Live Hearing:

Social Security: A Fresh Look at Workers’ Disability Insurance
Watch Now
The United States Senate Committee on Finance: Newsroom - Ranking Member's News
For Immediate Release
May 14, 2013
Contact:

TIGTA Report Summary on IRS Targeting Conservative Groups

Compiled By Senate Finance Committee Republican Staff

MEMORANDUM

TO:        Reporters and Editors
FROM:   Antonia Ferrier and Julia Lawless for Senate Finance Committee Ranking Member Orrin              Hatch (R-Utah)
RE:        TIGTA Report on IRS Targeting Conservative Groups
DATE:     Tuesday, May 14, 2013
____________________________________________________________________________

Today, the Treasury Inspector General of Tax Administration (TIGTA) released its report on the targeting of conservative groups by the Internal Revenue Service (IRS).  Following is a report summary compiled by the Senate Finance Committee Republican staff. In addition, a timeline of events can be found HERE.  


TIGTA REPORT SUMMARY

PURPOSE OF AUDIT
Determine whether allegations were founded that the IRS:

  • Targeted specific groups applying for tax-exempt status
  • Delayed processing of targeted groups’ applications
  • Requested unnecessary information from targeted groups

FINDINGS

  • IRS used inappropriate criteria that identified for review organizations applying for tax-exempt status based upon their names or policy positions instead of other objective criteria.
  • Ineffective management allowed the following to occur:
    • Inappropriate criteria was developed that stayed in place for more than 18 months.
      • About 1/3 of the applications subjected to additional processing included Tea Party, Patriots or 9/12 in their names.
  • Resulted in substantial delays in processing certain applications.
    • All applications that included the inappropriate criteria experienced substantial delays in processing.
    • The majority of the impacted applications sat without any work done on them for 13 months.
    • 28 applications were withdrawn given the length of time taken to process.
    • 160 out of the 196 applications reviewed by TIGTA were open from 206 to 1138 calendar days which crossed two election cycles and spanned 3 years.
  • Allowed unnecessary information requests to be issued and then later informed some of those groups that they did not need to provide the information which was previously requested.
    • TIGTA determined that the additional information requests sent out to 98 of 170 (58 percent) organizations that received those requests were unnecessary.
    • Examples of unnecessary questions included: 
      • names of donors
      • list of all issues important to the organization and the position of the organization on those issues
      • the political affiliation of the officer, director, speakers, candidates supported, etc.

KEY POINTS

  • Ineffective oversight by IRS management led to significant delays in processing potential political cases.
  • Lack of specific guidance to the Determinations Unit specialists on what activities are allowed by 501(c)(4) organizations led to confusion and delays in the review of the applications.
  • It took nearly two years after this criteria was first flagged as potentially inappropriate for the IRS to provide a 2 day training workshop to the specialists in May 2012 to train them on what activities are allowable by a 501(c)(4) organization.
  • Political cases on average were taking 574 calendar days to process as compared to 238 calendar days for regular tax exempt organizations.
  • IRS senior management failed to ensure that staff followed orders about screening after management became aware of inappropriate political targeting in July 2011.
  • 501(c)(5) organizations are subject to the same tests as 501(c)(4) organizations. There was a larger spike in percentage terms in 501(c)(5) applications in 2012 than there was in 501(c)(4)s, yet there was no profiling of 501(c)(5)s.

TIGTA RECOMMENDATIONS

  • IRS agreed with 7 of the 9 recommendations from TIGTA and proposed alternative corrective actions for the remaining two.  TIGTA does not think those alternatives will address their recommendations.

KEY TAKE AWAY POINT
While the IRS has taken limited action, a lot more needs to be done restore public confidence.

Source: Summary compiled by the Senate Finance Committee Republican Staff.

###