Last updated: May 13, 2013 11:10 pm

Barack Obama outraged at claims IRS targeted Tea Party groups

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Barack Obama said he was outraged over claims that the Internal Revenue Service improperly targeted Tea Party organisations for scrutiny and vowed to hold officials accountable.

“If, in fact, IRS personnel engaged in the kind of practices that have been reported on and were intentionally targeting conservative groups, then that’s outrageous and there is no place for it. They have to be held fully accountable,” the US president said on Monday in his first public remarks on the scandal. “I’ve got no patience with it, I will not tolerate it and we will make sure we find out exactly what happened on this.”

His statement came as lawmakers on the House ways and means committee announced the first hearing into the matter on Friday. Some Republicans also demanded the resignation of Steven Miller, the acting IRS chief.

Documents contained in an audit by the IRS inspector-general obtained by the Financial Times show that staff in the Cincinnati field office who were responsible for making decisions on how to evaluate requests for tax-exempt status began narrowing their search to focus on Tea Party groups in March 2010.

The burgeoning Tea Party movement was taking national politics by storm at the time and hammering Mr Obama’s policies on healthcare and the economy. Republicans won back the majority of the House of Representatives in November that year.

The audit documents, which were partly redacted, showed how IRS staff fine-tuned the criteria they were using to comb through applications for tax-exempt status, known as 501(c)4 applications. In June of 2011, the director of the division for exempt organisations for the IRS, Lois Lerner, was briefed on the fact that the words “Tea Party” and “Patriots” were used as criteria to scrutinise cases. Ms Lerner “raised concerns over the language” and instructed the team that the criteria be changed, according to the audit.

But the documents also show that by January 2012, IRS staff were looking out for political organisations that were involved in “limiting/expanding government, educating on the constitution and the bill of rights [and] social economic reform”.

About a month later, reports began to surface in the media that suggested the IRS was closely scrutinising conservative organisations. In March, the then-chief of the IRS, Douglas Schulman, who was appointed by George W. Bush, testified on Capitol Hill that the IRS was not targeting any specific political groups.

Although the White House has not been implicated, the possibility that the IRS sought to single out certain conservative entities that were requesting tax-exempt status has inflamed passions on the right, along with opposition to the president.

The IRS declined to comment.

Its division that scrutinises whether organisations ought to be tax exempt has usually been a target for criticism for not doing enough to question the activities of groups that appear heavily engaged in electoral politics but enjoy tax-free status because they purport to be non-partisan “social welfare” groups.

The IRS needs to enforce the laws on the books in a completely non-partisan manner but it must enforce the law rather than turning a blind eye to widespread abuses

- Gerald Hebert, Campaign Legal Center

Gerald Hebert, the head of the Campaign Legal Center, which lobbies for tougher campaign finance rules, said it was “breathtaking” that the IRS appeared to be “harassing mom and pop Tea Party” groups while “ignoring” blatant abuses of groups that have pumped millions of dollars into partisan political ads.

“The IRS needs to enforce the laws on the books in a completely non-partisan manner but it must enforce the law rather than turning a blind eye to widespread abuses,” he said.

Mr Obama said he had not been made aware of the alleged bias by the IRS until it became public on Friday and that people were “properly concerned” over the emerging scandal. The IRS required “absolute integrity” and could not be perceived as “anything less than neutral”, he said.

Some of the most powerful political organisations in the US have tax-exempt status under the tax code as long as their “primary purpose” is not the targeting or support of individual candidates. The practice has long been a source of contention for organisations that want to overhaul rules on campaign finance. They say that there is too little oversight of how such 501(c)4 groups operate and use their finances.

The special tax status allows organisations that are politically active to shield their donors’ identities and other activities.

Democratic campaign groups filed a complaint with the chief US campaign finance regulator, the Federal Election Commission, last year, where they accused three donor groups tied to the billionaire Koch brothers, among others, of using “secret money” to “subvert the democratic process”.

The complaint argued that the organisations were “political action committees” subject to certain regulations and not legitimate 501(c)4 organisations.

Americans for Prosperity, a lobby group, said the complaint was a “cynical attempt to suppress free speech and intimidate” those who oppose “big government”.

The permanent subcommittee on investigations in the Senate, known for its exhaustive probes into financial and tax issues, said on Monday that it would delay a planned June hearing on whether the IRS was properly enforcing rules on tax-exempt groups in light of the new scandal. The subcommittee said it would investigate the new issue.

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