Oversight Report: Obama's Use of 'Bully Pulpit' Led to IRS Targeting

WASHINGTON – A House committee report maintains that the rhetoric used by President Obama in disparaging the nation’s campaign finance system impelled the Internal Revenue Service to undertake an extensive review of the tax status of conservative groups.

The report compiled by the staff of the House Oversight & Government Reform Committee, “How Politics Led the IRS to Target Conservative Tax-Exempt Applicants for their Political Beliefs,” claims the president’s use of the “bully pulpit” led the IRS to target conservative groups seeking tax-exempt status, leading to often lengthy delays in the process.

According to the report, Obama’s public blistering of the U.S. Supreme Court’s decision in the Citizens United case, which prohibits the government from restricting political independent expenditures by corporations, associations or labor unions, launched the probes of groups, drawing extensive congressional scrutiny.

“For as much as some argue that the IRS’s targeting was not political, it (sic) abundantly clear that the targeting initiated and progressed in the context of a fierce rhetorical campaign by the president to delegitimize Citizens United and nonprofit political speech,” the report said.

Obama and congressional Democrats “have an absolute right to express legitimate policy concerns and advocate for policy changes,” the report acknowledged, but “the causal relationship between this rhetoric and the IRS targeting should not be ignored.”

“Using his bully pulpit, the President spoke,” the committee staff concluded. “He declared repeatedly that these conservative groups ‘posing’ as nonprofits with ‘benign-sounding’ names were ‘a threat to our democracy.’ The IRS listened and, in turn, it subjected these groups to systematic scrutiny and delay.”

The House Oversight & Government Reform Committee began investigating allegations that the IRS inappropriately scrutinized certain applicants seeking tax-exempt status in February 2012. Under Section 501(c)(4) of the Internal Revenue Code, organizations that meet certain criteria and focus on advancing “social welfare” goals are exempted from federal income taxes, although donations to these organizations are not tax deductible.

Organizations popularly referred to as 501(c)(4)s are allowed to participate in campaign-related activities provided that these activities do not comprise a majority of the organizations’ efforts.

On May 12, 2013, the Treasury Department inspector general issued a report that found that the IRS Division of Exempt Organizations inappropriately targeted Tea Party and other conservative applicants for tax-exempt status and subjected them to heightened scrutiny, resulting in extended delays that sidelined some applicants during the 2012 election cycle.

“The committee’s investigation shows that as the president generated attention to the issue of nonprofit political speech in 2010, IRS employees followed his public messaging,” the report said. “With jurisdiction over nonprofits and tax law, IRS employees read and acted upon the news reports. In this way, the IRS targeting is – and always has been – rooted in political machinations.”

“Put simply, as the president’s political rhetoric drove the national dialogue and shaped public opinion, the IRS received and responded to the political stimuli.”

The process, according to the report, had its genesis with Obama’s State of the Union address in January 2010 when he criticized the Supreme Court’s ruling in the Citizens United case, asserting that, “With all due deference to separation of powers, last week the Supreme Court reversed a century of law that I believe will open the floodgates for special interests – including foreign corporations – to spend without limit in our elections.”

Obama went on to urge Congress to “pass a bill that helps to correct some of these problems.”

Thereafter, the report said, the president “kept up the rhetorical assault as he railed against the decision in campaign-style speeches across the country.” IRS employees “followed his public messaging” and “in February 2010, the IRS identified and elevated the initial conservative tax-exempt applications due to concerns about media attention surrounding the Tea Party.” Lerner dispatched emails acknowledging that the IRS was being pressured to “fix the problem.”

The committee, chaired by Rep. Darrell Issa (R-Calif.), has been investigating to determine whether the White House coordinated with the IRS to deny the applications of conservative groups seeking tax-exempt status. The probe has centered on Lois Lerner, who directed the Division of Exempt Organizations during the period in question. She has refused to testify and last month was held in contempt of Congress.

Now it has been revealed that the IRS has proved unable to recover about 24,000 emails that Lerner exchanged with other administration officials from 2009 to 2011 as a result of what has been characterized as a “computer crash.” It was during that period that Lerner was overseeing the improper targeting of conservative and tea party groups. The committee wanted the emails to determine if she communicated with the White House over the situation.

As a result, Issa has subpoenaed IRS commissioner John Koskinen to appear before the committee next week to provide an explanation. He also has ordered delivery of “all back-up tapes, external drives, thumb drives, or other storage media the IRS used to capture, archive, back up, or otherwise record e-mails sent or received by Lois Lerner from January 1, 2009, to September 23, 2013.”

In addition the chairman wants “all electronic communication devices the IRS issued to Lois G. Lerner from January 1, 2009, to September 23, 2013, and have been lost as a result of a ‘computer crash.’”

In a statement, Issa asserted that the report establishes that the IRS listened to the president’s rhetoric and “subjected conservative groups to systematic scrutiny and delay.” Rep. Elijah Cummings (D-Md.), ranking member on the committee, dismissed the report as “partisan,” noting that it fails to show “any White House involvement or political motivation in the screening of tax-exempt applicants.”

The White House did not respond to the report.

Asked about the missing emails at Wednesday's briefing, press secretary Jay Carney replied, "I would refer you to the IRS and they've answered this question. They, you know, they can answer it again."

"We did in fact do a search for all communications between Lois Lerner and any person within the Executive Office of the President for this period. We found zero e-mails -- sorry to disappoint -- between Lois Lerner and anyone within the EOP during this period," Carney added. "We found three e-mails where a third party e-mailed both Lois Lerner and officials within the EOP. One was a spam e-mail and two others were from a person seeking tax assistance. Each of these e-mails has been produced to Congress."