BY ROBERT ROMANO | FEBRUARY 12, 2014
Obama's state of confusion on IRS underscores cover-up
What happened here was you've got a 501(c)(4) law that people think was confusing, that the folks did not know how to implement because it basically says if you're involved—"
That was President Barack Obama's explanation on Fox News' O'Reilly Factor of how the Internal Revenue Service (IRS) started targeting tea party and other non-profit groups back in 2010. That is, before O'Reilly interrupted him.
Yet, if ever there was a time to allow just a few more moments of spin into the so-called No Spin Zone, this was it. Obama was giving us everything.
For, the "confusion" angle is nothing new. It originated with the Treasury Inspector General's report on the scandal that was released in May 2013.
It stated, "In April 2012, the Senior Technical Advisor to the Acting Commissioner, Tax Exempt and Government Entities Division, along with a team of EO [Exempt Organizations] 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."
The report continued, offering the following conjecture: "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.'"
Bear in mind that the report was issued before Exempt Organizations head Lois Lerner pled the Fifth. And it preceded the mountain of evidence uncovered through congressional testimony that has since refuted the "confusion" supposition in its entirety.
Managing director at the D.C.-based technical office Holly Paz, has since testified that in Feb. 2010 "a case was identified where there was potential for political campaign activity, and that was when they reached out to Washington and the case was transferred to Washington."
Paz said she then forwarded it to agency tax specialist and attorney Carter Hull, who developed many of the invasive follow-up questions that attempted to probe just how political groups intended to be.
Michael Seto, the head of Hull's unit, when he had his opportunity to testify, fingered none other than Lerner, who apparently ordered that the tea party applications be subjected to special scrutiny.
In addition, Hull said that when he met with Lerner's senior adviser, he was told that his recommendations on the tea party applications would be first reviewed by the IRS general counsel William Wilkins.
So, Lerner and Wilkins were huddling on the issue and coordinating the decision-making process on the tea party and other 501(c)(4) organizations. But why were these organizations being targeted?
Hull's supervisor, Ronald Shoemaker told investigators that the counsel's office wanted information about the applicants' political activities leading up to the 2010 election.
This in itself is unsurprising. Former IRS commissioner Steven Miller had testified "What happened here was someone saw some tea party cases come through. They were acknowledging that they were going to be engaged in politics. This was the timeframe in 2010 when Citizens United was out. There was a lot of discussion in the system about the use of (c)(4)s."
Yet such scrutiny of (c)(4)s was unprecedented, as the technical unit's Paz had suggested, "Political campaign intervention in 501(c)(4)s was not something we have previously dealt with very much."
And, according to Shoemaker, the counsel's office at the agency "indicated that they wanted more development of possible political activity or political intervention right before the election period."
So, there does not appear to have been any confusion at all. The tea party groups indicated that at some level they would be engaged in politics, and Lerner and Wilkins conspired to put a lid on it. Were they, the agency's counsel and the head of Exempt Organizations, confused about how to implement the 501(c)(4) regulation, which has been around since 1960?
That is simply unbelievable. There was nothing at all suddenly confusing about implementing a 50-year old regulation that allows groups to engage in electioneering so long as it does not constitute a majority of their activities.
But leaving no room for doubt, a new IRS regulation issued by the Obama administration in November restricting the political speech of (c)4s was devised, not in 2013 to clarify the "confusing" regulation in response to the scandal, but at least starting in 2012 while the targeting was still going on, a June 2012 email from the Office of Tax Policy to Lerner uncovered by the House Ways and Means Committee has revealed.
The email from Ruth Madrigal stated, "we mentioned potentially addressing them (off - plan) in 2013," referring to (c)4s.
Treasury, in issuing the regulation had claimed "increased attention has been focused on potential political campaign intervention by section 501(c)(4) organizations. A recent IRS report relating to IRS review of applications for tax-exempt status states that '[o]ne of the significant challenges with the 501(c)(4) [application] review process has been the lack of a clear and concise definition of 'political campaign intervention.''"
The report cited by the regulation was published June 24, 2013 — only after IRS scandal had occurred — and again repeated the now-discredited "confusion" theory offered by the errant Inspector General report.
Chairman of the Ways and Means Committee Rep. Dave Camp blasted Treasury and the IRS for seemingly lying about the origins of the regulation: "If Treasury and the IRS fabricated the rationale for a rule change it would tend to raise questions about the integrity of the rule-making process."
What was different about the 2010 approach to implementing the regulation was that the "primary activity" test was being applied during the application process, which Paz noted "was not something we have previously dealt with very much." It was unprecedented.
Whether organizations are complying with this particular regulation, if anywhere, was typically left to Exempt Organization's examinations of annual tax records. You know, when there was an actual track record of expenditures that could be properly evaluated to determine compliance.
The real question is: Why did the IRS suddenly decide to determine a priori to what extent 501(c)(4) organizations would be political?
The only plausible explanation is this was a clear attempt to violate not just those regulations, but the Supreme Court's 2010 Citizens United v. FEC decision that protected electioneering the First Amendment right of Citizens United, a 501(c)(4), to make a movie critical of Hillary Clinton in 2008, then a prospective presidential candidate.
The "confusion" explanation is just a post-hoc cover story, that turns out not to have been true. What is truly stunning is that now the nation's chief executive is still willing to repeat as if it were fact in the face of overwhelming proof that the confusion excuse doesn't hold water. In fact, the entire scandal was orchestrated as a matter of policy.
Since confusion about the 50-year old regulation clearly is not the reason behind the targeting, there can only be one other conclusion that can be reached. It was deliberate — with the intent of intimidating Obama's political foes.
The simple fact that Obama attacked the Citizens United ruling weeks before the targeting began to occur makes it clear that this deliberate abuse of power was a at least a direct result of the President's harsh rhetoric. Now, four years later, Obama wants to pretend that the White House had nothing to do with it.
That is the most troubling aspect of the IRS tea party targeting scandal, besides the clear abuse of illegitimate power to restrict groups from engaging in activities the law allows and the Constitution's First Amendment clearly protects.
It is that given what we know, it is impossible to conclude anything other than the Obama White House has been engaged in a massive disinformation campaign designed to cover up their culpability in one of the most egregious abuses of power in our nation's history.
The only question that remains is when will Congress finally stop talking and take definitive action to stop Obama's continued abuse of power?
Robert Romano is the senior editor of Americans for Limited Government.