Busted! A watchdog organization found a paper trail that proves the IRS monitored conservative donor lists and hand picked their audit subjects from those lists.
Judicial Watch announced today that it has obtained documents from the Internal Revenue Service (IRS) that confirm that the IRS used donor lists to tax-exempt organizations to target those donors for audits. The documents also show IRS officials specifically highlighted how the U.S. Chamber of Commerce may come under “high scrutiny” from the IRS. The IRS produced the records in a Freedom of Information lawsuit seeking documents about selection of individuals for audit-based application information on donor lists submitted by Tea Party and other 501(c)(4) tax-exempt organizations (Judicial Watch v. Internal Revenue Service (No. 1:15-cv-00220)).
A letter dated September 28, 2010, then-Democrat Senate Finance Committee Chairman Max Baucus (D-MT) informs then-IRS Commissioner Douglas Shulman: “ I request that you and your agency survey major 501(c)(4), (c)(5) and (c)(6) organizations …” In reply, in a letter dated February 17, 2011, Shulman writes: “In the work plan of the Exempt Organizations Division, we announced that beginning in FY2011, we are increasing our focus on section 501(c)(4), (5) and (6) organizations.”
In 2010, after receiving Baucus’s letter, the IRS considered the issue of auditing donors to 501(c)(4) organizations, alleging that a 35 percent gift tax would be due on donations in excess of $13,000. The documents show that the IRS wanted to cross-check donor lists from 501(c)(4) organizations against gift tax filings and commence audits against taxpayers based on this information.
A gift tax on contributions to 501(c)(4)’s was considered by most to be a dead letter since the IRS had never enforced the rule after the Supreme Court ruled that such taxes violated the First Amendment. The documents show that the IRS had not enforced the gift tax since 1982.
But then, in February 2011, at least five donors of an unnamed organization were audited.
The documents show that Crossroads GPS, associated with Republican Karl Rove, was specifically referenced by IRS officials in the context of applying the gift tax. Seemingly in response to the Crossroads focus, on April 20, IRS attorney Lorraine Gardner emails a 501(c)(4) donor list to former Branch Chief in the IRS’ Office of the Chief Counsel James Hogan. Later, this information is apparently shared with IRS Estate Gift and Policy Manager Lisa Piehl while Gardner seeks “information about any of the donors.”
Emails to and from Lorraine Gardner also suggested bias against the U.S. Chamber of Commerce. An IRS official (whose name is redacted) emails Gardner on May 13, 2011, a blog post responding to the IRS targeting of political and other activities of 501(c)(4), (5) and (6) organizations: “The U.S. Chamber of Commerce is a 501(c)(6) organization and may find itself under high scrutiny. One can only hope.”
This is an absolutely unacceptable and outrageous abuse of federal power. The duty of the IRS is to collect taxes, not serve as a political henchman for the Executive Branch. If there was any doubt that the IRS was targeting conservatives (President Obama recently told Jon Stewart he is still an IRS Targeting Denier), here is the proof in black and white.