IRS’ List of Scrutinized Nonprofits Was Larger Than Previously Thought

In the latest wrinkle in the three-year-old dispute over alleged targeting of conservative nonprofits, the Internal Revenue Service compiled a new list of organizations that might be members of a class action claiming damages: The roster extends to 426 groups, a larger number than the 296 compiled by the agency’s inspector general in 2013.

Some critics of the IRS see the expanded list as a sign that the scope of the political targeting grew, though like the earlier list, it contains groups of varying political leanings.

Names include such groups as We the People Eugene, the League of Women Voters of Central Vermont, the Young Americans for Liberty Foundation, and the Patriots of Charleston.

The list was first reported by the Washington Times. It was pulled from a May 24 Justice Department Tax Division filing in U.S. District Court for the Southern District of Ohio in the case NorCal Tea Party Patriots v. the Internal Revenue Service. Plaintiffs claim the IRS’ Exempt Organizations division violated their privacy and constitutional rights by delaying and scrutinizing their applications for tax-exempt status as social welfare groups.

The list of class action members, required by a circuit court judge’s order in March, was accompanied by a note from Justice Department attorneys noting that the original list was even higher, but the agency had received opt-out requests for the class action from 40 entities. The IRS had received 165 notices marked “return to sender,” 35 of which were for groups with no known alternative address.

Edward Greim, a Kansas City, Mo., attorney representing the 426 organizations now party to the class action filed in 2013, told Tax Analysts on Monday that the original shorter list compiled in 2012 by the Treasury Inspector General for Tax Administration was “just a snapshot in time. The IRS was continuing its conduct after that list was created, at least for another year.”

A national group called the Tea Party Patriots, in commentary on its website, said, “The number of organizations targeted in the scandal is staggering, and goes to show how deep the corruption at President Obama’s IRS runs. IRS Commissioner John Koskinen, meanwhile, has looked the other way and apparently attempted to cover up the extent of the scandal.” The group asks readers to help impeach the commissioner.

Less concerned about the enlarged list is Paul Streckfus, an attorney who edits a daily newsletter on tax-exempt organizations. “It's true political groups seeking 501(c)(4) status were set aside for further development, which lasted much too long. But there has been uncovered no proof of a scandal, just an overly cautious IRS that was being pressured by both sides,” he told Government Executive. “The reality is that most applicants probably did not qualify for 501 (c)(4) status. The IRS should have denied them as they came in; they could have gone to court if the IRS came after them.”

Streckfus doubts the conservative groups suffered much harm, asserting that “deep-pocketed” interests are funding the lawsuits. “The people who have suffered are the ones who got caught up in this political witch hunt—[former IRS executives] Steve Miller, Lois Lerner, and all the other IRS employees who are still listed as defendants in some of these suits.”

The NorCal Tea Party Patriots case, said the plaintiffs’ attorney, goes to trial in summer 2017.