pi shurq Pillst ury Winthrop Shaw Pittman LLP 230C Street, NW Washington, DC 20037-1122 tel 202.663.8000 1 fax 202.663.8007 Jeffery L. Yablon tel 202.663.8441 jeffery yablon@pillsburylaw.com May 7, 201 4 Hand-De lib/cred Internal Revenue Service ATTN: atricia L. Thomas ax Law Specialist xempt Organizations lechnical Group 1 1111 Con titution Avenue NW Washingtt n, DC 20224-0002 Dear Ms. Fhomas: "1 his letter and its attachments (together, this ?Supplemental Submission?) supplement the ?ling iCrossroads Grassroots Policy Strategies made on February 28, 2014 (the ?Revised Protest?), in order to highlight previously unavailable information obtained by GPS that bears iipon a proper resolution of this matter. All of the information presented in the Revised Protest, including the de?ned and capitalized terms, is incorporated herein by reference. I. April 9. 2014. Letter from Committee on Ways and Means On April 9, 2014, the Committee on Ways and Means ofthe US. House of Represeiitatives sent a letter and attachments (the Letter?) to Attorney General Eric H. Holder, .lr a copy of which is attached hereto as Exhibit A. The Letter urges the United 1 States Department of Justice to conduct a criminal investigation of former IRS Exempt This documeht was obtained and uploaded by the Center for Responsive Politics (OpenSecrets.org) Internal Revenue Service May 7, 2014 Page 2 Organiza ti express [references to GPS (referred to as ?Crossroads?) and details IV ensure th applicatio 501(c)(4) and GPS who will (IF 3 ofJustic stated, it Ta] actual la Ni, and issue to GPS the favorable determination letter to wh same tirr tainted fro the outset. The Letter indicates that the highest 1 Exempt available Form 1021 requeste 1 conclusi l. This docume Division Director Lois A. Lerner. The Letter co ai, regardless of the facts, evidence, and established procedu for recognition as a tax-exempt social welfare organizatio assumes that both the Service?s representatives at the Confe onstitute the Advocacy Application Review Committee are takes no position on whether Ms. Lerner should be inves . or what the outcome of any such investigation should be. .4 no interest in being a cause ce'lebre or the face of what eting Scandal.? GPS merely wants the Service to look at tl Organization Division chose to deny application, witl facts. Speci?cally, the letter further indicates that th 1 application and voluminous additional submission by the Service would simply be a search for justi?cation: ntains ?fty-four (54) is. Lerner?s attempts to res, the Service deny under Code section The Letter indicates that it was copied to IRS Commissioner John Koskinen, rence and the individuals 2 familiar with it. tigated by the Department \s GPS has previously as become known as the 1e real facts, follow the ch it is entitled. At the the Service must recognize that its handling of application has been severely evels of leadership in the [out regard to all the Service?s review of submissions that were . to support a pre?ordained nt was obtained and uploaded by the Center for Responsive Politics (OpenSecrets.org) Internal Revenue Service May 7, 2014 Page 3 II. estionable Contacts between Ms. Lerner and Organizations Hostile to GPS Appear to ve Biased the Service against GPS 93 Iniformation made public in the Letter, as well as certa additional information already in the public record, details the questionable contacts between Ms. Lerner and Democra cy 21 and the Campaign Legal Center The materials cited in the Letter suggest that Democracy 21 and CLC met with Ms. Lerner and presented a limited review of selected information gathered and submitted by those organizations dbout Apparently in response, Ms. Lerner instructed Service employees to prepare a denial of application for recognitio of tax-exempt status. Thus, rather than examining all of the facts and circumstances as required by the Service?.; own procedures, the Service instead chose to accept an ?analysis? by third parties who were puchly known to be hostile toward GPS and did not have access to all of the information in the Se ice?s possession. While communications from third parties and press reports may 1 1 provide an impetus for Service examination, the Servrce must reach ifs own conclusions without relying (in mischaracterizations and selective information provided by outside interest groups. Moreover, it must look at all of the information in its possession. On October 5, 2010, Democracy 21 and CLC submitted the ?rst of multiple letters to then?IRS Commissioner Douglas H. Shulman and Ms. Lerner, ?call[ing] on the IRS to conduct The :heduling of this meeting between Ms. Lerner and Democracy 21 and CLC appears to have been prompted by the publication of Form 1024 application, which had been improperly released to an online medial source. in aw.com I This docume it was obtained and uploaded by the Center for Responsive Politics (OpenSecrets.org) Internal 1 May 7, 2 Page 4 an investig Democre and more multiple 2012.4 applicatibi hour afte Beard, behalf 01' {evenue Service 014 gation into whether Crossroads GPS . . . is operating in Viol cy 21 and CLC also submitted a series of letters to ?petition stringent rules for Code section 501(c)(4) organizations. If in December 14, 2012, ProPublica published an article about 1, which the Service illegally provided to the article?s authc ProPublica published this article based on the illegally?rele ommunications and Research Director at Democracy 21, ser Democracy 21?s President, Fred Wertheimer, requesting a Demc conte dated 3, 201 See Orgat dated 1 Other similar letters from Demot ptember 28, 2011; December 14, 2011; March 9, 2012; April 17, 2012 2 and January 2, 2013. ocracy 21 and CLC, Petition for Rulemaking On Campaign Activities 71' ations (July 27, 2011) available at 7__2011.pdf; see also Letters from Democracy 21 and CLC to Hon. arch 22, 2012 and August 9, 2012, available at (lacy 21 and CLC, Letters to the IRS, at page 1, available at re_Pe uplo See ProP mone - conta t: GPS TEG the Lette i and 8_09.pdf, respectively. These letters echo similar?efforts made by certa rom Lois Lerner to Democracy 21 and CLC (July 17, 2012), available 1 Barker, Karl Rove ?3 Dark Money Group Promised IRS It Would Sper ica (Dec. 14, 2012, 11:19 AM), available at onpro?t-told-the-irs. GPS ?rst became aware that its Form 1024 had A GPS for comment on December 13, 2012. Shortly before the article 15 contacted regarding the leak by Nan Marks, Senior Technical Advis< and Holly Paz, Director E0 Rulings and Agreements. The Service pro ter; to date GPS has heard nothing. 5 in urylawcom :ferences to GPS.3 Ms. Lerner responded to Democracy 21 tion of its tax status . . . the Service to adopt new 1e ?rst such letter included and CLC on July 17, Form 1024 ms Approximately one ased application, It an email to Ms. Lerner on neeting ?to discuss the democracy21.org/ wp- :racy 21 and CLC include those? 2; September 27, 2012; December by Section 501(c)(4) ds/D2l_and_CLC_Petition_to_ ouglas Shulman and Lois Lerner, 21 .org/uploads/Letter_to_IRSm 21 .org/uploads/ Final_Letter_to_ Members of the US. Senate. pt it 'Limited Money on Elections, g/article/ what-karl-roves-dark- been leaked when Ms. Barker was published on December 14, 3r to the Division Commissioner mised that it would investigate This docume nt was obtained and uploaded by the Center for Resp onsive Politics (OpenSecrets.org) Internal evenue Service May 7, 2014 Page 5 request DI a petition for rulemaking on candidate election activities by Section 501(c)(4) groups.?S Ms. Lerner responded in less than two hours, suggesting a meeting during the ?rst week of lanuary 2013.7 Ms. Beard and Ms. Lerner scheduled a meeting for January 4, 2013, and Ms. Beard informed Ms. Lerner that Fred Wertheimer and Donald Simon from Democracy 21 and Paul Ryan, Tara Malloy, and Gerald Herbert from CLC would all be in attendance.8 Ms. Lerner tl en asked Service employees David Fish and Andy Megosh for ?copies of all letters these orgs sent in asking for c4 guidance.?9 Two days before the scheduled meeting between Ms. Lerner and Democracy 21 and CLC, the two organizations submitted yet another letter to Acting IRS Commissioner Steven Miller ar Ms. Lerner, again requesting that the Service investigate GPS and deny its application for tax-e Kempt status. This letter also contains the organizations? suggestions regarding exactly how the Service should approach and consider Form 1024 application: I continuing any ongoing review of the application submittezl by Crossroads for status as a section 501(c)(4) organization, we believe it is essential that not accept at face value either the obviously self-serving statement on its plication that Crossroad campaign spending will not constitute its rimary purpose? or any self-serving claims by the organization that mmunications were ?issue ads.? he IRS should closely scrutinize the spending that Crossroads GPS engaged in ring the 2012 campaign. This includes both the spending that was reported to Letter, Ex. 2, at 1R80000122505. Id. Id. at R80000122502-03. 1d. at irylawcom This docume ht was obtained and uploaded by the Center for Responsive Politics (OpenSecrets.org) Internal Revenue Service May 7, 2014 Page 6 Drain ?express advocacy.? hm 501(c)(4) organization. the FEC as ?independent expenditures? because it included ?express advocacy,? and any other spending on communications that may well haV constituted iTt :rvention or participation in campaigns under IRS rules, even if the ads did not articular, we strongly urge you not to accept at face value any claim by GPS that any or all of its ads that mention federal candidates and did contain express advocacy were ?public education ads? or ?issue ads.? These 3, and the context in which they were run, must be reviewed by the IRS to lennine whether in fact any or all of the ads constituted ads to intervene or l3?licipate in elections, within the IRS de?nition of that standard. E. Revenue ling 2004-6, 2004-1 CB. 328. I bur letter to you of September 27, 2012, we submitted transcripts of the ads run Crossroads GPS from January 1, 2012 through September 24, 2012. We urged IRS to review each of these ads, and to apply the agency?s: standards to ermine whether the ads constituted intervention or participation in campaigns. again urge you to conduct such a review. rossroads GPS served as little more than a campaign operation in 2012. .rossroads GPS has no business being treated as a ?social welfare? organization an the IRS should deny its application for tax-exempt status as a section 0 . - 1. Excerpts of the letter contained in a press release issued by Democracy 21 and CLC were quickly circulated by email to Ms. Lerner, Nikole Flax, and other senior Service personnel.11 In response, lMs. Lerner informed those same personnel that a meeting with Democracy 21 and CLC hac been ?set up for some time. I plan to . . . begin the meeting by telling them we cannot 10 See ztiers to the IRS, at pages 65-66. Letter, Ex. 4, at 15. Jrvlawcom This document was obtained and uploaded by the Center for Responsive Politics (OpenSecrets.org) This docume Internal Re May 7, 2 Page 7 discuss guidance. IV Service by :venue Service 014 peci?c taxpayers, but are there to hear their general commen . . 12 We W111 be very cautious.? I s. . Lerner apparently prepared for the meeting by reviewing Democracy 21 and CLC. In an email to Nanette Downing Examin i Ih t] While it 21 andC addition Lerner?s discuss 5 the anu ons Unit in Dallas, Texas, Ms. Lerner stated: ad a meeting today with an organization that was asking us dance on the 04 issue. To get ready for the meeting, I aske :ument that had [sic] sent in over the last several years bec it in several referrals. I reviewed the information last night egations in the documents were really damning, so wonder me something with the org The ?rst complaint re were additional ones in 2011 and 2012.13 I 1 0 ie is evident that Ms. Lerner reviewed documents submitted to LC, there is no indication that she reviewed Form 10 11 to the Service?s requests, it seems quite-unlikely that she (11! earlier email saying that she would tell Democracy 21 and peciflc taxpayers, it appears that a speci?c taxpayer GPS - ary 4 meeting, and may have been the central focus of that 1d. Id, . 6, at 1R80000122549-50. urylaw.com ts regarding potential the letters submitted to the Director of the E0 to consider (1 for every ause I knew they had and thought the ad why we hadn?t came in 2010 and the Service by Democracy 24 application or submissions. Indeed, given the sheer volume of printed material submitted by GPS in i so. Moreover, despite Ms. ZLC that the Service cannot - was indeed discussed at eeting. twas Obtained and uploaded by the Center for Responsive Politics (OpenSecrets.org) Internal like-venue Service May 7, 2014 Page 8 Ir Lerner alsc P?m HH Cincinnati where we go with this--as I?ve told you before?-I don?t think your guys get it . . . . The organization at issue is Crossroads GPS, which is on the top of the list of c4 penders in the last two elections. It is in the news regularly as an organization at is not really a c4, rather it is only doing political activity . . . . Yet--twice we a der yes, but let me cogitate a bit on it.16 A so on Friday, January 4, 2013, Joseph Herr, the reviewing agent in the Service?s stated in emails on January 4 and January 7, respectively: addition to asking Ms. Downing ?why we hadn?t done so?ething with the org,?14 Ms. he referral committee unanimously non-selected the case twice. I don?t know Jected the referrals for somewhat dubious reasons and never followed up once ie 9903 were ?led.? [l]t 1: should be our job to go out and get the 990 and then determine whether the are very strong-~are true . . . . As I said, we are working on the rial for the 1024, so I need to think about whether to open an exam. I think of?ce who was assigned Form 1024 application, had a ?[c]onference call with EDT and acting area manager on how best to proceed with case. Septemb er The follc Vi reviewinf how best 1917 1 "his was the ?rst time since 27, 2012, that the reviewing agent had worked on Form 1024 application ?le. ling Monday, Mr. Herr noted the following in his log: ?Based on conference begin case information, tax law, and draft/template advocacy denial letter, all to think about 3 compose the denial letter.?18 This is the first reference ir the reviewing agent?s case Id. Id. at R80000122550. Id. at R50000122549. 1 etter, Ex. 10, at 1d. aw.com This docume wt was obtained and uploaded by the Center for Responsive Politics (OpenSecrets.org) Internal liie May 7, 2 Page 9 log to a summary opinion recomme prior to l? not only with Der applicati by law, i: above de :venue Service 014 enial of application. The next week, Mr. Herr noted 45. Lerner?s January 4, 2013, meeting. that the Service improperly discussed application att it 3r monstrate the following: those groups? multiple complaints against GPS and th application for recognition of tax?exempt status. 1d. at 80000071226. rylaw.com This docume of idea on howl plan to make denial argument and share whether the idea seems valid.?19 Notably, there is no entr dation for denial by an E0 Technical lawyer or any discr 3 chain of events revealed in the Letter and the publ )cracy 21 and CLC, but also that the Service made its decis as a direct result of that meeting and without the examina the Service?s own policies, and by ordinary notions of fair The January 4 meeting was prompted by ProPublica?s ~'1024, which was illegally disclosed to the public by th Ms. Lerner prepared for this meeting with Democracy Two days before the already-scheduled meeting, Dem submitted a letter based on illegally-released Pt ?11 was obtained and uploaded by the Center for Resp the following: ?Write-up ith Sharon Light for her in the case log showing a Ission ofa possible denial ic record strongly implies he January 4, 2013, meeting ion to deny tion of the facts as required ness. The facts discussed article about Form Service. 21 and CLC by reviewing eir calls to deny acracy 21 and CLC mm 1024 application to onsive Politics (OpenSecrets.org) Internal Revenue Service May 7, 20 Page 10 At 7) [4 the application. 20 Legal This docume Letter fr "l iiaw.com within the Service about the status of applicatic n. application in its entirety. Acting Commissioner Miller and Ms. Lerner. It speci?cally discussed Form 1024 and provided suggestions for how the Service should review and deny Immediately after meeting with Democracy 21 and CLC, Ms. Lerner inquired The reviewing agent in Cincinnati was directly ordered to prepare a denial letter. His case log entries suggest that this instruction was given on January 4, 2013, during a conference call with E0 Technical and an acting area manager. It seems unlikely that whoever issued this order had reviewed Form 1024 Democracy 21 and CLC ended their consistent practice of submitting letters regarding Form 1024 application after meeting with Ms. Lerner and did not resume this practice until 16 months later specifically May 6, 2014.20 Democracy 21 and CLC did not publicly discuss or reference their meeting with Ms. Lerner until after it was revealed in the Le1ter. ietailed timeline of these events is attached hereto as Exhibit B. om Democracy 21 and CLC to Hon. John Koskinen and Tamera Ripp 3rda (May 6, 2014), available at in was obtained and uploaded by the Center for Responsive Politics (OpenSecrets.org) Internal lie venue Service May 7, 23] 4 Page 11 Conclusion GPS does not argue that the misconduct set forth above entitles GPS to recognition by the Service as a tax-exempt organization under Code section 501(c)(4). What this Supplemental Submiss on shows, however, is that the administrative process used by the Service in this matter constitutes a gross violation of rights and is tainted beyond rec emption. Speci?cally, the sequence of actions described above demonstrates that the Service fa led to follow its own policies, procedures, and standards to effectuate a denial of application. Had the Service followed those established policies, procedures, and standards, application would have been gra ited long ago. A cordingly, GPS respectfully submits that the Service shoul :1 take the following actions: The Service should quickly resolve this matter, which has now lasted for more than three and a half years, by issuing a favorable determination letter. GPS is concerned that the Service might use the new information presented in the Letter and herein as an excuse to restart the entire process in the name of protecting rights. That would be outrageous and wrong. As GPS demonstrated to the Service in its initial application, its supplemental submissions, and the Revised Protest, this is not a diff cult case. The Service should be able to quickly reach a favorable decision by applying the standards of review it applies to all other Code section 501(c)(4) applicants. The only apparent reason for the delay in this matter has been the Service?s attempt to discover or lrylawcom This docume wt was obtained and uploaded by the Center for Responsive Politics (OpenSecrets.org) Internal I revenue Service May 7, 2 )14 Page 12 devisejusti?cations to support Ms. Lerner?s determination to deny application. (2) If the Service is unable to grant application quickly upon the recommendation of the working group present at the onference, the Service should afford GPS the opportunity to meet in person with the Advocacy Application Review Committee as soon as possible.2 The Revised Protest conclusively demonstrates that GPS qua i?es as a tax-exempt organization under Code section 501(c)(4). This Supplemental Submission demonstrates that the process question: an adver favorable u. sed by the Service to produce the Proposed Adverse Letter is, at best, tainted and highly Lble. Iti is in the interests of all concerned to avoid the years of litigation that will surely follow determination letter. The Service should end this matter immediately issuing a determination letter to GPS. 2] See In 501(cj This docume te (4 rim Guidance on Optional Expedited Process for Certain Exemption A TEGE-07-0613-08 (June 25, 2013), at pages 3-5. pplications Under Section ryIaW.C0m it was obtained and uploaded by the Center for Responsive Politics (OpenSecrets.org) Internal thenue Service May 7, 2014 Page 13 CD . spectfully submitted this 7th day of May, 2014. 2300 Street, NW Washington, DC 20037 Telephone: 202?663-8441 Facsimile: 202-663-8007 Tom Jose?ak Jason Torchinsky Michael Bayes Holtzman V0 gel Jose?ak PLLC 45 North Hill Drive, Suite 100 Warrenton, VA 20186 Telephone: 540-341-8808 Facsimile: 540-341-8809 Alvin Dunn Stephen S. Asay Pillsbury Winthrop Shaw Pittmai 23 00 Street, NW Washington, DC 20037 Telephone: 202-663?8000 Facsimile: 202?663?8007 LLP 1 LLP This docume it was obtained and uploaded by the Center for Resp onsive Politics (OpenSecrets.org) (17107: ?6 'Jr 3M [muss Kauxonv suuaw pun MUM uo samunuog saAmnuasaJdaH J0 asmoH [1 mm} Janaq This docume 11 was obtained and uploaded by the Center for Responsive Politics (OpenSecrets.org) sonnod eAIsuodsea Io; our liq pepeoldn pue peuIquo semi euInoop sIul DAVE CAMP, CHAIRMAN 5AM JOHNSON. TEXAS KEVIN BRADY. PAUL RYAN. WISCONSIN DEVIN NUNES. CALIFORNIA PATRICK J. TIBEFII. OHIO DAVID G. REICHERT, WASHINGTON CHARLES W. BOUSTANY. J?c LOUISIANA PETER J. HOSKAM. ILLINOIS JIM GERIACI-I. TOM PRICE. GEORGIA VERN BUCHANAN. FLORIDA ADRIAN SMITH. NEBRASKA ANION SCHOCK. ILLINOIS LYNN JENKINS. KANSAS PAULSEN. MINNESOTA KENNY MAHCHANT, TEXAS DIANE BLACK, TENNESSEE TOM REED, NBN YORK TODD YOUNG. INDIANA MIKE KELLV, TIM GRIFFIN. ARKANSAS JIM HENACCI, OHIO JENNIFER SAT-AVIAN. STAFF DIRECTOR (Enigma of the til-intuit Runs itlnust uf COMMITTEE ON WAYS AND MEANS 1102 HOUSE OFFICE BUILDING (202) 226?3625 Washington, it: 2051 s?am April 9, 2014 The Honorable Eric H. Holder, Jr. Attorney General US. Department of Justice 950 Avenue, NW Washington, DC 20530-0001 Dear Attorney General Holder: The Committee on Ways and Means (Committee) of the US. House of Representatives has discovered information in the course of its ongoing investigation of the targeting If? the .Internal Revenue Service (IRS) of taxpayers on the basis of their political views. ?his information suggests willful misconduct by an IRS of?cial, and also suggests that She may have violated multip federal criminal statutes. Rule 1(t) of the Rules of the House of Representatives for the 113th Congress delegates to the Committe legislative jurisdiction over ?[r]evenue measures generally,? including the Internal Rev enue Code (IRC or Code) and the Department of Treasury (Treasury), which includes the IRS. As a result, the Committee is responsible for considering all legislation that raises the revenue required to ?nance the federal government. The raising of such revenue depends on voluntary compliance with the IRC, which is undermined when taxpayers and exempt organizations perceive that the administration of the IRC is unfair or, worse, is biased against them. Oversight of the IRS, and particularly investigation of IRS activity that could undermine voluntary compliance with the IRC, is thus a fundamental obligation of the Committee.1 It is pursuant to this authority and in discharge of this obligation that the Committee has investigated allegations that the IRS mistreated certain taxpayers and exempt organizations on the basis of their politibal beliefs. I See also Rule Rules 0 "the House of Representatives, l.13th Congress (vesting Committee with authority to oversee and evaluate whether laws written by Committee are being administered consistent with congressional inte ?It and whether such laws should be changed); cf. IRC 6103 (expressly authorizing Committee review of certain material). SANDER M. LEVI sI, RANKING MEMBER CHARLES R. RANGE .. NEW YORK JIM JOHN LEWIS. GEDH IA RICHARD E. NEAL. xnvuan REGERRIK. MIKE THOMPSO 4. JOHN B. EARL ELUMENA JE . OREGON NON KIND, WISCD SIN BILL PASCFIELL, II. NEW JERSEY JOSEPH CHOWL Y. NEW YORK ALLYSON SCHW All 2, DANNY It. DAVIS ILJNOIS LINUA SANCHEZ CA LIFORNIA JANICE MAYS, MINORITY CHIEF COUNSEL sonnod eAgsuodsea Jo; Jeiueg liq pepeoldn pue peugeiqo seM upeumoop sgul During the course of its investigation, the Committee has obtained infermation that reveals that former IRS Exempt Organizations Division (EO) Director Lois G. Lerner while acting in her of?cial capacity, may have violated one or more criminal statutes. Speci?cally, the Commit tee?s investigation has uncovered conduct by Lerner that includes the following: 1. Lerner used her position to imprOperly in?uence agency action against only conservative organizations, denying these groups due process and equal protection rights under the law as guaranteed by the US. Constitution, in apparent violatior of 18 U.S.C. 242; 2. Lerner impeded ?cial investigations by providing misleading statements in response to quest' ns from the Treasury Inspector General for Tax Administr 'on (TIGTA), in apparent violation of 18 U.S.C. 1001; and 3. Lerner risked exposing, and may actually have disclosed, con?dential taxpaye information, in apparent violation of IRC 6103 by using her personal email to conduct of?cial business. These ?ndings, supported by the evidence described below, suggest that Lerner may l?ave violated multiple criminal statutes. The Committee asks that you pursue this evidence and enSure that the victims of IRS abuse do not also suffer neglect from the criminal justice system. I. Lerner Showed Extreme Bias and Preiudice in Exercising Her Power and In?uence Over the Non?Pro?t Sector As EO Director, Lerner had authority to act on behalf of the IRS.2 Lerner willfully used her authority to subject speci?c organizations to adverse treatment in de?ance of IRS controls. Lerner directed subordinates to subject ?specific right-leaning groups to increased scrutiny and audits, and even the denial of exempt status. a. Lerner ?3 Targetng of Crossroads GPS Blind to Priorities USA On October 1.9, 2010, Lerner explained to a group of Duke University students that 501(c)(4) organizations were spending money on campaign activity in the wake of 1F Citizens United decision: She said, is screaming the election. . At the same time, Assistant Senate Majority Leader Dick Durbin, etc then IRS Commissioner Doug Shulman to demand an investigation of Crossroads 0138.5 Lerner explained. to the sthdents, won?t know until I look at their 9905 next year 2 See IRC 7803 (setting out the ruthorities of the IRS Commissioner), see also Internal Revenue Manual 1.1.23.5 (providing that Director E0 reports directly to Deputy Commissioner of and, among other dutie?, ?supervises and is responsible for the activities of. . . E0 Rulings and Agreements and E0 Examinations functiom?). 3 See generally. Citizens United v. ed. Eiec. Comm 558 US. 3 [0 (2010). 4Transcribed from cmbedded&v=EH lZqu-l iM. Exhibit 1. 559:! Letter from Assistant Majori Leader Dick Durbin to IRS Commissioner Doug Shulman On October 12, 201i . Available at: (BJO'SieJoesuedQ) scanned eAisuquea Jo; Jeiueg our liq pepeoldn pue peugeiqo seM sgul whether they have done It ore than their primary activity as political or not, so I can?t co anything right now.?6 ile Lerner?s public comments seemingly cast a wide, unbias 3d net across the entire 501( spectrum, her private actions were different. Documents produced to Committee further link Lerner?s actions with complaints from Democracy 21.7 Those complaints chie?y focused on Crossroads Grassroots oficy Strategies (Crossroads) and other right?leaning groups, but also cite left-leaning gro such as Priorities USA.-8 On October 2010, just two weeks before her remarks atlhguke University, Fred Wertheimer of Democracy 21 and Gerald Hebert of the Campaign Legal Center (CLC) wrote to then-Commissioner Shulman and Lerner to, ?Request for IRS investigation to determine whether ?Crossroads is operating in violation of tax status.?9 Later, on July 27, 2011, Democracy 21 and CLC sent the IRS a self-styled, ?Petition for 'Rulemaking On Campaign Activities by Section 501(c)(4) organizations, in which they raised concerns about the political campaign activities of 501(c)(4) exempt organizations, including Crossroads and Priorities Finally, on December 14, 2012, Democracy 21 reqt ested a meeting with Lerner to discuss its July 27, 2011 petition.11 Lerner quickly organized a meeting for Democracy 21 not only with herself, but also with the Of?ce of Chief Counsel and the Of?ce of Tax Policy at the Department of the Treasury for January 4, 2013.12 In preparation for the meeting, Lerner asked David Fi sh, then acting Director of Rulings and Agreement Division, and Andy Megosh with E0 Guidance, for all ?letters these orgs sent in asking for c4 guidance. While Democracy 21?s petition raised concerns about groups across the political spectrum, documents IRS produced to the Committee show an aggressive and improper pursuit cf Crossroads by Lerner, but no evidence she directed reviews of similarly situated left- leaning groups.14 For example, on January 2, 2013, the Chief for Media Relations circulated a ProPublica article to Lerner and Nikole Flax, then chief of staff to Acting Commissioner Steve Miller, among others, ?FYI?uHere is the latest inbound for ProPublica.?15 Following was an article titled: ?Watchdog Groups Again Call on IRS to Deny Tax- Exempt Status to Karl Ro ve"s Crossroads GPS, Cite $70 Million in 2012 Campaign 6 Exhibit 1. 7 Democracy 21 describes itself as a ?nonpro?t, nonpartisan organization campaign ?nance reforn lobbying and ethics other govemment integrity measures.? See "Petition for Rulemaking On Campaign Activities? by Section 501(c)(4) Organizations" at 1110. Available at: and CLC Petition to IRS 7 27 2011.pdf. 8 See Democracy 21 ?Letters to th Available at: content/uploads/ZO] ioSee See fn 7. 112300000122502-122505, Exhibit 2. See in 8 for ?Petition for RulemakingSee Letter from House Ways an.l Means Committee Chainnau Dave Camp to IRS Acting Commissioner Daniel Wert?el of September 20. 2013 (requesting returns and return information of right-leaning American Crossroads, Crossroads GPS, and Americans far ProsPerity. as well as left-leaning Priorities USA, Priorities USA Action, and Organizing for Action), Exhibit 3. The documents show no special scrutiny of the [cit-leaning groups. ?5 111300001225 15-6, Exhibit 4. sognod eAisuodsea Jot J91U93 our liq pepeoldn pue seM 1L eanoop siul Expenditures as Pri'ma Fac?ie Evidence Group is Campaign Operation, not ?Social Welfare? The ?watchdog? groups to which the. article refers are Democracy 21 and Campaign Legal Center (CLC). This email prompted Lerner to give notice to Flat and others about the meeting scheduled for January 4 with. these groups: Just FYI for everyone "5 infatuation?ml received the incoming and will refer it to Exam as we do with any complaint. Ruth Madrigal, Vickie Judson andI are meeting with Democracy 21 and some others regarding their request for guidance on c4. This has been set up for Some time. i plan to have David Fish there and begin the meeting by telling them we cannot discuss speci?c We will be very cautious.? Notwithstanding .Lerner?t: apparent careful adherence to therule against discussing specific cases with people outside of the IRS, emails with her subordinates show a focused interest in Crossio'ads immediately following the meeting. Again, these emai 3 show no apparent interest in left-leaning groups. Lerner?s calendar shows the January 4, 2013 meeting with Democracy 21 blocked off for 11:00 AM-Noon and, bat ed on Lemer?s subsequent actions, it is clear that the meeting went forward as Before or'soon after the meeting, Lerner apparently contacted Tom Miller (E0 Technical) to ask about the status of Crossroads (whether the group had been audited or selected. for audit) because he replied by email at 1:55 PM the same day that the group had twice been before the Political Action Review Committee (PARC), in November 2010 and June 201 1, but was .not selected for audit.19 Following Tom Miller?s response, Lerner sent an email to Nanette Downing, the Director of the E0 Examinations Unit in Dallas, TX, demanding to know why Crossroads'had not been audited. '6 Available at: (The article updates an earlier ProPublica story from December 14, 2012 that?was based on an leaked copy of Crossroads application for exempt status.) ExhibitS. A ?referral? is, in 121 terms, acomplaint; pursuant to the it means: A. A doctrment or 0th communication, includingan electronic communication, received by E0 Classification-Referral from a source outside the Internal Revenue Service, whichallcges possible noncompliance with a law on the part of?an cxempt-o?rganizatidn, political organizatibn,taxable emit} or individual. 13. An internal docum (referral) prepared by an Internal Revenue Service employee and forwarded to E0 Classi?cation-Referral which identi?es current or potential noncompliance discovered during either he processing of an assign case, oratany other time in the performance of official duties. 4.75.5.2 (05-13-2005). ?3 (displaying ct cndar entry), Exhibit 5. See also, (tompiaini of Van Hollen et al. v. 1118 (one. August 21, 2013) at 1141 (noting that ?On January 4, 2013,1reprcsentativcs of Democracy 21 and the Campaign Leg al Center met with Ms. Lerner-21nd (ther IRS officials regarding the petition for AVailable at: ?content/uploads/20 1? IRS0.000122549-12255 I, .Eth- nit 6. The PARC is responsible for determining whether allegations of improper political activity by an exempt ofanization merit an audit. See ?6000037 8444-378446, Memorandum to Congress, tions Processes with Respect to Examinations,? Exhibit 7. At the direction of Lois Lerner, Nanette Downing created a special process. for reviewing complaints of political activity by exempt organizations following the Citizt us United decision. See Subcommittee on Oversight, Committee on Ways and Means, US. House of Representatives, Ii terview of: Nanette Downing, December 6, 20! 3 at 33-37, Exhibit 8. (BJO'SieJoesuedQ) sonnod engsuquea Joi Jeiueg our liq pepeoldn pue peugeiqo seM sgul I had a meeting today with an organization that was asking us to consider guidance on the c4 issue. To get ready for the meeting, I asked for every document that (sic) had sent in over the last 36 veral years because I knew they had sent in several referrals I reviewed the information last night and thought the allegations in the documents were really damning, so wondered why we hadn't done something with the org. The first complaint came in 2010 and there were additional ones in 2011 and The organization at issue is Crossroads I know the org is now in the ROG?based on allegations sent in this year, but this is an org that was a prime candidate for ex 1m when the referrals and 9905 ?rst came in.20 You should know tha: we are working on a denial of the application, which may solve the problem because we probably will. say it isn't exempt. Please make sure all moves regarding org are coordinated up here before we do anything.21 On the following Monda January 7, 2013, Lerner sent a follow-up email to Downing which states, ?As I said, are working on the denial for the [Crossroads] 1024, so I need to think about whet ter to open an exam. I think yes, but let me cogitate a bit on it.?22 Interviews of IRS personnel and a review of Crossroad?s ?le shows that Lerner was in fact actively seeking to ensure a denial of the group. In a transcribed interview of Victoria Judson, Associate Chief Counsel (Tax Exempt cit Government Entities), Cc. mmittee staff asked Judson about Lerner?s interest in Crossroads: Q: I think you said thit it was in the spring of 2012 that you discussed with Ms. Lerner a Crossroads GPS case and she gave you advance notice that that might be a denial. Is that correct? A: That's the best of my recollection. And I don't know if I would characterize it as ?discuss? as opposed to ?she told me that. . 3?23 Lerner?s plan to deny the Crossroad application is evident from the work log for the Cincinnati-based revenue agent assigned to the case, .as after her January 4, 2013 meeting with Democracy 21, the agent sprung into action. In the seven business days followmg her meeting, the revenue agent Joseph Herr, logged more time on the application than the entire year preceding.24 But more, the log shows that Herr was directed to reach a particular result with Crossroads. Herr?s log shows, in part: 2? Exhibit Subcommittee on Oversight, Cr mmittee on Ways and Means, U.S. House of Representatives, Interview of: Vic oria Ann Judson, Wednesday, Septcm Der II, 2013, at 57 (quotation marks added), Exhibit 9. 2? See 11(800071224-7l226, Exhibit 10. eAisuodsea J0,l liq pepeoldn pue seM iu eanoop siul On January 4, 2013, Herr notes a conference call with EOT [Exempt Organizations Techn'cal Division] in DC where speci?c guidance is given to him on ?how to best proc ed with the [Crossroads] case.? On January 7, this dance from BOT was memorialized in Herr?s time sheet, ?[b]ased on conferen 3e begin reviewing case information, tax law, and draft/template advoca cy denial letter, all to think about how best to compose the denial letter.?25 In the next journal entry from Herr, he summary of idea on howl plan to make denial argument and share with Sharon Light, the Special Advisor to E0 Director in Washington DC, for her opinion on whether the idea seems valid.?26 Now tere in his 2012 log entries is there any discussion of denial. In fact, in an analysis of the Crossroads application ir November 201 Lamong many others, EO Technical lawyer Hillary Goehausen makes no recommendation for denial.27 The Committee subsequently learned that the agency was in the process of denying Crossroads? application for exempt status and selecting them. for audit. Judson informed staff the organization would be receiving a proposed denial letter.28 An IRS representative separately told staff that Crossroads had also been selected for audit.? The evidence shows that without Lerner?s intervention, neither adverse action would have been taken against Crossroads. Again, the Committee has found no record of Lerner pursuing similarly situated left-leaning groups, deSpite receiving similar public complaints.3O In fact, during the same time period Lerner was engineering a denial and audit of Crossroads, document-s show Lerner had a favorable disposition toward left?leanin groups, including considering future employment with one. In response to a news story about the formation of Organizing For Action, a 501(c)(4), Lerner remarked to E0 Senior Technical Advisor Shar . Light, ?Oh?maybe I can get the DC of?ce job!? 31 Light then forwarded Lerner?s com cut to Holly Paz wondering if Lerner was considering retirement to pursue a po ential job opportunity at this left~leaning grow.tp.3?2 25 See id. 26 See id. 2711?.80000063029, Exhibit 2? Exhibit 9. - 29 Telephone brie ting by IRS sta to Oversight Subcommittee staff of September 3, 2013. 3? See 1. 1 3' See Email from Lois Lerner to haron Light of January 24, 2013, Exhibit 12. Mb. Democraq 21 is highly critical of Organizing For ction. See, Statement by Fred Wertheimer" January 22, 2013 (stating th reference to the formation ot?Or nizing For Action that, ?in taking this step, the President has opted for ?thc en d5 justify the means? approach that fraught with danger. It opens the door to opportunities for government corrupti Available at: wertheimer-nresident?obama-opt see also. ?15 Organizing For Action Too Close The White House?" National Putlic Radio (March 19, 2014)(quoting Democracy 21?s Fred Wertheimer, ?The test thing the president of the United States could do is shut [Organizing for Action] down. This is a danger to the it te grit)? and credibility of his presidency") Available at: too-close-to-the-white-house. 32 See Exhibit 12. (BJO'SieJoesuedQ) sonnod eAgsuodsea Jo; Jeiueg liq pepeoldn pue peugeiqo seM 1L eanoop sgul b. Evidence Suggests Lerner Targeted Other Right-Leaning Groups Evidence discovered by Committee also suggests that Lerner targeted other right- leaning groups. On Janu 2, 2013, ProPublica separately published an article titled, ?Controversial Dark Money Group Among Five That Told IRS They Would Stay Out of Politics, Then Didn?t? that was circulated within the Forwarding the ProPublica article, Lerner asked Holly Paz, David Fish and Sharon Light to ?meet on the status of these-applications please. Can we talk Friday??34 The ?ve groups named in the article are: Americans. for ReSponsible Leadership Freedom Path America is Not Stupid A Better America.35 00000 Information later provided to the Committee regarding IRS E0 examinations processes showed that four of the ?ve groups were subject to extra-scrutiny; two of the groups were placed in the surveillance program, called a ?Review of Operations,? and two were selected to be put before the Political Activity Review Committee, which determines; wheth3e7r a group will be audited.36 Ultimately three of the groups were selected for audit. c. Lerner ?s Defiance of Internal Controls and Abuse of A ut'hority The evidence demonstrates Lerner acted in de?ance of IRS internal controls. Internal IRS policies and procedt ?es, which would be well known to Lerner, deter any one person from deciding the dispos tion of a group based on political or personal animus. Josep 1 Grant, former Commissi ner of the Tax Exempt and?G?overnment Entities Division, and former boss of Lerner, to the Committee in a transcribed interview that it would be ?completely? inappropri to for a manager to target a speci?c organization for exam or adverse determination.38 The IRS put in place these safeguards ?in the 1990?s to ensdre 33 See out. Exhibit 13. 35 fn 33. 36 Telephone brie?ng by IRS stat to Oversight Subcommittee staff of September 3, 2013. 37 Telephone brie?ng by sta to Oversight Subcommittee staft?of March 27, 2014. ?3 See Subcommittee on Oversigl Committee on Ways and Means, US. House of Representatives, Interview of: Joseph H. Grant, Sept. 20, 20 3, at 39, Exhibit 14. Under questioning: Q: Would it be appropria for a manager at. IRS to refer a speci?c taxpayer to Exams or to intervene on their own on - I mean, th it own volition to A: I believe it would be inpletely - it would not be appropriate to intervene on their own. So and I'm not aware of that occurring. See also, Testimony Commi sioner Douglas Shulman before the US. House Committee on Appropriations Subcommittee on Financial Services and General Government Hearingon the FY 2013 Internal Revenue Service Budget, March 2012. Per Shulman: ]c have the safeguards built in to this precess so that no one person can decide to examine an organizati )n based on political activities. So you've got your peers watching. You can't just get a case, go off in the co er, iticlelco sonnod eAgsuodsea 10,1 Jeiueg out liq pepeoldn pue peugeiqo seM 1L ewnoop sgul equity and transparency and that no one individual could select organizations within certain classes for examination.,,39 These safeguards are re? acted in current E0 Examinations Unit procedures adopted during Lerner?s tenure that she nonetheless circumvented. From the FY2013 E0 wort plan: E0 will have a PARC (Political Action Review Committee) operating at all times comprised of three experienced career civil servant employees. PARC operations are overseen by the Managers of EPR and however, they shall not overr'a'e or in?uence any case selection decision oft/1e PARCS.40 The PARC determines whether organizations about which referrals are made are to be. subject to audit.? The PARC had twice refused to target Crossroads, yet Lerner stated to the head of E0 Examinations that, ?we are working on the denial for the [Crossroads] .1024, so I need to think about whether to open an exam. I think yes, but let me cogita a bit on it,? in de?ance of IRS policy.42 Lerner makes clear that she believes she is enti}led to approve or disapprove an application or subject an organization to an audit based 0 1 her say so alone and irrespective of the decision. cl. Lerner Se to Influence the Independent Appeals Process In addition to IRS safegu against interfering in the determinations and exams functions, there are inter al controls in place with regard to the Appeals Dividic that Lerner sought to circumvent. If E0 Determinations reaches the conclusion that ap application for exempt status does not satisfy the requirements under the Code, the IRS generally will issue a proposed adverse determination letter to the applicant and give notice of the opportunity to appeal.43 he. Appeals Division is independent of the E0 Division and thus outside of the EOIDirector?s chain of command.44 Furthermore, as a matter of law and not just IRS policy, ex parte communications between appeals officers or settlement of?cers anc other IRS employees, to the extent. that those communicatio ns appear to compromise the independence of Appeals, are prohibited.45 and run with your own ag :nda. Available at: loaded files/hhrg-l .pdf. 39 IRS, FINAL REPORT, PROJECT 302 Political Activities Compliance Initiative at 3 (emphasis added). Available at: ze/final paci reportpd? 4? Exhibit 15. refers to Examinations Programs Review and EOCA to Exempt Organizations Compliance Area. See also. IRS Exempt Organizations 2012 Annual Report FY 2013 Work Plan at 2. Available at: E0 AnnualRpt. 2013 Work Planpdf . 4? Exhibit 7. I ?3 Exhibit 6. 4" Internal Revenue Bulletin: 2013-2, Jan. 7, 2013, Rev. Proc. 2013?9, sec. 7.0L 4" See Section 1001(a)(4) of the litemal Revenue Service Restructuring and Reform Act of 1998, Pub. L. No. 105 206, 12 Stat. 685, 26 USC 7801 note The provision requires: The Commissioner of iternal Revenue shall. ..ensure an independent appeals function within the Internal Revenue Service, including the prohibition in the plan of?ex parle communications between appeals ol?? "ers and other Internal Revenue Service employees to the extent that such communications appear to compromise the independence of appeals of?cers. 45 See id. sonnod enisuodsea Jo,t Jeiueg out Aq pepeoldn pue peugeiqo seM 1L eanoop sgul An email from Lerner to the Chief of IRS Appeals, Chris Wagner, on January 31, 2013, shows she sought to influence the independent appeals process notwithstanding a prohibition against such contact. Lerner offers unsolicited advice about how to ban incoming c4 denials: I gave [your people] a heads up that, in the next few months we believe they will get a lot of business from our [taxpayers] regarding denials on 501(c)(4) applications. I explain ed the issue is whether they are primarily involved in soci welfare activities and whether their political intervention activities. ..I explained the issue was very ser sitive and visible and there is a lot of interest??Congress, press, political groups, you name it. .. I offered a general tutorial session (nonease? related) on the law and the complexities because-as I pointed I told them this is a place where we have worked very hard to be consistent and have all our cases worked by one group, and suggested they might want to do something similar. (PS we are under audit by TIGTA because of allegations of political bias on these 'If ou think it would be useful to have a meeting on this ?1et me Ironically, Lerner?s com unication closes with, ?Hope this doesn?t [sound] like I?m trying to run your shop.? ?he purpose of this email could .not be clearer. Lerner explained that her team orked very hard both to get what Lerner characterized as a hi ghly technical law righ and also to apply it consistently to the circumstances of ea :1 applicant. She further ch acterized the cases as ?sensitive and visible? and suggeste that Wagner should consult her.? Notwithstanding agency safeguards, the message from Lerner to the Appeals chief was unequiVocal: EO got these denials right and Appeals should af?rm them. II. Lerner Provided the Treasury Inspector General with Misleadingitatements The Committee has found documents that suggest Lerner?s Written statement to submitted during the course of audit, was knowingly misleading (Reference Number: 2013-10-053). The document titled, E0 Director?s responses to 3 questio as asked by Director Paterson, which Lerner drafted and submitted to TIGTA on Noverriber 2, 2012, contained specific statements that are contradicted by the documentary evide ce reviewed by the Committee.48 TIGTA asked: When did you become aware the IRS was targeting applications for tax exemption that mention: 1) the ?Tea Party,? ?Patriots,? or the ?9/12 Project?, 2) governme nt Spending, government debt or taxes, 3) education ?61R30000122863-l22864, Exhibit 16. 47 See Exhibit 16. The applicable Revenue Procedure allows Appeals to seek technical advice from E0, but that request for advice would come Appeals in the ?rst instance and would be documented, not behind the scenes 4" EO Director?s responses to 3 questions asked by Director Paterson, produced to the Committee by the Treasury Inspector General for Tax Admin' tratio?n, Exhibit 17. See also, telephone briefing by staff to Oversight Subcommittee staff of September 12, 2013. sonnod eAgsuodsea Jo; Jeiueg out liq pepeoldn pue peugeiqo seM iueumoop sgul of the public by advocacy/lobbying to ?make America abetter place to live?, or 4) criticizing how the country is being run? Lerner began her response with the statement: In early 2010, E0 Determinations witnessed an uptick in the number ol?applicatio for ?501(c)(3) or 501 status that contained indicators of potentially signi?carrt amounts of political campaign intervention (?advocacy Lerner here seeks to estalilish that there. was an increase in the number of applications received in Cincinnati that contained political campaign activity to minimize her responsibility for the targeting. However, the statement is the ?rst of a compilation of misleading half-truths. Just a few months before, on July 17, 2012, Lerner sent an email to Holly Paz and Nikole Flax offering comments on a talking point drafted for then-Deputy Commissioner for Services and Enforcement Steve Miller about a perceived uptick in political advocacy cases: Only one comment?J know we don't have published SOI stats for the uptick, but cur Cincy folks saw it happening ?can we get Nikole whatever "inside" info we have at led to that conclusion-she can then ?gure out how to use it.50 Holly Paz sought assistance from Nanlee Park,s 1 who responded later that evening anc included Lerner on the. response: [A]s Holly pointed out in her comment, we do not have a reliable method for tracking data by issue such as political activity. This is consistent with our congressional responses where We had explained we would have to manually go through each application, etc. Because of the above points, the ?rst bullet that presently reads as: Starting in 2010, E0 an increase in the number of section 501(c)(3) and section 501(c)(4) determination applications from organizations that appeared to be potentially engaged in political advocacy activities. Recommend it be rev lsed along the lines of the following): For about the past ?v 3. years [alternative verbiage: From FY 2008 through June 30th of FY 2012], E0 has observed an increase in the number of section 501(c)(4) determinati on applications ?led, as well as a general upward trend in section 501(c)(3) application ?rings.? 4" Exhibit 17. 5" 1R30000179271, Exhibit 18. 5' Exhit it 19. 5? Exhit it 20. 10 (610'sieroesuedo) sonnod elusuodsea Jo; Jeiueg liq pepeoldn pue peugeiqo seM 1h ewnoop sgul Despite being told that olitieal advocacy activities? could not be substantiated in her proposed talking point, Lerner used almost the exact same words in her response to federal law enforcement. Lerner knew her answer could not be substantiated, and yet provided it in response to audit in an attempt to minimize her role in the agency?s management fa lures. Lerner then answered the question of when she ?rst learned ?the IRS was targeting applications. . .that menti n. . .the ?Tea Party,? by saying that she: First became aware at the BOLO referenced ?tea party? organizations and E0 Determinations was sing the above criteria to determine what organizations met hat description when I briefed on these cases on June 29, 2011.53 This half-truth appears 0 lculated to obscure her knowledge that ?Tea Party? cases we re being treated differently, in part, at her direction, and far earlier than she acknowledge d. A series of emails show at Lerner knew as early as April 2010 that tea party cases were being ?agged and held i Cincinnati. - On April 28, 201 Lerner was told by email, ?there are 13 tea party cases out in Determinatio The attached spreadsheet even identi?es the issue invol red organization meets the requirements under 501(c)(3) and is not involVed in litical intervention? and notes that there is a grouping of tea party cases.54 - On May 13,2010, Lerner re3ponded to a detailed summary of the tea party ca .es and even inquires about the status of the cases. Upon review of the email, she asked follow-up questions regarding the tea party cases, ?[Are the] tea party 01865 applications for 03?? What?s their basis?? In response, she is explicitly told have tea party cases here in BOT in Cincy. In BOT, there .is a (0X3) application. In Cincy there are 10 and a couple of 5 In an email dated August 3, 2010, Lerner speci?cally asked her assistant to pr nt out a Sensitive Case Report (SCR) on the handling of the tea party cases, for ler review. The SCR noted that the cases were being held due to the likelihood attracting media attention, contrary to Lerner?s assertion that the targeting was prompted by the ?uptick in applications? with these characteristics.5 On anu'ary l, 20} 1, Lerner received an SCR that ?agged issues with ?tea party The next day, Lerner responded, ?Tea Party Matter very dangerous. . .. Counsel and Judy Kindell need to be in on this. Cincy should 5? Exhibit 17. 5? Exhi nit-21. 55 Exhi bit 22. Pursuant to? the Internal Revenue Manual (IRM) 7.29.3.2 (07-14-2008), Sensitive Case Reports are written for the bene?t upper management. 5611130000163358-163359, Exhiai123. 57 47507-147509, Exhi nit 24. ll (BJO'SieJoesuedQ) sonnod eAisuodsea J0,l Jeiueg liq pepeoldn pue seM siul probably NOT ha ire these cases.?58 Less than hour later, Lerner appeared to be directing Staff to ?nd a way to deny both 03 and c4 would be great if we can get there without saying the only reason they don't get a 3 is political . These email exchanges rr emorialize Lerner?s'knowledge that, as early as April 2010, the IRS was targeting applications for tax-exemption involving the name ?Tea Party? an dl holding these cases pend' review from 130 Technical in Washington, DC. Lerner Used Her Personal Email. for Of?cial Business, Including Con?dential Return Information; Further Investigation Could Review Unauthorized ?Disclo' iure In an email dated October 29, 2012, Lemer sent draft chronology containi ig con?dential return inforniation of taxpayers, protected by 26 U.S.C section 6103, to her personal email address: From: Lerner Lois Sent: Monday, October 29, 2012 10:51 AM To: 'tobomatic@msn.com? Subject: Fw: Revised timeline Attachments: Long Political Advocacy Timeline HOP commentsdoc Lois G. Lerner- Sent from my BlackBerry Wireless Handhelc 60 A review of the redacted chronology shows that nine of the 17 pages contain section 61 03 material.61 The next evening, Lerner sent this material back to her of?cial email address and to oth?ers?in the IRS with her comments: From: Toby Miles Sent: Tuesday, October 30, 2012 9:16 PM To: Paz Holly nemcy.marks@irs.gov; Lerner Lois Subject: Long Time line from LOIS Attachments: Long Political Advocacy Timeline HOP commentsdoc Looks pretty good-a couple questions/comments62 More recently on May 4, 2013, 130 Senior Technical .Advisor Meghan Biss, apparei 1y at L'erner?s request, sent a summary of One Fund Boston?s 501(c)(3) application, which consisted almost entirely of section 6103 material, to Lerner?s personal email address.53 5? Exhit it 25. 59 Exhibit 25. 6? 1-23, Exhibit 25 6' Exhibit 26. 62 1R80000062329, Exhibit 27. Vliles? is Lerncr?s husband?s, Michael R. Miles, last name. The source of the 1 a ne ?Toby? is not known. 6" 11180000322610, Exhibit 28. The application has since been approved and is available for public inspection. 12 sonnod enisuddsea Jo; Jeiueg out liq pepeoldn pue peugeiqo seM sgul Sending con?dential taxpayer information to a personal email address is prohibited by IRS policy, but is not ille gal.?54 However, it is a crime to disclose taxpayer return information.65 If persons other than Lerner had access to her personal email account, tobomatic@msn.com, an accessed this protected section? 6103 material, then Lerner may have violated a criminal atute for which the penalty is up to $5,000 ?ne and/or up to ?ve years in prison.66 IV. Conclusion Contrary to reports that I 8? Administrative Review Board found no pelitical bias or willful misconduct by Lo 5 Lerner, the Committee?s investigation has uncovered such . . . . . . . ev1dence. After rev1e ng these. same emails, Aetmg Commissmner Danny Werfel himself conceded that th re was evidence that raised questions about. wrongdoing at the agency. At a Septem er 18, 2013. hearing, Oversight Subcommittee Chairman Charles Boustany asked erfel whether Lerner acted in violation of internal agency controls: Chairman Boustanv. 13 id Lois Lerner seek to intervene in the examinations process or audit process? Mr. Werfel. I am not sure that I can fully answer that question because all those documents in Lois' em i1 ?le need to be further reviewed. 1 will say this, that there were emails that we tut ed over to you. .. that I thought raised questions, [which] i providggl directly to TIGTA and I also provided them to the Accountability Review Board. Werfel?s testimony is the first public admission by an IRS of?cial that evidence may show intentional wrongdoing; this concession is wholly consistent with the Committee?s investigation. Notwithstanding the Werfel Report and other IRS statements, the foregoing sets forth evidence that tends to intentional wrongdoing, including targeting speci?c taxpayers for adverse treatment, making misleading statements to law enforcement, and 6? See IRM 1 L3. 1.14.2 Electronic Mail and Secure Messaging [Last Revised: 03-07-2008] (1)21. Employees may not use E-mail to transmit SBU [(Scnsitive but Unclassi?ed? data unless they use th Seeure Messaging (SM) the sender and recipientmus't have SM in order for the B-ma to be protected. b. SBU information inclut es taxpayer data, Privacy Act protected information, some law enforcement information, and other information protected by statute or d. SBU data may not be sent to parties outside of IRS, including other government agencies taxpayers, or heir es cannot send E-mails containing SBU data outside the IRS network, even 1? Specifically authorized by the taxpayer. (emphasis'added) ?5 See IRC 7213. Unauthorized disclosure of information. 66 See id. 67 Stephen Ohlemacher, of? ?ial at heart of tea party scandal retires," Associated Press, Sept. 23, 2013. Avail at: US House Committee on We} 5 and Means Oversight Subcommittee Hearing on the Internal Revenue Service?s Exempt Organizations Division Audit, September 18, 2013. (510'sreloesuedo) sonnod eAgsuodsea Jo; J91U93 our liq pepeoldn pue peugerqo SBM twewnoop 3qu the possible disclosure of con?dential taxpayer information. The Committee requests that you act on the findiilgs within this letter and the attached documentation to enSL re: the rights of law-abiding taxpayers are protected. Please contact Committee staff at (3102) 225-3 625 if you have. any questions. incerely, DAVE CAMP Chairman cc: The Honorable J. Russell George, IGTA The Honorable John Koskinen, Commissioner, IRS 14 (BJO'SieJoesuedQ) sonnod eAgsuodsea Jo; Jeiueg Aq pepeoldn pue peugeiqo seM inewnoop 8qu WW Lois Lerner Discusses. Political Pressure on IRS in 2010 what happened last year was the Supreme Court, out of a block getting chipped away and chipped away the federal election arena, the Supreme Court dealt it a huge blow overturning 100 ye 1r old precedent that said. basically, appropriations can give directly to political campaigns. And everyone is up in arms because they don?t like it. Federal Election Commission can?t do anything about it they want the IRS to ?x the: problem. The IRS laws are not set up to ?x the problem. can do straight political activity. They can that says ?vote for Joe Blow.? That?s something they can do as long as long as their primary activity is their activity, which is social Welfare. So everybody is screaming at us, it now before the election, can you see how much ti ese people are spending?? I won?t know until I look at their >903 next year whether they have done more than their primary activity as political or no so I can?t do anything right now. Transcribed from a video of ois? Lerner speaking to a group of student?s a! the Duke University Sanford School of Public Policy ?3 Foundation Impact Research Group, October 19, 2010. sonnod eAisuodsea Jo; J91UGQ an], liq pepeoldn pue seM siql EXHIBIT 2 From: Lerner Lois Sent: Wednesday, December 19, 2012 10:39 AM To: Fish David L: Megosh Andy Subject: FW: Meeting with Democracy 21 and Campaign Legal Center Can i get copies of all letters these orgs sent in asking for c4 guidance ?Thanks 041:! Director of Exempt Organizations From: Beard [mailtcn Sent: Wednesday, December 19, 20! 2 11:30 AM i To: Lerner Lois Subject: RE: Meeting with Democraw 21 and Campaign Legal Center Lois, The five people attending the meeting will be Fred Wertheimer'and Donald Simon from Democracy 21 and Paul Ryan, Tara Malloy and Gerald Hebert from the Campaign Legal Center. Thanks and we look forward to receiving the invitation. Beard Communications Research Director Democracy 21 2000 Massachusetts Ave NW Washington, DC 20036 From: Lerner Lois Sent: Wednesday, December 19, 2012 10:48 AM To: Beard Cc: Sandifer Theodora Subject: RE: Meeting with Democracy 21 and Campaign Legal Center about how to get to us once you reach the building. Will any one other than you and .. My secretary, Theodora Sanc ifer, will send an invitation, and will provide you with hing-nation Wertheimer be attending? IR80000122502 sonnod Jo; J91U9C) an], liq pepeoldn pue peuietqo seMnueanoop siql wan/1 EXHIBIT 2 9&4) Director of Exempt Organizations From: Beard [mailtoz Sent: Wednesday, December 19, 2012 10:21 AM To: Lerner Lois Subject: RE: Meeting with Democracy 21 and Campaign Legal Center Lois, January 4?h at 11am works for Mr. Wertheimer and the Campaign Legal Center. Thanks, Beard Communications Research Director Democracy 21 2000 Massachusetts Ave NW Washington, DC 20036 From: Lerner Lois [mailto:Lois.G.L rner irs. ov] 1 Sent: Tuesday, December 18, 2012 :44 PM To: Beard Cc: Sandifer Theodora; Marx Dawn Subject: RE: Meeting with Democracy 21 and Campaign Legal Center I have Spoken with my colleagues. We can meet Friday, January 4th at 11:00. let us know if that works and we will send out an invitation. 922?: gm Director of Exempt Organizatio TS From: Beard [mailto: Sent: Monday, December 17, 2012 1 26 PM To: Lerner Lois Subject: RE: Meeting with Democracy 21 and Campaign Legal Center Great. Thank you very much. card lR80000122503 (610'steloesuedo) somlod eAgsuidsea JO1J91UGQ euJ, Aq pepeoldn pue peugerqo semiruewnoop sgul wau EXHIBIT 2 i Communications Research Director Democraty 21 2000 Massachusetts Ave NW Washinoton DC 20036 From: Lerner Lois Sent: Monday, December 17, 2012 12:06 PM To: Beard Cc: Sandifer Theodora Subject: RE: Meeting with Democracy 21 and Campaign Legal Center Let?s see what we can put together. We?ll get back to you once we've reached my col eagues. gm i Director of Exempt Organizatio ts 1 From: Beard [mailtoz I Sent: Monday, December 17, 2012 11:46 AM To: Lerner Lois Cc: Sandifer Theodora Subject: RE: Meeting with Democracy 21 and Campaign Legal Center Dear Ms. Lemer, Thank you for getting back to me. After speaking with Mr. Wertheimer and the Campaign Legal Center, they are all free all day on Friday1 January 4, 2013. Whatever time werks best for you is ?ne with them. If that day does not work, I can try to ?nd another day that they will be free. Thank you, Beard Communications Research Dire :tor Democracy 21. 2000 Massachusetts Ave NW Washinoton, DC 20036 i sonnod eAgsqusea J01J91U93 sq], liq pepeoldn pue peugeiqo semliJeanoop sgul EXHIBIT 2 Sent: Friday, December 14, 2012 2: l6 PM To: Beard Cc: Sa ndifer Theodora Subject: RE: Meeting with Democra:y 21 and Campaign Legal Center From: Lerner Lois [mailtozLois.G.lerner@irs.gov] A i effort by ED, IRS Chief Coun el and Treasury, it makes the most sense to have all offices in attendance at the eeting. I have reached out to my counterparts and we an set something up for the first ek in January, but schedules do not permit a meeting be re then. Please provide some proposed dates/times and my secretary, Theodora Sandi will coordinate schedules. Thank you for your interesti meeting with us. Because all E0 related guidance is air int ??wu Director of Exempt Organizations From: Beard Sent: Friday, December 14, 2012 12 25 PM To: Lerner Lois Subject: Meeting with Democracy 2L and Campaign Legal Center Dear Ms. Lerner, I am writing on behalf of Fred Wert?heimer, President of Democracy 21, to inquire about setting up a eeting for him and the Campaign Legal enter to meet with you to discuss the request for a petition for rulem ing on candidate election activities by Section 501(c)(4) groups. If possible, Mr. Wertheimer woulc like to set up a meeting sometime next week. Thank you very much and I look arward to speaking with you. Beard Communications Research Director Democracy 21 Washin ton, DC 20036 2000 Massachusetts Ave NW (BJO'sieJoesuedQ) sounod Jo; J81UGQ an], liq pepeoldn pue peugeiqo semliuewnoop sgul DAVE CAMP. MICHIGAN, CHAIRMAN SAM JOHNSON. KEVIN BRADY, TEXAS PAUL RYAN. WISCONSIN NUNES. CALIFORNIA PATRICK J. OHIO DAVID G. HEICHERT.WI15HII-IGT0N CHARLES W. JR. PETER J.-ROSKAM ILLINOIS JIM GENLACH. PRICE. GEORGIA FLOHIDA SMITH, NEBRASKA AARON SCHOCK. ILLINOIS LVNN JENKINS, KANSAS MINNESOTA KENNY MARCIMHT. YEXAS DIANE BLACK. IENNESSEE of the ??nitrd genius Elinuar or COMMITTEE ON WAYS AND MEANS 1102 LONGWOHTH House OFFICE BUILDING 225-3625 Washington. 330: lOili?DS-?Iti EXHIBIT 3 sworn M, chw, MEMBER CHARLES n. axwur: .r aw vonx JIM t. A5 JOHN LEWIS. neon .Ia mciman E. MEAL. xnvuzn BECEMA. AITOHNIA more nuooerr. 5 MIKE rnowsou. AL ronnm JOHN n. LARSON. BLUMENAUE . 0 menu RON KIND. WISCD mu. .19. NE JOSEPH cnowmv. Mr. I: ALLYSON sctiwnn DANNY, K. DAVIS. ILLIN LINDA SANCHEZ. JHNIA JANICE HAYS, MINORITY CHIEF JUNSEI. TOM NEW 1?0le TODD YOUNG. INDIANA MIKE KELLY. TIM GRIFFIN, ARKANSAS JIM RENACCI. OHIO JENNIFER SAFAVIAN. STAFF DIRECTOII September 20, 2013 Mr. Daniel Werfel Acting Commissioner Internal Revenue {Service 1 111 Constitution iue, NW. Washington, DC. 2022.4 Dear Mr. Werfel, In order to conduct oversight on matters within jurisdiction of the Committee on Ways and Means (Committee), including the administration of federal tax law, and pursuant to my authority under IRC ?6103, I am writing to request certain returns and return information as to the fcllowing organizations. No later than October 4, please produce t) the Committee all documents relating to the following organizations: American Crossroads Crossroads GPS Priorities USA Priorities USA Action Americans for Prosper Organizing for Action I am designating six in mbers of the Committee staff as my agents to receive returns and return information ins ar as it is disclosed pursuant to this re uest: This document is a record of the Committee and is entrusted to the Internal Revenue Service for your use only in. handling this matter. Additionally, any documents created the Internal Revenue Service in connection with a response to this Committee docume including (but not limited to) any replies to the Committee, are records of the Committ and shall be segregated from agency records and remain subject to the control of the Committee. According y, the aforementioned documents are not ?agency records? for h: sonnod eAgsupdsea Jo; Jeiueg out liq pepeoldn pue peugeiqo se/vi fueumoop sgul EXHIBIT 3 purpose of the Freedom of Information Act. Absent explicit Committee authorization, access to this document and any responsive documents shall be limited to Internal Revenue Service personnel who need such access for the purpose of providing information or assistance to the Committee. Thank you in advance For your assistance in this matter. It?you have an uestions le sc contact Ways and Mea as Committee 5 a Sincerely, DAVE CAMP Chairman EXHIBIT 4 sonnod eAisuodsea Jo; Jeiueg euJ, liq pepeoldn pue semyiTewnoop siul From: Le?ner Lois Sent: adnesday, January 02,2013 4:29 PM To: Eldridge Michelle Flax Nikole Lemons Terry Cc: Sterner Christopher Vozne Jennifer Zarin Roberta Kirbabas Mark Williams Grant; Burke Anthony; Patterson Dean Subject: RE: ProPublica: 501c4 questions - says deadline today Just FYI for everyone's infor ation -I received the incoming and will refer it to Exam a we do with any complaint. Ruth drigal, Vickie Judson and I are meeting with Democracy 2i and some others on Friday regarding their request for guidance on c4. This has been set for some time. I plan to have David Fish there and begin the meeting by telling them we ca mot discuss specific taxpayers, but are there to hear their?general comments regarding potential guidance. We will be very cautious. .45.: gas? Director of Exempt Organizations From: Eldridge Michelle Sent: Wednesday, January 02, 2013 4:16 PM To: Flax Nikole Lerner Lois Lemons Terry Cc: Sterner Christopher Vozne Jemifer Zarin Roberta Kirbabas Mark Williams Grant; Burke Anthony Datterson Dean Subject: FW: ProPublica: 501c4 questions says deadline today is latest inbound from ProPublica. They are updating their story given a new lette sent to IRS by Democracy 21 and Campaign Legal Center. Below is the cut and past version ofthat letter. I recommend that wejust let this?one sit and wait out the deadline. We can certainly declfne comment on the letter sent to us -but gets more problematic on the issue of th applicati 3n based on previous correspondence. Please let me know if you have other thoughts. Thanks. Michelle Watchdog Groups Again Call on IRS to Deny Tax -Exempt Status to Karl Rove?s Crossroads GPS Wednesday, January 02, .2013 Watchdog Groups Again Call an IRS to Deny Tax-Exempt Status to Karl Rove's Crossroads GPS, fits $70 Million in 2012 Campaign Exper ditures as Prima Facie Evidence Group is Campaign Operation, not "Social Welfare" Group In a letter sent today to the IRS, Democracy 21, join ed by the Campaign Legal Center, again called on the agency to eny Karl Rove?s Crossroads GPS tax?exempt stai us as a section 501(c)(4) social welfare organization. According to the letter from the watch :iog groups: sonilod eAisu dsea Jo; Jeiueg euJ, liq pepeoldn pue seNi siul According to the Center for Responsive Politics (CRP), Crossroads GPS spent $70 million on independent expenditt re to elect Republican candidates or defeat Democratic candidatesin the 2012 elections. This is an extraordinary amount of money to be spent on influencing elections by 3 gm Jp which claims it is a "social welfare? organization. Indeed, Crossroads GPS and its affiliate Super PAC, American Crossroads, together spent a total of $175 million on independent expehditures and eiectioneering communications to influence the 2012 election s?far more than any :ther outside spender, according to CRP. The letter from the watchdog groups continues: [W]e submit that the $70 million spent by Crossroads GPS Just on campaign ads reported to the FEC in 2012 is prim zfacie evidence that the organization does he ve a "primary purpose? to engage in campaign activities. The statement made by Crossroads 695 two years ago on its application for tax -exempt status that its campaign activities will be "limited in amount, and will not constitute the organ izatlo 'l'S primary purpose? are simply not credible, lnlight of the actual practices of the organization and the tens of millions dollars Crossroads GPS spent on campaign ads since then. As we have stated in previous letters, the misuse of "social wel fare? organizations as vehicles for campaign spend n1: results in direct and serious harm to the American people because it hides from public scrutiny the identity of the donors fund ng the campaign spending. According to Democracy 21 President Fred Werth eimer: The apparent failure of the to grani tax -exempt status to Crossroads GPS, more than two years after Crossroads applied for status as a 501(c)(4) "social welfare? organization, provides some hope that the agency will do the right thing ant rejec the Crossroads GPS application. It appears clear that Crossroads GPS exists for the overriding purpose of influencing elections. Crossroads GPS found er Karl Rove is a political operative, not a "soc al welfare? activist. Crossroads GPS spent tens of mil lions of dollars on TV ads to elect and defeat candidates and is nothing more than a campaign operation posing as a "social welfare" organization. The IRS must not allow Crossroads GPS to get away with its Charade of claiming to be a "social welfare? org anizat 'i so it can hide the donors financing its campaign activities from the American people. Crossroads GPS must be held accountab for abusing the nation?s tax laws to inject i ens of millions of dollars in "dark money" into federal races. According to the letter sent today: ProPublica, a news organization, recently received and publicly disseminated the Form 1024, "Application for Recogr ition of EXemption under Section 501(a), filed Crossroads GPS on September 3, 2010, seeking recognitlo as a "social we fare? organization under section 501(c)(4) the internal Revenue code. So far as we are aware, the IRS has yet to grant :he "application. in its application, Crossroads GPS state that 50 percent of its activities will be devoted to "p ublic education," 30 pe rent will be devoted to ?influericiingi legislatio and policymaking,? and 20 percent will be devoted to ?research.? Application at 2. Thus, when asked to provide a "det iled narrative description of all the activities of the organ lzation past, present and planned,? Crossroads GPS fails to men ion any activities devoted to influencing federal elections, and instead desc es 100 percent 'of its activities as involving eff other than electioneering. Inconsistently, in response to a differe question on the application, Crossroads GPS states that it plans to spend fu ads "to distribute independent political comm nications," but such activity ?will be limited in amount, and will not constit .it a the organization?s primary purpose. Id; a 4. We have written to you on a number of occasions in the past two years regarding the enormous sums of money sper by Crossroads GPS to influence the 2010 a nd 2012 federal elections. in those letters, we have challenged the organiza tic n's eligibility for section 501(c)(4) tax -exernpt status. 22516 617% 9 to law mumWW3 tam-Iv mm "Mild on 3?1qu 31?73 i. 9 410430943934 vav ?luv: lam Suntan own Imch 00 I 1 a '1 Jo; any;qu - 00 Ipth mi 2 I 9 510'] mu ms "is ?Jld93 666 mama [9631 ulsmduwa '3 1:2 Kannowaa 1mm Gums?11: 'nvwn on 6 Manama Amnlosqu Inlun s?ugawl ou - apola 8 we 1 0.L 210903?. J3MINES 10m ?u 330 W035 905:9 "Pawn lup?au at ?a no "1015 on Kappa 82(2925252 ZRIZOZSYGIU garagr? A ?z I I epud eS I Etoz?vo Manuel: 9 .LIBIHXEI mm This document was obtained and uploaded by the Center for Responsive Politics (OpenSecretsorg) sonnod eAisuodsea Jo; J91U93 eu: liq pepeoldn pue peuietqo seM 1L eanoop EXHIBIT 6 From: Le: ner Lois Sent: Monday. January 07, 2013 4:56 PM To: Downing Nanette Subject: RE Referral organization The reasons stated for note lecting earlier on that the org is for -profit is most disturb g. The other two reasoned that ther was no 990 ?led and it had a 1024 pending so let's send to Cincy. That would make sen if this were a 03, but it doesn't if it is a c4. They don't ave to come into Cincy. If we only pen audits on orgs that ?le 990s, that's a big hole in the system. Then you have new papers telling us what the orgs are doing, but we never lc ok. If the org has been around log enough to owe us a 990 and they aren't filing to hide what they are alleged to have done, it should be our job to go out and get the 990 and then determine whether the allegations-that are very strong-are true. As I said, we are working on the denial for the 1024, so I need to think about whether to open an exam. I think yes, but let me cogitate a bit on it. Do I have information regard ng the cases approved for exam previously and their priorities? I'd like to get some into the field, but can't until l'm comfortable with that. Thanks 04?; foggy?! Director of Exempt Organizations From: Downing Nanette Sent: Monday, January 07, 2013 12: 19 PM To: Lerner Lois Subject: RE: Referral organization I pulled up referral files on this organi ation. We have received numerous referrals on this organization over the set 3 years (25 in total). The system show that the organization did not file a form 990 until April 2 012,. The ?rst gilt referrals were limited news article. They were put into 2 referral files and sent to committee. There was no 990 filed and the committee notated that an applicatio was pending. The ?le indicates that they submitted the referral inf ormalion to determinations. The reason for the selection was due to the limited information provided in the news article. These are the Mo referral non selection me tioned by Tom. Future referrals had additional information. We were instructed in August 2011 to hold all political referrals unt I ual track was finalized. All future referrals were associated together and included in the dual track. The PARC reviewed in December 2012 and selected it for examination. I have pulled the ?les and see that they went back to the committee in December 2012 for final committee re View. From: Lerner Lois Sent: Friday, January 04, 2013 4:50 PM To: Downing Nanette Subject: FW: Referral organization I had a meeting today with an organization that was asking us to consider guidance on the 04 issue. To get ready for the meeting, I asked for every document that had sent in over the last 1 sonnod eAisuodsea Jo; J81UGQ sq], Itq pepeoldn pue seM ?t eanoop siul warn EXHIBIT 5 several years because i knew they had sent in several referrals. I reviewed the infor ation last night and thought the allegations in the documents were really damning, so won ared why we hadn't done something with the org. The first complaint came in 2010 and th re were additional ones in 2011 and 2012. asked Tom Miller whether recalled seeing referral committee notes on the referra when he and Judy went down to to at the referrals. He looked them up, and as you can slee below, the referral committee unani ously non -selected the case twice. I don't know where/u go with this-as I've told you bef re --I don't think your guys get it and the way they look ?tthese cases is going to bite us so day. The organization at issue is Crossroads GPS, lich is on the top of the list of c4 spen ers in the last two elections. it is in the news regularly as an organization that is not reall a c4, rather it is only doing political activity ?taking in ney from large contributors who ish to remain anonymous and funneling it into tight ele' ral races. Yet-twice we rejects the referrals for somewhat dubious reasons and neverf towed up once the 9905 were filed. 1 I know the org is now in the OO-based on allegations sent in this year, but this is a? rg that was a prime candidate for ex when the referrals and 9903 first came i n. worry th if the allegations in the present co plaint onty discuss this year, Exam will slot if for a fut year because this year's 990 isn't yet. My level of confidence that we are equipped to his work continues to be shaken I don't even know what to recommend to make this be r. I'm guessing if it hadn't been for us implementing Dual Track, the org would never be examined. And, I am not co fident they will be able to handle the exam without constant hand holding-the issues he are going to be whether the expenditures they call genlel'al advocacy are political interv ntiOn. Please keep me apprised of org's status in the R00 and the outcome of'the referr I committee. You should kno that we are working on a denial of the applic ation, wh 1 may solve the problem because probably will say it isn't exempt. Please make sure al moves regarding the org are coordi ated up here before we do anything. gm Director of Exempt Organizations From: Miller Thomas Sent: Friday, January 04, 2013 1:55 PM To: Lerner Lois Subject: Referral organization i looked at the file on that orga ization, which is currently in the Inventory" category. The organization was created in Ju 2010. It has twice previously been considered by the RC, 11/2010, and 6/2011. Both ti 3 it was. not selected by unanimous vote, though some comm ttee explanations are questionable. On the 11/2010 tracking sheet, two members not that the organization had recently filed orm 1024, with one recommending forwarding the referral infc rmation to Determinations and the othe transferring the case to the ROO. The third member wrote owever, that ?the referral is on a for-pro it which is in no way correct. Although it is understa dable that recommending an examin tion could be considered premature at either point, especially as the organization did not file Forms 90 until late April 2012, when itfiled one for the period 06/041 '2010- 05/31/2011, and another forth period 06/01/2011 -12/31/2011 (presumably to change list year). 2 sonnod eAisuodsea Jo; J91U93 qu, Aq pepeoldn pue seM 1Teuinoop siql EXHIBIT 6 The file contains the classifier recommendation that the case be referred forfield examinationindication when twould go back to referral committee. Tom Miller Thomas J. Miller Technical Advisor Exempt Organizations Rulings 8; Agreements Phone: Fax: sonnod enisuodsea Jo; J81UGQ euJ, Itq pepeoldn pue peuietqo semquewnoop siul I warn EXHIBIT 7 i This summary discu sees at a high level Exempt Organizations (E0) processes with respect to examinations and compliance checks of tax exempt organizations involved political activity. An enforcement review of a tax exempt organization falls into one of two broad categories: examinations and compliance checks; The IRS conducts examinations, also known as audits, which are authorized under 1 Section 7602 of the Internal Revenue Code. An examination is a review of a taxpayer?s books and records to determine tax liability, and may involve the questioning of third parties. For exempt organizations, an examination also determines an organization's qualification for tax?exempt status. E0 conducts two different types of examinations: correspondence and field examinations. A correspondence examination is conducted remotely solely through the issuance of information document requests to the taxpayer? by the examiner. During a field examination the examiner conducts invperson i interviews of the taxp ayer's representatives in addition to issuing information document requests. . A compliance check '3 a review to determine whether an organization is adhering to recordkeeping and information reporting requirements and/or whether an organization?s activities are consists nt with its stated tax?exempt purpose. Although during a i compliance check the examiner may contact the taxpayer, it is not an examination sincie it does not involve review of the taxpayer?s, books and records-and does not directly i relate to determining a- tax liability for any particular period. See Publication 4386, Compliance Checks, for further details. As a result of the Advisory Committee for Tax Exempt and Government Entities (ACT) recommendation, E0 established the Review of Operations (R00) in 2005. its initial vision was to follow~up on exempt organizations within three to five years of recognition; of exemption in order to assess whether the organizations are operating as stated in . their applications for xemption. The R00 conducts compliance reviews on organizations. ?It is a thorized to determine whether an organization's activities are consistent with its sta ed tax-exempt purpose and whether the organization is adhering to re?co'rdkeeplng and reporting requirements. However. unlike a compliance check, the ROO does not make axpayer contact. In addition, because the R00 does not conduct an examination, it is oi authorized to examine an organization's books and records or ask questions regardi tax liabilities or the organization's activities. EO Determinations kes referrals to E0 Examinations when questionable activity is likely to occur, t? ture operations may impact exempt status, generate Unrelated Business income (U l) or other tax liabilities, or necessitate a change in private foundation classi?cati (IRM 7.20.1.52). EO Determinations started Sending referrals to the R00 in approx mater July 2006. At that time, specialists in E0 Determinations i were required to com lets a Form 6038 and a Form 6038 Attachment. in March 2009, the Form 6038 was discontinued for cases closed through the screening program and i replaced with a version of Form 14261, Memorandum to File. Theprocedures were i also changed and required the specialist to complete a Form 6038 attachment only if the specialist made a referral to the ROO. in 2011, the Form 6038 and attachments i sonnod enisqusea Jo; J81UGQ euJ, Aq pepeoldn pue peuietqo seM ryewnoop siul . 7 were discontinued a 1d replaced with the Form 14261 and Form 14266 for the R00 referrals. See 720152 for additional information. The initial vision for the ROOhas been expanded to include the building of cases for ED Examinations for var ous compliance initiatives. The initial review conducted by the ROO allows for a mc re focused examination thus increasing the overall effectiveness cf E0 Examinations. in 2011, E0 began building a Dual Track process to use data analytics and referra to determine if exempt organizations have compliance issues . related to political adtivities. Procedures were approved in October 2012. Cases identified in the Dual Track process, including those identified through data analytics and referrals. first ar routed to the R00 for case development and research. These cases than are route to a Committee for review and decision on whether an examination is warra ted. Dual Track Data Analytics and Referral examination cases were first assigned the field late October 2012. The Director, E0 suspended examination case November 16. 2012, pending the development of additional guidance. On Febru ry 4, 2013, the directive to resume examination work Was given. The first Dual Track xamlnation case was started in March 2013. On June 3.2013, the new TEGE leadership team made a decision to temporarily suspend all Dual Tra examinations until a review of the procedures and process is completed. During summer of 2013. a cross functional team was created to reviewI the selection and dat analytics criteria and made recommendations. TEGE leadershipl is still evaluating the am's recommendations. Although several Dual-Track cases were started in Marc 2013. taXpayer contacts remain suspended. i In response to a con ressional request, the RS reviewed the 493 cases that were on the advocacy case tr cking spreadsheet as of May 9, 2013, to determine whether theyi were considered by ROO or are currently under examination. E0 Examinations he received a total of 53 eferrals on 24 organizations identified on the list. None of these i referrals were from Determinations. Referrals can come from various sources. including, external'st keholders, other areas of the Federal government, and taxpayerle Eleven referrals Went rough the Due! Track process, and 13 referrals were determine by career civil servan classi?ers not to have political allegations and thus did not go i through Dual Track. ive organizations were identified through data analytics of the Dual Track process. ut .of 16 Dual Track cases (11 referrals and five data analytics), 1% have been reviewed the R00 and two are currently in the R00 review proceSs. (See the following su. mary). EO Examinations sep rater identified 60 organizations-that were referred to E0 Examinations from Determinations during the period of 2012 through 2013. However, E0 Examin tions has not taken any actions on these referrals for two - reasons. First, they re not acted onbecause they were referrals for future year follow-ups. Second. ey have not been acted on because in reviewing the R00, Dual Track and examinatio processes during the summer of 2013, new TEGE leadership. decided to return thes referrals to E0 Determinations for further review to ensure the referrals were iate. Accordingly. no EO Determinations referrals of political advocacy cases have resulted in review by the ROO or processing through the Dual Track system. somlod eAlsuddsea J04J91U93 qu, Aq pepeoldn pue peulelqo seM A. Referrals: 1) Eleven referrals went through Dual Track process: a. Selected for examination: (None assigned to field groups) 3 b. Not selected for examination: 1 c. Awaiting Commilt 3e Review: 5 d. Transferred to RCO for research and review: 2 2)Thirteen referrals were determined by career classifiers not to have political allegat one, so did not go through the Dual Track process a. Selected for exa inatlon (None assigned to field groups) I 2 b. Not selected for examination: 6 c. Awaiting classification 5 B. Duel-Track Data An lytics: - Selected for examlnatlon (None assigned to field groups) 5 'w'e 5::91 12 Butauawwoo ?Sutp1tng asnoi U1JOM3U01 wooa u; pleu SBM Jallew erqe aul u; '3?0 EIGZ ?9 ?Kepin DNINMOG 1&0 d0 GNV SAVM NC) aaumwoa NNDG I usmxa This docume wt was obtained and uploaded by the Center for Responsive Politics (OpenSecretsorg) sonnod eAgsuodsea J01J91U93 euJ, Aq pepeoldn pue peugeiqo seM iueumoop sgul I waM EXHIBIT 3 33 we finish a project, you know, folks are trained, if we get something on it, it won't be a formal project. So 501(c) (3)5 and politicals was just normal process as any other referral. It still would go through justzanormal committee, because it's very sensitive. Then, 2010, Citizens United came out. We started getting referrals on 501(c)(4js, political, we started getting congressional. Uh?huh. A You know, folks above me came and said, tow are you going to deal with these? We know this is going to be very Who was that? Who would have come and asked you? A Lois, up the chain, you know. Kind of like for your work plan, what are you gaing to do. how are you going to do this? We had to take a stea back. We said, this is a new area, we need processes, we need procedures, we need training. Right. A At that time, we said, stop refer?als because we want to make sure we?re being consistent with trem all. So, you know, this was the end of 2010. 2011, we developed - you know, they tasked to me, what are yau going to do, as the Director? I put a team together, a crosT-functional team, said, how are we going to do this? And we waized to use, you know, what we learned from the political stuff, you somlod eAgsuodsea 104191u93 euJ, liq pepeoldn pue peugeiqo semliuewnoop sgul EXHIBIT 8 34 know, and the past project we had, what worked best. TIGTA had come in and looked at it. But we also had something new; we had the new 990. We had new data. You know, we were coming up with a strategy of the new 990. The Oversight Board was asking us, how are you going to use all this new data from the 990? We came up with a strategy of all these potential queries of how we could use the 990. And, you know, a piecelof it was political, a piece is fraud, nonfiler stuff, different things, and we had some with political. So we said, this is new than when we did PACI. We know ve've got referrals, we know we?ve got data analytics, and we came up with this dual-track approach. So we came up with this concept in a picture, out then we stillhad in place, procedures, and train our folks. We built processes. We built dEfinitions. We had to build training my classifiers, and we did and the R00 folks and my committee members. We knew how sensitive this would be, that we wanted very tight Controls and we wanted some extra safeguards in place. So, I mean, just a very high-level overview. If a referral comes in with a political allegation, it goes to the R00 to review, to do all that publicly available information, to see if they see any potential reasonable belief that, yes, there's political activities going on or maybe you know, a referral. Maybe they're just confused and it's lobbying stuff. The R00 will do sonnod eAgsuquaa 104191u93 liq pepeoldn pue peugeiqo sem'iuewnoop sgul wamexmmia 35 that review. And then we set up committee members, that the committee members look at the R00 review. And that committeec? three then makesthat that an exam should be done. Let me ask about the PARC. Is that the term for the political committee? A Uh-huh. In the words of a report by the IRS, the purpose of the PARC is to ensure equity and transparency and that no one individual could select an organization within certain classifications for examination. A Uh?huh. Is that your understanding, that the true purpose is to prohibit one person from actually effecting these decisions? A Right. You know, I've got several different committees. like a church committee. Sure. A And it's when it's very sensitive that we don't want it in any one person's hands to have to make that cecision. I understand. If an entity is looked at 3y the PARC, is that kird of a one-time thing? Or can a group be referred to the PARC several times? A ?fhey could - I mean, at the beginning. as +e started. you know. we had this inventory, so when something went to the somlod eAgsuodsaa Jo; JSIUSQ euJ, liq pepeoldn pue paugeiqo semliuewnoop sgul 1 wan 36 R00, if we had already received 10 referrals. the wTole packet went. But I would assume in the future, if I get a new referral in, it will go through the process again. And, ?n a way. that?s like any of my referrals. You know, there are individuals who will send - you know, I could get 50 referrals. Well, it goes through alorocess, and itITight be that eventually they provide - you know, it can't just be a referral saying, I don?t like this person, I think they' re doing something wrong. I mean, that?s why we've got these safeguards in place, and that's why, you know there's got to be information for somebody to have a reasonable belief there's a potential area of noncompliance there. So, yes. you can send more, and it will go througr the review process. You mentioned safeguards that are in place. What are those? What types of safeguards are in place? A Well, part of the safeguard is the committee of three. Right. A 3art of the safeguartlis we built this referral system. have, that the system automatically calculates and that the individual actually puts their comments in the system, whereas before it was all paper. We did - so this is all dual?track. Before I briefed up, say, and I had all my processes in place, I'm ready to go, I've somlod eAgsuddsea J04J91U93 sq], liq pepeoldn pue peugeiqo semqmewnoop sgul wan EXHIBIT 3 37 got my first small bucket that we're ready to exam ne. we had some folks come'hiand consistency checkq quality check. We bUilt.definitions. We built.definitions.of- I'nitrying to think of an example of some of the definitions. YOL know, what was the impact? You know, was it you know, if it's you know, what was the political nature? Was itaispeech that went out Oi the Internet? You know. just to help - or was it one sign one time? You know. again, just some definitions to try to help them to give them some clear guidance on making those final decisions so that we were consistent. Does the PARC look at or consider whether or not a group has a R00 recommendation? )0 they consider the Is that known to the PARC as they look at a case? I can't be certain to answer that quest on. Would the PARC have information that was obtained by a A Yes, they will have the R00 file. 0 They have the R00 file. A And if the PARC needs to do additional research, that is part of their - They also have the ability to A The ability to do additional research. EXAMINATION BY MS. ACUNA: somlod eAgsuodsea Jo; JSIUSQ euJ, liq pepeoldn pue peugeiqo id ewnoop sgul 8 38 So when they do additional research and whei they have the ROO file, that all becomes part of the PARC file w?th respect to that referral? A Yes. Yeah. It will all go in the file. Okay. And that's electronically, as well or just the hard copies? A No, it will all be put in the electronic file. So it will be loaded up into that system we were discussing? A Uh-huh. And can any one person override a PARC decision? A No. No. So once the PARC makesaadecision one way or the other. no one can come would expect I don't think you were in here when I talked about this. I would expect if anybody tried to do that, they would turn that in We are not allowed to do that Okay. Mr. Well, right now, we're at an Do you want to take a break? Mr. Kaiser. Your call. Mr. It?s up to you. Ms. prning. I'm okay. Mr. Okay. Great. 'w'e 50:91 12 Butauawwoo ?Butp1tng ant440 asnoH u140M3u01 LUOOH 1? mad SEM Janeu: SAOQB am, U1. '3'0 EIOZ Jeqweldas ?KepseupeM NOSGHF NNV VIHOLDIA 330 MBIAEHLNI NOLBNIHSVM :iO 'S'l'i CINV SAVM N0 33.1..LINNOC) N0 GTEHZHEIH NHDG I llEilHXEl This docume was obtained and uploaded by the Center for Responsive Politics (OpenSecretsorg) sonnod Jo; JSIUSQ euJ, liq pepeoldn pue peugelqo Jewnoop sgul EXHIBIT 9 57 Okay. A I don't know of any I don?t know what, if any, work my team may have done with respect to specific cases. Prior. Okay. Mr. Carlo. Chris. may Mr. A?m?3?g3g?_ Yes. BY MR. CARLO: I think you said that it was in the spring of 2012 that you discussed with Ms. Lerner a Crossroads GPS case and she gave y0u advance notice that that might be a denial. Is that correct? A That's the best of my recollection. And 1 don't know if I would characterize it as discuss as opposed to she told me that That you had some - A A heads-up about it. And that you didn't recall having'any with her about any other Tea Party~type cases? A The one thing I recall discussing with he? was whether there were other cases as well and whether the cases that were coming reflected different sides of the political spectrum. Okay. And what did she tell you? A She told me they did. "hey did. What was it about Crossroads that made that Irftherewereothercases,other Tea Party cases, other cases on the other side of the political Cause Chronology Recor 1 down.? "suwwh, EXHIBIT 10 Page 1 Employer's or Org 'mtion's Name Em Crossroad Grassroots Policy Strategies 27?27533 78 Screener?s Name Total I 11111611 3121:: Plan name and Plan Number Specialist's Name Liz l-lofacre 5 Joseph Herr Reviewer?s Name Date in diiridual Action Time Topics Discussed, Informal ion/Amendments Fol 10w- Contracted Code Requested or Other Action Taken up Date 1/30/ 12 I Assigned case. 2/2/12 1 6 OFAC review dc check completed no matches found; 1301. 0 review - check completed - no matches found. This is a high pro?le case; the news media has been monitoring this-organization. Conduct internet research on the organization. View advocacy communications by organization on You Tube. Review tax law related to organization RR 81-95, 20046. Draft . Letter1312. 2/3/12 Stephen Seek, E0 1, 4 6 Discuss case with Stephen Seok, coordinate for Advocacy Project. Search Deterrdinations internet for mention of organization in news media. Finishing review tax law . and draftirlg letter. Send draft to Stephen fo review. 2/16/12 Stephen Seok, 4 2 Meeting with Advocacy Coordinator and inager to review developmental 3/08/12 Steve Bowling, letter. They suggested some changes to letter. Finish letter and mail to Jon tdpell organization and FDA. 2/22/12 Mich e] Bayes, 3 POA left voice-mail message requesting an extension. I returned the call and 3/22/12 (DA granted the extension. 2/23/12 Advocacy cases placed on. hold 3/16/12 2 Mail 60-day extension letter to organization POA. (Copy of Letter 1312 5/ 15/12 1 included in mail; not included for case ?le spy) 3/ 19/ 12 Mich Bayes, 3 FDA le? voicemail message. 1 return call; POA asked for more time. 1 0A explained a 60-day extension was sent on Fr day. 4/23/12 Advocacy cases requested to be turnedlin for review per program manager. 5/04/12 Mich cl Bayes, 3 FDA left message. 0A 5/07/12 Mich e} Bayes, 3 0.5 I left return message. POA returned my call POA discussed the response: 1 IA said organization could send in the information they currently have available and that?l would it" to see if it suf?ced. He also asked for. some additional time (about a week). 1 said 1 would elevate the request for additional time. Action Codes 1 . Review ?le, ap Examination 0 chnfercnce A. Employer/ dministrator/Trustee Of?ce B. Represent ivc?s Of?ce C. DistrictO 1e Fonn (4 97? Internal Service This documer alication, amendments/infonnation 2. Correspondch 3. Telephone concts 4. Catalog Number 24265N Remarks Department oldie Treasury - twas obtained and uploaded by the Center for Politics (OpenSecrets.org) .. .w me e. "ow. .. an or Hahn-Ar New weir?? tame Case Chronology Recorii Page 2 Employer?s or Organ nation's Name Crossroads Grassroots Policy Strategies 127?2753378 i Screener?s Name Total 1 Authert Elm .4 Plan name and Plan liiumber Specialist?s Name Liz Hofacre 0 5 1 Jose ph Herr 1 Reviewer?s Name 5/09/12 Mic e?l Bayes, 3 Received approval for extension. 1 called FDA to let him know. 5/322;' 12 5/22/12 Mic ell Bayes. 3 FDA left voicemail stating response was sent overnight 5/23/12 1 2 Receive response 6/07/12 1 5.5 Begin review of large response. Create spreidsheet to analysize cost of each 1 television ad and track whether political or vocacy. 6/08/12 i 2 Continue analysis of response. 1 6/25/12 Send information to EDT to get their aid in nalyzing cases. 6/25/12 i Note: Specialist was instructing seven separ te sessions of CPE the weeks of 8/17/12 June 25 through August 9/17/12 - Specialist on leave 9/21/12 1 9/2711 2 2 As requested from BOT, draft a brie?ng on my thoughts on case and how 1 case might be worked. Submit by email to Andy Megosh and request to schedule conference call. 1 1/04/13 4 2 Conference calli'with BOT and acting area manager 0n how best to proceed 1 with case. 1 1/07/13 i 1 2 Based on conference begin reviewing case in ormation, tax law, and 1 draft/template advocacy denial letter, all tot ink about how best to compose the denial letter. 1/09/13 1 '7 Work on analyzing case and drafting denial. :ttcr 1/ 10/13 1 7 Work on analyzing case and drafting denial l=tter i . 1/11/13 1 7 Work on analyzing case and drafting denial latter Action Codes 7 Remarks 1. Review ?le, apt liitation, amendments/information 2. Correspondence 3. Telephone cont: 4. Examination or coaference A. Employer/lE This documer 5464-A (4- Internal Revenue Service '5 Of?ce Catalog Number 24265N tdhiinistrator/Tmstee Of?ce Department of the Treasury - tiwas obtained and uploaded by the Center for Resptimsive Politics (OpenSecrets.org) Case Chronology Recori Page 3 Employer's or Orgjnization's Name Crossroads Frassroots Policy Strategies 327-2753378 Screener's Name Total 1 Muthert Time a 0.4 Firm name and Plar umber Specialists Name Liz Hofacrc 0 5 Joseph Herr Reviewer?s Name 1 i . 1/14/13 1 2 Writeeup summary ot?idea on how 1 plan to mice denial argument and share 1/22/13 with Sharon Light for her opinion on whethdr the idea seems valid. 1 5/02/13 4 1 Call with Andy Megosh from BOT to discum draft denial letter. 5/03/13 9 Review case materials. Review draft denial letter of similar case. Prepare spreadsheet to help analyze ads. Begin draft of denial using the similar case i as template. . 5/09/13 i 8 Continue spreadsheet to help analyze ads. Continue draft of denial using the - similar ease as template. 1 5/10/13 i 4.5 Continue spreadsheet to help analyze ads. Continue draft of denial 1 5/13/13 1 1 3 Continue working on draft of letter 5/14/13 2 Continue working on draft of letter 1 5/15/13 i 2 Continue working on draft of letter 5/ 17/ [3 2 Continue working on draft of letter 5/30/13 1 4 Complete ?rst working draft of denial letter. Send dra? along with spreadsheet analysis to Sharon Light for review by BOT. i 1 Action Codes Remarks 1. Review ?le, applilbation, amendments/infonnation 2. Correspondence 3. Telephone cont it? 4. Examination or nference A. Employer/A ministratorfl?rustce Of?ce B. Representa i c?s Of?ce- C. District 0 . I Form (4- 97? Catalog Number 24265N Department oftlic Treasury - internal Revenue Service documerit was obtained and uploaded by the Center for (OpenSecrets.org) EXHIBIT 11 mum-1mm "will: on via. arrgrimyIR80000063029 This docume twas obtained and uploaded by the Center for Resp nsive Politics (OpenSecretsorg) EXHIBIT 12 From: Sent To: Subject: Retirement talk Light Sharon Thursday, January 24, 2013 10:48 AM Paz Holly 0 FW: EO Tax Journal 2013-15 From: Lerner Sent: Thursday To: Light Sharo Subject: RE: 0h--maybe Director of Exelmpt Organizations aisi; January 24, 2013 11:46 AM 1 ax Journal 2013-15 an get the DC office job! From: Light Sh Sent: Thursday, . To: Lerner Lois Subject: RE: This is the most organizing-for?a on anuary 24, 2013 11:35 AM Paz Holly 0; Fish David Tax Journal 2013-15 if ir formative article I?ve read about it Right now, the Ollfama campaign site includes info about this new org, featuring a bi who is leaving Since Priorities not. did not file a 1024, I would think they would follow the same se he White House to run it from Chicago. They?ll also have a DC office. 'politics[archiveZZOlBZOllhow - egg from the new executive director f?declaring path here. But maybe From: Lerner Lai Sent: Thursday, anuary 24, 2013 11:26 AM To: Paz Holly 0 ?sh David Cc: Light Sharo1 Subject: RE: I know-~this -it may say Aegm Director of E) DlTax Journal 2013-15 the second article I've read about this. You may W: hether they intend to apply I Organizations ant to look for the earlier one - From: Paz Holly I Sent: Thursday, January 24, 2013 10:05 AM This docume rd) nt was obtained and uploaded by the Center for Resp onsive Politics (OpenSecrets.org) To: Lerner Lois Cc: Light Sharon Subject: RE: I am not aware Fish David Jr a Tax Journal 2013-15 aat we have received this but will check. it is hard to have certaintyi EXHIBIT 12 vithout the org's EIN though. From: Lerner Lois Sent: Thursday To: Paz Holly 0, Subject: Fw: Has this org acth not going to Lois G. Lerner January 24, 2013 8:27 AM Fish David 3 Tax Journal 2013 -15 My come in? if so, do we have it in We need to be careful to oecause I am not feeling great so will be in later today. Thanks Sent from my ackBerry Wireless Handheld ake sure we are comfortable. lam From: paul stre Sent: Thursday To: paul streckf Subject: E0 Ta From/ the I Ed?tor, 130 Email Update Copyright 201 1 - New 2 - IRS Deniei JS Journal 2013-15 mic ofFaML Stredo?w, 2013-15 (Thursday, January 24, 2013) 3 Paul Streckfus It Supersede :k fus [mailt anuary 24, 2013 05:11 AM Eastern Standard Time 1 - New Dem Of?cials: to Supersede ?ret over New Obama Nonpro?t By James Hoh Some key Demo 3? traditional part candidates. State party lea lack of detail mark right nov campaign that Martin backs understand p0: 1e ?3 al something differ he electing Demac: arm, Politico, January 23, 2013 crats worry that President Obama?s new Organizing for Actio apparatus, cannibalizing dollars and volunteers while making rs grumbled Tuesday at the Democratic National Committee? how exactly the new tax -exempt advocacy organization will said Minnesota Democratic chairman Ken Martin. ?We were 1 of that [the Obama campaign machi nery] would fold into st: ent, which is they?re going to set up this I1 idea of the new structure in theory but worries that the organ. 'ats will get left behind in the chase for donors and activists. t--Citizens United the necessity to set up vehicles for different t] 2 Organization for Bene?tting Musicians a nd Music Companies group will marginalize the it harder to elect down -ballot i meeting in Washington about a work. ?It?s still a big question told before the end of this rte parties. Now we?re being told zations responsible for actually ?m not a dummy,? he said. lpes of money to ?ow, but the This document was obtained and uploaded by the Center for Resrionsive Politics OpenSecrets.org) including Jim] Plouffe. An OI Many rank-and-?le committee members, especially those who do not chair st positive about his state party campaign was Elizabeth Wan VIessina (Obama?s former campaign manager who will chair th A spokeswoman did not respond to a request for comment. tile new endeavor. Gus Bi ckford, a Massachusetts national co NI rked together well during the 2012 election. That was true, fricused on winning neighboring New Hampshire while the stat elf to the Senate. ?We didn?t ?ght against each other,? he said. EXHIBIT 12 group), Jon Carson and David te parties, were much more itteeman, noted that OFA and said, even though the Obama party?s priority was electing He does not exrpect in?ghting for limited resources. ?I?m not na'i've as to how olitical fundraising works,? said Bickford. ?Fro Oregon nation with outside at word really ha think it?s prettj match see.? She said her st national help i1 Calvo. ?The in what I do know I don?t think so I?m not a person to sa 11 committeewoman Laura Calvo said local Democrats already [vocacy organizations like labor or abortion rights groups. ?So trickled down to something that?s concrete, that you can sit 'ting,? she said. ?Sometimes the structure and the logistics (CXCI . 3 that causes what I would call hiccups, but there?s never been 3 ate party, because Oregon?s not a swing state, has a stable struct 1 2012. ?We were pretty much left 0 our own devices, and the ore progressive voices there are out there, the better off we are.? 2 - IRS Denie i 3 Organization for Benefitting Musicians and Music Compa I recognize th all possible ar uments in denial letters to applicants, hoping that on judi argument for enial he or she agre es with. In denial letter 2b1303018, reprinted below, the National Of?ce cites 13 sixties and sev nties -- the golden age of E0 revenue rulings) and four court case? (Aside: hy many org anizations-don?t protest remains a mystery.) To me the und vying issue, based on the facts set forth, is whether the applica commercial thusly: ?Your rlimary source of income is from gifts, grants, and contribution: from member ip, consulting, and other fees.? That doesn?t sound like your ty unless the fee is on consulting inc ome. An important factor here may be the software is fre ,iyou will charge a ?at fee for your hosting services.? Are the source of reve In its rationale forums, panels and blog.? websites and which states: product manua raises another manuals not ec enough, the ne ,lbecause of the section 7428 declaratory judgment provisions, eavor or something else. Also, I?d like to know more about its ue? denying the applicant, the IRS sta tes: ?You do not conduct it?s a bad thing.? ave lots of experience partnering ar, it?s so hr and new that the down and read. Personally, I and the priorities don?t quite major problem as far as I can ure that could win without party really pulled through,? said nies the IRS feels compelled to make cial review a judge will ?nd an revenue rulings (all from the ases, but did the IRS make its at is engaged in some sort of funding, which is descr ibed . You also receive some income pical commercial endeavor, statement that ?Although osting services a signi?cant any public discussion groups, ectures or similar programs; all of your educational instructio occurs online on your website 'le this may be true, is the IRS saying more traditional educatio a1 program 8 are favored over ?gs? Surely not. I suppose this sentence needs to be read in co ese activities are best described as providing product inforrna l,?which does not rise to the level of educational as required unc 1 ?estion: is the IRS saying providing product information is not ucational and presumably commercial endeavors? I these two Kt sentence states: ?Furthermore, you are not described in I.R.C 4 This docume it was obtained and uploaded by the Center for Resp text with the next sentence, tion and are analogous to a ier I.R.C But this educational? Are product sentences are not head -scratching 501(c)(3) as a charitable iRscoomo onsive Politics (OpenSecrets.org) EXHIBIT 13 From: Lerner Lois Sent: Wednesday, January 02. 2013 11:42 AM To; Paz Holly 0; Fish David Light Sharon Cc: Marx Dawn Subject: latest article I'd like to meet on status of these applications please. Can we talk Friday? .442 gr, 1 Director of Exempt Organizations From: Flax kole Sent: Wedne day, January 02, 2013 12:32 PM To: Lerner 1.0 Marks Nancy Fish David Subject: i tarticle irs-thev?would-stav-out This documeritlwas obtained and uploaded by the Center for Responsive Politics (OpenSecrets.org) EXHIBIT 14 1 RPTS HUMISTON DCMN SECKMAN SUBCOMMITTEE ON OVERSIGHT, COMMITTEE ON WAYS AND MEANS, U.S. HOUSE OF REPRESENTATIVES. WASHINGTON, D.C. INTERVIEW OF: JOSEPH H. GRANT Friday, September 20, 2013 Washington, D.C. The interview in the above matter was held at Room 1102, Longworth House Office Building, commencing at 10:04 a.m. This docume it was obtained and uploaded by the Center for Responsive Politics (OpenSecrets.org) EXHIBIT 14 39 Okay. A You know, hypothetically, if, you know, somebody had come to me with -- Mr. Pollack. I wouldn't even give a hypothetical. The i i . answer is you don't recall it ever happening. Mr. Let's let him answer i Mr. I never did it. Mr. Counsel. Mr. ?r?33g_ That?s fine. I just never had occasion to do that. BY MR. i Sure. That's fair? A I suppose some set of circunstances could be put together where, you know. I might have felt a need to do that, but I never did. Are you aware of an instance where where an executive at the IRS did that? A No. Would it be appropriate for a manager at IRS to refer a specific taxpayer to Exams or to intervene on their own on I mean, their own volition to Derms? A I believe it would be completely it would not be appropriate to intervene on their own. So and I?m not aware of that occurring. Rather than passing along. This documeritiwas obtained and uploaded by the Center for Politics (OpenSecrets.org) Step 3 c) Other 501(c) organizations that have filed a return Step 4? Step Step 5 888. . Step 7: EXHIBIT 15 - if it appears that a return has not been filed because the organization has not been operating more than a year, the case is returned to the Classification Referrals manager to set up as a future?year referral. The case will be resent to the ROO unit when the return is filed or becomes delinquent. (Note: The Referrals Manager runs a Future-Year Referrals Report and processes the required returns). JI'hese referrals are sent to ROD. The referrals are researched by Classification-Referrals to determine whether the entity was examined previously under the Political Activity Ccmpiiance initiative and the result of that examination. if it has been exahi'ned, the prior case file (ilommittee (PARC). Step 3) the following: I - Future Year Referral - Not selected for Examination - Selected for Compiiance Check Selected for Examination (OCEP) I - Selected for Examination (field) i - Selected for Examination (not political) Transfer to ROO (for additional research) ?20f5 retrieved and forwarded to the ROO for consideration along with the current Hega?on. The ROO secures the filed Form 990 along with any other re evant returns, such as Form 990-T and Form 1120-POL. The ROO tests the organization's Form 990 against the risk models using a check heet to see whether the risk models would have identified the alleged violation. (If no eturn has been filed, this step is skipped). ROO also completes a lead sheet on the he case file (including the referral) is returned to Classification-Referrals for updating he referral database and is forwarded for review by a Politic ail Activities Referral The PARC reviews the case file and determines whether the case should be one of This documer tlwas obtained and uploaded by the Center for Responsive Politics (OpenSecrets.org) Step will have at least one PARC operating at all times compri career civil servant employees. PARC positions generally ar basis for a minimum period of one year. The EPR Manager Volunteers for the PARCs. PARC operations are overseen and however, they shall not override or influence any tilt the PARCs. 9. if the case is Selected for Examination, the PARC determine. ?high priority", which results in the case being forwarded to elivery for immediate assignment to a group (See 5 results in the case being retained in Classification pending re the IRS concluded in a prior examination that a 501(c)(3) il'iterv?ened in a political campaign, the case Will automatically priority." ?Jtherwise the PARC considers the following factors to deterr categorized as a ?high priority": - The amount of money expended (measured either in a relation to the organization?s other activities). The size of the audience exposed to the alleged interv whether the audience consisted of thousands of peopl The significance of the political campaign. For instanc was for a national office in a closely contested race. The frequency of the alleged intervention. For instanc intervention occurred five or more times, versus a one The degree of specificity used to identify the candidate support/opposition. For instance, whether it Was very organization was supporting or opposing. The degree of candidate participation in the alleged inl whether the candidate was an officer or director of the used the organization?s resources to promote his or he The degree to which the organizationis soliciting contr political campaign intervention. For instance, whether constructed a mechanism to solicit political contributiOi donation by the organization. Any other relevant factors. 30f5 This documer EXHIBIT 15 sed of three experienced a filled on a rotational vill solicit and assign by the Managers of EPR case selection decision 3 whether the case is a ase Selection and Step 10), or ?other,? which ceipt of a case order. 'ganization had be classified as "high nine whether it should be bsolute terms or in ention. For instance, a versus 100 or fewer. e, whether the election a, whether the -time event. orthe clear whom the exempt ervention. For instance, exempt organization and candidacy. ibutions to support its the organization is, versus a one?time t.was obtained and uploaded by the Center for RespOnsive Politics (OpenSecrets.org) EXHIBIT 16 From: Lerner Lois Sent: Thursday. January 31, 2013 1:07 PM To: Wagner Christopher (Chief Appeals) Subject: A Couple Items Ijust got off our quarterly meeting with Appeals and wanted to raise a couple issues to make sure we re all on the same page. I'm raising with you because I arr your org nization to know where I should be going, and at least wi you do red to be aware. not familiar enough with the second item, I think 1. Appa ntly Appeals is going through a Lean Six Sigma process One thing they brought to but also old us they think it isn't very good --so we're not sure oft eir basis for the claim that Ltaking too long. They have spoken to some of our man gers about the process, but without a; a that we can look at and an explanation about how the are going about this, it is hard to nderstand where the starting point is and where the pain oints may be. They have not met ith either Holly and Nan, who are the Directors of the pro rams they are looking at, and who I believe could save them a lot of time. Thought you mig twant a briefing on this from the r-you may be perfectly OK with their approach, but we a baffled. 2. Durin the meeting I gave them a heads up that, in the next few onths we believe they will get a lot ?business from our TPs regarding denials on 501 a plications. I explained the issue is hether they are primarily involved in social weifare activi ies a nd whether their political nlervention activities, along with other non -social welfare activities mean they don?t meet the cf4 requirements. i explained the issue was very sensitive and visible and there is a lot of int restuCongress, press, political groups, you name it. i pe sonally have been up to the Hill a lieast 8 times this past year to explain the complexities of the rules --they are not black an white and they are not always intuitive. I offered a gene tutorial session (non- case-rel edlon the law and the complexities because --as pointe out--this is a new issue driven a recent Supreme Court case expanding spending in ele tions to corporatiOns, and a desire fisome to make the expenditures without having their na es show up on Federal Election eports. The fact that these orgs can do some of this acti ity and still be a c4 further complic es the issue. ltold them this is a place where. we have rked very hard to be consiste t' and have all our cases worked by one group, and sugg ted th ey might want to do . somethi 9] similar. (PS we are under audit by TIGTA because of all gations of political bias on these ca es) If I were you, this is definitely something l'd want to aware of and have a high level per Overseeing and reporting regula rly to me. You were in TEGE long enough to understa how dangerous what we do can be. From the cfall, I could tell you have a lot of acting folks who will be coming and going over the next yea feel that pain. But, from my perspective, that only mak as high level involvement more imperative. If you think it would be useful to have a meeting on this --let me know. Hope this doesn?t should like I'm trying to run your shop --have enough trouble with my own. (- This documert was obtained and uploaded by the Center for Politics (OpenSecrets.org) EXHIBIT 16 Jaz?? 1 Director of Exempt Organizations .IRSODOO122864 This document was obtained and uploaded by the Center for Responsive Politics (OpenSecrets.org) This documer Document: E0 Director?s responses 3aterson. Durpose: To document the responses of the E0 Directc :riteria for identifying advocacy cases. Source: Lois Lerner, E0 Director to 3 questions ask To the best of your knowledge, did any individual or Jutside the IRS influence the creation of criteria targetir al exemption that mention: 1) the ?Tea Party,? ?Patriot 3 .oject?, 2) government spending, government debt or 1 3f the public by advocacyllobbying to ?make America a live", or 4) criticizing how the country is being run? vb. To the best of my knowledge, no individual or organizai iniluenced the creation of these Criteria. To the best of your knowledge, did IRS or Tax ExemF Entities Division management sanction the use of criter ?plications for tax exemption that mention: 1) the "Tea Eithe ?9/12 Project?, 2) govmnment spending, governm :3)ieducation of the public by advocacyllobbying to ?ma! alace to live", or 4) criticizing how the country is being I When did you become aware the IRS was targeting a exemption that mention: 1) the ?Tea Party," ?Patriots,? Droject?, 2) government spending, government debt or i )f the public by advocacy/lobbying to ?make America a hie?, or 4) criticizing how the country is being run? early 2010, E0 Determinations witnessed an uptick in the applications for 501(c)(3) or 501(c)(4) status that containe potentially significant amounts of political campaign interven organizations"). E0 Determinations ?rst became of aware :?bruary 2010, when an E0 Determinations screener identi applicant that planned to spend a signi?cant amount of its bl elections, which he believed was like organizations that had niedia attention for purportedly seeking classification as 5( welfare organizations but operating like 527 political organ 'ilS manager of the potential "emerging issue." i i To ensure consistent treatment of applications, EO Determii Jean alerting its specialists to emerging issues by sending aarticular issues or factual situations warranting additional re arocessing..,Because it was difficult to keep track ofall of th it was obtained and uploaded by the Center for Resp EXHIBIT 17 ed by Director regarding the organization 9 applications for or the ?9/12 axes, 3) education better place to ion outside the and Government a targeting Party,?l?Patriots,? ent debt or taxes, is America a better un? pplications for tax ir the ?9/1 2 axes, 3) education better piace to number of indicators of tion (?advocacy fthis uptick in fled a 501(c)(4) Jdget on influencing been receiving social izations. He alerted rations had long mails describing aview or coordinated bnsive Politics (OpenSecrets.org) see separate email I EXHIBIT 17 alerts, EO Determinations staff requested a consolidated list of all such alerts. EECI) Determinations was developing the Be On the Lookout (BOLO) list in early 2010. The BOLO, which is an Excel spreadsheet, provides a centralized source ofIregularly updated information to E0 Determinations specialists about ro'tenti'ally abusive organizations or fraud issues, issues and cases requiring coordinated processing,? emerging issues and issues for whi :h to watch. The EBCIDLO currently includes four tabs: (1) Potential Abusive, (2) Emerging Issues, (3)l Coordinated Processing. and (4) Watch List. "he ?rst BOLO list contained the following entry on the Emegi?ng issues tab: These case involve various local organizations in the Tea Party movement are p?,plying for exemption under 501(c)(3) or 501(c)(4) Tnat description was ed to the BOLO to help specialists identify cases involVirg potentially i ni?cant political campaign intervention for assignment to particular )eterminations group so that they could be consistently processed in accordance ri advice provided by EC Technical. The language used on the BOLO was eIected by Determinations Specialists with the involvement of a front-line wanager in E0 Determinations. At this time, the language was not reviewed or pproved by executive management. . is; the number of advocacy cases grew", the Acting Director, EO Rulings ?reements wanted to ensure that EO Determinations was ot being over~ ,lusive in identifying such cases (including organizations tr at were solely ngaged in lobbying or policy education with no apparent po itical campaign intervention). in addition, in light of the diversity of applications selected under tii "tea party? label some had ?tea party" in their name but others did not, some stated that they were af?liated with the ?tea party" movement while others stated theywere affiliated with the Democratic or Republican party, etc), the A cting Director, EO Rulings Agreements sought clarification as to the criteria being used to identify these cases. in preparation for brie?ng me, the Acting Diriector, EO Rulings Agreements asked the E0 Determine tions Program l\ Vi 'lanager what criteria Determinations was using to determine whether a case rats a "tea party" case. Because the BOLO only contained a brief reference to DLganizatio'ns involved with the Tea Party movement applying for exemption n_ er 501(c)(3) and 501(c)(4)" in June 2011, the E0 Determ nations Program lainager asked the manager of the screening group what criteria were being sad to label ?tea party" cases (?Do the applications specify/state tea party'? If 0 how do we know applicant is involved with the tea party novement??). The ianager of the screening group responded that, "The following are issues that staid indicate a case to be considered a potential ?tea party? case and sent to r, up 7822 for secondary screening. 1. ?Tea Party?, ?Patriots or '9/12 Project? is eerrenced in the case ?le. 2. Issues include government spending, government ~1 This documenIt was obtained and uploaded by the Center for RespcInsive Politics (OpenSecrets.org) This document :lbt and taxes. 3. Educate the public through advocacy/ls 3 itical of the how the country is being run." A 5i interviews with E0 Determinations employees scription and the above-referenced list of criteria used by 0 determine which cases fell under the BOLO description of referring to the group of advocacy cases. rather than a . r'ticular group. Applications that did not contain these tern i icators of potentially signi?cant politiCal campaign interve erred to the group assigned to work such cases. I became aware that the BOLO referenced ?tea party" organizations and E0 II terminations was using the above criteria to determine wt description when was briefed? on these cases on June 9 aka America a better place to live. 4. Statements in the c% EXHIBIT 17 islative activities to se ?le that are evealed, the BOLO EO Determinations are their shorthand argeting any 1s, but that contained 1tion, were also at organizations met a. Teyre?tryi at the uturing these organizations. Per my direction, the BOLO 7, 2012. The separate entries for Occupy groups and ACO i?cant amounts of political campaign intervention (raising is (C: G) do not meet this criteria." A al ted and the advocacy organization description was revise 501(c)(4), 501(c)(5), and 501(c)(6) organizations purpose and/or excess private bene?t). Note: advoca 5 es lobbying) that are currently listed on the Case As same time that I directed the BOLO be revised, I also 0 ctor-ofEO Rulings Agreements toimplement procedure ill/as obtained and uploaded by the Center for Respo 9, 2011. ediately directed that the BOLO be revised to eliminate reference to "tea I a y" organizations and refer instead more generally to advca?cy nuanizations. The BOLO was revised on July 11, 201 i; the ?issue name" was hnged from ?Tea Party" to "Advocacy Orgs?, and the ?lssu - Description" was oi nged to ?Organizations involved with political, lobbying, xmption under 501(c)(3) or advocacy for ption to avoid as updated on May 2N successors were ad to read, vith indicators of questions as to icy action type signment Guide irected the Acting refocupda?ngthe lisive Politics (OpenSecrets.org) EXHIBIT 17 BOLO that included executive?level approval. On May 17, 2012. the Acting Director of EO Rulings Agreements issued a memorandum that set forth such procedures, which require that all additions and changes to the BOLO be aoproved by the manager of the emerging issues coordinator, the E0 Determinations Program Manager, and the Director, Rulings 8. Agreements. This document \ilvas obtained and uploaded by the Center for Responsive Politics (OpenSecrets.org) EXHIBIT 18 From: Lerner Lois 6 Sent: Tuesday, July 17, 2012 9:51 AM To: Paz Holly Flax Nikole . Subject: RE: Emailing: c4 talking points Impedance: High Only one nent--l know we don't have published SOI stats for the uptick, but our (Zincy folks saw it happening --can we get Niko whatever "inside" info we hav 1hat led to that conclusion --she can then figure out how to use it. Lois G. Lern er Director of Ix empt Organizations Iv From: Paz Holly 0 Sent: Tuesd y, July 17, 2012 7:23 AM To: Flax Nik ale Lerner Lois 6 Subject: Emai ing: c4 talking points 7 -16?12.doc I have added some edits and comments to Lois'. lam hecking on numbers and will 4m: back to you ASAP. lR80000179271 This documeliit was obtained and uploaded by the Center for Responsive Politics (OpenSecrets.org) EXHIBIT 19 From: Lerner Lois Sent: Tuesday, July 17, 2012 9:46 AM To: Paz Holly 0 Subject: RE: Emailing: c4 talking points good Lois G. Lern er Director of Exempt Organizations Message From: Paz i- ly sent: Tuesday, July 17, 2012 10:44 AM To: Lerner Lois Subject: RE Emailing: c4 talking points 7-16-12.doc That is who I am checking with.. Message From: Lerne Lois (3 .Sent: Tuesday, July 17, 2012 10:42 AM To: Paz Hol Flax Nikole Subject: RE Emailing: c4 talking points 7-16-12.d0c Contact Na ee--she knows all about the response. Lois G. Lem er Director of Exempt Organizations Message-mi From: Paz l- ly 0 Sent: Tuesday, July 17, 2012 10:08 AM To: Flax Nikole Lerner Lois Subject: RE Emailing: c4 talking points 7?16?12.doc The SCI numbers I was looking at were closures (that's all SOI has that is relevant to is question). I think the numbers in Boustany response must be receipts i am checking and will get back to you. From: Flax Nikole Sent: July 17, 2012 9:21 AM To: Paz Holly Lerner Lois Subject: RE Emailing: c4 talking points 7 -16-12.doc This documeliit was obtained and uploaded by the Center for Responsive Politics (OpenSecrets.org) EXHIBIT 19 On the poi whether there was an increase in c4 applications -. in the Boustany respt increase. like the figures are different from what you pulled from 501 so we ne an importa tpoint. mse we show that applications did ed to track this down as i think it is From Bous :4 applications 2008 - '141 2009 - 157 . 2010 - 1591 2011 - 2242 2012 - 1715 (through April 1, 2012 - if this pace stands all year Would be a significant increase) From: Paz Holly 0 Sent: Tuesc ay, July 17, 2012 7:23 AM To: Flax Nikole Lerner Lois?G Subject: Err a ling: c4 talking points 7 ~16-12.doc I have added some edits and comm ents to Lois'. I am checking on numbers and will abt'back to you ASAP, This document was obtained and uploaded by the Center for Politics (openSecretsorg) EXHIBIT 20 From: Sent; To: Cc: Subject: I'll ask exan Lois G. Lern ?Origina From: Nikol To: Nalee To: Lois Cal To: Justin Lt To: Joseph I Cc: Mistr Ct Sent: Jul 18 The chart is Can Steve 3 From: Park Sent: Tuesd To: Flax Nik Cc: Lerner Subjech RE: Per Lois, I tc Boustany at First, under including a Regarding Background attachment for c35 and application numbers we June 30th Description. in issa). YOL at 0 out c4 application nu mbers. LE ouple bullets. Feel free to ignore or accept. 18 :45, total app closures (including specifically c4 apps), and 3P :re provided in Boustany responses, except for FY 2012 data through vi Lerner Lois Wednesday, July 18, 2012 8:55 AM Flax Nikole Park Nalee; Lowe Justin; Urban Joseph Mistr Christine Re: Emailing: c4 talking points 7-16-12.doc er Sent from my BlackBer-ry Wireless Handheld Message -- a - ar ir me eran ri Subject: FW: =lax Number stine Emailing: c4 talking points 7 ~16-12.doc 2012 9:52 AM very helpful, thanks. a chart like this first one with exam numbers - c35, c4s, and totals or ea \lalee By, July 17, 2012 7:53 PM 3 at a Paz Holly mailing: c4 talking points 7 -16-12.doc a look on the talking points based on what we've told gal Requirements, I added a few suggested (tracked) changes, reference to c4 application numbers in the first bullet u'nder see comment Comment is referring to the second are, which is a summary on the numbers of applications received provals for CBS and C45 - starting from FY 2008. All these ich were collected as part of hearing preparations - for Updated Stats 7/3/2012) and unless otherwise noted ISTM should already have all this data in the hearing prep 1 This documeriitiwas obtained and uploaded by the Center for Resp :h ofthe years listed? Thanks. IR80000179389 bnsive Politics (OpenSecrets.org) EXHIBIT 20 binders, but ljust consolidated them into this one -sheeter for an easier trend/tom Jarison read. Also, as Holy pointed out in her comment, we do not have a reliable method data by issue such as political activity. This is consistent gressional responses where we had explained we would have to manually through each application, etc. Because of he above points, the first bullet that presently reads as 2 Starting in 010, E0 observed an increase in the number of section 501(c)(3) Dl(c)(4) determination applications from organizations to be potentially engaged in political advocacy activities. be revised along the lines of the following): For about past five years [alternative verbiage: From FY 2008 through June 30th 2012], E0 has observed an increase in the number of section 501(c)(4) determination applications filed, as well as a general upward trend in section 501(c)(3) application filings. NaLee This documeni was obtained and uploaded by the Center for Politics (OpenSecrets.org) EXHIBIT 21 From: Sent To: Cc: Subject: Attachments: Please ?nd attac Of note, we add: Tea Party cases those cases has Pakistan Founda Steven Grod Acting Manage Rulings and Agr phone fax .1 .1 3 Internal Revenue Grodnitzky Steven Wednesday, April 28, 2010 5:23 PM Lerner Lois Choi Robert Letourneau Diane Grodnitzky Steven SCR Chart SCR report Table 2010 Final.doc a copy of the SCR chart for cases in E0 Technical for the period a one new SCR concerning 2 Tea Party cases that are being worke in E0 Determinations and we are coordinating with them to provi on our devel0pment of the ones in DC. We also closed one signi ti -- providing relief to displaced persons in Pakistan. tzky EO Technical ments, TEGE ervice This docume wt was obtained and uploaded by the Center for Resp ending April 28, 2010. here in DC. Currently, there are 13 1e direction as to how to develop icant case last month -- American onsive Politics (OpenSecrets.org) EXHIBIT 21 E0 Technical Signi?cant Case Report (April 28, 2010) Name of Group EIN Received Issue Tax Law Estimated Status! Next action Org/Group #IManag er Specialist Completion Date Prescott Tea Party. 2/Ron 27-0484865 4/2/2010 Whether a tea party organization meets the Chip Hull 9/30/2010 One development letter sent, and working an LLC and Shoemaker and requirements under 501(c)(3) and is not sending development letter for the second case. Albuquerque Tea 90-0513502 involved in political Intervention. Also. will coordinate with Cincy as to helping to Party. Inc. develop their cases. American Pakistan 2/Ron 27?0726675 Cincinnati Whether US org ionned to provide relief to Jackie CLOED TLS is recommending a favorable exemption. Foundation Shoemaker 10/7/09 displaced persons In Pakistan quali?es for Manasterli Will coordinate with other foreign -grant making EOT C3 organizations in the of?ce to ensure consistency. 10/22/09 Case Closed April 2010. Bluegrass Family 1/Ellen Beri 61-1241101 6/08 Whether HMO operator recognized as Justin Lowe 6/30/2010 Brie?ng for TEGE Commissioner re -scheduled Health exempt under C4 quali?es for C4 status for May The Calhoun 2/Ron 57-0523954 Cincinnati Whether private school that previously Meghan 5/30/2010 Guidance completed review of proposed denial Academy Shoemaker 8/28/07 applied for and was denied C3 status due to Wrathall and then sent back to EOT to make changes EOT 118/03 racial discrimination now quali?es . and Guidance will take a ?nal look before issuance. Delta Denial of 1/ Ellen Beri ck 51-0226088 Cincinnati Whether HMO operator recognized as Justin Lowe 6/30/2010 Coordinate and Bluegrass cases to then Delaware 9/22/06 exempt under 01 quali?es for C4 status bn'et TEGE Commissioner on May 14. 2010. EDT 11/9/06 Emerge Maine. 1/ Ellen Ben ck 41 -8018017 Cincinnati Whether orgs that recruit women belonging Slri Buller 6/30/2010 Reviewed by Judy Kindell, send to TEGE Emerge Nevada, 1/11/08 to Democratic party to schools that teach Counsel to ensure consistency as to litigation Emerge EOT campaign-related skills qualify for 04 statu strategy. Massachusetts . 10/9/08 Oregon EPM Civil Rights 2/Ron 264582939 Cincinnati Whether org that pays travel and interpreter Andy Strelka 6/30/2010 The TLS reviewed case from Cincy and issued Funds Shoemaker 7/16/09 expenses Incurred by attorneys providing in April 2010 an additional development letter to EOT pro bono legal services to Guantanamo ensure that expenses by attorneys a re not used 12/1/09 detainees quali?es for 03 status for private bene?t purposes. Jewish Giving Online . ed Liebe 26-3398630 Cincinnati Whether TP seeking 03 status for internet Peter Holiat 6/30/2010 Submit proposed adverse deterrninatlon letter to Inc. 11/28/05 solicitation for foreign orgs is a conduit Guidance after being reviewed by EOT group EOT and/or provides impermissible private bene?t reviewar. 7/29/09 inman Health Care ed Lieber 26-6552611 Cincinna_tl Whether applicant for VEBA status Obi Unknown Need to determine whether bankruptcy li_tig?tion This docume-n "230000141310 twas obtained and uploaded by the Center for Responsive Politics (OpenSecrets.org) EXHIBIT 21 4/15/09 established and funded by subsidiary of org Chukwuanu issue would have an impact on processing EOT shortly before org's quali?es application. 8/26/09 whether we cannot rule because bankruptcy proceedings are pending litigation Muslim Alliance in an ed Lieber 71?0997466 Cincinnati Applicant for 03 status endorsed Obama on Matt Parrish 6/30/20 Briefed E0 Director on 4/19/10. Continue North America 5/21/07 its website; its president was co - researching other board members and of?cers EOT 3/4/09 in 93 World Trade Center plot . and coordinate with Joe Urban to help draft and send additional development letter. Methodist 1/ Ellen Earl: 30-0347273 Cincinnati Whether org providing consulting and Slri Buller 6/30/20 Received comments from E0 Guidance and now lntemational 4/07 training to foreign entitles operating health making changes as a result. Then send to EOT 2/08 care facilities quali?es for CS TEGE Counsel. National Railroad 1/ Ellen Berti 01-6186277 8/4/08 Whether income earned from investment is Justin Lowe 6/30/20 Alter conference of right. TP submitted additional Retirement not subject to UBIT information as to whether assets are Investment not subject to US as assets of the Federal government. Meeting with TEGE Counsel and EP week of 3/29 to review and strategize as to next steps. Counsel reached out to Counsel to explore grantor -trust issue and waiting for repiy. Brief EO executives when infon'nation is in from Counsel. Tennessee Pooled 1/ Ellen Beri ,k 62-1833034 Cincinnati Whether trustee of pooled established Susan Cundil?f 6/30/20 Hold conference of right with related case Assets 3/27/03 for disabled persons under Medicaid (Family of Mass.) then send to Counsel for EOT program quali?es fer C3 status concurrence for final adverse. 7/25/03 United Order of 2/Ron 26- 2/16/2010 Whether organization with ties to polygamist Leonard 8/30/20 Sent development letter on 4/6/10 and sent Texas Shoemaker 4728535 ranch quali?es for exemption as apostolic or Orcino development letter to related org. on 4/15/10. religious order under ?501(d) Wortd Wildlife Fund 2/Ron 52-1693387 11/6/09 Whether WWF's sale of carbon credits is Meghan 8/30/10 WWF must modify its request to limit It to the Shoemaker substantially related to WWF's exempt Wrathail substantially related issue . Then send tech. purposes and thus not su?blect to UBIT assistance to ITM Bernice Bishop DBA 3fl'ed Lleber 99?0073480 3121010 Whether a series of land transactions that Peter Holiat 6/30/20 TLS reviewing case and preparing draft uling Kamehameha PLR are taking place over a ten year period is and then will submit to Guidance and CC for Schools received in subject to UBIT. We are expecting to get review. E0 Tech. more requests. Miss America 2/Ron 27-0390958 3/1/2010 Whether an organization that provides non - Len Hen? Sent: Tuesday, October 30, 2012 9:16 PM To: Paz Holly nancymarks- Lerner Lois Subject: Long Timeline from LOIS Attachmedtss: Long Political Advocacy Timeline HOP commentsdoc Looks pretty good-~a couple questions/comments This documer was obtained and uploaded by the Center for Responsive Politics (OpenSecrets.org) EXHIBIT 28 From: Biss Meghan Sent: Saturday, May 04, 2013 10:08 AM To: Lerner Lois tobomatic@msn.com Subject: Summary of Application Attachments: One Fund Boston.docx Lois: Attached is a su nmary of the entire application from One Fund Boston. It includes the information from their initial 1023, our devel ment letter, and their May 3 response. In it, I also point out situa :ions where the revenue rulings they cite aren't exac on point. Additionally, where they reference other victim compensation funds, I included the information we ave on those funds from internet research. As a note, the rora compensation fund may be an issue for the community foundation that made the payments. The CF is large enou (171 million on 2011 Form 990) that a 5 million payment to victirr shouldn?t jeopardize their exemption. Bu vTe won?t know anything for sure until their 2012 Form 990 is filed. Also, this article re funds distributing money to victims is interesting: After you have llaki a chance to look over this document, we can have a discussion a aout it and any questions prior to your meeting tilt Steve. Thanks, Meghan This docume at was obtained and uploaded by the Center for Responsive Politics (OpenSecrets.org) Timeline of Outside In?uences: Involvement of Democracy 21, Campaign Legal Cen in the Service?s Review of Crossroads ter, and Others PS Description of Activiti BS June 2, 2. Crossroads GPS founded. Sept. 28 US. Senator Max Baucus (D-MT) writes to IRS Shulman to request that the Service ?survey majo organizations involved in political campaign actiV are operated for the organization?s intended tax-e: that political campaign activity is not the organiza Iommissioner Douglas 501(c)(4), and ity to examine whether they tempt purpose and to ensure tion?s primary activity.? Oct. 5, 2 Call to investigate GPS. Democracy 21 and CLC Commissioner Shulman and Lois Lerner that ?cal whether Crossroads GPS . . . ?is operating in viola submit a letter to led on the IRS to investigate .tion of its tax status? . . . 3?2 Oct. 11, US. Senator Dick Durbin (D-IL) writes to Comm IRS to ?examine the purpose and primary activitie issioner Shulman to ask the of GPS.3 July 27, Democracy 21 and CLC file a ?petition? with the 501(c)(4) regulations.4 This petition is based sub: GPS, referring to GPS more than 20 times. Service urging new itantially on the activities of Sept. 28 Call to investigate GPS. Democracy 21 and CLC investigation into whether is] ineligible for1 provided to section 501(c)(4) organizations.?5 Commissioner Shulman and Ms. Lerner urging the Service to ?conduct an submit a letter to ?he tax exempt status Dec. 14, Call to investigate GPS. Democracy 21 and CLC Commissioner Shulman and Ms. Lerner to ?suppl and ?to provide additional information submit a letter to ement? their previous letter ical activities of Ben Letter Durb http2/ Demc (July Letter gal_C Letter http:/ niith, Baucus: IRS should investigate outside groups, Politico (Sept. 29, ciacy 21 and CLC, Petition for Rulemaking On Campaign Activities by exiter_9_2 s_201 1 .pdf. 1 1 i om Democracy 21 and CLC to Hon. Douglas Shulman and Lois Lem: Urges IRS to Investigate Spending by Crossroads GPS (Oct. 11, 2010, 2?1, 2011), available at from Democracy 21 and CLC to Hon. Douglas Shulman and Lois Lernr from Democracy 21 and CLC to Hon. Douglas Shulman and Lois Lem: 2010), available at e_outside_groups.html. :r (Oct. 5, 2010), available at available at Jdb-4a5b-93ec-706f0cb9cb99. Section 501 (4) 0rgani:ations :r (Sept. 28, 2011), available at :mocracy_21_and_Campaign_Le :r (Dec. 14, 2011), pdf. This docume it was obtained and uploaded by the Center for Resp onsive Politics (OpenSecrets.org) Feb. 16, 2012 U.S. Senators Bennet, Franken, Merkley, Schumer, Shaheen, Udall, and Whitehouse write a letter to Commissioner Shulman ?to inquire? if the Service ?is investigating or intends to investigate whether groups designated 1 as ?social welfare? organizations, and thus receiving tax and other advantages under section 501(c)(4) . . . are improperly engaged in a substantial or even a I predominant amount of campaign activity.?7 Senator Bennet?s press release refers to GPS. Mar. 9, 2012 Call to investigate GPS. Democracy 21 and CLC submit a letter to Commissioner Shulman and Ms. Lerner to ?urge the IRS to move forward I expeditiously to investigate the groups we have identi?ed in our earlier 1 letters? and to resist any ?pushback? the agency may encounter.8 Mar. 22, 2012 Democracy 21 and CLC submit a letter to Commissioner Shulman and Ms. Lerner to reiterate a call for new 501(c)(4) rules.9 Apr. 17, 23012 Call to investigate GPS. Democracy 21 and CLC submit a letter to Commissioner Shulman and Ms. Lerner to ?again call on the IRS to investigate and take appropriate enforcement action against . . . 3?10 May 24, 2012 Call to deny Form 1024 application. Democracy 21 and CLC submit a letter to Commissioner Shulman and Ms. Lerner to urge the Service ?to move to deny the application of Crossroads PS for section 501(c)(4) tax- exempt status . . . IRS is aware of the current public interest in this issue. These regulations have been in place since 1959. We will consider proposed changes in this area as we work with the IRS Of?ce of Chief Cou nsel and the Treasury Department?s Of?ce of Tax Policy to identify tax issues that should be addressed through regulations and other published guidance.?12 July 17, 2'012 Ms. Lerner responds to letters from Democracy 2l and CLC, writing: ?The Senato is Call for IRS Investigations into Potential Abuse of Tax-Exempt Status by Groups Engaged in Camp azlgn Activity (Feb. 16, 2012), available at newsroom/press/release/ Lette flrom Democracy 21 and CLC to Hon. Douglas Shulman and Lois Lem :r (Mar. 9, 2012), available at http:/ Letter from Democracy 21 and CLC to Hon. Douglas Shulman and Lois Lem :r (Mar. 22, 2012), available at Lette from Democracy 21 and CLC to Hon. Douglas Shulman and Lois Lern 3r (Apr. 17, 2012), available at http:/i Viiww.democracy21 Letter from Democracy 21 and CLC to Hon. Douglas Shulman and Lois Lerner (May 24, 2012), available at http:/ 12 Lettei from Lois Lerner to Fred Wertheimer, President, Democracy 21, and J. Gerald Hebert, Executive Directoi, Campaign Legal Center (July 20, 2012), available at Lettei_from_IRS_7_20_12.pdf. This docume i'lt was obtained and uploaded by the Center for Responsive Politics (OpenSecrets.org) July 27, US. Senator Carl Levin (D-MI) writes to Commissioner Shulman regarding 501(c)(4) rules and requests information about the tax-exempt applications of 12 organizations, including GPS.I3 Aug. 9, Democracy 21 and CLC submit a letter to Comm Lerner to urge the Service to ignore a letter from Service ?seeking to delay and discourage any action by the agency? because the letter ?is not about determining the proper interpretation and enforcement of the tax laws,? but rather ?a partisan effort to al campaign groups like Crossroads GPS to continue hiding their donors from the American people by posing as section 501(c)(4) ?social welfare? - - 14 organlzations.? lssioner Shulman and Ms. Republican Senators to the ow pro-Republican Aug. 21 2012 Democracy 21 and CLC submit a letter to Comm Lerner to call attention to an article by ProPublica about 501(c)(4) organizations, including GPS.15 lssioner Shulman and Ms. Aug. 31 2012 Senator Levin writes to the Service again on the subject of organizations? applications for tax-exempt status.16 1 Sept. 27, E2012 Call to deny Form 1024 application. Dem letter to Commissioner Shulman and Ms. Lerner information to document that Crossroads GPS is organization with an overriding purpose to in?uence candidate electio s, and is accordingly not entitled to tax-exempt status as a Section 501(c)(4) ?social welfare? organization.?17 cracy 21 and CLC submit a 0 ?provide additional Dec. 3, Democracy 21 and CLC submit a letter to Acting Miller and Ms. Lerner to complain about the Service?s 2012-2013 Priority Guidance Plan and to reiterate that GPS ?does not requirements for a 501(c)(4) ?social welfare? org Commissioner Steven meet the eligibility ization.? 1 8 Letter ltom Senator Carl Levin, Chairman, Permanent Subcommittee on Inve Shulman (July 27, 2012), available at 3aff18157dad. Lette http: http: pdf. -9-1 Lette? from Democracy 21 and CLC to Hon. Douglas Shulman and Lois Lerner (Aug. 21, 2012), available at gov/co Lette' om Democracy 21 and CLC to Hon. Douglas Shulman and Lois Lerner (Sept. 27, 2012), available at http: stigations, to Hon. Douglas ?id=6d757f1 8-73 7b-4d8f-b7b0- om Democracy 21 and CLC to Hon. Douglas Shulman and Lois Lerner (Aug. 9, 2012), available at Z.pdf. Lette' Elem Senator Carl Levin to Hon. Douglas Shulman (Aug. 31, 2012), available at Lette' Irom Democracy 21 and CLC to Acting Commissioner Steven T. Miller and Lois Lerner (Dec. 3, 2012), available at -PLA 1 This docume wt was obtained and uploaded by the Center for Responsive Politics (OpenSecrets.org) This docume ProP mone W&l\ Id. 1d. at 1d. Lette avail: W&Letter, Ex. 2, at 1R80000122505. bllica (Dec. 14, 2012, 11:19 AM), available at nonpro?t-told-the-irs. 1 80000122502. from Democracy 21 and CLC to Acting Commissioner Steven T. Mille lb at '1 Letter, Ex. 5. Letter, Ex. 6, at 1R80000122550-51. ht was obtained and uploaded by the Center for Resp 1 Dec. 14, 2012 ProPublica publishes an article based on Farm 1024 application, which 11:19 arm was illegally disclosed to the public. Fred Wertheimer, President, Democracy 21, and Paul Ryan, Senior Counsel, CLC, are both quoted in the article.19 i Dec. 14, 2012 Beard, Communications Research Director, Democracy 21, writes 12:25 pm an email to Ms. Lerner requesting a meeting.20 This request was sent little more than one hour after ProPublica?s article is released, strongly suggesting the intended topic of the meeting. Dec. 14. 2012 Ms. Lerner responds to the request and agrees to meet with Democracy 21.21 2:16 pm Dec. 19. 2012 Ms. Lerner asks who will attend the meeting. Ms. Beard informs Ms. Lerner that Fred Wertheimer and Don Simon will attend from Democracy 21 and that Gerald Hebert, Paul Ryan, and Tara Malloy will attend from CLC.22 Dec. 19, 2012 After scheduling the meeting with Democracy 21 and CLC, Ms. Lerner asks Service employees David Fish and Andy Megosh for ?copies of all letters these orgs sent in asking for c4 guidance.?23 Jan. 2, 2013 Call to deny Form 1024 application. Dem acracy 21 and CLC submit a letter to Acting Commissioner Miller and Ms. Lerner providing suggestions for reviewing application and urging the Service ?to deny application for tax-exempt status as a section 501 organization.?24 Jan. 4, 013 Ms. Lerner meets with Democracy 21 and CLC representatives.25 11:00 a Jan. 4, 2013 Thomas Miller sends an email to Ms. Lerner advising her about the status of 1:55 pm 1 the GPS matter and why the organization had not been selected for examination.26 '9 Kim arker, Karl Rove '3 Dark Money Group Promised IRS It Would Spent 'l imited? Money on Elections, g/article/ what-karl-roves?dark- and Lois Lerner (Jan. 2, 2013), 1 3 .pdf. onsive Politics (OpenSecrets.org) Jan. 4, 2 4:50 pm 13 Ms. Lerner sends an email to Nanette Downing re Democracy 21 and CLC. Ms. Lerner admits that meeting, I asked for every document that had [sic years because I knew they had sent in several refe information last night and though the allegations i damning, so wondered why we hadn?t done some garding the meeting with get ready for the I sent in over the last several rrals. I reviewed the the documents were really thing with the org.?27 Jan. 4, 2 13 The review agent assigned to Form 1024 a ?[c]onference call with EOT and acting area man: with case.? This is the ?rst activity in the matter pplication has a lger on how best to proceed since September 27, 2012.28 Jan. 7, 2 13 Ms. Lerner sends an email to Ms. Downing, statir we are working on the denial for the 1024, so I he open an exam. I think yes, but let me cogitate a bit on it. the following: ?As I said, ed to think about whether to ,,29 Jan. 7, 2 13 The review agent indicates the following in his ca conference begin reviewing case information, tax advocacy denial letter, all to think about how best letter.? This is the first mention of a denial letter se log: ?Based on law, and draft/template to compose the denial the case log.30 Jan. 9-1 I, 2013 The review agent drafts the denial letter.31 Jan. 14, 2013 The review agent indicates the following in his ca of idea on how I plan to make denial argument an for her opinion on whether the idea seems valid.? that the review agent was instructed to prepare a reaching that conclusion himself. se log: ?Write-up summary share with Sharon Light 32 This description suggests lenial letter rather than May 23, 2013 Democracy 21 and CLC submit a letter to InSpect George to share copies of their letters to the Servi matters. This letter does not mention the meeting January 4.33 or General J. Russell ce regarding 501(c)(4) with Ms. Lerner on Sept. 23 A 34 2013 Ms. Lerner retires from the Service. 27 28 Letter, Ex. 10, at 29 LLetter, Ex. 6, at 3? etter, Ex. 10, at IRSOO00071225. 31 1d. at 1 80000071226. 33 Lette om Democracy 21 and CLC to Tax Inspector General for Tax Admin 23, 2 )1l3), available at RE-Ilts-5-23-13zpdf. 34 Laure anrench, Lois Lerner still Hill ?s favorite pi?ata, Politico (Updated Sept http2/ 5 This docume it was obtained and uploaded by the Center for Resp Id. at 1380000122549-50. stration J. Russel George (May 24, 2013, 6:58 AM), available at onsive Politics (OpenSecrets.org) Apr. 9, 2 014 The House Committee on Ways and Means vote (the Letter) to the United States Departm actions taken by Ms. Lerner.35 5 out a criminal referral letter ant of Justice regarding Apr. 1( 2014 The House Committee on Oversight and Gover Congress for her re?isal to testify.36 resolution recommending that the House ?nd . Lerner in contempt of ment Reform adopts a Apr. 1( 2014 Crossroads GPS was improper? and explaining meeting with Ms. Lerner ?was requested to disc Democracy 21 and the Campaign Legal Center 2011.?37 Democracy 21 and CLC issue a press release ?5 ongly disagree[ing] with the [Ways and Means] Committee?s ?nding that the investigation of at the January 4, 2013, $5 a petition ?led by vith the IRS on July 27, May 6, 2 014 letter to IRS Commissioner John Koskinen and Service to ?deny section 501(c)(4) exempt status Call to deny Form 1024 application. Democracy 21 and CLC submit a l?amera Ripperda urging the to Crossroads 35 Just door 35 Con com 37 Den Pur. inde way pres Lett http: Leg: 0 K. 38 31' Hole c: House 81 i-E Committee on Ways and Means, Ways and Means Committee Refers 2 for Criminal Prosecution (Apr. 9, 2014), available at http://waysandr 75999. Committee on Oversight and Government Reform, Oversight Commit of Congress Resolution (Apr. 10, 2014), available at http://oversig ngress-resolution/ . :racy 21 and CLC, Watchdog Groups Challenge House Ways and Mec it of Crossroads GPS was Improper (Apr. 10, 2014), available at http:/ eleases<emid=61. from Democracy 21 and CLC to Hon. John Koskinen and Tamera Rip This documei Lois Lerner to Department of neans.house.gov/news/ tee Approves Lois Lerner ms Committee Letter Claiming IRS idog-groups-challenge-house- perda (May 6, 2014), available at n-Democracy-Zl -and-Campaign- itl was obtained and uploaded by the Center for Resp onsive Politics (OpenSecrets.org)