What is known so far about the Internal Revenue Service’s examination of political nonprofit groups doesn’t answer one main question — whether the U.S. tax agency’s actions were malicious or just inept. IRS employees, trying to figure out how to sort through a surge in applications for nonprofit status, used shortcut phrases such as “Tea Party” and “patriot” to flag groups for scrutiny, according to an inspector general’s timeline. After IRS officials raised concerns in June 2011, there’s no evidence that the agency started over with a new system. That scrutiny was elevated to a scandal on May 10, when Lois Lerner, the director of the IRS’s Exempt Organizations Division, acknowledged in remarks to a conference of tax lawyers that applications using those phrases had been singled out for extra examination. The filtering done by IRS employees in Cincinnati now imperils the agency’s ability to enforce the laws on politically active nonprofit groups.
The issue wasn’t so much political motivation as it was poor management, said Paul Streckfus, editor of EO Tax Journal, which covers the world of tax-exempt organizations.
“I think they were trying in their own awkward way to sort through the applications on a nonpartisan basis,” said Streckfus, a former IRS employee who is based in Pasadena, Maryland. “People give the IRS much too much credit for being organized or efficient.”
The IRS’s acknowledgment that it selected groups based in part on ideology has drawn criticism from across the political spectrum. The limited information released so far — a timeline that is an appendix of the inspector general’s forthcoming report — leaves many questions.