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E-mails Suggest Collusion Between FEC, IRS to Target Conservative Groups

By Eliana Johnson

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Washington, Jul 31, 2013 | comments

Embattled Internal Revenue Service official Lois Lerner and an attorney in the Federal Election Commission’s general counsel’s office appear to have twice colluded to influence the record before the FEC’s vote in the case of a conservative non-profit organization, according to e-mails unearthed by the House Ways and Means Committee and obtained exclusively by National Review Online. The correspondence suggests the discrimination of conservative groups extended beyond the IRS and into the FEC, where an attorney from the agency’s enforcement division in at least one case sought and received tax information about the status of a conservative group, the American Future Fund, before recommending that the commission prosecute it for violations of campaign-finance law. Lerner, the former head of the IRS’s exempt-organizations division, worked at the FEC from 1986 to 1995, and was known for aggressive investigation of conservative groups during her tenure there, too.

“Several months ago . . . I spoke with you about the American Future Fund, a 501(c)(4) organization that had submitted an exemption application the IRS [sic],” the FEC attorney wrote Lerner in February 2009. The FEC, which polices violations of campaign-finance laws, is not exempted under Rule 6103, which prohibits the IRS from sharing confidential taxpayer information, but the e-mail indicates Lerner provided that information nonetheless: “When we spoke last July, you had told us that the American Future Fund had not received an exemption letter from the IRS,” the FEC attorney wrote.

The timing of the correspondence between Lerner and the FEC suggests the FEC attorney sought information from the IRS in order to influence an upcoming vote by the six FEC commissioners. The FEC received a complaint in March 2008 from the Minnesota Democratic Farmer Labor Party alleging that the American Future Fund had violated campaign-finance law by engaging in political advocacy without registering as a political-action committee. The American Future Fund responded to that complaint in June 2008, telling the commission that it had applied for tax exemption in March of that year and was a “501(c)(4) social-welfare organization that was organized to provide Americans with a conservative and free-market viewpoint and mechanism to communicate and advocate on the issues that most interest and concern them.” According to the e-mail correspondence, a month after receiving the American Future Fund’s response, the FEC general counsel’s office — which is prohibited under law from conducting an investigation into an organization before the FEC’s six commissioners have voted to do so — contacted Lerner to investigate the agency’s tax-exempt status.

The FEC general counsel’s office, in its recommendation on the case, apparently didn’t tell the agency’s commissioners about how it had obtained the information about the group’s tax-exempt status. Recommending that the commissioners prosecute the American Future Fund, the general counsel’s office wrote, “According to its response, AFF submitted an application for tax-exempt status to the Internal Revenue Service . . . on March 18, 2008.” The footnote to that sentence reads, “The IRS has not yet issued a determination letter regarding AFF’s application for exempt status. Based on the information from the response and the IRS website, it is likely that the application is still under review.” In fact, an FEC lawyer knew that the organization had yet to obtain tax-exempt status because Lerner provided the confidential information. 

The general counsel’s report was issued in September 2008, but it was over five months before the six FEC commissioners voted, in late-February 2009, on whether to prosecute the American Future Fund for violations of campaign-finance laws. (The typical lag time between the submission of a general counsel’s recommendation and a commission vote is about a month, according to a source familiar with the workings of the commission.) As the vote approached, on February 3, 2009, the FEC lawyer went back to Lerner for an update on the status of the American Future Fund’s application. “Could you please tell me whether the IRS has since issued an exemption letter to the American Future Fund? Also if the IRS has granted American Future Fund’s exemption, would it be possible for you to send me the publicly available information and documents related to American Future Fund?”

Despite the recommendations of the general counsel’s office, the six FEC commissioners split on whether to pursue the American Future Fund’s case and voted six-to-zero to close the case.

House Ways and Means Committee chairman Dave Camp and oversight-subcommittee chairman Charles Boustany are calling on the IRS, in the wake of these revelations, to provide all communications between the agency and the FEC between 2008 and 2012. “The American public is entitled to know whether the IRS is inappropriately sharing their confidential tax information with other agencies,” Camp and Boustany write in a letter they will send to acting IRS administrator Danny Werfel on Wednesday.

The FEC enforcement attorney also inquired about the tax-exempt status of another conservative organization, the American Issues Project. “I was also wondering if you could tell me whether the IRS had issued an exemption letter to a group called the American Issues Project? The group also appears to be the successor of two other organizations, Citizens for the Republic and Avenger, Inc.” Also sought were “any information and documents that would be publicly available in relation to the American Issues Project, Citizens for the Republic, or Avenger, Inc.”

Lerner was placed on paid administrative leave in late May after she revealed the IRS had inappropriately targeted conservative groups. The IRS has yet to respond to requests from lawmakers about her current employment status with the agency.

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