IRS scandal brings out more charges of political audits

Kevin G. Hall

If reports of political targeting of conservatives by the Internal Revenue Service shocked the nation, they didn’t seem that surprising to many other groups who experienced problems with the tax agency in the past.

Liberal groups such as Greenpeace and People for the Ethical Treatment of Animals say they were targeted, too, by past administrations. The conservative group Judicial Watch says it was singled out for tax scrutiny during the Clinton administration because it supported impeachment.

Charges of politically motivated targeting by the IRS are notoriously difficult to prove or disprove. The older cases differ from the current scandal and the evidence of political attacks is circumstantial. But in interviews with McClatchy, leaders of these well-known activist groups assert they were targeted during Bush and Clinton administrations.

“We have been targeted,” said Jeff Kerr, chief counsel for People for the Ethical Treatment of Animals.

Jeff Kerr, chief counsel for People for Ethical Treatment of Animals

PETA was audited by the IRS in 1990 and 1992, when George H.W. Bush was president, and then again from 2003 to 2005 during George W. Bush’s presidency.

“The IRS agents admitted to us it was politically motivated and was the result of pressure tactics,” Kerr said of the 2003 audit that PETA blames on pressure from lawmakers acting on behalf of the meat and dairy industries.

“One of the agents even said, ‘You should be less controversial.’ The last time I looked that is what engaging in free speech activity is,” said Kerr.

One agent he pointed to was Ron Prowler, who has since retired from the IRS after 37 years.

“I don’t recall ever saying that to anybody,” Prowler said when reached in Florida. “I recall the audit obviously, but I would have never said that to anybody, because that’s not correct. . . . It was not politically motivated. It was based on what we call an ‘information item.’”

Many audits are triggered by anonymous or direct information about a group or citizen, a so-called “information item.” The IRS also offers rewards to tipsters equal to about 10 percent of taxes owed.

Marcus Owens, who headed the IRS Exempt Organization division from 1990 to 2000, also disputed the notion of politically motivated audits.

“Everyone who gets audited thinks they’re being targeted by the IRS,” said Owens, now a private attorney. “I’m not aware, since the Nixon administration . . . of an audit triggered by partisan politics.

The conservative group Judicial Watch said the Clinton administration ordered the IRS to audit it, in part because of its efforts to have Bill Clinton impeached for lying about his affair with intern Monica Lewinsky.

“It was expensive, exhausting and it was intimidating because they were asking questions about your politics and things like that,” said Tom Fitton, the group’s president then and now.

When Fitton asked why the 1997 audit was happening, he says he was told, “What do you expect when you sue the president.”

“They wanted a lot of information about virtually all of our activities, audited us for seven years of returns. It was quite onerous what we had to go through,” said Fitton.

He did not offer any proof of political motives behind the audit.

The IRS probed the environmentalist group Greenpeace in 2003, apparently looking to see if it comingled funds from two different tax-exempt organizations it runs. Greenpeace says the allegation of comingling came from Public Interest Watch, a group the Wall Street Journal three years later discovered was funded almost entirely by oil giant ExxonMobil.

During the audit, said Mark Floegel, a senior investigator for the environmental group, an IRS agent looked at a Greenpeace photo of an activist chained to an Exxon gas pump and said, “That’s not going to happen anymore.’ That was particularly chilling for us.”

He added, “Circumstantially on the face of it, it is a pretty damning case. But we never got the explanation from the IRS, other than our books were in order.”

Greenpeace operates two distinct tax-exempt organizations, one to which citizens can donate and deduct the donation from their taxes, and another in which donations aren’t deductible but are anonymous. On Sept. 7, 2005, the environmental group was hit with a double whammy. Both tax-exempt groups were told in writing by IRS Agent Charles Walker that they’d be audited.

In documents shared with McClatchy, the IRS asked Greenpeace for everything from bank statements to support documentation for all 2002 expenditures to emails over a period of three years from officers and key employees pertaining to compensation and all related-party activities.

Code Pink, a peace and social activism group that actively opposed the Iraq war and urged the impeachment of George W. Bush, also said it was audited on political grounds.

Its parent – Environmentalism Through Inspiration & Non Violent Action – was audited by the IRS in 2008. Code Pink Co-founder Jodie Evans said her auditor later told her the audit was politically motivated.

“He’s since contacted me and said it was, but I am not going to out the auditor,” said Evans. The auditor would not talk to McClatchy.

The questions asked by the IRS of the Code Pink-affiliated group did sound similar to what conservative groups are today complaining about. In a June 25, 2008, letter shared with McClatchy, IRS Agent Andrew Hay asked for training manuals, contracts, leases and a timeline of all the group’s events over 18 months in 2007 and 2008. He also sought “Publications or newsletters produced by your organization for the ‘Campaigns.’” The IRS also asked for “Letters soliciting funds that identify the nature of the ‘Campaigns’ to be financed or supported.”

The questions were fair game, said Prowler, the former IRS agent.

“The process of obtaining an exemption is a privilege. Not everyone in the United States is exempt from taxation . . . you have to meet highly specific criteria, that Congress decided, not the IRS . . . and jump through hoops and answer questions,” he said, adding that he never witnessed political motivation but worked in Washington during the Nixon revelations and was shocked. “I knew a lot of people and nobody I know has ever had that experience.”

David Lightman of the Washington Bureau contributed.

By Kevin G. Hall
McClatchy Washington Bureau