Deputy Attorney General James Cole on Thursday testified before a House oversight panel about how the FBI ended up with a database from the Internal Revenue Service containing private taxpayer information for about 12,000 nonprofit advocacy groups.
The matter has helped fuel Republican suspicions that the Obama administration coordinated inter-agency efforts to quiet conservative organizations during the past two election cycles.
GOP lawmakers have persisted with that theory ever since the IRS inspector general issued a report in May 2013 that said the agency had targeted tax-exempt groups for extra scrutiny based on their names and policy positions. Since then, questions have arisen about former IRS official Lois Lerner communicating with the Justice Department, the FBI and the Federal Elections Commission.
Cole described the events that led to the information handoff between the IRS and FBI during a hearing with the House subcommittee on economic growth, job creation and regulatory affairs. Here’s what he said:
The Justice Department initiated contact with the IRS in 2010 to discuss tax-exempt groups. Cole testified that a Justice attorney reached out to determine “what potential violations related to campaign finance activity might evolve following the Supreme Court’s decision in Citizens United v the [Federal Election Commission].”
Lerner, then-head of the IRS’s tax-exempt division, met with a Justice Department lawyer as a result of that request, according to Cole. “In the course of that meeting it became clear that it would be difficult to bring criminal prosecutions in this area,” the attorney general said.
Cole testified that the IRS did not refer any groups for prosecution, and the Justice Department never opened any investigations as a result of the discussion. But he said the meeting prompted the IRS to provide the FBI with “discs that we understood at the time to contain only public portions of filed returns of tax exempt organizations.” He was referring to the database of 12,000 tax returns.
Cole said an FBI analyst reviewed the index of the discs and “did nothing further with them,” adding that “to the best of our knowledge, they were never used for any investigative purpose.”
The Justice Department did not realize that the records “inadvertently” included protected taxpayer information until the IRS notified the agency of the situation early last month, according to the attorney general.
Cole said of the disks: “To the best of our knowledge, they were never used for any investigative purpose.”
Cole said Justice Department lawyers contacted Lerner again in May 2013, after Sen. Sheldon Whitehouse (D-R.I.) sent a letter to the agency asking whether it had an effective way of sharing information with the Treasury Department about potential false statements from tax-exempt groups to the IRS.
Contact between the two agencies appears to have ended there. “Ms. Lerner indicated that someone else from the IRS would follow up with the section but that follow-up did not occur,” Cole said.
He added that the Justice Department attorneys in both cases were “merely fulfilling their responsibilities as law enforcement officials” and “ensuring that the department remained vigilant in its enforcement of [campaign-finance] laws.”
Rep. Jim Jordan (R-Ohio), who heads the House oversight panel, expressed doubts about Cole’s explanation for why the IRS shared the taxpayer information. “You say it’s available publicly but you don’t get it publicly, you go get it from the IRS, and it contains confidential taxpayer donor information,” he said. “All those are facts, correct?”
“They’re not necessarily facts that are all linked together,” Cole replied.
Democrats have said Republicans are trying to convince voters of an administration scandal as the midterm elections near.
“It simply does not exist,” said Rep. Elijah Cummings (Md.), the top Democrat on the House Oversight and Government Reform Committee. “This is not the basis of White House scandal. This is the latest example of Republicans desperately searching for one , and then using any excuse they can to manipulate the facts until they no longer have any resemblance to the truth.”