The Corner

IRS Scandal Circles Back to Lerner

The investigation into the Internal Revenue Service’s targeting of tea-party groups is likely to circle around Lois Lerner once again. Testimony from key witnesses indicates that the embattled former head of the IRS’s Exempt Organizations division and her senior adviser, Judith Kindell, involved the chief counsel’s office in the processing of tea-party applications. At issue were two “test” applications elevated from the agency’s Cincinnati outpost to its headquarters in Washington, D.C., the handling of which was supposed to guide the treatment of the remainder of the tea-party cases that sat in Cincinnati. Though three years has elapsed since one of applications was filed, IRS lawyers say the organization that applied for tax-exempt status has yet to hear from Lerner’s team at the IRS. 

Former IRS lawyer Carter Hull told the House Oversight Committee on Thursday that Lerner attended an August 2011 meeting where she, Hull, and lawyers from the agency’s chief counsel’s office, among others, discussed the test cases. The former director of the IRS’s Rulings and Agreements office, Holly Paz, told investigators that Kindell was involved in shaping the guidelines for tea-party applications shortly after they were elevated to Washington headquarters in  2010. Lerner nonetheless blamed “our line people in Cincinnati who handled the applications” for botching the application process when, on May 10, she responded to a planted question at a conference of the American Bar Association. The accusation was repeated by White House press secretary Jay Carney. Lerner’s unfounded allegation felt like “a nuclear strike on us,” a Cincinnati agent told the committee.  

The involvement of the chief counsel’s office set off speculation this week about whether the William Wilkins, the chief counsel and a generous donor to Democratic causes, was personally involved in slow walking the applications. The IRS has vigorously denied that allegation, and new evidence shows that the officials from the chief counsel’s office who participated in the August 2011 meeting operated far below him in the chain of command. Hull told lawmakers yesterday that three lawyers from the chief counsel’s office — Don Spellman, David Marshall, and Amy Franklin — attended the meeting about the tea-party cases at which Lerner and Kindell were also present. (The IRS has stated that Wilkins was not present.) Documents provided to National Review Online show that five layers of management exist between Spellman and Marshall, lawyers in the office of the Associate Chief Counsel for Tax Exempt and Government Entities, from Wilkins himself, while Franklin is no longer listed as an agency employee. 

Why the chief counsel’s office became involved in the matter remains unclear, but witness testimony suggests it was Lerner’s office that pushed to involve the agency’s top lawyers. Hull told the committee that the tea-party cases were taken out of his hands when Kindell requested they be sent to her, and then to lawyers in the chief counsel’s office. Lerner personally told Hull’s boss, Michael Seto, that the applications needed to go through a “multi-tier review” that included scrutiny from her staff and the chief counsel’s office. This process appears to have been unprecedented. “This is the only case I remember sending directly” to Kindell, Hull, a 48-year IRS veteran, told investigators. 

Though Lerner’s office was by all indications interested in the tea-party applications, the cases that got to her office were never resolved. Hull’s superviser, Ronald Shoemaker, had the following exchange with investigators:  

Q: [The application is] still pending as of today. As far as you know. 

A: As far as I know.

Hull had this exchange: 

Q: Still open as far as today?

A: As far as I know. I don’t know for certain. 

The Oversight Committee, according to a senior GOP aide, has yet to interview Kindell or to strike a deal with Lerner, who invoked her Fifth Amendment rights at a May hearing, to obtain her testimony. The question now is whether Lerner and Kindell were taking orders from anybody and, if so, from whom.


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