(Bloomberg) The Internal Revenue Service has completed work on 91 of 132 applications for tax-exempt status from politically oriented groups and approved 70 of them, the agency’s acting commissioner said.
Those groups’ applications had been delayed for at least 120 days and some had been stalled for years. The IRS said 21 groups either withdrew their applications or didn’t respond to correspondence from the agency and weren’t approved.
“While we work to ensure fairness and efficiency in making determinations about tax exemption, we will continue to uphold the law as it relates to exempt organizations,” Danny Werfel, the acting IRS commissioner, said Wednesday at a House Ways and Means subcommittee hearing. “We will continue to meet our obligation to grant tax-exempt status only to those” that are fully eligible.
Lawmakers have criticized the IRS for its scrutiny of Tea Party groups, which the agency acknowledged and apologized for in May. That disclosure led to several employees losing their posts and to investigations from congressional committees and the Federal Bureau of Investigation.
“What is clear is that the IRS faces a long road to recover its reputation,” said Representative Charles Boustany, a Louisiana Republican who cited new data about examinations of Republican-leaning groups.
Audits Suspended
Werfel said the IRS has suspended audits in this area to make sure it had appropriate “safeguards” in place. “That whole process is on hold,” he said.
IRS regulations require that organizations must not be primarily involved in politics to receive tax-exempt status as a social-welfare group.
Separately, Ways and Means panel members and the IRS sought an investigation into the leak to USA Today of a 2011 spreadsheet listing 162 groups and an agency lawyer’s comments on whether they should qualify for tax exemption.
Under the tax code, that is confidential information and disclosure is a felony.
The IRS issued a statement saying it was “troubled” by the apparent violation.
“We have referred the matter to the Treasury Inspector General for Tax Administration, which is our standard practice for potential disclosure violations,” the IRS said in the statement. “We understand TIGTA is reviewing the matter.”
‘Clear Violations’
Under the tax code, such confidential information is restricted to a few entities, including the IRS and the inspector general’s office, and the chairmen of the House Ways and Means and Senate Finance panels with jurisdiction over tax legislation.
Sarah Swinehart, a spokeswoman for Ways and Means Republicans, said the office didn’t release the document, and she said the leak is a “clear violation” that the committee takes “very seriously.”
“Whoever leaked this document, and I can only assume it was a Republican, left out any context within which to view it,” said Josh Drobnyk, a spokesman for the committee’s Democrats. “That’s been the pattern from Republicans throughout this investigation—selective leaking in an effort to score political points.”
