-Caveat Lector-
Monday November 15 2:13 PM ET
Documents Pinpoint Federal Audits
By LARRY MARGASAK and JOHN SOLOMON Associated Press Writers
WASHINGTON (AP) - Members of Congress and the White House have
triggered audits of hundreds of tax-exempt groups this decade by
lodging complaints with the Internal Revenue Service against
their political foes.
The referrals range from citizen letters and newspaper articles
to personal demands for investigations, according to documents
reviewed by The Associated Press.
The White House once referred a constituent complaint about a
group that had suggested presidential lawyer Vincent Foster had
been murdered. Democratic lawmakers sought investigations of
conservatives ranging from the Heritage Foundation to the Rev.
Jerry Falwell.
And the Republican chairman of the House committee that writes
tax laws sought an audit of a Buddhist temple in California after
it was host for a Democratic fund-raiser featuring Vice President
Al Gore.
``It is my assumption that the Internal Revenue Service has
commenced, or will soon commence, an investigation into these
activities,'' House Ways and Means chairman Bill Archer wrote
Oct. 18, 1996, just three weeks before the presidential election.
The IRS says less than 1 percent of the 6,000 to 10,000 audits of
tax-exempt groups each year originate with complaints from
lawmakers or the White House. The White House forwards about
1,300 constituent letters each year to the IRS ranging from
complaints of wrongdoing to obscure tax questions.
Agency officials say audit decisions are based solely on evidence
of wrongdoing, not on the political stature of the requesters or
any positions taken by the group involved. Federal law generally
prohibits tax-exempt groups from advocating the election or
defeat of political candidates.
``We read our mail and deal with the facts appropriately. To
ignore the mail is a dereliction of responsibility,'' said Marcus
Owens, the IRS official who oversees tax-exempt organizations.
Owens said any auditors making a politically motivated decision
``would lose their jobs and perhaps would wind up with deeper
legal problems.''
One lawmaker who sought an audit contends politics does play a
role.
Former Rep. David Skaggs, D-Colo., said he referred two
conservative organizations to the IRS in 1996 to achieve some
``evenhandedness'' after House Republicans began a ``very
concerted assault'' on liberal tax-exempt groups.
Skaggs referred the Heritage Foundation and Citizens Against
Government Waste to the tax agency based on a newspaper report.
It said the groups had sent out a mailing signed by GOP
presidential candidate Bob Dole and then had shared the list of
responders with Dole's campaign.
Within two months of Skaggs' request, both groups found
themselves undergoing costly audits that continue today.
``I believed then and I believe now that these were serious
possible violations and the appropriate step was to ask the
people with the expertise,'' Skaggs said. ``But it would be
incredible to suggest, and I won't, that there was not a
political dimension to these things. Of course there is.''
Critics say the system is ripe for abuse by politicians eager to
sic the IRS on enemies. The Landmark Legal Foundation, a
conservative legal group, sued the IRS to gain access to requests
for audits, and found that requests from Congress and the White
House go up in election years.
``The documents show there's a systematic effort by Congress and
the White House to intimidate and silence organizations with whom
they disagree,'' said Mark Levin, head of Landmark.
The documents also show IRS officials highlight the origins of
complaints.
The IRS computer tracking system in Washington clearly denotes
the name of the politician who referred the matter. And the
original letter from the White House or lawmaker is forwarded to
the case agent.
Lawmakers' requests are stamped ``expedite'' to remind IRS
officials they must reply in writing within 15 days. A few
requests reviewed by AP were marked with notations such as ``hot
politically'' or ``sensitive.''
A quarter century ago, President Nixon tried unsuccessfully to
force the IRS to ``go after our enemies and not go after our
friends.''
Today, the practice is more subtle. Members of Congress or the
White House usually attach to their referral a letter from a
like-minded constituent or a news article alleging wrongdoing.
The Clinton White House once referred a conservative organization
that relentlessly pursued the claim that Foster had not committed
suicide, as ruled by authorities, but was murdered.
Presidential aides also forwarded a complaint faxed to President
Clinton from a supporter in Beverly Hills, Calif., that the
Western Journalism Center was engaged in a ``vicious media
campaign to hurt you.''
The fax didn't allege any specific tax violations. It simply
noted the center was tax-exempt and an ``ad needs
investigation.'' The IRS audited the group, but eventually upheld
its tax-exempt status.
Treasury Department investigators reviewed the audit and
concluded it was proper. They said the White House referral was
one of several constituent complaints it routinely sent over.
``Citizens often write to the president about issues under the
jurisdiction of different federal agencies. We have a choice. We
could forward their letters or we can throw them out. We chose to
forward them,'' White House spokesman James Kennedy said. He said
all letters are referred regardless of their political
orientation.
When Archer contacted the IRS about the Buddhist temple, he made
no secret about his desire for an audit. ``I would certainly
recommend such an investigation,'' he wrote in a letter that
demanded he be kept apprised of IRS action.
More than a year later, the Hsi Lai Temple near Los Angeles was
named an unindicted coconspirator in the indictment of a
Democratic fund-raiser.
Not all requests result in audits.
Rep. Henry Waxman, D-Calif., an ally of the president, referred
Falwell, an outspoken critic of Clinton, for investigation based
on a constituent complaint in May 1993 that ``religious
broadcasters are using their tax-exempt status for political
purposes.''
Waxman urged the agency to keep his constituent's ``concerns in
mind.''
The congressman got a speedy reply, but the IRS didn't audit
Falwell. Five of his organizations had just been audited two
years earlier.
IRS officials insist they don't buckle under pressure.
``Archer can use all the language he wants to order, demand,
cajole and persuade. But a decision is only made on the facts,
and I would expect my commissioner to back me up,'' Owens said.
But most complaints from lawmakers and the White House end up
getting referred to IRS field offices, according to a court
filing by Thomas J. Miller, a projects chief in Owens' division.
``The only information items generally not referred ... are those
that are either unintelligible or that allege no wrongdoing, or
that are more in the nature of a generic question regarding the
tax laws,'' Miller told the court.
For those audited, the experience can be costly.
John Von Kannon, vice president and treasurer of the Heritage
Foundation, said the audit has cost his organization more than
$100,000. He says the group doesn't believe it did anything
wrong.
``We are a conservative organization and there will be some
people who don't like us. That's life,'' Von Kannon said.
Copyright © 1996-1999 The Associated Press
*****
Congress Audit Requests 'Sensitive'
The Associated Press
Tuesday, Nov. 16, 1999; 1:38 a.m. EST
Internal Revenue Service officials say their agents don't make
politically motivated decisions to audit tax-exempt groups, but
that doesn't mean tax officials are oblivious to the motivations
of those requesting action.
A handwritten memo, referring to a request from House Ways and
Means Committee Chairman Bill Archer, R-Texas, made it clear that
the complaint had to be handled gingerly.
"This letter was so 'hot' politically that ... the final outgoing
correspondence went directly out from the A/C's (assistant
commissioner's) office," the memo said. The document viewed by
the AP was not signed.
Archer had written Sept. 4, 1996, asking the IRS whether a
college course taught by then-House Speaker Newt Gingrich, R-Ga.,
had been singled out for an audit.
Some IRS internal documents related to requests from lawmakers
include terms such as "expedite" or "sensitive."
One Aug. 4, 1995, memo implied that Sen. Phil Gramm, R-Texas,
really didn't care about the substance of the IRS' reply to a
constituent's complaint about a tax-exempt organization's
political activities.
"On the Gramm letter, it seems to me we shd name the constituent
right in the 1st sentence, since that's presumably how his office
files their correspondence. Otherwise, they've got to go looking
thru the attachments (believe me, they don't really give a damn
what it said) before they can know which of their files to close.
"Why not say: The FTC has referred a letter dated April 10 from
your constituent, Joe Crank, to this office for reply."
The IRS has issued special guidelines to its employees for
handling requests from Congress, urging officials around the
country to "develop positive, productive, working relationships"
with lawmakers.
Those guidelines note the IRS receives numerous phone calls and
letters from lawmakers, and advises "the way the service handles
these calls and letters collectively will be significant in
determining how members of Congress view the service."
Sen. Jim Bunning, R-Ky., when he still was a member of the House,
asked the IRS to investigate a tax-exempt group he believed had
"violated the rules for tax-exempt organizations by engaging in
lobbying activities," according to an agency summary.
The memo was stamped "expedite." IRS officials said congressmen's
requests are routinely stamped that way to remind employees they
need to provide a written response within 15 days.
When Rep. Owen Pickett, D-Va., wrote the agency in 1994 inquiring
whether black churches had been improperly targeted by the IRS
for political audits, he got a three-page response from then-IRS
Commissioner Margaret Milner Richardson.
The commissioner wrote that there was no targeting based on race,
but she acknowledged "not all of our field offices fully adhered
to the Manual Instruction."
"Recent contacts were made with five churches in the Commonwealth
of Virginia after media reports about apparent church actions
that could jeopardize tax-exempt status," she said, explaining
that the contacts were "an informal and nonthreatening way" of
reminding churches of their responsibilities under tax laws.
Most complaints from lawmakers and the White House end up getting
referred to IRS field offices, according to a court filing by
Thomas J. Miller, a projects chief in Owens' division.
"The only information items generally not referred ... are those
that are either unintelligible or that allege no wrongdoing, or
that are more in the nature of a generic question regarding the
tax laws," Miller told a federal court in a freedom of
information lawsuit.
Sometimes, referrals are so sensitive that lawmakers refuse to
discuss them or even identify the groups they referred.
Among those whose offices declined to provide details of their
letters when questioned by The Associated Press were Bunning,
Sen. John Breaux, D-La., and Sen. Dianne Feinstein, D-Calif.
© Copyright 1999 The Associated Press
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