By The Wall Street Journal Editorial Board
House committees are still digging into the IRS political targeting scandal, and based on a hearing Wednesday there’s more to learn. The day produced more evidence blowing apart President Obama’s claims that there was “not even a smidgen of corruption” or political motivation in the IRS handling of groups applying for tax-exempt status.
Mr. Obama wants Americans to believe that the targeting resulted from the confusing tax law governing nonprofits, which he says was “difficult” to interpret and resulted in mere “bureaucratic” mistakes. This is also the Administration’s justification for issuing new regulations governing 501(c)(4)s that would effectively silence White House opponents this election year. Published in the Federal Register in November, the new rules cite the “lack of a clear and concise” regulation as reason for the rewrite.
House Ways and Means Chairman Dave Camp blew up this fairy tale at Wednesday’s hearing with new IRS Commissioner John Koskinen. Mr. Camp unveiled a June 14, 2012 email from Treasury career attorney Ruth Madrigal to key IRS officials in the tax-exempt department, including former director Lois Lerner.
The email cites a blog post about the political activity of tax-exempt 501(c)(4) groups and reads: “Don’t know who in your organizations [sic] is keeping tabs on c4s, but since we mentioned potentially addressing them (off-plan) in 2013, I’ve got my radar up and this seemed interesting.”
Interesting for sure. The IRS typically puts out a public schedule of coming regulations, and Mr. Camp noted that in this case “off-plan” appears to mean “hidden from the public.” He added that committee interviews with IRS officials have found that the new 2013 rules were in the works as early as 2011, meaning the Administration has “fabricated the rationale” for this new regulation.
Mr. Camp added that everything his committee has discovered contradicts the White House argument that the IRS scandal was caused by legal “confusion.” The current rules governing 501(c)(4)s have existed, unchanged, since 1959. Prior to 2010 the IRS processed and approved tax-exempt applications in fewer than three months with no apparent befuddlement.
The IRS hyper-scrutiny of conservative groups only began in 2010 amid the Obama Administration’s larger political attack on political donors like the Koch brothers, and emails show that IRS officials were acutely aware of this political environment. In February 2010, for example, an IRS screener in Cincinnati flagged an application to his superiors noting: “Recent media attention to this type of organization indicates to me that this is a ‘high profile’ case.”
From then on applications were routed through the offices of Mrs. Lerner and Obama-appointed IRS chief counsel William Wilkins, and long approval delays ensued. Extensive interviews and emails show that neither the initial Cincinnati interest, nor the subsequent Washington delay, was in any way driven by “confusion.”
Mr. Koskinen promised in December to restore public trust in the IRS, but he didn’t do much of that on Wednesday. He toed the Administration line on the new 501(c)(4) rules, promising to address concerns only “to the extent I have any control” over the process. He refused to say if he’d comply with Mr. Camp’s request for IRS and Treasury documents pertaining to the rule-making, fretting instead about low IRS “morale” and lack of funding.
The quickest way Mr. Koskinen could restore public trust in the IRS would be to halt the new politically toxic 501(c)(4) rules until investigations into the original targeting are complete. Meantime, the House should sharply reduce IRS funding until the agency is more responsive.