Targeting from the Top of the IRS

by Eliana Johnson
High-ranking IRS lawyers, possibly including an Obama appointee, delayed tea-party applications.

The congressional investigation into the Internal Revenue Service’s targeting of tea-party groups inched closer to the White House yesterday as testimony from three IRS attorneys indicated lawyers in the agency’s chief counsel’s office were involved in reviewing the applications of tea-party groups for tax exemption. The office is led by William Wilkins, one of two IRS officials appointed by President Obama.

A source tells National Review Online that Judith Kindell, a senior adviser to Lois Lerner, also held up the processing of tea-party cases by demanding to review them herself. Lerner, who has become emblematic of the scandal that continues to roil the tax-collection agency, is the embattled former director of the IRS’s Exempt Organizations division who remains on paid administrative leave, refusing to testify about the targeting unless lawmakers grant her blanket immunity.

Wilkins, who, according to the IRS, heads an office of 1,600 attorneys, has been involved in Democratic politics for over three decades. He joined the Democratic staff on the Senate Finance Committee in 1981 and became the committee’s staff director and chief counsel in 1987, before going on to a career in private practice at the white-shoe law firm WilmerHale. There, he defended pro bono Reverend Jeremiah Wright’s United Church of Christ when the IRS investigated potential violations of its 501(c)(3) status after then-senator Barack Obama delivered a speech there. Wilkins has also donated generously to Democratic causes, contributing over $35,000 to Democratic politicians and party affiliates since 1990, according to the Center for Responsive Politics. He has also contributed to Republican politicians, including Iowa’s Chuck Grassley, but not nearly as generously.

His involvement in the targeting of tea-party groups is a matter of dispute. The IRS has denied it, saying in a statement that he is “not involved in the 501(c)(4) application process” and “did not learn about specific groups being singled out by name until earlier this year.” A senior GOP aide, however, tells National Review Online that witnesses interviewed by congressional investigators claim Wilkins became aware of the targeting at some point in 2012. According to White House press secretary Jay Carney, Wilkins informed neither his boss — the Treasury Department’s chief counsel — nor the White House when he learned of it. Whether he personally helped to develop the guidelines for reviewing tea-party applications remains unknown.

In interviews with congressional investigators, three IRS lawyers involved in the processing of tea-party cases — Carter Hull, Ronald Shoemaker, and Michael Seto — said that lawyers in Wilkins’s office, as well as Lerner’s adviser, Kindell, put the applications of conservative groups through a complex, multi-layered review process that delayed their processing. An IRS source says that Kindell is considered the “political guru” in the Exempt Organizations division as well as “the definitive expert” on “political activities in exempt organizations tax law.” She is the author of Revenue Ruling 2007-41, which provides that tax-exempt organizations “may not participate in, or intervene in . . . any political campaign on behalf of (or in opposition to) any candidate for public office” and provides several examples of impermissible political activities among exempt organizations.

According to Hull, a recently retired lawyer with the Exempt Organizations Technical Unit who was providing guidance to the Cincinnati agent processing tea-party cases, Kindell told him the chief counsel’s office would need to review the applications. That, he said, was unprecedented. It also caused lengthy delays in the processing of tea-party applications during the 2010 election season. The applications elevated to Washington, D.C. were “test” applications whose treatment was to provide guidance for the Cincinnati agents processing the bulk of the tea-party cases; lacking a determination on their status, Cincinnati was unable to process any other tea-party applications while agents there waited for word from Washington.

Though he was instructed to make determinations on the applications, Hull explained, “I couldn’t do it because I had no idea which way we were going.” Elizabeth Hofacre, the Cincinnati agent charged with processing tea-party applications, told investigators, “I never got any feedback from [Hull] at all” during that period. The head of the Determinations Unit in Cincinnati, Cindy Thomas, said that for nearly a year, between October 2010 and September 2011, tea-party applications languished while agents waited for guidance from top lawyers in Washington.

Hull’s superiors, Michael Seto and Ronald Shoemaker, confirmed his account. Seto, the manager of the Exempt Organizations Technical Unit, told investigators that applications were sent to the chief counsel’s office after Lerner “sent me an e-mail saying that . . . these cases need to go through multi-tier review and they will eventually have to go [through her staff] and the chief counsel’s office.” If Seto’s testimony is to be believed, Lerner appears at best to have withheld information from, and at worst to have misled, Congress about her knowledge of the scrutiny to which tea-party applications were being subjected. When the Oversight Committee in March 2012 expressed concern that the organizations were the subject of “heightened scrutiny,” Lerner said only that some applications required “further development” and, in cases with “no established public precedent,” agents sought guidance from lawyers in the Exempt Organizations Technical Unit. She did not tell the committee that her senior adviser and lawyers in the chief counsel’s office had worked to craft guidelines for reviewing the applications about which the committee had inquired.

Though Hull began processing tea-party applications in April 2010, it was not until August 2011 that the chief counsel’s office held a meeting with Hull and Kindell about them. Because the applications had sat dormant for so long, lawyers from the chief counsel’s office indicated they needed updated information from the tea-party groups before they could make a determination. In particular, they sought information about the groups’ political activity “right before the [2010] election period,” according to Hull’s supervisor, Ronald Shoemaker. Shockingly, Shoemaker told investigators that to his knowledge, in the three years since one of the tea-party applications elevated to Washington, D.C., was filed, Kindell and the chief counsel’s office have yet to make a determination on it. “That’s a very long time period,” he said.

Four Republican congressmen disclosed the explosive testimony on Wednesday in a letter to the IRS’s acting administrator, Danny Werfel, who was appointed by President Obama in the wake of the targeting scandal. The disclosures amount to a counterpunch to a 36-page memo from Democratic committee staff released Monday accusing the GOP of engaging in a “sustained and coordinated campaign” to politicize the investigation. Democrats denounced Republicans for alleging that the targeting was politically motivated, calling the allegations “unsubstantiated” and declaring there was “no political motivation or White House involvement in this process.”

Despite the partisan grudge match taking place beneath the surface, we continue, slowly, to get closer to the truth.

— Eliana Johnson is media editor of National Review Online.