The scandal involving the IRS’s discrimination against conservative groups seems to grow more dizzying by the day.
Acting IRS commissioner Danny Werfel on Monday told reporters that the now-infamous “Be On The Lookout” list was far broader than originally disclosed in the Treasury Department inspector general’s report. News accounts in outlets such as the Associated Press and Bloomberg News supported Werfel’s claim, indicating that terms on the list ran the gamut, politically speaking, from “tea party” to “progressive” and “occupy,” and even to groups whose applications included the word “Israel.”
A November 2010 version of the list obtained by National Review Online, however, suggests that while the list did contain the word “progressive,” screeners were instructed to treat progressive groups differently from tea-party groups. Whereas they were merely alerted that a designation of 501(c)(3) status “may not be appropriate” for progressive groups — 501(c)(3) organizations are prohibited from conducting any political activity — they were told to send applications from tea-party groups off to IRS higher-ups for further scrutiny.
That means the applications of progressive organizations could be approved by line agents on the spot, while those of tea-party groups could not. Furthermore, the November 2010 list noted that tea-party cases were “currently being coordinated with EOT” — Exempt Organizations Technical, a group of tax lawyers in Washington, D.C. Those of progressive organizations were not.
To Werfel’s account, add the testimony of Holly Paz. The highest-ranking official interviewed by the House Oversight Committee to date, Paz did not contend that the lookout list was politically inclusive. Rather, she told committee investigators that the use of the term “tea party” to flag applications was politically neutral. Paz, who served as the director of the IRS
’s Office of Rulings and Agreements before she was put on administrative leave earlier this month, told committee investigators that “tea party” merely served as shorthand for an application for tax exemption from any group, conservative or liberal, that showed a potential for political intervention. “It’s like calling soda ‘coke’ or, you know, tissue ‘Kleenex.’ [Line agents] knew what they meant, and the issue was campaign intervention.”
Paz continued, “The criteria didn’t seem to limit what side of the issue,” according to an interview transcript reviewed by National Review Online. “There was a variety of different political persuasions amongst the groups that were — you know, whose applications were in this bucket of cases.”
Her testimony, however, stands in stark contrast to that of Cincinnati IRS agent Elizabeth Hofacre, who handled all tea-party cases between April and August 2010. Hofacre told investigators that she understood “tea party” to be a proxy for conservative and Republican groups; she said she sent back the applications of liberal groups for general processing.
Paz testified that she became aware of the tea-party cases in February 2010, when she recommended that the first case identified by screeners be elevated to IRS headquarters in Washington, D.C., for consideration. Later that year, she was presented with a list of 40 tea-party cases under scrutiny.
Paz insisted, however, that liberal groups were flagged in this process, too. The “lookout list” generated by officials in Cincinnati alerted screeners to flag, for example, groups that “criticize how the government is being run.” When investigators asked Paz if “groups that believe the government should be run more like Europe is run” would be included in that group, she responded, “Yes, that’s correct.”
In the course of Paz’s testimony, she also revealed much about how the IRS has responded internally to this scandal. We know that the director of Exempt Organizations, Lois Lerner, now on administrative leave, ordered what she deemed to be objectionable language on the infamous lookout list to be changed in June 2011. Yet in January 2012, it was changed back to something resembling its original, politically discriminatory form. Paz identified for investigators the three individuals responsible for making that change, and said that not only have they not been reprimanded, but that two of the three have been promoted.
Paz took part in an internal IRS investigation, completed in May 2012, that reached conclusions similar to those outlined in the Treasury Department inspector general’s report released in mid-May of this year — that the agency was improperly targeting conservative groups — but neither she nor her superiors informed Congress of those findings, which the IRS has never made public.
And by Paz’s account, the IRS has done little to correct the problems that allowed that targeting to continue unabated for almost two years. How will the agency ensure in the future that cases don’t languish for years, as those of so many tea-party groups did, and as many still are? Managers, she told the House committee, will be “exercising increased managerial oversight with regard to the timeliness of cases and holding their employees accountable.” If they are held as accountable as the employees who fiddled with the lookout list, this is not reassuring. How will the agency prevent employees from sending intrusive questionnaires, akin to the ones so many tea-party groups received? Now, according to Paz, “an assigned expert in Washington” will review all letters. That, in fact, is how the original intrusive questionnaires originated.