IRS consumer group wants apology payments amid Tea Party fracas

WASHINGTON Wed Jun 26, 2013 10:04am EDT

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WASHINGTON (Reuters) - A watchdog inside the Internal Revenue Service, responding to charges of agency bias against Tea Party and other conservative groups, called on Wednesday for "apology payments" of up to $1,000 for those the agency subjects to excessive delays.

In its semi-annual report to Congress, the National Taxpayer Advocate said it largely agreed with recommendations for reform last month by the Treasury Inspector General for Tax Administration (TIGTA).

TIGTA's report set off controversy after it found the IRS gave undue partisan scrutiny to Tea Party and other conservative groups, even holding up some applications for years without action. It recommended more concise guidelines for IRS agents when reviewing tax-exempt applications.

That report threw the IRS into a crisis, prompting the exit of top IRS officials and FBI and congressional investigations. New developments in the six-week long saga have slowed, and prospects for quick fixes in Congress seem unlikely.

In her report on Wednesday, Taxpayer Advocate Nina Olson said IRS problems go deeper.

"The real crisis facing the IRS - and therefore taxpayers - is a radically transformed mission coupled with inadequate funding to accomplish that mission," Olson said.

Olson recommended that Congress authorize the IRS to make "apology payments" to applicants for tax exempt status stuck in IRS bureaucracy due to miscommunication and management failures.

She called for payment of up to $1,000 to taxpayers where the agency "has caused excessive expense or undue burden," or a "significant hardship."

Many Republicans want to cut funding for the agency, which they say has become too powerful in recent years.

A major source of controversy in the tax-exempt fracas has been the use of a "be on the lookout list" using terms like "Tea Party" to flag applicants for extra scrutiny.

Internal IRS documents released this week showed liberal groups, using the search terms "progressive" and "blue," may also have faced excessive scrutiny and delays.

Olson said that of the 915,000 taxpayer cases her office handled during the time studied by the inspector general, only 19 cases appeared to have faced the selection criteria.

She said of these, the IRS granted exemption status to 11, and said it found that none of the six cases handled by the Cincinnati office, at the center of the controversy, appear to involve a pattern of inappropriate selection criteria.

At the heart of the tax-exempt controversy were groups applying for tax-exempt status under 501(c)(4) of the tax code. These entities can engage in a limited amount of partisan activity, as long as that is not their primary purpose.

Fuzzy IRS rules in this area led to confusion among IRS agents in applying the law, Olson said in her report.

Under current law, applicants seeking (c)(4) status cannot use the courts to demand an answer on their applications, like charities organized under 501 (c)(3) can.

Olson recommended giving the groups this legal redress.

(Reporting By Kim Dixon; Editing by Nick Zieminski)

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Comments (5)
Bfstk wrote:
What a silly response to a tempest in a tea pot (pun intended). The government has long targeted various groups they view as unpatriotic or dangerous to the existing order. It has been far worse than what the tea partiers have endured including agent provocateurs, spies, dirty money. It was conducted by government folks much like the tea partiers– i.e. right wing nuts, Now fair is foul and foul is fair. The tea pots need to get over this and their self-professed indignation are more like crocodile tears than real outrage.

Jun 26, 2013 11:08am EDT  --  Report as abuse
atunionbob wrote:
I still fail to see how this was wrong to investigate a so called Social group that is so far away from being a Social group that is ridiculous. The Tea Party is a political group and in NO way does it do any thing Social to earn it the tax exempt status. If the Republican and Democratic party pay tax then the Tea Party should too. Regardless. I personally do not see any wrong done here. Any time some one or some groups apply for tax exempt status they should be checked out first, and not just given the “oh well they would not lie” attitude. The Tea Party has screamed over every little thing that the Obama adim has done, and has shown themselves to be racist, bigoted, and hateful beyond compare and should be illegal as far as I am concerned, but this is the USA and they have the right to their opinion just like I do. Its call freedom of Speech. The Tea Party is dead come 2014 because the American people have seen the lies, the deceit the fraud, and are not going to forget it. I used to vote Republican, I voted for Reagan, Nixon, Bush #1 and most of the Republicans in Congress. However I have woken up. I see now how the greed of the few there have turned our country into a “Do as I say not as I do” Party. How they are forcing their religion upon every one in this country. How the NRA and KOCH bros have bought and paid for them lock, stock, and barrel. They will be gone come 2014 because those of us who used to be Republican still have that Elephant memory. We do not forget!

Jun 26, 2013 11:09am EDT  --  Report as abuse
nashingteeth wrote:
Not only do they not want to pay taxes, they want tax payers to pay them compensation. Amazingly disgusting. I am appalled. Maybe we should raise our taxes to pay these non tax payers.

Jun 26, 2013 11:17am EDT  --  Report as abuse
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