about the fact that she had blamed “low-level” employees in the Cincinnati office for the targeting.

  • May 10, 2013: In an email to an aide responding to a request for information from a Washington Post reporter, Lerner admited that she “can’t confirm that there was anyone on the other side of the political spectrum” who had been targeted by the IRS. She then added that “The one with the names used were only know [sic] because they have been very loud in the press.”
  • May 10, 2013: An email from former Cincinnati program manager Cindy Thomas excoriated Lerner for her comments blaming “low-level” employees in its Cincinnati office for targeting tax-exempt organizations that had “Tea Party” or “Patriots” in their names during the 2012 election. Highlighting the words “low-level workers” in bold-face type each of the seven times she used it in short, pungent email, Thomas asked, “How am I supposed to keep the low-level workers motivated when the public believes they are nothing more than low-level workers and now will have no respect for how they are working cases?” Lerner’s response nearly an hour later was brief: “I will be back shortly and give you a call.”
  • May 15, 2013: In an email from an aide to Lerner, the aide specifically mentioned “Tea Party Organizations, the “Tea Party movement,” and “Tea Party Patriots” as organizations targeted by the IRS.

Last week, the Ways and Means Committee voted to refer Lerner to the Justice Department for criminal prosecution. A day earlier the House Oversight Committee voted to hold Lerner in contempt of Congress.

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