Playing politics with tax records
...“Mistakes were made,” the agency said in a statement. IRS official Lois Lerner explained that staffers used a “shortcut” to sort through a large number of applications from groups seeking tax-exempt status, highlighting organizations with “tea party” or “patriot” in their names. The IRS insisted emphatically that partisanship had nothing to do with it. However, it seems that groups with “progressive” in their titles did not receive the same scrutiny.

If it was not partisanship, was it incompetence? Stupidity, on a breathtaking scale? At this point, the IRS has lost any standing to determine and report on what exactly happened. Certainly Congress will investigate, as House Majority Leader Eric Cantor (R-Va.) promised. Mr. Obama also should guarantee an unimpeachably independent inquiry.

One line of questioning should focus on how the IRS’s procedures failed to catch this “shortcut” before its employees began using it. Another should center on how this misguided practice came to light, and on what the IRS planned and plans to do about it. Ms. Lerner was responding to a question when the news first came out; it’s not clear whether the government intended otherwise to disclose what had happened. Nor have officials been clear whether disciplinary measures have been taken....

The IRS’s Tea-Party Targeting
...Third, and perhaps most troubling, those tea-party organizations were sent letters of inquiry demanding information that would seldom if ever be demanded of any other applicant in the process. The IRS demanded lists of donors, names of spouses and family members, detailed information about political views and associations — all of that “under penalties of perjury.” Many applicants dropped out of the process. The questions were remarkably invasive: For example, the IRS demanded to know not only whether political candidates participated in public forums conducted by the groups, but which issues were discussed, along with copies of any literature distributed at the forum and material published on websites. (The IRS has been less forthcoming with its own materials related to this investigation.) If the organizations collected dues, the IRS demanded to know how much they were. It demanded everything down to the résumés of employees. The inquiry was not limited to members of the organization, its executives, or its directors, but included even their family members: The IRS demanded to know — again, under penalty of perjury — whether any of their family members might be thinking about running for office. Its demand for the names of all donors — and all recipients of grants — is in violation of IRS policy....

...“Obviously, you don’t get dozens of inquiries asking unconstitutional questions, with zero corresponding inquiries into liberal groups, unless there is something going on,” says David French, senior counsel for the American Center for Law and Justice, which is representing 27 groups from 18 states in the IRS matter. “It’s not just the numbers, it’s the questions themselves. They were designed to dissect the operations of the organizations.” Mr. French believes that the IRS’s actions were intended as political intimidation.

He also is skeptical that the problem is limited to the Cincinnati office: “We dealt with offices from California to D.C. on this,” he says. With regard to the congressional testimony denying such targeting, he concludes: “Either they lied or they didn’t do the most basic due diligence.”...

Tax Audits Are No Laughing Matter
...At his Arizona State University commencement speech last Wednesday, Mr. Obama noted that ASU had refused to grant him an honorary degree, citing his lack of experience, and the controversy this had caused. He then demonstrated ASU's point by remarking, "I really thought this was much ado about nothing, but I do think we all learned an important lesson. I learned never again to pick another team over the Sun Devils in my NCAA brackets. . . . President [Michael] Crowe and the Board of Regents will soon learn all about being audited by the IRS."

Just a joke about the power of the presidency. Made by Jay Leno it might have been funny. But as told by Mr. Obama, the actual president of the United States, it's hard to see the humor. Surely he's aware that other presidents, most notably Richard Nixon, have abused the power of the Internal Revenue Service to harass their political opponents. But that abuse generated a powerful backlash and with good reason. Should the IRS come to be seen as just a bunch of enforcers for whoever is in political power, the result would be an enormous loss of legitimacy for the tax system....

IRS Mishap Gives Republicans Ammunition in Effort to Defund the Agency
The Internal Revenue Service’s admission that it inappropriately targeted conservative political groups for special scrutiny during the 2012 presidential election only gives congressional Republicans more ammunition as they try to defund and weaken the agency.

For the past few years, Republican lawmakers have sought to slash the funding of the IRS. Reducing the agency’s budget makes it more difficult for it to collect taxes and audit individuals. (Score one for Republicans who dislike high taxes).

But, more importantly, the IRS is also one of the key agencies that will implement the Affordable Care Act. Much of the funding stream for the incoming health care law, arguably the president’s signature legislative achievement, comes from two tax increases: a 3.8 percent hike on investment income for wealthy individuals, estates, and trusts, as well as an additional Medicare tax.

By stripping the IRS of money, the Republicans are indirectly trying to attack the roll-out of the health care law that begins in 2014.

Now, the news that rogue, low-level IRS agents in Ohio investigated conservative groups improperly just adds fuel to the Republicans’ bashing. The agents investigated these organizations to see if they had miscast themselves as tax-exempt groups while actually doing political work. About 75 groups were targeted, according to the Associated Press....

IRS Singled Out Conservative Groups for Extra Scrutiny
Conservative groups have been complaining for a few years that they're being harassed by the IRS, forced to endure an inordinate amount of scrutiny. I've been ignoring those complaints, because it just seemed so unlikely. Sure, that sort of thing used to go on: Kennedy ordered the IRS to investigate both right- and left-wing groups he didn't like, and Richard Nixon was audited three times between 1961 and 1968. But those were the bad old days. No modern administration, or modern agency would do that. Well, I take it back. The IRS admits that, in fact, it did single out conservative groups for scrutiny...

'Mistakes Were Made'
...Between 2010 and 2012, the IRS saw the number of applications for section 501(c)(4) status double. As a result, local career employees in Cincinnati sought to centralize work and assign cases to designated employees in an effort to promote consistency and quality. This approach has worked in other areas. However, the IRS recognizes we should have done a better job of handling the influx of advocacy applications. While centralizing cases for consistency made sense, the way we initially centralized them did not. Mistakes were made...

IRS admits targeting conservatives for tax scrutiny in 2012 election
The Internal Revenue Service on Friday apologized for targeting groups with “tea party” or “patriot” in their names, confirming long-standing accusations by some conservatives that their applications for tax-exempt status were being improperly delayed and scrutinized.

Lois G. Lerner, the IRS official who oversees tax-exempt groups, said the “absolutely inappropriate” actions by “front-line people” were not driven by partisan motives.

Rather, Lerner said, they were a misguided effort to come up with an efficient means of dealing with a flood of applications from organizations seeking ­tax-exempt status between 2010 and 2012.

During that period, about 75 groups were selected for extra inquiry — including burdensome questionnaires and, in some cases, improper requests for the names of their donors — simply because of the words in their names, she said in a conference call with reporters.

They constituted about one-quarter of the 300 groups who were flagged for additional analysis by employees of the IRS tax-exempt unit’s main office in Cincinnati. ...

NYT: The I.R.S. Does Its Job
Taxpayers should be encouraged by complaints from Tea Party chapters applying for nonprofit tax status at being asked by the Internal Revenue Service to prove they are “social welfare” organizations and not the political activists they so obviously are.

Tea Party supporters claim they are being politically harassed with extensive I.R.S. questionnaires. But the service properly contends that it must ensure that these groups are “primarily” engaged in social welfare, not political campaigning, to merit tax exemption under section 501(c)(4) of the tax code.

Such I.R.S. inquiries are long overdue...