IRS cases were referred to ‘Group 7822’

McClatchy Washington BureauJune 18, 2013 

— The Internal Revenue Service diverted applications for tax-exempt status from tea party and like-minded organizations to a special track known as Group 7822 for special scrutiny, according to transcripts of an interview by congressional interrogators with a key IRS official.

The lengthy interview with John Shafer, a senior manager in the screening department of the IRS division in charge of tax-exempt designations, was shared with reporters by Rep. Elijah Cummings, D-Md.

Staffs from several congressional committees have been interviewing employees in the Cincinnati-based IRS office that handles applications for exempt organization status.

Cummings’ aim was to refute assertions by the chairman of the House Oversight and Government Reform Committee, Rep. Darrell Issa, R-Calif., that the special scrutiny was part of a Washington-based conspiracy. Cummings, the top Democrat on the committee, said the transcript of five hours of interviews on June 9 “debunks conspiracy theories about how the IRS first started reviewing these cases.”

Issa said he was “deeply disappointed” in Cummings. He said Cummings “has wrongly argued that questions about IRS conduct are somehow not legitimate. His own previous release of excerpts from this very same transcript undermines his claims that the committee is somehow trying to keep some specific revelation from public view.”

The IRS transcript helped fill in blanks about information that was generally known but not well understood. For example, Shafer confirmed that his boss, Holly Paz, was present when a Treasury Department auditor queried him about treatment of tea party applications. “I wasn’t sure why she was there,” he said. Shafer said her presence did not change his answers.

Shafer described himself as a conservative Republican and explained how applications that met criteria that the IRS has since called inappropriate were selectively screened. The criteria included buzzwords such as constitution, Bill of Rights and other tea party themes referring to the Founding Fathers. These words caused applications to be pulled aside and sent to what’s called Group 7822. He did not say how the criteria were developed or by whom.

He said the tea party cases were called “emerging issues” by agency officials, apparently because they had received media attention.

“Each case is again reviewed and the determination is made on the facts and circumstances within that case,” he said. Asked what caused an emerging issue, “I 100 percent do not know, OK?” he answered. “What I would do is go into the electronic system and I would transfer these cases to Group 7822.”

That lack of knowledge remains at the heart of the IRS scandal. Shafer’s testimony makes clear that the criteria seemed to be set in Washington. Cummings claimed the transcript shows there was no concerted White House involvement in the targeting of political opponents, while Issa maintains there is still insufficient detail to make that assertion.

Under questioning, Shafer pushed back on the original IRS explanation that a couple of “rogue” agents in Cincinnati were to blame for the targeting of tea party groups.

“We do have a number of checks and balances that would lend me to believe that whatever the definition of a rogue agent is, which I don’t know, it would be difficult for me to believe that,” he said.

The White House has maintained nobody from the executive office was involved, but spokesman Jay Carney has changed his story several times over who learned about the scandal in the White House, when and how.

On Washington involvement, Shafer said an IRS worker he supervised was looking for guidance about a tea party case. Shafer referred the matter to his bosses in Washington and said that Paz, a former top official in the IRS’ exempt organizations division, “elevated it” and said that the agency wanted to “see this case.”

The IRS has acknowledged using inappropriate criteria to ensure that new political players were in fact educational groups performing a social welfare purpose as required by law. Republicans charge the groups were targeted and their applications delayed until after the 2012 elections.

The transcript shows that in early 2010, Shafer recalled media attention concerning a tea party application and that he “had concerns about this being a high-profile case.”

It was “normal business” to be concerned with a case that could be described as high profile, Shafer said. If cases appeared similar, it was important they be reviewed by the same agent or group.

Much of the questioning from congressional staffers focused on Lois Lerner, who headed the exempt organizations division and refused to testify before Congress. She has been placed on administrative leave while congressional, Justice Department and Treasury Department probes play out.

During a recent House Ways and Means Committee hearing, a former Republican candidate for the U.S. Senate told lawmakers that Lerner, then a lawyer at the Federal Election Commission, offered to stop investigating his campaign if he promised never again to run for high office. It was Lerner who triggered the IRS scandal by apologizing for inappropriate treatment of tea party groups in an attempt to get ahead of a Treasury Department auditor’s report that days later would criticize the agency.

Much of the transcript is full of the kind of bipartisan bickering that has soured the American public to politics, with interrogators sniping at each other in front of Shafer and trying to score points in a document they knew would become public.

“This is, like, the fifth or sixth time that you’ve now interrupted our questions. You’ve had an equal amount of time to ask the witness questions,” barked one of Shafer’s questioners. “I’d respectfully ask that you respect the witness’ time and stop interrupting.”

Email: khall@mcclatchydc.com; Twitter: @KevinGHall; Email: dlightman@mcclatchydc.com; Twitter: @LightmanDavid

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