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POLITICS: PennAve

Ex-IRS official: Tea Party was 'shorthand' for all political groups

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Internal Revenue Service agents used "Tea Party" as "shorthand" for any group filing for tax-exempt status that the agents thought was dedicating too much time to campaign activities and not just to single out conservative groups, a former top IRS deputy told congressional investigators.

Holly Paz, recently fired from her job as director of the agency's rulings and agreements office, told congressional staffers investigating the IRS that use of the term "Tea Party" was not a way to single out conservative groups. Rather, the term was used as a synonym for agency's definition of "campaign intervention," which, according to the IRS, "includes any activities that favor or oppose one or more candidates for public office." Groups that fit that description could be denied tax-exempt status, she said.

"It was sort of a shorthand reference," Paz said, according to a transcript of her interview with congressional investigators. "It's like calling soda 'Coke' or, you know, tissue 'Kleenex.' They knew what they meant, and the issue was campaign intervention."

Paz is among several former and current IRS officials being grilled by lawmakers trying to determine who ordered the targeting of conservative groups that sought federal tax exempt status. An independent Treasury Department audit last month revealed that "Tea Party," "Patriot" and "9/12" were part of a "Be On the Look Out" or BOLO program devised by IRS agents to flag conservative groups. Many of those groups subsequently waited years to receive tax exempt status while others reported getting no response from the IRS.

Paz insisted to investigators that there was no intention of scrutinizing a group based on political leanings, even though no evidence has surfaced that liberal groups applying for the same exemption were rejected as often or given the same tough scrutiny. Paz acknowledged that "at least" one group seeking tax exempt status was held up for no reason other than that its name had Tea Party in it.

Paz said the division examining tax-exempt applications was simply under-staffed and was "looking for efficiencies."

The BOLO list, she said, was "an efficient way" to "track things that they needed to be aware of."

Paz also told investigators that IRS officials in Washington were involved in reviewing applications from conservative groups. Paz said that by October 2010, her supervisor in D.C., attorney Carter Hull, was examining approximately 40 applications from groups seeking tax exempt status and more than half of them had "Tea Party" in their names.

Paz said tagging all potentially political groups as "Tea Party" originated with the Cindy Thomas, the Cincinnati program manager of the tax exempt division.

The two women referred to the matter in email exchanges as "the Tea Party cases." Paz said that was simply Thomas's use of "shorthand," because the first application she scrutinized came from a Tea Party group.

Hill investigators, however, point to interviews they have conducted with agents in the Cincinnati office who said applications from liberal and progressive groups never go tougher scrutiny.

Elizabeth Hofacre, who managed the "Tea Party" portfolio in the Cincinnati office in 2010, said the applications from liberal groups were returned to "the general inventory."

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