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Report: Nonprofit applications had not spiked before IRS targeted Tea Partiers

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Politics,Beltway Confidential,Sean Higgins,Tea Party,IRS

Washington Post Fact Check columnist Glenn Kessler makes an important catch regarding Lois Lerner, the Internal Revenue Service official in charge of the exempt organizations division who first revealed the agency’s targeting of Tea Party groups.

Kessler notes that during a speech at an American Bar Association event — the same one where she made the news in the first place — Lerner explained the reason for the targeting was in part because the IRS was getting overwhelmed by nonprofit applications.

But between 2010 and 2012, we started seeing a very big uptick in the number of 501(c)(4) applications we were receiving, and many of these organizations applying more than doubled, about 1500 in 2010 and over 3400 in 2012.

The idea being that they had to deal with surge this by prioritizing, and that the Tea Party targeting was an accidental by-product of that.

Kessler notes that the dates and numbers don’t add up:

But this claim of “more than doubled” appears to be a red herring. The targeting of groups began in early 2010, after the Supreme Court’s decision in Citizens United v. FEC was announced on Jan. 21. The ruling paved the way for political groups to apply under a tax-exempt status known as 501(c)(4). Most charities apply under 501(c)(3), but under 501(c)(4), nonprofit groups that engage in “social welfare” can also perform a limited amount of election activity.

At first glance, the inspector general’s report appears to show that the number of 501(c)(4) applications actually went down that year, from 1,751 in 2009 to 1,735.

But it turns out that these are federal fiscal-year figures, meaning “2010” is actually Oct. 1, 2009 to Sept. 30, 2010, so the “2010” year includes more than three months before the Supreme Court decision was announced.

Astonishingly, despite Lerner’s public claim, an IRS spokeswoman was not able to provide the actual calendar year numbers. By allocating one-quarter of the fiscal year numbers to the prior year, we can get a very rough sense of the increase on a calendar-year basis. (Figures are rounded to avoid false precision; 2012 is not possible to calculate.)

2009: 1745

2010: 1865

2011: 2540

In other words, while there was an increase in 2010, it was relatively small. The real jump did not come until 2011, long after the targeting of conservative groups had been implemented. Also, it appears Lerner significantly understated the number of applications in 2010 (“1500”) in order to make her claim of “more than doubled.”

Kessler points out two other statements by Lerner that do not bear scrutiny either:  her claims about when she first learned of the targeting and whether anyone had ever asked her about it prior to her ABA announcement.

But it is Kessler’s look into the timeline that the most important thing. While there was an increase in nonprofit applications prior to the IRS’s new policy, it didn’t qualify as a surge, raising again the question of what prompted the policy in the first place.

 

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Sean Higgins

Senior Writer
The Washington Examiner