The Justice Department has reached settlement agreements with groups that alleged their constitutional rights were violated when their applications for tax-exempt status received extra scrutiny because their names contained words such as “tea party” or “patriots,” court filings show.
The Justice Department and those suing agreed they would dismiss the case with a judge’s declaration that it was illegal to unevenly apply tax laws based on an organization’s name or particular political viewpoint.
The targeting of tea party organizations that applied for tax-exempt status was a major controversy of the Obama administration, with hundreds of conservative-leaning groups receiving scrutiny. In some cases, it delayed the processing of applications for years.
Many felt the conduct was an example of the president punishing his political enemies.
In a statement, Attorney General Jeff Sessions took aim at his predecessors — noting it was “during the last administration” that officials began using “inappropriate criteria,” such as groups’ names or policy positions, to screen applications. He said the criteria “disproportionately impacted conservative groups.”
“There is no excuse for this conduct,” Sessions said. “Hundreds of organizations were affected by these actions, and they deserve an apology from the IRS. We hope that today’s settlement makes clear that this abuse of power will not be tolerated.”
The Senate Finance Committee and the Treasury Inspector General for Tax Administration (TIGTA) already had launched extensive investigations, with their findings supporting and adding fuel to conservatives’ claims.
The Justice Department also conducted a criminal investigation but decided not to bring charges, including against Lois Lerner, the IRS official who oversaw tax-exempt groups.
“Our investigation uncovered substantial evidence of mismanagement, poor judgment and institutional inertia, leading to the belief by many tax-exempt applicants that the IRS targeted them based on their political viewpoints,” then-Assistant Attorney General for Legislative Affairs Peter J. Kadzik wrote in 2015.
“But poor management is not a crime,” Kadzik wrote. “We found no evidence that any IRS official acted on political, discriminatory, corrupt, or other inappropriate motives that would support a criminal prosecution.”
The IRS had earlier apologized for the practice, though Lerner also said at the time that it was not driven by partisan motives. She said the technique was essentially a misguided attempt to handle a glut of applications between 2010 and 2012. TIGTA revealed this year that liberal-leaning groups had received extra scrutiny, too.
Hundreds of tea partyers and others had joined lawsuits alleging that their constitutional rights had been violated and seeking monetary damages.
The settlement reached in one case in federal court in the District did not include monetary damages but did concede that IRS managers in the exempt-organizations division were “delinquent” in their oversight responsibility and “did not take appropriate steps to ensure that the applications were processed expeditiously and accurately.” The settlement also singled out Lerner for failing to inform upper-level managers of the serious delays in processing applications from tea party and other political groups.
The Justice Department under Sessions has declined to reopen the criminal investigation involving Lerner.