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  • just a conservative girl 9:40 PM on 04/09/2015 Permalink | Reply
    Tags: abuse of power, conservative principles, , police offiicers, police shooting, , slager,   

    Cops, Shootings, and The Usual Knee Jerk Reactions 

    One of my big pet peeves is willful blindness.  I can’t stand it.  I mean I really can’t stand it.  I especially hate it when it comes to politics.  I will vote for a democrat if I believe they are best person for the job.  Now, that doesn’t happen often, but in theory it can happen. In fact, I have voted for democrats in my life.  One was a protest vote for governor many years ago.  The republican candidate made this comment about the death penalty that I just couldn’t stomach and I refused to vote for him, since I don’t like not voting, I cast my ballot for his opponent.   


    I don’t like it any better when it comes to issues that while in practicality aren’t political, but where one stands on that issue usually will fall within political lines.  Cops being a good example.  Generally speaking, the far left will almost always cry racism when a white cop has some sort of altercation with a person of color.  The right will, in many instances, say the thug got what he deserved.  Normally speaking it is far more nuanced than that.  


    A shooting between a white officer and black man happened last weekend, the dead man was unarmed and running away at the time of the shooting.  The police officer told his story.  Once that story was told a person who happened to be walking to work that morning saw the incident and used his phone to record it.  Once this man heard the police officer’s story he knew that his video told a very different story, so he turned it over to the family of Walker Scott, the man who was shot and killed.  


    The video shows Scott running away from Officer Michael Slager.  The officer raises his firearm and shoots eight shots.  Mr Scott was struck multiple times in the back side of his body.  On the video the officer can be heard saying into his radio

    “Shots fired and the subject is down. He took my Taser.”

    The problem is that video doesn’t back that up.  The police officer clearly went back to where he was standing, picked up an object, walked back to the body and dropped something on the ground near a dying man. All the while giving no medical attention to man whatsoever.  


    A man has lost his life.  He was shot in the back multiple times by an officer who took an oath to serve and to protect.  That is his job.  That is what he is paid to do.  The fact that people are saying this man somehow got what he deserved is simply stunning to me.  

    What is the NEED to run? The action of running caused him to be shot. If he didn’t run the officer would not have shot him. He didn’t like it that he was going to be arrested due to a warrant….so he ran

    The punishment for that should be death?  No judge, no trial, no jury, just a verdict by a police officer, who in seconds, lies about what happened.  That is something we want happening in this country?  


    I support law enforcement.  The reason I support law enforcement is that I believe in the rule of law.  With that belief comes the understanding that sometimes the people we need to protected from are bad cops.  They are out there.  That cannot be denied.  


    As conservatives we should want all bad cops to be weeded out and fired.   Yes police officers do a dangerous job.  Yes they have the right to go home at the end of every day.  But so do we.  We shouldn’t be shot in the streets by over zealous cops.  


    I fully understand that more information may come out.  We have yet to hear the defense of the officer.  But conservatives can’t stand it when liberals and the media make assumptions that a police officer is racist simply based on the fact the person they are dealing with has a different hue on the color bar.  Why then are so many jumping to the conclusion that officer was somehow justified in this shooting when the evidence, at this point, doesn’t back that up?  


    Mr. Scott was an unarmed man, running away from the officer.  He posed no threat.  Yes running away from the cop wasn’t smart.  But again, the punishment for that isn’t death.  That is something for a court to decide what the punishment should be, likely jail time.  Yes Mr. Scott apparently owed back child support.  Again, not punishable by being shot in the back and left face down in the dirt to die like a rabid animal.  


    If you want to justify this you aren’t looking at facts.  You are making a knee jerk reaction to protect someone based on the badge he wears.  Just ask Serpico how many that wear a badge that aren’t doing it out some calling to protect you from evil criminals.  Bad cops exist.  Protecting them makes you look as willfully blind as the people who keep up the false narrative of “hands up, don’t shoot” in the case of Michael Brown in Ferguson, Missouri.  


    One of the principles of conservatism that I find most appealing is the equal protection under the law.  No one should above said law.  I don’t care what uniform he puts on.  A cop doesn’t get a pass simply because he is a cop.  He has the same rights as everyone else does.  Mr. Scott had rights as well.  Or, at least he should have.  


    A social media friend of mine made a comment:

     Conservatism is only as good as that which it seeks to conserve.

    Another example of what set me off today:

    Sad part part is….this guy was arrested 9 times for refusing to support his children….he was willing to die, than to support his kids….and YOU people support that…..that is pathetic…

    Yeah, I don’t that thinking is worth conserving.  A knee jerk reaction to protect someone who wears a badge is no better than blaming an officer for protecting themselves against a criminal who means them harm.  

     

     
  • just a conservative girl 10:20 PM on 05/14/2013 Permalink | Reply
    Tags: abuse of power, government report,   

    Report on IRS Abuses 

    TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION
    Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    May 14, 2013
    Reference Number: 2013-10-053
    This report has cleared the Treasury Inspector General for Tax Administration disclosure review process
    and information determined to be restricted from public release has been redacted from this document.
    Redaction Legend:
    1 = Tax Return/Return Information
    Phone Number | 202-622-6500
    E-mail Address | TIGTACommunications@tigta.treas.gov
    Website | http://www.treasury.gov/tigta HIGHLIGHTS
    INAPPROPRIATE CRITERIA WERE intervention was started soon after receipt, no
    USED TO IDENTIFY TAX-EXEMPT work was completed on the majority of these
    APPLICATIONS FOR REVIEW applications for 13 months. This was due to
    delays in receiving assistance from the Exempt
    Highlights Organizations function Headquarters office.
    For the 296 total political campaign intervention
    applications TIGTA reviewed as of
    December 17, 2012, 108 had been approved, Final Report issued on May 14, 2013 28 were withdrawn by the applicant, none had
    been denied, and 160 were open from 206 to Highlights of Reference Number: 2013-10-053 1,138 calendar days (some for more than to the Internal Revenue Service Acting three years and crossing two election cycles). Commissioner, Tax Exempt and Government
    Entities Division. More than 20 months after the initial case was
    identified, processing the cases began in IMPACT ON TAXPAYERS earnest. Many organizations received requests
    Early in Calendar Year 2010, the IRS began for additional information from the IRS that
    using inappropriate criteria to identify included unnecessary, burdensome questions
    organizations applying for tax-exempt status to (e.g., lists of past and future donors). The IRS
    review for indications of significant political later informed some organizations that they did
    campaign intervention. Although the IRS has not need to provide previously requested
    taken some action, it will need to do more so information. IRS officials stated that any donor
    that the public has reasonable assurance that information received in response to a request
    applications are processed without from its Determinations Unit was later destroyed.
    unreasonable delay in a fair and impartial WHAT TIGTA RECOMMENDED manner in the future.
    TIGTA recommended that the IRS finalize the WHY TIGTA DID THE AUDIT interim actions taken, better document the
    TIGTA initiated this audit based on concerns reasons why applications potentially involving
    expressed by members of Congress. The political campaign intervention are chosen for
    overall objective of this audit was to determine review, develop a process to track requests for
    whether allegations were founded that the IRS: assistance, finalize and publish guidance,
    1) targeted specific groups applying for develop and provide training to employees
    tax-exempt status, 2) delayed processing of before each election cycle, expeditiously resolve
    targeted groups’ applications, and 3) requested remaining political campaign intervention cases
    unnecessary information from targeted groups. (some of which have been in process for
    three years), and request that social welfare
    WHAT TIGTA FOUND activity guidance be developed by the
    Department of the Treasury. The IRS used inappropriate criteria that
    identified for review Tea Party and other In their response to the report, IRS officials
    organizations applying for tax-exempt status agreed with seven of our nine recommendations
    based upon their names or policy positions and proposed alternative corrective actions for
    instead of indications of potential political two of our recommendations. TIGTA does not
    campaign intervention. Ineffective management: agree that the alternative corrective actions will
    1) allowed inappropriate criteria to be developed accomplish the intent of the recommendations
    and stay in place for more than 18 months, and continues to believe that the IRS should
    2) resulted in substantial delays in processing better document the reasons why applications
    certain applications, and 3) allowed unnecessary potentially involving political campaign
    information requests to be issued. intervention are chosen for review and finalize
    and publish guidance. Although the processing of some applications
    with potential significant political campaign DEPARTMENT OF THE TREASURY
    WASHINGTON, D.C. 20220
    TREASURY INSPECTOR GENERAL
    FOR TAX ADMINISTRATION
    May 14, 2013
    MEMORANDUM FORACTING COMMISSIONER, TAX EXEMPT AND GOVERNMENT
    ENTITIES DIVISION
    FROM: Michael E. McKenney
    Acting Deputy Inspector General for Audit
    SUBJECT: Final Audit Report – Inappropriate Criteria Were Used to Identify
    Tax-Exempt Applications for Review (Audit # 201210022)
    This report presents the results of our review to determine whether allegations were founded that
    the Internal Revenue Service (IRS): 1) targeted specific groups applying for tax-exempt status,
    2) delayed processing of targeted groups’ applications for tax-exempt status, and 3) requested
    unnecessary information from targeted groups. This audit was initiated based on concerns
    expressed by members of Congress and reported in the media regarding the IRS’s treatment of
    organizations applying for tax-exempt status. This review is included in our Fiscal Year 2013
    Annual Audit Plan and addresses the major management challenge of Tax Compliance
    Initiatives.
    We would like to clarify a few issues based on the IRS response to our report. The response
    states that our report views approvals as evidence that the Exempt Organizations function should
    not have looked closely at those applications. We disagree with this statement. Our objection
    was to the criteria used to identify these applications for review. We believe all applications
    should be reviewed prior to approval to determine whether tax-exempt status should be granted.
    The IRS’s response also states that issues discussed in the report have been resolved. We
    disagree with this statement as well. Nine recommendations were made to correct concerns we
    raised in the report, and corrective actions have not been fully implemented. Further, as our
    report notes, a substantial number of applications have been under review, some for more than
    three years and through two election cycles, and remain open. Until these cases are closed by the
    IRS and our recommendations are fully implemented, we do not consider the concerns in this
    report to be resolved. Management’s complete response to the draft report is included as
    Appendix VIII. Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Copies of this report are also being sent to the IRS managers affected by the report
    recommendations. If you have any questions, please contact me or Gregory D. Kutz,
    Assistant Inspector General for Audit (Management Services and Exempt Organizations).
    2Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Table of Contents
    Background ……………………………………………………………………………………………. Page 1
    Results of Review ………………………………………………………………………………….. Page 5
    The Determinations Unit Used Inappropriate Criteria
    to Identify Potential Political Cases …………………………………………………….. Page 5
    Recommendation 1: ………………………………………………………… Page 10
    Recommendations 2 and 3: ………………………………………………. Page 11
    Potential Political Cases Experienced Significant
    Processing Delays …………………………………………………………………………….. Page 11
    Recommendations 4 and 5: ………………………………………. Page 16
    Recommendations 6 through 8: ………………………………….. Page 17
    The Determinations Unit Requested Unnecessary
    Information for Many Potential Political Cases …………………………………….. Page 18
    Recommendation 9: ……………………………………………….. Page 21
    Appendices
    Appendix I – Detailed Objective, Scope, and Methodology …………………… Page 22
    Appendix II – Major Contributors to This Report …………………………………. Page 25
    Appendix III – Report Distribution List ………………………………………………. Page 26
    Appendix IV – Outcome Measures ……………………………………………………… Page 27
    Appendix V – High-Level Organizational Chart of Offices
    Referenced in This Report …………………………………………………………………. Page 29
    Appendix VI – Timeline of Written Criteria for Identifying
    Potential Political Cases …………………………………………………………………….. Page 30
    Appendix VII – Comprehensive Timeline of Events …………………………….. Page 31
    Appendix VIII – Management’s Response to the Draft Report ………………. Page 44 Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Abbreviations
    BOLO Be On the Look Out
    EO Exempt Organizations
    I.R.C. Internal Revenue Code
    IRS Internal Revenue Service Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Background
    Organizations, such as charities, seeking Federal tax exemption are required to file an application
    with the Internal Revenue Service (IRS). Other organizations, such as social welfare
    organizations, may file an application but are not required to do so. The IRS’s Exempt
    Organizations (EO) function, Rulings and Agreements office, which is headquartered in
    Washington, D.C., is responsible for processing applications for tax exemption. Within the
    Rulings and Agreements office, the Determinations Unit in Cincinnati, Ohio, is responsible for
    reviewing applications as they are received to determine whether the organization qualifies for
    tax-exempt status.
    In Fiscal Year 2012,1
    70 percent of all closed applications for tax-exempt status were approved
    during an initial review with little or no additional information from the organizations. If
    substantial additional information is needed, the application is placed in unassigned inventory
    until it can be assigned to a specialist in the Determinations Unit for further processing. The
    specialist develops a letter(s) requesting the additional information and issues it to the
    organization. Once the specialist receives all the necessary information to determine whether an
    organization should be afforded tax-exempt status, a final determination letter is issued to the
    organization either approving or denying the request for tax-exempt status.
    If the Determinations Unit needs technical assistance processing applications, it may call upon
    the Technical Unit in the Rulings and Agreements office in Washington, D.C.2
    The IRS’s goal
    for processing all types of applications for tax-exempt status was 121 days in Fiscal Year 2012;
    however, some cases may take substantially longer. For example, the EO function states in its
    Fiscal Year 2013 Work Plan that applications requiring additional information are not assigned
    for review until an average of five months after they are received.
    Most organizations requesting tax-exempt status must submit either a Form 1023, Application
    for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, or
    Form 1024, Application for Recognition of Exemption Under Section 501(a), depending on the
    type of tax-exempt organization it desires to be. For example, a charitable organization would
    request exemption under Internal Revenue Code (I.R.C.) Section (§) 501(c)(3),3
    whereas a social
    welfare organization would request exemption under I.R.C. § 501(c)(4).4
    1
    A 12-consecutive-month period ending on the last day of any month. The Federal Government’s fiscal year begins
    on October 1 and ends on September 30.
    2
    For a high-level organizational chart of offices referenced in this report, see Appendix V.
    3
    I.R.C. § 501(c)(3) (2012).
    4
    I.R.C. § 501(c)(4) (2012).
    Page 1Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    The I.R.C. section and subsection an organization is granted tax exemption under affects the
    activities it may undertake. For example, I.R.C. § 501(c)(3) charitable organizations are
    prohibited from directly or indirectly participating in or intervening in any political campaign on
    behalf of or in opposition to any candidate for public office (hereafter referred to as political
    campaign intervention).5
    However, I.R.C. § 501(c)(4) social welfare organizations,
    I.R.C. § 501(c)(5)6
    agricultural and labor organizations, and I.R.C. § 501(c)(6)7
    business leagues
    may engage in limited political campaign intervention. Figure 1 highlights certain characteristics
    of common types of tax-exempt organizations.
    Figure 1: Characteristics of Certain
    Common Types of Tax-Exempt Organizations
    I.R.C. §§ 501(c)(4),
    Characteristic I.R.C. § 501(c)(3) (c)(5), and (c)(6)
    May receive tax deductible charitable
    contributions. Yes No
    May engage in political campaign
    intervention. No Limited (must not constitute
    primary activity of organization)
    Must publicly disclose the identity
    its donors.
    of No No
    May engage
    activity).
    in lobbying8
    (i.e., legislative Limited (must not
    be substantial)
    Yes (unlimited amount
    if in furtherance of
    tax-exempt purposes)
    May engage in general advocacy9
    not
    related to legislation or the election of
    candidates.
    Yes (permitted as an
    educational activity)
    Yes (unlimited amount
    if in furtherance of
    tax-exempt purposes)
    Must apply with the IRS. Yes No
    Source: Draft Advocacy Guide Sheet and Internal Revenue Manual.
    5
    Political campaign intervention is the term used in Treasury Regulations §§ 1.501(c)(3)-1, 1.501(c)(4)-1,
    1.501(c)(5)-1, and 1.501(c)(6)-1.
    6
    I.R.C. § 501(c)(5) (2012).
    7
    I.R.C. § 501(c)(6) (2012).
    8
    An organization engages in lobbying, or legislative activities, when it attempts to influence specific legislation by
    directly contacting members of a legislative body (Federal, State, or local) or encouraging the public to contact those
    members regarding that legislation. An organization also engages in lobbying when it encourages the public to take
    a position on a referendum. Lobbying is distinguished from political campaign intervention because lobbying does
    not involve attempts to influence the election of candidates for public office.
    9
    An organization engages in general advocacy when it attempts to 1) influence public opinion on issues germane to
    the organization’s tax-exempt purposes, 2) influence nonlegislative governing bodies (e.g., the executive branch or
    regulatory agencies), or 3) encourage voter participation through “get out the vote” drives, voter guides, and
    candidate debates in a nonpartisan, neutral manner. General advocacy basically includes all types of advocacy other
    than political campaign intervention and lobbying.
    Page 2Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    During the 2012 election cycle, the activities of tax-exempt organizations received media
    coverage concerning the amount of money spent on influencing elections. According to the
    Center for Responsive Politics, tax-exempt groups, such as I.R.C. § 501(c)(4), I.R.C. § 501(c)(5),
    and I.R.C. § 501(c)(6) organizations, spent $133 million in Calendar Year 2010 on Federal
    candidate-oriented expenditures. In Calendar Year 2012, this figure increased to $315 million.10
    In addition, as shown in Figure 2, the number of applications for tax-exempt status has increased
    over the past four fiscal years.11
    Figure 2: Number of Applications for
    I.R.C. §§ 501(c)(3)–(6) Tax-Exempt
    Status Received by the IRS
    Fiscal
    Year
    I.R.C. Subsection
    501(c)(3) 501(c)(4) 501(c)(5) 501(c)(6)
    2009 65,179 1,751 543 1,828
    2010 59,486 1,735 290 1,637
    2011 58,712 2,265 409 1,836
    2012 66,543 3,357 1,081 2,338
    Source: These data were provided by the EO function as
    background and were not validated for accuracy or reliability.
    During the 2012 election cycle, some members of Congress raised concerns to the IRS about
    selective enforcement and the duty to treat similarly situated organizations consistently. In
    addition, several organizations applying for
    I.R.C. § 501(c)(4) tax-exempt status made allegations that
    the IRS 1) targeted specific groups applying for tax-exempt
    status, 2) delayed the processing of targeted groups’
    applications for tax-exempt status, and 3) requested
    unnecessary information from targeted organizations.
    Lastly, several members of Congress requested that the IRS
    investigate whether existing social welfare organizations
    are improperly engaged in a substantial, or even
    predominant, amount of campaign activity.
    We initiated this audit based on concerns expressed by Congress and reported in the media
    regarding the IRS’s treatment of organizations applying for tax-exempt status. We focused our
    10 The Center for Responsive Politics obtained its information from the Federal Election Commission. We only
    included expenditures reported to the Federal Election Commission specifically for advocating the election or defeat
    of clearly identified Federal candidates.
    11 Some of this increase may be due to the reapplication of those organizations whose tax-exempt status was revoked
    as a result of not filing information returns for three consecutive years.
    Page 3
    This audit focused on
    allegations that the IRS targeted
    specific groups applying for
    tax-exempt status, delayed the
    processing of targeted groups’
    applications, and requested
    unnecessary information from
    targeted organizations.Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    efforts on reviewing the processing of applications for tax-exempt status and determining
    whether allegations made against the IRS were founded.12 Tax-exempt application case files
    were selected for review in June 2012 and were reviewed as provided by the EO function
    between July and November 2012. We did not review whether specific applications for
    tax-exempt status should be approved or denied.
    This review was performed at the EO function Headquarters office in Washington, D.C., and the
    Determinations Unit in Cincinnati, Ohio, during the period June 2012 through February 2013.
    We conducted this performance audit in accordance with generally accepted government
    auditing standards. Those standards require that we plan and perform the audit to obtain
    sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions
    based on our audit objective. We believe that the evidence obtained provides a reasonable basis
    for our findings and conclusions based on our audit objective. Detailed information on our audit
    objective, scope, and methodology is presented in Appendix I. Major contributors to the report
    are listed in Appendix II.
    12 A future audit is being considered to assess how the EO function monitors I.R.C. §§ 501(c)(4)–(6) organizations
    to ensure that political campaign intervention does not constitute their primary activity.
    Page 4Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Results of Review
    The Determinations Unit Used Inappropriate Criteria to Identify
    Potential Political Cases
    The Determinations Unit developed and used inappropriate criteria to identify applications from
    organizations with the words Tea Party in their names. These applications (hereafter referred to
    as potential political cases)13 were forwarded to a team of specialists14 for review. Subsequently,
    the Determinations Unit expanded the criteria to inappropriately include organizations with other
    specific names (Patriots and 9/12) or policy positions. While the criteria used by the
    Determinations Unit specified particular organization names, the team of specialists was also
    processing applications from groups with names other than those identified in the criteria. The
    inappropriate and changing criteria may have led to inconsistent treatment of organizations
    applying for tax-exempt status. For example, we identified some organizations’ applications
    with evidence of significant political campaign intervention that were not forwarded to the team
    of specialists for processing but should have been. We also identified applications that were
    forwarded to the team of specialists but did not have indications of significant political campaign
    intervention. All applications that were forwarded to the team of specialists experienced
    substantial delays in processing. Although the IRS has taken some action, it will need to do
    more so that the public has reasonable assurance that applications are processed without
    unreasonable delay in a fair and impartial manner in the future.
    Criteria for selecting applications inappropriately identified organizations based
    on their names and policy positions
    The Determinations Unit developed and began using criteria to identify potential political cases
    for review that inappropriately identified specific groups applying for tax-exempt status based on
    their names or policy positions instead of developing criteria based on tax-exempt laws and
    Treasury Regulations.
    **********************************1*****************************************
    **********************************1*******************************************
    *1***. According to media reports, some organizations were classified as I.R.C. § 501(c)(4)
    social welfare organizations but operated like political organizations. ********1**********
    13 Until July 2011, the Rulings and Agreements office referred to these cases as Tea Party cases. Afterwards, the
    EO function referred to these cases as advocacy cases.
    14 Initially, the team consisted of one specialist, but it was expanded to several specialists in December 2011. The
    EO function referred to this team as the advocacy team.
    Page 5Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    *********************************1**************************************. Soon
    thereafter, according to the IRS, a Determinations Unit specialist was asked to search for
    applications with Tea Party, Patriots, or 9/12 in the organization’s name as well as other
    “political-sounding” names. EO function officials stated that, in May 2010, the Determinations
    Unit began developing a spreadsheet that would become known as the “Be On the Look Out”
    listing (hereafter referred to as the BOLO listing),15 which included the emerging issue of Tea
    Party applications. In June 2010, the Determinations Unit began training its specialists on issues
    to be aware of, including Tea Party cases. By July 2010, Determinations Unit management
    stated that it had requested its specialists to be on the lookout for Tea Party applications.
    In August 2010, the Determinations Unit distributed the first formal BOLO listing. The criteria
    in the BOLO listing were Tea Party organizations applying for I.R.C. § 501(c)(3) or
    I.R.C. § 501(c)(4) status. Based on our review of other BOLO listing criteria, the use of
    organization names on the BOLO listing is not unique to potential political cases.16 EO function
    officials stated that Determinations Unit specialists interpreted the general criteria in the
    BOLO listing and developed expanded criteria for identifying potential political cases.17
    Figure 3 shows that, by June 2011, the expanded criteria included additional names (Patriots and
    9/12 Project) as well as policy positions espoused by organizations in their applications.
    Figure 3: Criteria for Potential Political Cases (June 2011)
    “Tea Party,” “Patriots” or “9/12 Project” is referenced in the case file
    Issues include government spending, government debt or taxes
    Education of the public by advocacy/lobbying to “make America a better place to live”
    Statement in the case file criticize how the country is being run
    Source: EO function briefing dated June 2011.
    The mission of the IRS is to provide America’s taxpayers top quality service by helping them
    understand and meet their tax responsibilities and by applying the tax law with integrity and
    fairness to all. According to IRS Policy Statement 1-1, IRS employees accomplish this mission
    by being impartial and handling tax matters in a manner that will promote public confidence.
    However, the criteria developed by the Determinations Unit gives the appearance that the IRS is
    not impartial in conducting its mission. The criteria focused narrowly on the names and policy
    15 The BOLO listing includes a consolidated list of emerging issues the EO function identifies for dissemination to
    Determinations Unit specialists.
    16 We did not review the use of other named organizations on the BOLO listing to determine if their use was
    appropriate.
    17 During interviews with Determinations Unit specialists and managers, we could not specifically determine who
    had been involved in creating the criteria. EO function officials later clarified that the expanded criteria were a
    compilation of various Determinations Unit specialists’ responses on how they were identifying Tea Party cases.
    Page 6Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    positions of organizations instead of tax-exempt laws and Treasury Regulations. Criteria for
    selecting applications for the team of specialists should focus on the activities of the
    organizations and whether they fulfill the requirements of the law. Using the names or policy
    positions of organizations is not an appropriate basis for identifying applications for review by
    the team of specialists.
    We asked the Acting Commissioner, Tax Exempt and Government Entities Division; the
    Director, EO; and Determinations Unit personnel if the criteria were influenced by any
    individual or organization outside the IRS. All of these officials stated that the criteria were not
    influenced by any individual or organization outside the IRS. Instead, the Determinations Unit
    developed and implemented inappropriate criteria in part due to insufficient oversight provided
    by management. Specifically, only first-line management approved references to the Tea Party
    in the BOLO listing criteria before it was implemented. As a result, inappropriate criteria
    remained in place for more than 18 months. Determinations Unit employees also did not
    consider the public perception of using politically sensitive criteria when identifying these cases.
    Lastly, the criteria developed showed a lack of knowledge in the Determinations Unit of what
    activities are allowed by I.R.C. § 501(c)(3) and I.R.C. § 501(c)(4) organizations.
    Determinations Unit employees stated that they considered the Tea Party criterion as a shorthand
    term for all potential political cases. Whether the inappropriate criterion was shorthand for all
    potential political cases or not, developing and using criteria that focuses on organization names
    and policy positions instead of the activities permitted under the Treasury Regulations does not
    promote public confidence that tax-exempt laws are being adhered to impartially. In addition,
    the applications for those organizations that were identified for processing by the team of
    specialists experienced significant delays and requests for unnecessary information that is
    detailed later in this report.
    After being briefed on the expanded criteria in June 2011, the Director, EO, immediately
    directed that the criteria be changed. In July 2011, the criteria were changed to focus on the
    potential “political, lobbying, or [general] advocacy” activities of the organization. These
    criteria were an improvement over using organization names and policy positions. However, the
    team of specialists subsequently changed the criteria in January 2012 without executive approval
    because they believed the July 2011 criteria were too broad. The January 2012 criteria again
    focused on the policy positions of organizations instead of tax-exempt laws and Treasury
    Regulations. After three months, the Director, Rulings and Agreements, learned the criteria had
    been changed by the team of specialists and subsequently revised the criteria again in May 2012.
    (See Appendix VI for a complete timeline of criteria used to identify potential political cases).
    The May 2012 criteria more clearly focus on activities permitted under the Treasury Regulations.
    As a result of changes made to the criteria without management knowledge, the Director,
    Rulings and Agreements, issued a memorandum requiring all original entries and changes to
    criteria included on the BOLO listing be approved at the executive level prior to implementation.
    Page 7Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    The team of specialists processed applications by organizations with names
    other than Tea Party, Patriots, and 9/12
    To determine if organizations other than those specifically identified in the inappropriate criteria
    were processed by the team of specialists, we reviewed the names on all applications identified
    as potential political cases.18 Figure 4 shows that approximately one-third of the applications
    identified for processing by the team of specialists included Tea Party, Patriots, or 9/12 in their
    names, while the remainder did not. According to the Director, Rulings and Agreements, the
    fact that the team of specialists worked applications that did not involve the Tea Party, Patriots,
    or 9/12 groups demonstrated that the IRS was not politically biased in its identification of
    applications for processing by the team of specialists.
    Figure 4: Breakdown of Potential Political Cases by Organization Name
    72
    11
    13
    202
    Tea Party
    9/12
    Patriots
    Other
    Source: EO function Potential Political Case Tracking Sheet as of May 31, 2012.
    While the team of specialists reviewed applications from a variety of organizations, we
    determined during our reviews of statistical samples of I.R.C. § 501(c)(4) tax-exempt
    applications that all cases with Tea Party, Patriots, or 9/12 in their names were forwarded to the
    team of specialists.19
    18 We could not determine which potential political cases may have been identified based on an organization’s
    policy positions.
    19 We determined this through two statistical samples of 338 (7.5 percent) from a universe of 4,510 I.R.C. § 501(c)(4)
    tax-exempt applications filed during May 2010 through May 2012 that were not forwarded to the team of specialists.
    See Appendix I for details on our sampling methodology.
    Page 8Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Some applications with indications of significant political campaign intervention
    were not identified for review by the team of specialists
    In May 2012, the Director, Rulings and Agreements, approved the current criteria for identifying
    potential political cases. The criteria are “501(c)(3), 501(c)(4), 501(c)(5), and 501(c)(6)
    organizations with indicators of significant amounts of political campaign intervention….” To
    determine if all cases with indications of significant political campaign intervention were sent to
    the team of specialists, we reviewed two statistical samples of I.R.C. § 501(c)(4) applications.
     Applications That the IRS Determined Required Minimal or No Additional
    Information for Processing – We reviewed a statistical sample of 94 I.R.C. § 501(c)(4)
    cases closed from May 201020 through May 2012 from a universe of 2,051 applications
    that the IRS determined required minimal or no additional information from the
    organizations (also referred to by the EO function as merit closures). We determined that
    two (2 percent) of 94 approved applications had indications of significant political
    campaign intervention and should have been forwarded to the team of specialists.21
    Based on our statistical sample, we project an estimated 44 merit closure applications
    were not appropriately identified as potential political cases during this time period.22
     Applications Identified by the IRS That Required Additional Information for
    Processing – We reviewed a statistical sample of 244 I.R.C. § 501(c)(4) cases closed
    from May 2010 through May 2012 or open as of May 31, 2012, from a universe of
    2,459 applications that the IRS determined required additional information from the
    organizations applying for tax-exempt status (also referred to by the EO function as full
    development applications) but were not forwarded to the team of specialists. For the
    applications that were available for our review, we found that 14 (6 percent)23 of
    237 applications24 included indications of significant political campaign intervention and
    should have been processed by the team of specialists.25 We project an estimated 141 full
    development applications were not appropriately identified as potential political cases
    during this time period.26
    20 May 2010 was chosen because it is the first date that we were informed that the Determinations Unit was using
    criteria which identified specific organizations by name.
    21 Neither of the two cases involved a Tea Party, Patriots, or 9/12 organization.
    22 See Appendix IV.
    23 None of the 14 cases involved a Tea Party, Patriots, or 9/12 organization.
    24 We could not analyze seven sampled application case files because of incomplete documentation in the case files
    (six applications) or the case file could not be located (one application). See Appendix IV.
    25 We determined that eight applications were appropriately forwarded to the team of specialists. Five of the
    eight application case files involved Tea Party, Patriots, or 9/12 organizations.
    26 See Appendix IV.
    Page 9Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    To determine if cases without indications of significant political campaign intervention were
    sent to the team of specialists, we reviewed all of the applications identified as potential
    political cases as of May 31, 2012.
     Applications That the IRS Determined Should Be Processed by the Team of
    Specialists – We reviewed all 298 applications that had been identified as potential
    political cases as of May 31, 2012. In the majority of cases, we agreed that the
    applications submitted included indications of significant political campaign intervention.
    However, we did not identify any indications of significant political campaign
    intervention for 91 (31 percent) of the 296 applications27 that had complete
    documentation.28
    We discussed our results with EO function officials, who disagreed with our findings.
    Although EO function officials provided explanations about why the applications should
    have been identified as potential political cases, the case files did not include the specific
    reason(s) the applications were selected. EO function officials also stated that
    applications may not literally include statements indicating significant political campaign
    intervention.29 According to EO function officials, organizations may not understand
    what constitutes political campaign intervention or may provide vague descriptions of
    certain activities that the EO function knows from past experience potentially involve
    political campaign intervention. In these cases, the EO function believes it is important
    to review the applications to ensure that political campaign intervention is not the
    organizations’ primary activity. To provide further assurance that Determinations Unit
    employees are handling tax matters in an impartial manner, it would be helpful to
    document specifically why applications are chosen for further review.
    Recommendations
    The Director, EO, should:
    Recommendation 1: Ensure that the memorandum requiring the Director, Rulings and
    Agreements, to approve all original entries and changes to criteria included on the BOLO listing
    prior to implementation be formalized in the appropriate Internal Revenue Manual.
    Management’s Response: The IRS agreed with this recommendation and will
    ensure that the procedures set forth in the memorandum requiring the Director,
    27 We could not complete our review of two cases due to inadequate documentation in the case files. See
    Appendix IV.
    28 Seventeen (19 percent) of the 91 applications involved Tea Party, Patriots, or 9/12 organizations.
    29 It should also be noted that, in some cases, specialists obtained additional information after the application was
    received that indicated the organizations were involved in political campaign intervention which was not available in
    the initial application documentation we reviewed.
    Page 10Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Rulings and Agreements, to approve in advance all original entries and changes to the
    BOLO listing are made part of the Internal Revenue Manual.
    Recommendation 2: Develop procedures to better document the reason(s) applications are
    chosen for review by the team of specialists (e.g., evidence of specific political campaign
    intervention in the application file or specific reasons the EO function may have for choosing to
    review the application further based on past experience).
    Management’s Response: The IRS proposed an alternative corrective action to
    our recommendation. The IRS stated it will review its screening procedures to
    determine whether, and to what extent, additional documentation can be implemented
    without having an adverse impact on the timeliness of case processing.
    Office of Audit Comment: We do not believe this alternative corrective action fully
    addresses the recommendation. Developing procedures to better document the reasons
    applications are chosen for further review would help ensure that applications are being
    handled in an impartial manner. In addition, as detailed in the next section of this report,
    the average time these applications have been open is 574 days as of December 17, 2012.
    We do not believe documenting a brief explanation about why applications are chosen for
    review would have an adverse impact on the timeliness of case processing.
    Recommendation 3: Develop training or workshops to be held before each election cycle
    including, but not limited to, the proper ways to identify applications that require review of
    political campaign intervention activities.
    Management’s Response: The IRS agreed with this recommendation and will
    develop training on the topics described in Recommendations 3, 5, 6, and 9. Because
    election cycles are continuous, the IRS will develop a schedule which ensures that
    staff have the training as needed to handle potential political intervention matters.
    Potential Political Cases Experienced Significant Processing Delays
    Organizations that applied for tax-exempt status and had their applications forwarded to the team
    of specialists experienced substantial delays. As of December 17, 2012, many organizations had
    not received an approval or denial letter for more than two years after they submitted their
    applications. Some cases have been open during two election cycles (2010 and 2012). The
    IRS Strategic Plan 2009–2013 has several goals and objectives that involve timely interacting
    with taxpayers, including enforcement of the tax law in a timely manner while minimizing
    taxpayer burden. The EO function does not have specific timeliness goals for processing
    applications, such as potential political cases, that require significant follow-up with the
    Page 11Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    organizations.30 The time it takes to process an application depends upon the facts and
    circumstances of the case.
    Potential political cases took significantly longer than average to process due to ineffective
    management oversight. Once cases were initially identified for processing by the team of
    specialists, the Determinations Unit Program Manager requested assistance via e-mail from the
    Technical Unit to ensure consistency in processing the cases. However, EO function
    management did not ensure that there was a formal process in place for initiating, tracking, or
    monitoring requests for assistance. In addition, there were several changes in Rulings and
    Agreements management responsible for overseeing the fulfillment of requests for assistance
    from the Determinations Unit during this time period. This contributed to the lengthy delays in
    processing potential political cases. As a result, the Determinations Unit waited more than
    20 months (February 2010 to November 2011) to receive draft written guidance from the
    Technical Unit for processing potential political cases.
    As a result, the IRS delayed the issuance of letters to organizations approving their tax-exempt
    status. For I.R.C. § 501(c)(3) organizations, this means that potential donors and grantors could
    be reluctant to provide donations or grants.31 In addition, some organizations withdrew their
    applications and others may not have begun conducting planned charitable or social welfare
    work. The delays may have also prevented some organizations from receiving certain benefits of
    the tax-exempt status. For example, if organizations are approved for tax-exempt status, they
    may receive exemption from certain State taxes and reduced postal rates. For organizations that
    may eventually be denied tax-exempt status but have been operating while their applications are
    pending, the organizations will be required to retroactively file income tax returns and may be
    liable to pay income taxes for, in some cases, more than two years.
    To analyze the delays, we: 1) reviewed the events that led to delays in processing potential
    political cases, 2) compared the amount of time cases assigned to the team of specialists were
    open to applications that were not assigned to the team of specialists, and 3) determined if
    organizations were eligible to sue the IRS due to delays in processing certain applications.
    Potential political cases experienced long processing delays
    The team of specialists stopped working on potential political cases from October 2010 through
    November 2011, resulting in a 13-month delay, while they waited for assistance from the
    Technical Unit. Figure 5 illustrates significant events and delays concerning potential political
    cases. For a comprehensive timeline of events related to potential political cases, see
    Appendix VII.
    30 The EO function, however, had an overall goal to process merit and full development tax-exempt applications in
    121 days for Fiscal Year 2012.
    31 Of 298 cases reviewed, 89 were I.R.C. § 501(c)(3) organizations.
    Page 12Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Figure 5: Timeline of Events and Delays Involving the Processing
    of Potential Political Cases (*****1******* Through May 2012)
    Source: Interviews of EO function employees and our review of EO function e-mails.
    Ineffective oversight by management led to significant delays in processing potential political
    cases. ***************************************1*****************************
    **********1*******************************. In April 2010, the Determinations Unit
    Program Manager requested via e-mail a contact in the Technical Unit to provide assistance with
    processing the applications. A Technical Unit specialist was assigned this task and began
    working with the team of specialists. The team of specialists stopped processing cases in
    October 2010 without closing any of the 40 cases that were begun. However, the Determinations
    Unit Program Manager thought the cases were being processed. Later, we were informed by the
    Director, Rulings and Agreements, that there was a miscommunication about processing the
    cases. The Determinations Unit waited for assistance from the Technical Unit instead of
    Page 13
    Date Events and Delays
    ******1****** *****************************1*******************************
    *******************1**********.
    April 2010 The team of specialists is formed with one specialist who is assigned potential
    political cases and begins working on them with the assistance of a Technical Unit
    employee.
    October 2010 The team of specialists stops processing potential political cases while waiting for
    assistance from the Technical Unit.
    July 2011 The EO function decides to develop written
    to process the potential political cases.
    guidance for the Determinations Unit
    November 2011 Draft written guidance is provided to the Determinations Unit.
    December 2011 Additional specialists are added to the team of specialists.
    January 2012 Specialists begin issuing additional information request letters to organizations
    applying for tax-exempt status, requesting that the information be provided in
    two to three weeks. These time periods are standard response times given for any
    information request and are included in the Internal Revenue Manual.
    February 2012 Concerns are raised in the media regarding requests for significant amounts of
    information from organizations applying for tax-exempt status. The Director, EO,
    stops specialists from issuing any more letters requesting information. Instead,
    letters allowing extensions of 60 days to respond to previous additional information
    letters were developed and issued in March and April 2012. These letters also noted
    that applicants should contact the IRS if they needed longer than 60 days to respond.
    May 2012 A workshop is given to Determinations Unit specialists assigned to potential
    political cases. Afterwards, a review of all the open cases is completed to
    recommend whether additional processing is necessary or whether the cases can
    be closed (as of December 17, 2012, 160 applications were still being processed). Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    continuing to process the cases. The Determinations Unit Program Manager requested status
    updates on the request for assistance several times via e-mail. Draft written guidance was not
    received from the Technical Unit until November 2011, 13 months after the Determinations Unit
    stopped processing the cases. As of the end of our audit work in February 2013, the guidance
    had not been finalized because the EO function decided to provide training instead.32
    Many organizations waited much longer than 13 months for a decision, while others have yet to
    receive a decision from the IRS. For example, as of December 17, 2012, the IRS had been
    processing several potential political cases for more than 1,000 calendar days. Some of these
    organizations received requests for additional information in Calendar Year 2010 and then did
    not hear from the IRS again for more than a year while the Determinations Unit waited for
    assistance from the Technical Unit. For the 296 potential political cases we reviewed,33 as of
    December 17, 2012, 108 applications had been approved, 28 were withdrawn by the applicant,
    none had been denied, and 160 cases were open from 206 to 1,138 calendar days (some crossing
    two election cycles).
    In March 2012, the Deputy Commissioner, Services and Enforcement, asked the Senior
    Technical Advisor to the Acting Commissioner, Tax Exempt and Government Entities Division,
    to look into concerns raised by the media about delays in processing applications for tax-exempt
    status from Tea Party groups and the nature of the questions being asked related to the
    applications. In April 2012, the Senior Technical Advisor to the Acting Commissioner, Tax
    Exempt and Government Entities Division, along with a team of EO function Headquarters
    office employees, reviewed many of the potential political cases and determined that there
    appeared to be some confusion by Determinations Unit specialists and applicants on what
    activities are allowed by I.R.C. § 501(c)(4) organizations. We believe this could be due to the
    lack of specific guidance on how to determine the “primary activity” of an I.R.C. § 501(c)(4)
    organization. Treasury Regulations state that I.R.C. § 501(c)(4) organizations should have social
    welfare as their “primary activity”; however, the regulations do not define how to measure
    whether social welfare is an organization’s “primary activity.”
    As a result of this confusion, the EO function Headquarters employees provided a two-day
    workshop to the team of specialists in May 2012 to train them on what activities are allowable by
    I.R.C. § 501(c)(4) organizations, including lobbying and political campaign intervention. After
    this workshop, potential political cases were independently reviewed by two people to determine
    what, if any, additional work needed to be completed prior to making a decision to approve or
    deny the applications for tax-exempt status. This review continued on any newly identified
    potential political cases. Prior to the hands-on training and independent reviews, the team of
    specialists had only approved six (2 percent) of 298 applications. After the hands-on training
    32 In response to the National Taxpayer Advocate’s 2007 Annual Report to Congress, the IRS commented that
    putting guide sheets for processing applications for tax-exempt status on its Internet site would result in fewer
    delays.
    33 *************************************1******************************************.
    Page 14Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    and independent reviews began, the Determinations Unit approved an additional 102 applications
    by December 2012.34 In addition, it was decided that applications could be approved, but a
    referral for follow-up could be sent to another unit,35 which could review the activities of an
    organization at a later date to determine if they were consistent with the organization’s
    tax-exempt status.
    Potential political cases were open much longer than similar cases that were not
    identified for processing by the team of specialists
    For Fiscal Year 2012, the average time it took the Determinations Unit to complete processing
    applications requiring additional information from organizations applying for tax-exempt status
    (also referred to by the EO function as full development cases) was 238 calendar days according
    to IRS data. In comparison, the average time a potential political case was open as of
    December 17, 2012, was 574 calendar days (with 158 potential political cases being open longer
    than the average calendar days it took to close other full development cases).36 Figure 6 shows
    that more than 80 percent of the potential political cases have been open more than one year.
    Figure 6: Number of Calendar Days Potential Political Cases
    Were Open (as of December 17, 2012)
    Total
    Cases
    Number and Percentage37 of Potential
    Political Cases Open by Calendar Day Range
    0–120
    Calendar
    Days
    121–180
    Calendar
    Days
    181–270
    Calendar
    Days
    271–365
    Calendar
    Days
    More
    Than 365
    Calendar
    Days
    160 0
    (0%)
    0
    (0%)
    3
    (2%)
    28
    (18%)
    129
    (81%)
    Source: Our analysis of EO function documentation.
    34 Of the 102 applications, 29 (28 percent) involved Tea Party, Patriots, or 9/12 organizations.
    35 The Review of Operations Unit completes compliance reviews on tax-exempt organizations to determine whether
    they are operating in accordance with their tax-exempt purposes and are current with their filing requirements. Unit
    personnel review information available on IRS systems, filed returns, applications for tax exemption, and the
    Internet to assess the organizations’ operations and make recommendations for further actions.
    36 See Appendix IV.
    37 Percentages may not equal 100 percent due to rounding.
    Page 15Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Some charitable organizations were eligible to sue the IRS for declaratory
    judgment due to the delays in processing applications
    The Determinations Unit did not always timely approve or deny the applications for
    I.R.C. § 501(c)(3) tax-exempt status for potential political cases. However, the tax law provides
    organizations with the ability to sue the IRS to force a decision on their applications if the IRS
    does not approve or deny their applications within 270 calendar days.38
    As of May 31, 2012,39 32 (36 percent) of 89 I.R.C. § 501(c)(3) potential political cases were open
    more than 270 calendar days, and the organizations had responded timely to all requests for
    additional information, as required. As of the end of our fieldwork, none of these organizations
    had sued the IRS, even though they had the legal right. In another 38 open cases, organizations
    were timely in their responses to additional information requests, but the 270-calendar-day
    threshold had not been reached as of May 31, 2012. These 38 organizations may have the right
    to sue the IRS in the future if determinations are not made within the 270-calendar-day period.
    Recommendations
    The Director, EO, should:
    Recommendation 4: Develop a process for the Determinations Unit to formally request
    assistance from the Technical Unit and the Guidance Unit.40 The process should include actions
    to initiate, track, and monitor requests for assistance to ensure that requests are responded to
    timely.
    Management’s Response: The IRS agreed with this recommendation and will
    develop a formal process for the Determination Unit to request assistance and to
    monitor such requests.
    Recommendation 5: Develop guidance for specialists on how to process requests for
    tax-exempt status involving potentially significant political campaign intervention. This
    guidance should also be posted to the Internet to provide transparency to organizations on the
    application process.
    Management’s Response: The IRS proposed alternative corrective action to our
    recommendation. The IRS will develop training on the topics described in
    Recommendations 3, 5, 6, and 9. Because election cycles are continuous, the IRS
    38 Revenue Procedure 2012-09 provides further guidance on the implementation of this right.
    39 Tax-exempt application case files were selected for review in June 2012 based on a May 31, 2012, listing of
    applications being processed by the team of specialists.
    40 The Guidance Unit provides formal and informal guidance that explains how certain laws, such as regulations,
    revenue rulings, revenue procedures, notices, and announcements, may apply to exempt organizations.
    Page 16Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    noted that it will develop a schedule which ensures that staff have the training as
    needed to handle potential political intervention matters.
    Office of Audit Comment: We do not believe that this alternative corrective action
    fully addresses our recommendation. We believe that specific guidance should be
    developed and made available to specialists processing potential political cases. Making
    this guidance available on the Internet for organizations could also address a concern
    raised in the IRS’s response that many applications appear to contain incomplete and
    inconsistent information.
    Recommendation 6: Develop training or workshops to be held before each election cycle
    including, but not limited to: a) what constitutes political campaign intervention versus general
    advocacy (including case examples) and b) the ability to refer for follow-up those organizations
    that may conduct activities in a future year which may cause them to lose their tax-exempt status.
    Management’s Response: The IRS agreed with this recommendation and will
    develop training on the topics described in Recommendations 3, 5, 6, and 9. Because
    election cycles are continuous, the IRS reported that it will develop a schedule which
    ensures that staff have the training as needed to handle potential political intervention
    matters.
    Recommendation 7: Provide oversight to ensure that potential political cases, some of which
    have been in process for three years, are approved or denied expeditiously.
    Management’s Response: The IRS agreed with this recommendation and stated
    that, while this is an ongoing project, it is closely overseeing the remaining open cases
    to ensure that it reaches determinations as expeditiously as possible.
    The Acting Commissioner, Tax Exempt and Government Entities Division, should:
    Recommendation 8: Recommend to IRS Chief Counsel and the Department of the Treasury
    that guidance on how to measure the “primary activity” of I.R.C. § 501(c)(4) social welfare
    organizations be included for consideration in the Department of the Treasury Priority Guidance
    Plan.41
    Management’s Response: The IRS agreed with this recommendation and will
    share this recommendation with the IRS Chief Counsel and the Department of
    Treasury’s Office of Tax Policy.
    41 The Department of the Treasury issues a Priority Guidance Plan each year to identify and prioritize the tax issues
    that should be addressed through regulations, revenue rulings, revenue procedures, notices, and other published
    administrative guidance.
    Page 17Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    The Determinations Unit Requested Unnecessary Information for
    Many Potential Political Cases
    The Determinations Unit sent requests for information that we later (in whole or in part)
    determined to be unnecessary for 98 (58 percent) of 170 organizations that received additional
    information request letters.42 According to the Internal Revenue Manual, these requests should
    be thorough, complete, and relevant. However, the Determinations Unit requested irrelevant
    (unnecessary) information because of a lack of managerial review, at all levels, of questions
    before they were sent to organizations seeking tax-exempt status. We also believe that
    Determinations Unit specialists lacked knowledge of what activities are allowed by
    I.R.C. § 501(c)(3) and I.R.C. § 501(c)(4) tax-exempt organizations. This created burden on the
    organizations that were required to gather and forward information that was not needed by the
    Determinations Unit and led to delays in processing the applications. These delays could result
    in potential donors and grantors being reluctant to provide donations or grants to organizations
    applying for I.R.C. § 501(c)(3) tax-exempt status. In addition, some organizations may not have
    begun conducting planned charitable or social welfare work.
    After receiving draft guidance in November 2011, the team of specialists began sending requests
    for additional information in January 2012 to organizations that were applying for tax-exempt
    status. For some organizations, this was the second letter received from the IRS requesting
    additional information, the first of which had been received more than a year before this date.
    These letters requested that the information be provided in two or three weeks (as is customary in
    these letters) despite the fact that the IRS had done nothing with some of the applications for
    more than one year. After the letters were received, organizations seeking tax-exempt status, as
    well as members of Congress, expressed concerns about the type and extent of questions being
    asked. For example, the Determinations Unit requested donor information from
    27 organizations43 that it would be required to make public if the application was approved, even
    though this information could not be disclosed by the IRS when provided by organizations
    whose tax-exempt status had been approved. Figure 7 shows an example of requests sent to
    organizations applying for tax-exempt status regarding donors.
    42 See Appendix IV.
    43 Of the 27 organizations, 13 had Tea Party, Patriots, or 9/12 in their names.
    Page 18Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Figure 7: Example of Requests for Information Regarding
    Past and Future Donors in Letters Sent in January/February 2012
    Provide the following information for the income you received and raised for the years from
    inception to the present. Also, provide the same information for the income you expect to
    receive and raise for 2012, 2013, and 2014.
    a. Donations, contributions, and grant income for each year, which includes the following
    information:
    1. The names of the donors, contributors, and grantors. If the donor, contributor, or
    grantor has run or will run for a public office, identify the office. If not, please
    confirm by answering this question “No.”
    2. The amounts of each of the donations, contributions, and grants and the dates you
    received them.
    3. How did you use these donations, contributions, and grants? Provide the details.
    If you did not receive or do not expect to receive any donation, contribution, and grant income,
    please confirm by answering “None received” and/or “None expected.”
    Source: Application case files.
    After media attention, the Director, EO, stopped issuance of additional information request
    letters and provided an extension of time to respond to previously issued letters. The Deputy
    Commissioner for Services and Enforcement then asked the Senior Technical Advisor to the
    Acting Commissioner, Tax Exempt and Government Entities Division, to find out how
    applications were being processed and make recommendations. The Senior Technical Advisor
    and a team of specialists visited the Determinations Unit in Cincinnati, Ohio, and began
    reviewing cases. As part of this effort, EO function Headquarters office employees reviewed the
    additional information request letters prepared by the team of specialists and identified
    seven questions that they deemed unnecessary. Subsequently, the EO function instituted the
    practice that all additional information request letters for potential political cases be reviewed by
    the EO function Headquarters office before they are sent to organizations seeking tax-exempt
    status. In addition, EO function officials informed us that they decided to destroy all donor lists
    that were sent in for potential political cases that the IRS determined it should not have
    requested. Figure 8 lists the seven questions identified as being unnecessary.
    Page 19Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Figure 8: Seven Questions Identified As Unnecessary by the EO Function
    Number Question
    1 Requests the names of donors.
    2 Requests a list of all issues that are important to the organization and asks that
    the organization indicate its position regarding such issues.
    3 Requests 1) the roles and activities of the audience and participants other than
    members in the activity and 2) the type of conversations and discussions
    members and participants had during the activity.
    4 Asks whether the officer, director, etc., has run or will run for public office.
    5 Requests the political affiliation of the officer, director, speakers, candidates
    supported, etc., or otherwise refers to the relationship with identified
    political party–related organizations.
    6 Requests information regarding employment, other than for the organization,
    including hours worked.
    7 Requests information regarding activities of another organization – not just
    the relationship of the other organization to the applicant.
    Source: EO function review of additional information request letters.
    We reviewed case file information for all 170 organizations that received additional information
    request letters and determined that 98 (58 percent) had received requests for information that was
    later deemed unnecessary by the EO function. Of the 98 organizations:
     15 were informed that they did not need to respond to previous requests for information
    and, instead, received a revised request for information.
     12 either received a letter or a telephone call stating that their application was approved
    and they no longer needed to respond to information requests they had received from the
    IRS.
    Page 20Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Figure 9 shows excerpts from the approval letter developed for organizations that did not need to
    respond to a previous additional information request letter.
    Figure 9: Excerpts From a Template Approval Letter, Which Includes a Statement
    That Previously Requested Information Is No Longer Needed
    Dear Applicant:
    We are pleased to inform you that upon review of your application for taxexempt status we have determined that you are exempt from Federal income tax
    under section 501 (c) (4) of the Internal Revenue Code. Because this letter
    could help resolve any questions regarding your exempt status, you should
    keep it in your permanent records.
    Please not that we have just completed another review of your request to be
    recognized as tax-exempt under section 501 (c) (4) of the Internal Revenue
    Codes. Based on that review, we concluded that we do not need the additional
    materials previously requested because your application and materials provide
    sufficient information.
    Source: IRS template approval letter.
    Recommendation
    Recommendation 9: The Director, EO, should develop training or workshops to be held
    before each election cycle including, but not limited to, how to word questions in additional
    information request letters and what additional information should be requested.
    Management’s Response: The IRS agreed with this recommendation and will
    develop training on the topics described in Recommendations 3, 5, 6, and 9. Because
    election cycles are continuous, the IRS reported that it will develop a schedule which
    ensures that staff have the training as needed to handle potential political intervention
    matters.
    Page 21Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Appendix I
    Detailed Objective, Scope, and Methodology
    The overall objective was to determine whether allegations were founded that the IRS:
    1) targeted specific groups applying for tax-exempt status, 2) delayed processing targeted
    groups’ applications for tax-exempt status, and 3) requested unnecessary information from
    targeted groups. To accomplish our objective, we:
    I. Assessed the actions taken by the EO function in response to the increase in applications
    for tax-exempt status from organizations potentially involved in political campaign
    intervention.
    A. Interviewed EO function management to identify steps taken and who authorized
    them. We also developed a timeline of events.
    B. Obtained a list of applications that were identified for processing by the team of
    specialists and determined the status of the identified cases (open, approved, denied,
    etc.) through May 31, 2012. We also received an updated list of identified cases
    through December 17, 2012, to determine the status of each initial case as of this date.
    C. Determined whether procedures and controls in place since May 2010 resulted in
    inconsistent treatment of applications potentially involving political campaign
    intervention.
    II. Determined whether changes to procedures and controls since May 2010 affected the
    timeliness of reviewing applications potentially involving political campaign
    intervention.
    A. Interviewed EO function personnel to determine whether there were any outside
    influences that affected the timeliness of reviewing potential political cases.
    B. Reviewed all 89 I.R.C. § 501(c)(3) potential political cases to determine whether they
    were processed within the 270-day standard required by law.
    III. Determined whether the actions taken by the EO function to identify applications for
    tax-exempt status of organizations potentially involved in political campaign intervention
    were consistent.
    A. Selected a statistical sample of 244 open and closed I.R.C. § 501(c)(4) application
    cases from a universe of 2,459 cases that the IRS determined needed significant
    additional information (full development) on the Employee Plans/Exempt
    Organizations Determination System from May 2010 through May 2012 to determine
    whether they should have been identified for processing by the team of specialists.
    Page 22Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    We selected our statistical sample using the following criteria: 90 percent confidence
    level, 50 percent error rate,1
    and ± 5 percent precision rate. We used a random sample
    to ensure that each application case had an equal chance of being selected, which
    enabled us to obtain sufficient evidence to support our results. A contracted
    statistician reviewed our projections.
    1. Obtained the universe of 2,459 cases from the Employee Plans/Exempt
    Organizations Determination System and performed validity checks to ensure that
    the data were accurate. We found the data could be relied on for this review.
    2. Obtained a statistical sample of open and closed application cases.
    3. Determined whether application cases with potential political campaign
    intervention issues were identified for processing by the team of specialists.
    4. Interviewed EO function personnel to obtain their perspective on any application
    cases we identified that should have been identified for processing by the team of
    specialists but were not.
    B. Selected a statistical sample of 94 closed I.R.C. § 501(c)(4) application cases from a
    universe of 2,051 cases that the IRS determined did not need significant additional
    information (merit cases) on the Employee Plans/Exempt Organizations
    Determination System from May 2010 through May 2012 to determine whether they
    should have been identified for processing by the team of specialists. We selected
    our statistical sample using the following criteria: 90 percent confidence level,
    10 percent error rate,2
    and ± 5 percent precision rate. We used a random sample to
    ensure that each application case had an equal chance of being selected, which
    enabled us to obtain sufficient evidence to support our results. A contracted
    statistician reviewed our projections.
    1. Obtained the universe of 2,051 cases from the Employee Plans/Exempt
    Organizations Determination System and performed validity checks to ensure that
    the data were accurate. We found the data could be relied on for this review.
    2. Obtained a statistical sample of closed application cases.
    3. Determined whether application cases with potential political campaign
    intervention issues were not identified for processing by the team of specialists.
    1
    An expected error rate of 50 percent was chosen because we determined that cases needing significant additional
    information had criteria that included the names of specific groups.
    2
    An expected error rate of 10 percent was chosen because procedures require that cases with political issues
    generally need significant additional information.
    Page 23Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    4. Interviewed EO function personnel to obtain their perspective on any applications
    we identified that should have been identified for processing by the team of
    specialists but were not.
    C. Obtained and reviewed all 298 application cases identified for processing by the team
    of specialists as of May 31, 2012, to determine whether they were correctly identified.
    1. Determined whether application cases were correctly identified for processing by
    the team of specialists.
    2. Interviewed EO function personnel to obtain their perspective on any cases we
    identified that should not have been identified for processing by the team of
    specialists.
    D. Computed the average cycle time of processing potential political cases and
    compared it to the average cycle time for processing similar cases that were not
    processed by the team of specialists.
    E. Determined the number of organizations that may have been adversely affected by
    inconsistent treatment.
    IV. Determined whether the EO function consistently had a reasonable basis for requesting
    information from organizations seeking tax-exempt status that were potentially involved
    in political campaign intervention.
    A. Reviewed all 170 potential political cases that were issued additional information
    request letters to determine whether the letters included questions deemed
    unnecessary by the EO function.
    B. Interviewed EO function personnel to obtain their perspective on additional
    information that was requested that may not have been necessary to help make a
    determination decision.
    C. Determined the number of taxpayers that may have been adversely affected.
    Internal controls methodology
    Internal controls relate to management’s plans, methods, and procedures used to meet their
    mission, goals, and objectives. Internal controls include the processes and procedures for
    planning, organizing, directing, and controlling program operations. They include the systems
    for measuring, reporting, and monitoring program performance. We determined the following
    internal controls were relevant to our audit objective: EO function policies, procedures, and
    practices for identifying and processing applications for tax-exempt status with indications of
    political campaign intervention. We evaluated these controls by interviewing personnel,
    reviewing documentation, reviewing statistical samples of applications for tax-exempt status, and
    reviewing applications identified as involving potential political campaign intervention.
    Page 24Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Appendix II
    Major Contributors to This Report
    Gregory D. Kutz, Assistant Inspector General for Audit (Management Services and Exempt
    Organizations)
    Russell P. Martin, Acting Assistant Inspector General for Audit (Management Services and
    Exempt Organizations)
    Troy D. Paterson, Director
    Thomas F. Seidell, Audit Manager
    Cheryl J. Medina, Lead Auditor
    Julia Moore, Senior Auditor
    Michael A. McGovern, Auditor
    Evan A. Close, Audit Evaluator
    Page 25Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Appendix III
    Report Distribution List
    Acting Commissioner C
    Office of the Commissioner – Attn: Chief of Staff C
    Chief Counsel CC
    Deputy Commissioner for Services and Enforcement SE
    National Taxpayer Advocate TA
    Acting Deputy Commissioner, Tax Exempt and Government Entities Division SE:T
    Director, Exempt Organizations, Tax Exempt and Government Entities Division SE:T:EO
    Director, Office of Legislative Affairs CL:LA
    Director, Office of Program Evaluation and Risk Analysis RAS:O
    Office of Internal Control OS:CFO:CPIC:IC
    Audit Liaison: Director, Communications and Liaison, Tax Exempt and Government Entities
    Division SE:T:CL
    Page 26Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Appendix IV
    Outcome Measures
    This appendix presents detailed information on the measurable impact that our recommended
    corrective actions will have on tax administration. These benefits will be incorporated into our
    Semiannual Report to Congress.
    Type and Value of Outcome Measure:
     Reliability of Information – Actual; nine application case files that were either incomplete or
    could not be located for us to review (see page 5).
    Methodology Used to Measure the Reported Benefit:
    During our review of applications for tax-exempt status that were not identified for the team of
    specialists, we were unable to review seven case files because the case file lacked complete
    documentation (six cases) or the case file could not be located (one case). In addition, during our
    review of all identified potential political cases through May 31, 2012, we were unable to
    analyze two case files because of incomplete documentation.
    Type and Value of Outcome Measure:
     Reliability of Information – Potential; 44 organizations whose tax-exempt applications were
    not appropriately identified as having significant potential political campaign intervention
    (see page 5).
    Methodology Used to Measure the Reported Benefit:
    We selected a simple random sample of 94 I.R.C. § 501(c)(4) cases closed from May 2010
    through May 2012 from a universe of 2,051 applications that the IRS determined required
    minimal or no additional information from organizations applying for tax-exempt status. During
    our case reviews, we determined that two cases were not appropriately identified as having
    significant potential political campaign intervention. We projected, with 90 percent confidence,
    an actual error rate of between 0.38 percent and 6.55 percent1
    and that between eight and
    134 applications2
    were not properly identified for processing by the team of specialists.
    1
    The point estimate error rate for the sample is 2.13 percent. The 90 percent confidence interval was calculated
    using the Exact Binomial Method.
    2
    The point estimate number of error applications is 44. The 90 percent confidence interval was calculated using the
    Exact Binomial Method.
    Page 27Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Type and Value of Outcome Measure:
     Reliability of Information – Potential; 141 organizations whose tax-exempt applications were
    not appropriately identified as having significant potential political campaign intervention
    (see page 5).
    Methodology Used to Measure the Reported Benefit:
    We selected a simple random sample of 244 I.R.C. § 501(c)(4) cases closed from May 2010
    through May 2012 or open as of May 31, 2012, from a universe of 2,459 applications that the
    IRS determined required additional information from organizations applying for tax-exempt
    status.3
    During our case reviews, we determined that 14 cases were not appropriately identified
    as having significant potential political campaign intervention. We projected, with 90 percent
    confidence, an actual error rate of between 3.38 percent and 8.43 percent4
    and that between
    84 and 198 applications5
    were not properly identified for processing by the team of specialists.
    Type and Value of Outcome Measure:
     Taxpayer Burden – Potential; 158 organizations that waited longer than average for the IRS
    to make a decision regarding their tax-exempt status (see page 11).
    Methodology Used to Measure the Reported Benefit:
    We obtained data from the EO function on the average number of days it took to determine
    whether an application for tax-exempt status was approved or denied. In Fiscal Year 2012, it
    took on average 238 days to close a case that needed additional information from the
    organization prior to approving or denying the application. As of December 17, 2012, there were
    158 potential political cases that were open more than 238 calendar days.
    Type and Value of Outcome Measure:
     Taxpayer Burden – Potential; 98 organizations that received additional information request
    letters with questions that were later deemed unnecessary by the EO function (see page 18).
    Methodology Used to Measure the Reported Benefit:
    We reviewed 170 potential political cases that had received additional information request letters
    from the Determinations Unit. Using a list of seven questions/topics that the EO function
    categorized as unnecessary, we identified 98 potential political cases that included additional
    information request letters asking questions deemed unnecessary by the EO function.
    3
    We found that seven cases from the sample of 244 were not reviewable because of incomplete documentation.
    4
    The point estimate error rate for the sample is 5.91 percent with a precision of ± 2.52 percent.
    5
    The point estimate number of error applications is 141 with a precision of ± 57 applications.
    Page 28Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Appendix V
    High-Level Organizational Chart
    of Offices Referenced in This Report
    The following is a high-level organizational chart of offices we discuss in this report, starting
    with the Deputy Commissioner for Services and Enforcement, who reports to the IRS
    Commissioner.
    Page 29
    Acting Commissioner, Tax
    Exempt and Government
    Entities Division
    Washington, DC
    Deputy Commissioner for
    Services and Enforcement
    Washington, DC
    Senior Technical
    Advisor
    Washington, DC
    Director, EO
    Washington, DC
    Director, Rulings
    and Agreements
    Washington, DC
    Program
    Manager,
    Determinations
    Unit
    Cincinnati, OH
    Technical
    Specialists
    Washington, DC
    Manager,
    Technical Unit
    Washington, DC
    Manager,
    Guidance Unit
    Washington, DC
    Determinations
    Specialists
    Cincinnati, OH
    Guidance
    Specialists
    Washington, DC
    Senior Technical
    Advisor
    Washington, DC Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Appendix VI
    Timeline of Written Criteria for
    Identifying Potential Political Cases
    The following illustrates the changes to the written criteria provided to Determinations Unit
    employees for identifying applications for the team of specialists.
    Page 30
    Date Criteria Developed or Actions Taken
    February 2010 ************************1******************************
    ************************1**************.
    March–April The Determinations Unit began searching for other requests for tax
    2010 exemption involving the Tea Party, Patriots, 9/12, and I.R.C. § 501(c)(4)
    applications involving political sounding names, e.g., “We the People” or
    “Take Back the Country.”
    July 2010 Determinations Unit management requested its specialists to be on the
    lookout for Tea Party applications.
    August 2010 First BOLO listing issued with criteria listed as “…various local
    organizations in the Tea Party movement…applying for exemption under
    501(c)(3) or 501(c)(4).”
    July 2011 Criteria changed to “Organizations involved with political, lobbying, or
    advocacy for exemption under 501(c)(3) or 501(c)(4)” based on the
    concerns the Director, EO, raised in June 2011.
    January 2012 Criteria changed to “Political action type organizations involved in
    limiting/expanding government, educating on the constitution and bill of
    rights, social economic reform/movement” based on Determinations Unit
    concerns that the July 2011 criteria was too generic.
    May 2012 Criteria changed to “501(c)(3), 501(c)(4), 501(c)(5), and 501(c)(6)
    organizations with indicators of significant amounts of political campaign
    intervention (raising questions as to exempt purpose and/or excess private
    benefit).” Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Appendix VII
    Comprehensive Timeline of Events
    The following chart illustrates a timeline of events from February 2010 through July 2012
    involving the identification and processing of potential political cases. It shows that there was
    confusion about how to process the applications, delays in the processing of the applications, and
    a lack of management oversight and guidance. The timeline was developed using documentation
    provided by the EO function as well as numerous interviews with EO function personnel.
    Page 31
    Date Event Additional Details Source
    February 25,
    2010
    ****************1************************ E-Mail
    Around
    March 1, 2010
    The Determinations Unit Group Manager asked a
    specialist to search for other Tea Party or similar
    organizations’ applications in order to determine the
    scope of the issue. The specialist continued to complete
    searches for additional cases until the precursor to the
    BOLO listing was issued in May 2010.
    Determinations Unit
    personnel indicated that
    they used the description
    Tea Party as a shorthand
    way of referring to the
    group of cases involving
    political campaign
    intervention rather than to
    target any particular group.
    The specialist used Tea
    Party, Patriots, and 9/12 as
    part of the criteria for these
    searches.
    Interview
    March 16–17,
    2010
    Ten Tea Party cases were identified. The Acting
    Manager, Technical Unit, requested two more cases be
    transferred to Washington, D.C.
    ***********************1*********************
    Not all of the ten cases had
    Tea Party in their names.
    E-Mail
    April 1–2, 2010 The new Acting Manager, Technical Unit, suggested the
    need for a Sensitive Case Report on the Tea Party cases.
    The Determinations Unit Program Manager agreed.
    E-Mail
    April 5, 2010 ****************1*************************** E-Mail
    April 5, 2010 A Determinations Unit specialist developed a list of
    18 identified Tea Party cases during a search of
    applications. Three had already been approved as
    tax-exempt.
    While the heading of the
    document listing these
    18 cases referred to Tea
    Party cases, not all of the
    organizations listed had
    Tea Party in their names.
    E-Mail Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Page 32
    Date Event Additional Details Source
    April 19, 2010 The first Sensitive Case Report was prepared by the
    Technical Unit.
    Sensitive Case Reports are
    shared with the Director,
    Rulings and Agreements,
    and a chart summarizing
    all Sensitive Case Reports
    is provided to the Director,
    EO.
    Documentation
    April 25–26,
    2010
    The Determinations Unit Program Manager requested
    Technical Unit contacts for the specialist assigned to
    work other Tea Party cases. Contacts were received.
    *************************1*******************
    *********************
    E-Mail
    May 17, 2010 The Determinations Unit specialist will send additional
    information request letters to the Technical Unit for
    review prior to issuance as part of the Technical Unit’s
    attempt to provide assistance to the Determinations Unit.
    E-Mail
    May 26, 2010 ******************1**************************
    **************
    E-Mail
    May 27, 2010 The Technical Unit began reviewing additional
    information request letters prepared by the
    Determinations Unit.
    Interview
    and E-Mail
    June 7, 2010 Determinations Unit began training its specialists on
    emerging issues to watch for, including an emerging
    issue referred to as Tea Party Cases.
    Documentation
    June 14, 2010 *******************1************************* E-Mail
    June 30, 2010 ********************1************************ **********1*********** E-Mail
    July 2010 Determinations Unit management requested its
    specialists to be on the lookout for Tea Party
    applications.
    E-Mail
    July 2, 2010 ***************1***************************** E-Mail
    July 27, 2010 Prior to the BOLO listing development, an e-mail was
    sent updating the description of applications involving
    potential political campaign intervention and providing a
    coordinator contact for the cases. The description was
    changed to read, “These cases involve various local
    organizations in the Tea Party movement [that] are
    applying for exemption under 501(c)(3) or 501(c)(4).”
    Interview and
    Documentation Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Page 33
    Date Event Additional Details Source
    August 12, 2010 The BOLO listing was developed by the Determinations
    Unit in order to replace the existing practice of sending
    separate e-mails to all Determinations Unit employees as
    to cases to watch for, potentially abusive cases, cases
    requiring processing by the team of specialists, and
    emerging issues. The description of applications
    involving potential political campaign intervention on
    the BOLO listing was the same description used in the
    July 27, 2010, e-mail.
    Interview and
    Documentation
    August 2010 The responsibility for applications involving potential
    political campaign intervention was moved to a different
    team of specialists as part of a group realignment within
    the Determinations Unit.
    Interview and
    Documentation
    October 2010 Applications involving potential political campaign
    intervention were transferred to another Determinations
    Unit specialist. The specialist did not work on the cases
    while waiting for guidance from the Technical Unit.
    Per the Director, Rulings
    and Agreements, there was
    a miscommunication about
    not working the cases
    while waiting for guidance.
    Interviews
    October 19,
    2010
    Technical Unit personnel forwarded a memorandum to
    their Acting Manager describing the work completed on
    the Tea Party cases by the Technical Unit. Included was
    a list of the cases the Technical Unit had assisted the
    Determinations Unit with.
    The list included 40 cases,
    18 of which did not have
    Tea Party in their names.
    E-Mail
    October 26,
    2010
    Determinations Unit personnel raised concerns to the
    Technical Unit with the approach being used to develop
    the Tea Party cases: Why does the Technical Unit need
    to review every additional information request letter
    when a template letter could be approved and used on all
    the cases?
    E-Mail
    November 16,
    2010
    A new coordinator contact for potential political cases
    was announced.
    Interview and
    Documentation
    November 16–17,
    2010
    A Determinations Unit Group Manager raised concern to
    the Determinations Unit Area Manager that they are still
    waiting for an additional information request letter
    template from the Technical Unit for the Tea Party cases.
    The coordinator had received calls from taxpayers
    checking on the status of their applications.
    E-Mail
    November 17,
    2010
    The Determinations Unit Program Manager discussed
    Tea Party cases with the Technical Unit manager.
    Review of the cases by the Technical Unit found that not
    all of the cases had the same issues so a template letter
    had not been developed.
    E-Mail Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Date Event Additional Details Source
    December 13,
    2010
    The Determinations Unit Program Manager asked the
    Technical Unit manager for a status on the Tea Party
    cases. The Technical Unit manager responded that they
    were going to discuss the cases with the Senior
    Technical Advisor to the Director, EO, shortly.
    E-Mail
    January 28,
    2011
    The Determinations Unit Program Manager requested an
    update on the Tea Party cases from the Technical Unit
    Acting Manager.
    E-Mail
    January 2011 A new person
    Manager role.
    took over the Technical Unit Acting Interview
    February 3,
    2011
    The Technical Unit Acting Manager provided an update
    to the Determinations Unit Program Manager on the
    cases being worked by the Technical Unit. Letters were
    being developed and would be reviewed shortly.
    E-Mail
    March 2, 2011 A Determinations Unit Group Manager reminded the
    Determinations Unit Program Manager to follow up with
    the Technical Unit on the status of the Tea Party cases.
    E-Mail
    .
    March 30, 2011 *******************1************************.1
    E-Mail
    March 31, 2011 The Determinations Unit Program Manager stated that,
    while waiting for assistance from the Technical Unit, the
    Determinations Unit still needed to work Tea Party cases
    to the extent possible.
    This contradicts the
    October 2010 decision not
    to work cases until
    assistance is received from
    the Technical Unit and
    supports the statement of
    the Director, Rulings and
    Agreements, that there was
    a miscommunication about
    not working the cases
    while awaiting assistance.
    E-Mail
    April 13, 2011 *****************1***************************. E-Mail
    June 1–2, 2011 The Acting Director, Rulings and Agreements, requested
    criteria used to identify Tea Party cases from the
    Determinations Unit Program Manager. The
    Determinations Unit Program Manager requested criteria
    from a Determinations Unit Group Manager.
    E-Mail
    1
    The Taxpayer Advocate Service is an independent organization within the IRS that provides assistance to
    taxpayers whose tax problems have not been resolved through normal IRS channels. Taxpayer Advocate Service
    employees must, at times, rely on assistance from employees assigned to other IRS functions. To request assistance,
    the Taxpayer Advocate Service issues an Operations Assistance Requestspecifying the actions needed to help
    resolve the taxpayer’s problem.
    Page 34Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Page 35
    Date Event Additional Details Source
    June 2, 2011 A Determinations Unit Group Manager provided criteria
    for identifying potential Tea Party cases to the
    Determinations Unit Program Manager. Information
    was then forwarded to the Acting Director, Rulings and
    Agreements.
    These criteria are very
    different than the
    BOLO listing criteria
    available at the time.
    E-Mail
    June 6, 2011 **************************1******************
    *******************************
    E-Mail
    June 6, 2011 The Acting Director, Rulings and Agreements,
    commented that the criteria being used to identify Tea
    Party cases may have resulted in over-inclusion.
    **********************1**********************
    **
    E-Mail
    June 6, 2011 The Determinations Unit Program Manager mentioned
    that the Determinations Unit needed assistance from the
    Technical Unit to ensure consistency.
    E-Mail
    June 29, 2011 A briefing was held with the Director, EO. The briefing
    paper noted that the Determinations Unit sent cases that
    met any of the criteria below to a designated team of
    specialists to be worked:
     “Tea Party,” “Patriots,” or “9/12 Project” is
    referenced in the case file.
     Issues include Government spending, Government
    debt, or taxes.
     Education of the public via advocacy/lobbying to
    “make America a better place to live.”
     Statements in the case file criticize how the country
    is being run.
    Over 100 applications were identified by this time. It
    was decided to develop a guide sheet for processing
    these cases.
    The briefing paper for the
    Director, EO, was prepared
    by Tax Law Specialists in
    the Technical Unit and the
    Guidance Unit and was
    reviewed by the Acting
    Manager, Technical Unit.
    A Guidance Unit specialist
    was the primary author of
    the briefing paper.
    During the briefing, the
    Director, EO, raised
    concerns over the language
    of the BOLO listing
    criteria. The Director, EO,
    instructed that the criteria
    be immediately revised.
    Documentation
    and E-Mail
    July 5, 2011 A conference call was held with the Technical Unit; the
    Director, EO; and the Determinations Unit Program
    Manager. They developed new criteria for identifying
    cases. The Determinations Unit Program Manager made
    changes to the BOLO listing. The criteria were changed
    to “organizations involved with political, lobbying, or
    advocacy for exemption under 501(c)(3) or 501(c)(4).”
    E-Mail Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Page 36
    Date Event Additional Details Source
    July 5, 2011 The EO function Headquarters office would be putting
    document together with recommended actions for
    identified cases.
    a E-Mail
    July 23, 2011 The Technical Unit was assigned a new person to
    coordinate with the Determinations Unit.
    E-Mail
    July 24, 2011 Work commenced on the guide sheet when the Acting
    Manager, Technical Unit, asked tax law specialists to
    draft a list of things for Determinations Unit specialists
    to look for when working these cases.
    E-Mail
    August 4, 2011 Rulings and Agreements office personnel held a meeting
    with Chief Counsel so that everyone would have the
    latest information on the issue.
    E-Mail
    August 4, 2011 A Guidance Unit specialist asked if Counsel would
    review a check sheet prior to issuance to the
    Determinations Unit. The Acting Director, Rulings and
    Agreements, responded that Counsel would review it
    prior to issuance.
    E-Mail
    August 10, 2011 *******************1*************************
    **********************
    Documentation
    September 15,
    2011
    The Determinations Unit Program Manager sent a list of
    all identified cases to the Acting Director, Rulings and
    Agreements, so that the Technical Unit could complete a
    limited “triage” of the cases using available information
    from the electronic case files. A Technical Unit
    specialist reviewed the list to determine if any cases
    could be closed on merit or closed with an adverse
    determination letter. This triage was considered a third
    screening.
    E-Mail
    September 21,
    2011
    The draft guide sheet was sent for review and comment
    to various EO function Headquarters office employees.
    E-Mail
    October 2011 A new person took
    and Agreements.
    over as the Acting Director, Rulings Interview
    October 24,
    2011
    A Technical Unit manager forwarded initial triage results
    to the Determinations Unit.
    E-Mail
    October 25,
    2011
    Based on the categories and terminology used in the
    triage results spreadsheet, the Determinations Unit
    Program Manager was unclear what the Determinations
    Unit should do with the triage results – close cases,
    develop further, etc. – and requested the status on the
    guidance from the Technical Unit.
    E-Mail Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Page 37
    Date Event Additional Details Source
    October 26,
    2011
    A Technical Unit specialist provided further explanation
    of the triage results in an e-mail to the Determinations
    Unit Program Manager.
    E-Mail
    October 30,
    2011
    The Determinations Unit Program Manager contacted
    the Acting Manager, Technical Unit, asking additional
    questions regarding the triage results and requesting a
    status update on the Technical Unit guidance.
    ******************1**************************
    ******************1**************************
    E-Mail
    November 3,
    2011
    An updated draft version of the guide sheet
    EO function employees for comment.
    was sent to E-Mail
    November 6,
    2011
    The Acting Manager, Technical Unit, had a Technical
    Unit specialist provide more details on the triage results,
    and informed the Determinations Unit Program Manager
    that the guidance was being reviewed prior to issuance.
    E-Mail
    November 6,
    2011
    The Acting Director, Rulings and Agreements, informed
    the Acting Manager, Technical Unit, and the
    Determinations Unit Program Manager that, based on
    feedback received, the guidance developed would not
    work in its present form – it was “too lawyerly” to be
    useful and needed the Determinations Unit input.
    Interview
    and E-Mail
    November 15,
    2011
    The Determinations Unit Program Manager forwarded
    the Technical Unit specialist’s triage results to the Senior
    Technical Advisor to the Director, EO, per the Director’s
    request.
    E-Mail
    November 22,
    2011
    The Acting Manager, Technical Unit, forwarded the
    clarified triage results to the Determinations Unit
    Program Manager.
    E-Mail
    November 23–30,
    2011
    A new Determinations Unit coordinator was assigned
    oversight of the cases by a Determinations Unit Group
    Manager. The draft Technical Unit guidance was
    provided to the Group Manager. The coordinator began
    working cases after receiving the guidance in
    anticipation of a team being assembled to work the
    cases.
    Interview
    and E-Mail
    November 2011 The Determinations Unit specialist assigned the cases
    began working them after receiving the draft Technical
    Unit guidance.
    Interview Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Page 38
    Date Event Additional Details Source
    December 7–9,
    2011
    A team of Determinations Unit specialists was created to
    review all the identified cases. An employee from
    Quality Assurance was also part of the team. The
    Technical Unit provided contacts for them.
    E-Mail
    December 16,
    2011
    The first meeting was held by the team of specialists. Interview
    and E-Mail
    January 2012 The first batch of letters requesting additional
    information for applications containing incomplete or
    missing information was issued by Determinations Unit
    specialists based, in part, on their reading of the draft
    guidance issued by the Technical Unit.
    Interview
    and E-Mail
    January 2012 A Determinations Unit specialist was tasked with
    performing a secondary screening of identified potential
    political cases to ensure that they involved political
    activities and not just general or lobbying advocacy.
    Interviews
    January 25,
    2012
    The BOLO listing criteria were again updated. The
    criteria was revised as “political action type
    organizations involved in limiting/expanding
    Government, educating on the Constitution and Bill of
    Rights, social economic reform/movement.” The
    coordinator contact was changed as well.
    Interview and
    Documentation
    February 27,
    2012
    A member of the team of specialists asked when to start
    issuing additional information request letters to
    applicants again.
    E-Mail
    February 27,
    2012
    The Determinations Unit Program Manager questioned
    why the team of specialists was not issuing additional
    information request letters. The Determinations Unit
    Group Manager for the team of specialists had told the
    team coordinator to stop developing template questions,
    not to stop issuing additional information request letters.
    The miscommunication was corrected on
    February 29, 2012.
    E-Mail
    February 29,
    2012
    The Director, EO, requested that the Acting Director,
    Rulings and Agreements, develop a letter to clearly
    inform applicants what was going to happen if they did
    not respond to the additional information request letters
    and giving them more time for their responses.
    E-Mail Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Page 39
    Date Event Additional Details Source
    February 29,
    2012
    The Director, EO, stopped any more additional
    information request letters from being issued on
    advocacy cases until new guidance was provided to the
    Determinations Unit. In addition, the Acting Director,
    Rulings and Agreements, discussed with the
    Determinations Unit Program Manager about having
    specialists print out website information and asking the
    organizations to verify the information instead of asking
    for applicants to print out the website information.
    E-Mail
    February–March
    2012
    Numerous news articles began to be published with
    complaints from Tea Party organizations about the IRS’s
    unfair treatment. Congress also began to show interest
    in the IRS’s treatment of Tea Party organizations.
    Documentation
    March 2012 A new person became Acting Group Manager of the
    team of specialists.
    Interview
    March 1, 2012 A draft list of template questions was prepared by the
    team of specialists and forwarded to the Guidance Unit.
    Questions included asking
    for donor information.
    E-Mail
    March 5, 2012 The Acting Manager, Technical Unit, established
    procedures for reviewing the first favorable
    determination letter drafted by the Determinations Unit.
    E-Mail
    March 6, 2012 ****************1****************************
    ***********************
    E-Mail
    March 8, 2012 The Deputy Commissioner for Services and
    Enforcement requested that, if a taxpayer called about
    having to provide donor information, the Determinations
    Unit would allow them to not send the donor names but
    would inform them that the IRS may need it later.
    E-Mail
    March 8, 2012 The Acting Director, Rulings and Agreements, sent to
    the Determinations Unit Program Manager for comment
    a draft letter on giving applicants additional time to
    respond to the additional information request letters.
    The Determinations Unit Program Manager raised a
    concern of giving organizations that were not compliant
    with standard response timelines special treatment.
    E-Mail
    March 15, 2012 The Determinations Unit received guidance on how to
    handle different scenarios based upon the status of their
    cases. Those I.R.C. § 501(c)(4) organizations that had
    not responded to an additional information request letter
    were issued another letter giving them an additional
    60 days to respond. Those letters were to be issued by
    March 16, 2012. This additional time letter was a
    one-time occurrence.
    Interview
    and E-Mail Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Page 40
    Date Event Additional Details Source
    March 23, 2012,
    and March 27,
    2012
    The Senior Technical Advisor to the Acting
    Commissioner, Tax Exempt and Government Entities
    Division, and the Deputy Commissioner for Services and
    Enforcement discussed concerns with the media
    attention the Tea Party applications were receiving. The
    Deputy Commissioner for Services and Enforcement
    asked the Senior Technical Advisor to look into what
    was going on in the Determinations Unit and make
    recommendations.
    Interview
    April 2012 The Acting Director, Rulings and Agreements, learned
    that the BOLO listing criteria had been changed on
    January 25, 2012, and informed the Director, EO.
    Interview
    April 4, 2012 The Determinations Unit received the extension letter for
    issuance to I.R.C. § 501(c)(3) organizations that had not
    responded to a previous additional information request
    letter.
    E-Mail
    April 17, 2012 Tax Exempt and Government Entities Division
    Headquarters office employees received the Technical
    Unit triage results and the draft guidance provided by the
    Technical Unit. Template questions developed by the
    team of specialists were also provided.
    E-Mail
    April 23, 2012 Senior Technical Advisor to the Acting Tax Exempt and
    Government Entities Division Commissioner visited the
    Determinations Unit in Cincinnati, Ohio, with a group of
    EO function employees, and reviewed about half of the
    identified cases.
    Interview
    April 24, 2012 The Acting Director, Rulings and Agreements, requested
    that the Senior Technical Advisor to the Director, EO,
    review all the additional information request letters
    issued and identify troubling questions, which
    organizations received them, and which members of the
    team of specialists asked them.
    E-Mail
    April 25, 2012 The Senior Technical Advisor to the Director, EO,
    provided results of the additional information request
    letter review, including a list of troubling questions.
    The results included the
    names of donors as a
    troubling question.
    E-Mail
    April 25, 2012 Chief Counsel’s office provided additional comments on
    the draft guidance developed for the Determinations
    Unit.
    E-Mail Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Page 41
    Date Event Additional Details Source
    May 8, 2012 The Determinations Unit Program Manager was
    informed that EO function Headquarters office
    employees planned to visit Cincinnati, Ohio, to provide
    training on cases and perform a review of the cases to
    recommend what additional actions, if any, were needed
    to make a determination.
    E-Mail
    May 9, 2012 The Director, Rulings and Agreements, asked about the
    process for updating the BOLO listing.
    E-Mail
    May 14–15,
    2012
    Training was held in Cincinnati, Ohio, on how to process
    identified potential political cases. The Senior Technical
    Advisor to the Director, EO, took over coordination of
    the team of specialists from the Determinations Unit.
    E-Mail
    May 16, 2012 A joint team of Determinations Unit specialists and
    EO function Headquarters office employees began
    reviewing all potential political cases began in
    Cincinnati, Ohio. Cases were divided into four groups
    with recommendations for how to proceed: favorable
    determination, favorable with limited development,
    significant development, and probably adverse. This
    took around three weeks to complete. A worksheet was
    used to document the reviews.
    E-Mail
    May 17, 2012 The Director, Rulings and Agreements, issued a
    memorandum outlining new procedures for updating the
    BOLO listing. The BOLO listing criteria were updated
    again. New criteria reads: “501(c)(3), 501(c)(4),
    501(c)(5), and 501(c)(6) organizations with indicators of
    significant amounts of political campaign intervention
    (raising questions as to exempt purpose and/or excess
    private benefit).”
    Suggested additions and
    changes must be approved
    by a Determinations Unit
    coordinator, the
    Determinations Unit
    Program Manager, and the
    Director, Rulings and
    Agreements.
    Interview
    and E-Mail
    May 21, 2012 The EO function determined that the requested donor
    information could be destroyed or returned to the
    applicant if not used to make the final determination of
    tax-exempt status. It does not need to be kept in the
    administrative file. A letter would be issued to the
    organizations informing them that the donor information
    was destroyed.
    Interview
    and E-Mail
    May 24, 2012 A telephone call script was developed to inform some
    organizations that had not responded to the additional
    information requests that it was not necessary to send the
    requested information and that their applications had
    been approved. Also, an additional paragraph was
    developed for the determination letter.
    E-Mail Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Page 42
    Date Event Additional Details Source
    May 2012 After the review of identified cases was completed, each
    Determinations Unit specialist working cases was
    assigned a Technical Unit employee to work with on the
    cases. The Technical Unit employee reviewed all
    additional information request letters prior to issuance.
    The Quality Assurance Unit began reviewing
    100 percent of the cases prior to closure. The Quality
    Assurance Unit review will shift from 100 percent
    review to a sample review once a comfort level with the
    results of the quality review was achieved.
    Interview
    May 2012 A decision was made to refer cases to the Review of
    Operations Unit for follow-up if there were indications
    of political campaign intervention but not enough to
    prevent approval of tax-exempt status.
    Interview
    and E-Mail
    June 4, 2012 A draft letter was developed to send to organizations that
    provided donor information. The letter would inform the
    organizations that the information was destroyed.
    E-Mail
    June 7, 2012 The Director, Rulings and Agreements, provided
    guidance on how to process cases now that they had
    been reviewed and divided into categories. Any new
    cases received would go through the same review
    process prior to assignment.
    E-Mail
    July 15, 2012 A new Acting Determinations Unit Group Manager was
    overseeing the team of specialists.
    Interview Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Appendix VIII
    Management’s Response to the Draft Report
    Page 43Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Page 44Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Page 45Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Page 46Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Page 47Inappropriate Criteria Were Used to
    Identify Tax-Exempt Applications for Review
    Page 48

     
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