The American Center for Law and Justice, which has filed a federal lawsuit on behalf of 41 Tea Party and other conservative groups that claim to have been unlawfully targeted by the Internal Revenue Service, said Wednesday it is rejecting the government's offer for "expedited review" of applications for some conservative groups that have been waiting for years for a determination on their tax-exempt status, calling the offer “deeply flawed.”
Last month, the IRS offered to expedite the application process for organizations seeking 501(c)(4) status by creating a 60/40 standard that would grant tax exemptions to organizations that agree to devote 60 percent or more of their time and expenditures on activities to promote social welfare, and 40 percent or less on political activity (see IRS Outlines Steps to Fix Problems with Tax-Exempt Applications).
The ACLJ contended that the 60/40 ratio created by the IRS is not a legal standard defined by applicable statutes or regulations.
“The IRS created this standard out of thin air in an effort to placate Americans who have been unlawfully and unconstitutionally targeted by the IRS because of their political beliefs,” said ACLJ chief counsel Jay Sekulow in a statement. “This so-called solution is deeply flawed and does nothing to address and correct the real problem at the IRS: a pervasive and systematic assault on conservative organizations. The IRS remains an agency incapable of self-governance or self-correction. Our federal lawsuit is moving forward to stop this abusive targeting scheme and to hold those responsible for this disturbing conduct accountable.”
In a letter to an official in the Justice Department’s Tax Division rejecting the “expedited review” for seven groups represented by the ACLJ, Sekulow wrote, “. . . the 60/40 percentage representations which you propose to impose upon our clients in order for them to be eligible for the expedited process are not legal standards defined by applicable statutes or regulations. These percentages are merely safe harbor provisions the IRS has crafted in response to the problems that have been created by its own admitted misconduct.”
He noted that each application of the seven organizations seeking 501(c)(4) status have now been pending for more than 645 days, and in the case of the Albuquerque Tea Party, for 1,297 days.
The ACLJ told DOJ Tax Division senior litigation counsel Grover Hart III that “because these seven clients have been awaiting determination for years and have complied with all legitimate requests for additional information, we request that the IRS complete its review of their applications and make a final determination immediately.”
The seven organizations that rejected the IRS offer include the Greater Phoenix Tea Party Patriots in Arizona, the Allen Area Patriots in Texas, the Laurens County Tea Party in South Carolina, the North East Tarrant Tea Party in Texas, the Myrtle Beach Tea Party in South Carolina, the Albuquerque Tea Party in New Mexico, and the Acadiana Patriots in Louisiana.
The development comes just one day before congressional hearings resume on the IRS scandal before the House Oversight and Government Reform Committee.
The ACLJ's lawsuit, posted here, urges the court to find that the Obama administration overstepped its authority and violated the First and Fifth Amendments of the U.S. Constitution, the Administrative Procedure Act, as well as the IRS’s own rules and regulations. The lawsuit asks for a declaratory judgment that the defendants unlawfully delayed and obstructed the organizations’ applications for a determination of tax-exempt status by means of conduct that was based on unconstitutional criteria and impermissibly disparate treatment of the groups.
The suit also seeks injunctive relief to protect the ACLJ’s clients, and their officers and directors, from further IRS abuse or retaliation. In addition, the lawsuit seeks compensatory and punitive monetary damages to be determined at trial at a later date.
The ACLJ represents a total of 41 organizations in 22 states in the lawsuit (see Tea Party Groups File Lawsuit against IRS). Of the 41 groups, 19 organizations received tax-exempt status after lengthy delays, 17 are still pending, and five withdrew their applications out of frustration with the IRS process.
The IRS contends that the targeting scheme originated with a few IRS agents based in the Cincinnati office and that the abusive conduct has been halted. However, the ACLJ said it has correspondence showing the tactic was used not only in the Cincinnati office, but also from two offices in California—El Monte and Laguna Niguel—as well as the national office in Washington, D.C. The Washington office sent a letter to one of the ACLJ’s clients as recently as April 2013.
Furthermore, the ACLJ said it has letters signed by Lois Lerner, director of the IRS’s Exempt Organizations division, suggesting her personal involvement in sending invasive questionnaires to 15 of its clients in March 2012, nine months after she was told about the problem and promised to stop it.
The ACLJ said it has heard from nearly 120,000 Americans who signed a petition calling on President Obama and members of Congress to end the IRS abuse.