The Internal Revenue Service followed "established procedures" in deciding which tax-exempt entities to investigate for possible improper involvement in last year's political campaign, and there is no evidence that the agency's decisions were politically motivated, according to an inspector general's report released yesterday.
The IRS attracted headlines last fall when the NAACP announced that the agency was threatening to revoke its tax-exempt status because its chairman, Julian Bond, had given a speech attacking the Bush administration.
Bond called the IRS investigation "Nixonian," and the civil rights group has since said it would not cooperate with the probe.
But the office of the Treasury inspector general for tax administration (TIGTA), after a probe of its own that was requested by IRS Commissioner Mark W. Everson and other senior agency officials in November, found that the IRS had set up proper procedures and followed them.
"We were alert for any indications that inappropriate actions, such as political influence, may have been taken with regard to the handling of" the activities of tax-exempt organizations, but "we did not identify any," Deputy Inspector General Pamela J. Gardiner of TIGTA wrote in a memorandum accompanying the report.
But the probe did find that there were delays that pushed the IRS's first contact with the affected organizations into September, six weeks before the election. "We believe contacting organizations so close to the election and the late publicity about this project contributed to the allegations of improper motivation on the part of the IRS," Gardiner said.
The report made no direct reference to the NAACP -- nor did it name any organization that might have been considered for investigation -- so it was not clear whether the inquiry looked at that specific case.
TIGTA is a special office set up to investigate issues involving the IRS and its personnel. It is separate from Treasury's office of the inspector general.
Under the law, certain types of groups, including charities and educational institutions, are exempt from federal income tax. These organizations, known as 501(c) (3) groups, after the tax-code section conferring the exemption, are barred from engaging in political campaigns, making political contributions, or engaging in activities that may be beneficial or detrimental to a particular candidate.
According to the report, the IRS last summer set up a "Political Intervention Project" to "fast-track" allegations made to the agency that tax-exempt groups were engaging in political activity forbidden by law. The IRS receives many such allegations, along with other information that might indicate a violation by a tax-exempt group.
Such information was referred to a committee of three experienced technical reviewers, who determined whether there appeared to be grounds for an IRS investigation. The panel documented its reasons for its decisions.
"We analyzed the . . . committee's decisions and did not identify any cases in which the same criteria were used to select one information item for examination and to decline a similar item for examination," Gardiner said.
Of 40 groups selected by the IRS panel for further investigation, 18 were pro-Republican, 12 were pro-Democratic, one was pro-Green and the others' leanings could not be determined, TIGTA said.
Of 20 not deemed worthy of further examination, eight were pro-Republican, four were pro-Democratic and 10 were undetermined.
Angela Ciccolo of the NAACP noted that the report "doesn't make any judgment on the ultimate question" of whether the NAACP violated the rules and said it was "really good" that "the IRS did agree to take some corrective actions about the process it uses."
