Exhibits Available From Camp's Letter to DOJ on Lerner

. . . And what happened last year was the Supreme Court, out of a block getting chipped away and chipped away in the federal election arena, the Supreme Court dealt it a huge blow overturning 100 year old precedent that said, basically, appropriations can give directly to political campaigns. And everyone is up in arms because they don't like it. Federal Election Commission can't do anything about it -- they want the IRS to fix the problem. The IRS laws are not set up to fix the problem. (c)(4)s can do straight political activity. They can go out and pay for an ad that says 'vote for Joe Blow.' That's something they can do as long as long as their primary activity is their (c)(4) activity, which is social welfare. So everybody is screaming at us, 'fix it now before the election, can you see how much these people are spending?' I won't know until I look at their 990s next year whether they have done more than their primary activity as political or not, so I can't do anything right now.

Transcribed from a video of Lois Lerner speaking to a group of students at the Duke University Sanford School of Public Policy's Foundation Impact Research Group, October 19, 2010.

From: Lerner Lois G

The five people attending the meeting will be Fred Wertheimer and Donald Simon from Democracy 21 and Paul Ryan, Tara Malloy and Gerald Hebert from the Campaign Legal Center.

Thanks and we look forward to receiving the invitation.

January 4^th at 11am works for Mr. Wertheimer and the Campaign Legal Center.

Thank you for getting back to me.

After speaking with Mr. Wertheimer and the Campaign Legal Center, they are all free all day on Friday, January 4, 2013. Whatever time works best for you is fine with them. If that day does not work, I can try to find another day that they will be free. Thank you,

I am writing on behalf of Fred Wertheimer, President of Democracy 21, to inquire about setting up a meeting for him and the Campaign Legal Center to meet with you to discuss the request for a petition for rulemaking on candidate election activities by Section 501(c)(4) groups.

If possible, Mr. Wertheimer would like to set up a meeting sometime next week.

Thank you very much and I look forward to speaking with you.

In order to conduct oversight on matters within jurisdiction of the Committee on Ways and Means (Committee), including the administration of federal tax law, and pursuant to my authority under IRC § 6103, I am writing to request certain returns and return information as to the following organizations. No later than October 4, please produce to the Committee all documents relating to the following organizations:

This document is a record of the Committee and is entrusted to the Internal Revenue Service for your use only in handling this matter. Additionally, any documents created by the Internal Revenue Service in connection with a response to this Committee document, including (but not limited to) any replies to the Committee, are records of the Committee and shall be segregated from agency records and remain subject to the control of the Committee. Accordingly, the aforementioned documents are not "agency records" for the purpose of the Freedom of Information Act. Absent explicit Committee authorization, access to this document and any responsive documents shall be limited to Internal Revenue Service personnel who need such access for the purpose of providing information or assistance to the Committee.

Thank you in advance for your assistance in this matter. If you have any questions, please contact Ways and Means Committee staff * * *

I recommend that we just let this one sit and wait out the deadline. We can certainly decline comment on the letter sent to us -- but gets more problematic on the issue of the application based on previous correspondence. Please let me know if you have other thoughts. Thanks. -- Michelle

Watchdog Groups Again Call on IRS to Deny Tax-Exempt Status to Karl Rove's Crossroads GPS Wednesday, January 02, 2013

According to the letter from the watchdog groups:

According to the Center for Responsive Politics (CRP), Crossroads GPS spent $70 million on independent expenditures to elect Republican candidates or defeat Democratic candidates in the 2012 elections. This is an extraordinary amount of money to be spent on influencing elections by a group which claims it is a "social welfare" organization.

Indeed, Crossroads GPS and its affiliated Super PAC, American Crossroads, together spent a total of $175 million on independent expenditures and electioneering communications to influence the 2012 elections -- far more than any other outside spender, according to CRP.

The letter from the watchdog groups continues:

[W]e submit that the $70 million spent by Crossroads GPS just on campaign ads reported to the FEC in 2012 is prima facie evidence that the organization does have a "primary purpose" to engage in campaign activities. The statement made by Crossroads GPS two years ago on its application for tax -exempt status that its campaign activities will be "limited in amount, and will not constitute the organization's primary purpose" are simply not credible, in light of the actual practices of the organization and the tens of millions of dollars Crossroads GPS spent on campaign ads since then.

As we have stated in previous letters, the misuse of "social welfare" organizations as vehicles for campaign spending results in direct and serious harm to the American people because it hides from public scrutiny the identity of the donors funding the campaign spending.

According to Democracy 21 President Fred Wertheimer:

The apparent failure of the IRS to grant tax-exempt status to Crossroads GPS, more than two years after Crossroads applied for status as a 501(c)(4) "social welfare" organization, provides some hope that the agency will do the right thing and reject the Crossroads GPS application.

It appears clear that Crossroads GPS exists for the overriding purpose of influencing elections. Crossroads GPS founder Karl Rove is a political operative, not a "social welfare" activist. Crossroads GPS spent tens of millions of dollars on TV ads to elect and defeat candidates and is nothing more than a campaign operation posing as a "social welfare" organization.

The IRS must not allow Crossroads GPS to get away with its charade of claiming to be a "social welfare" organization so it can hide the donors financing its campaign activities from the American people. Crossroads GPS must be held accountable for abusing the nation's tax laws to inject tens of millions of dollars in "dark money" into federal races.

According to the letter sent today:

ProPublica, a news organization, recently received and publicly disseminated the Form 1024, "Application for Recognition of Exemption under Section 501(a), filed by Crossroads GPS on September 3, 2010, seeking recognition as a "social welfare" organization under section 501(c)(4) of the Internal Revenue Code. So far as we are aware, the IRS has yet to grant the application.

In its application, Crossroads GPS states that 50 percent of its activities will be devoted to "public education," 30 percent will be devoted to "influenc[ing] legislation and policymaking," and 20 percent will be devoted to "research." Application at 2. Thus, when asked to provide a "detailed narrative description of all the activities of the organization -- past, present and planned," Crossroads GPS fails to mention any activities devoted to influencing federal elections, and instead describes 100 percent of its activities as involving efforts other than electioneering.

Inconsistently, in response to a different question on the application, Crossroads GPS states that it plans to spend funds "to distribute independent political communications," but such activity "will be limited in amount, and will not constitute the organization's primary purpose." Id. at 4.

We have written to you on a number of occasions in the past two years regarding the enormous sums of money spent by Crossroads GPS to influence the 2010 and 2012 federal elections. In those letters, we have challenged the organization's eligibility for section 501(c)(4) tax-exempt status.

 

* * * * *

 

 

 

As I said, we are working on the denial for the 1024, so I need to think about whether to open an exam. I think yes, but let me cogitate a bit on it.

Do I have information regarding the cases approved for exam previously and their priorities? I'd like to get some into the field, but can't until I'm comfortable with that. Thanks

Future referrals had additional information. We were instructed in August 2011 to hold ail political referrals until dual track was finalized. All future referrals were associated together and included in the dual track. The PARC reviewed in December 2012 and selected it for examination. I have pulled the files and see that they went back to the committee in December 2012 for final committee review.

From: Lerner Lois G

I asked Tom Miller whether he recalled seeing referral committee notes on the referrals when he and Judy went down to look at the referrals. He looked them up, and as you can see below, the referral committee unanimously non-selected the case twice. I don't know where we go with this -- as I've told you before -- I don't think your guys get it and the way they look at these cases is going to bite us some day. The organization at issue is Crossroads GPS, which is on the top of the list of c4 spenders in the last two elections. It is in the news regularly as an organization that is not really a c4, rather it is only doing political activity -- taking in money from large contributors who wish to remain anonymous and tunneling it into tight electoral races. Yet -- twice we rejected the referrals for somewhat dubious reasons and never followed up once the 990s were filed.

I know the org is now in the R00 -- based on allegations sent in this year, but this is an org that was a prime candidate for exam when the referrals and 990s first came in. I worry that if the allegations in the present complaint only discuss this year, Exam will slot if for a future year because this year's 990 isn't in yet. My level of confidence that we are equipped to do this work continues to be shaken. I don't even know what to recommend to make this better. I'm guessing if it hadn't been for us implementing Dual Track, the org would never be examined. And, I am not confident they will be able to handle the exam without constant hand holding -- the issues here are going to be whether the expenditures they call general advocacy are political intervention.

Please keep me apprised of the org's status in the R00 and the outcome of the referral committee. You should know that we are working on a denial of the application, which may solve the problem because we probably will say it isn't exempt. Please make sure all moves regarding the org are coordinated up here before we do anything.

The file contains the classifier recommendation that the case be referred for field examination, but I did not see an indication when it would go back to referral committee.

An enforcement review of a tax exempt organization falls into one of two broad categories: examinations and compliance checks,

The IRS conducts examinations, also known as audits, which are authorized under Section 7602 of the Internal Revenue Code. An examination is a review of a taxpayer's books and records to determine tax liability, and may involve the questioning of third parties. For exempt organizations, an examination also determines an organization's qualification for tax-exempt status. EO conducts two different types of examinations: correspondence and field examinations. A correspondence examination is conducted remotely solely through the issuance of information document requests to the taxpayer by the examiner. During a field examination the examiner conducts in-person interviews of the taxpayer's representatives in addition to issuing information document requests.

A compliance check is a review to determine whether an organization is adhering to recordkeeping and information reporting requirements and/or whether an organization's activities are consistent with its stated tax-exempt purpose. Although during a compliance check the examiner may contact the taxpayer, it is not an examination since it does not involve review of the taxpayer's books and records and does not directly relate to determining a tax liability for any particular period. See Publication 4386, Compliance Checks, for further details.

As a result of the Advisory Committee for Tax Exempt and Government Entities (ACT) recommendation, EO established the Review of Operations (R00) in 2005. Its initial vision was to follow-up on exempt organizations within three to five years of recognition of exemption in order to assess whether the organizations are operating as stated in their applications for exemption. The R00 conducts compliance reviews on organizations. It is authorized to determine whether an organization's activities are consistent with its stated tax-exempt purpose and whether the organization is adhering to recordkeeping and reporting requirements. However, unlike a compliance check, the R00 does not make taxpayer contact. In addition, because the R00 does not conduct an examination, it is not authorized to examine an organization's books and records or ask questions regarding tax liabilities or the organization's activities.

EO Determinations makes referrals to EO Examinations when questionable activity is likely to occur, e.g., future operations may impact exempt status, generate Unrelated Business Income (UBI) or other tax liabilities, or necessitate a change in private foundation classification (IRM 7.20.1.5.2). EO Determinations started sending referrals to the R00 in approximately July 2006. At that time, specialists in EO Determinations were required to complete a Form 6038 and a Form 6038 Attachment. In March 2009, the Form 6038 was discontinued for cases closed through the screening program and' replaced with a version of Form 14261, Memorandum to File. The procedures were also changed and required the specialist to complete a Form 6038 attachment only if the specialist made a referral to the R00. In 2011, the Form 6038 and attachments were discontinued and replaced with the Form 14261 and Form 14266 for the R00 referrals. See IRM 7.20.1.5.2 for additional information.

The initial vision for the R00 has been expanded to include the building of cases for EO Examinations for various compliance initiatives. The initial review conducted by the R00 allows for a more focused examination thus increasing the overall effectiveness of EO Examinations. In 2011, EO began building a Dual Track process to use data analytics and referrals to determine if exempt organizations have compliance issues related to political activities. Procedures were approved in October 2012. Cases identified in the Dual Track process, including those identified through data analytics and referrals, first are routed to the R00 for case development and research. These cases then are routed to a Committee for review and decision on whether an examination is warranted. Dual Track Data Analytics and Referral examination cases were first assigned to the field late October 2012. The Director, EO suspended examination case work November 16, 2012, pending the development of additional guidance. On February 4, 2013, the directive to resume examination work was given. The first Dual Track examination case was started in March 2013.

On June 3, 2013, the new TEGE leadership team made a decision to temporarily suspend all Dual Track examinations until a review of the procedures and process is completed. During the summer of 2013, a cross functional team was created to review the selection and data analytics criteria and made recommendations. TEGE leadership is still evaluating the team's recommendations, Although several Dual-Track cases were started in March 2013, taxpayer contacts remain suspended.

In response to a congressional request, the IRS reviewed the 493 cases that were on the advocacy case tracking spreadsheet as of May 9, 2013, to determine whether they were considered by the R00 or are currently under examination. EO Examinations has received a total of 53 referrals on 24 organizations identified on the list. None of these referrals were from EO Determinations. Referrals can come from various sources including, external stakeholders, other areas of the Federal government, and taxpayers. Eleven referrals went through the Dual Track process, and 13 referrals were determined by career civil servant classifiers not to have political allegations and thus did not go through Dual Track. Five organizations were identified through data analytics of the Dual Track process. Out of 16 Dual Track cases (11 referrals and five data analytics) 14 have been reviewed by the R00 and two are currently in the R00 review process (See the following summary).

EO Examinations separately identified 60 organizations that were referred to EO Examinations from EO Determinations during the period of 2012 through 2013. However, EO Examinations has not taken any actions on these referrals for two reasons. First, they were not acted on because they were referrals for future year follow-ups, Second, they have not been acted on because in reviewing the R00, Dual Track and examination processes during the summer of 2013, new TEGE leadership decided to return these referrals to EO Determinations for further review to ensure the referrals were appropriate. Accordingly, no EO Determinations referrals of political advocacy cases have resulted in review by the R00 or processing through the Dual Track system.

 

 

 

RPTS BLAZEJEWSKI

 

DCMN H0F5TAD

 

Then, 2910, Citizens United came out. We started getting referrals on 501(c)(4)s, political, we started getting congressional.

Q Uh-huh.

A You know, folks above me came and said, how are you going to deal with these? We know this is going to be very --

Q Who was that? Who would have come and asked you?

A Lois, up the chain, you know.

Kind of like for your work plan, what are you going to do, how are you going to do this? We had to take a step back. We said, this is a new area, we need processes, we need procedures, we need training.

Q Right.

A At that time, we said, stop (c)(3) referrals because we want to make sure we're being consistent with them all.

So, you know, this was the end of 2010. 2011, we developed -- you know, they tasked to me, what are you going to do, as the Director? I put a team together, a cross-functional team, said, how are we going to do this? And we wanted to use, you know, what we learned from the (c)(3) political stuff, you know, and the past project we had, what worked best. TIGTA had come in and looked at it.

But we also had something new; we had the new 990. We had new data. You know, we were coming up with a strategy of the new 990. The Oversight Board was asking us, how are you going to use all this new data from the 990? We came up with a strategy of all these potential queries of how we could use the 990. And, you know, a piece of it was political, a piece is fraud, nonfiler stuff, different things, and we had some with political. So we said, this is new than when we did PACI. We know we've got referrals, we know we've got data analytics, and we came up with this dual-track approach.

So we came up with this concept in a picture, but then we still had -- we said, we cannot start exams until we have processes in place, procedures, and train our folks. We built processes. We built definitions. We had to build training from my classifiers, and we did -- and the R00 folks and my committee members. We knew how sensitive this would be, that we wanted very tight controls and we wanted some extra safeguards in place.

So, I mean, just a very high-level overview. If a referral comes in with a political allegation, it goes to the R00 to review, to do all that publicly available information, to see if they see any potential reasonable belief that, yes, there's political activities going on or maybe -- you know, a referral. Maybe they're just confused and it's lobbying stuff. The R00 will do that review.

And then we set up committee members, that the committee members look at the R00 review. And that committee of three then makes that final decision whether or not there's reasonable belief that an exam should be done.

Q Let me ask about the PARC. Is that the term for the political committee?

A Uh-huh.

Q In the words of a report by the IRS, the purpose of the PARC is to ensure equity and transparency and that no one individual could select an organization within certain classifications for examination.

A Uh-huh.

Q Is that your understanding, that the true purpose is to prohibit one person from actually effecting these decisions?

A Right. You know, I've got several different committees, like a church committee.

Q Sure.

A And it's when it's very sensitive that we don't want it in any one person's hands to have to make that decision.

Q I understand. If an entity is looked at by the PARC, is that kind of a one-time thing? Or can a group be referred to the PARC several times?

A They could -- I mean, at the beginning, as we started, you know, we had this inventory, so when something went to the R00, if we had already received 10 referrals, the whole packet went. But I would assume in the future, if I get a new referral in, it will go through the process again.

And, in a way, that's like any of my referrals. You know, there are individuals who will send -- you know, I could get 50 referrals. Well, it goes through a process, and it might be that eventually they provide -- you know, it can't just be a referral saying, I don't like this person, I think they're doing something wrong. I mean, that's why we've got these safeguards in place, and that's why, you know -- there's got to be information for somebody to have a reasonable belief there's a potential area of noncompliance there.

So, yes, you can send more, and it will go through the review process.

Q You mentioned safeguards that are in place. What are those? What types of safeguards are in place?

A Well, part of the safeguard is the committee of three.

Q Right.

A Part of the safeguard is we built this referral system. And this is something, you know, that from back years ago we didn't have, that the system automatically calculates and that the individual actually puts their comments in the system, whereas before it was all paper.

We did -- so this is all dual-track. Before I briefed up, say, and I had all my processes in place, I'm ready to go, I've got my first small bucket that we're ready to examine, we had some folks come in and just do a consistency check, quality check.

We built definitions. We built definitions of -- I'm trying to think of an example of some of the definitions. You know, what was the impact? You know, was it -- you know, if it's -- you know, what was the impact of the political nature? Was it a speech that went out on the Internet? You know, just to help -- or was it one sign one time? You know, again, just some definitions to try to help them to give them some clear guidance on making those final decisions so that we were consistent.

Q Does the PARC look at or consider whether or not a group has a R00 recommendation?

A Do they consider the R00?

Q Is that known to the PARC as they look at a case?

A I can't be certain to answer that question.

Q Would the PARC have information that was obtained by a R00?

A Yes, they will have the R00 file.

Q They have the R00 file.

A And if the PARC needs to do additional research, that is part of their --

Q They also have the ability to --

A The ability to do additional research.

Q So when they do additional research and when they have the R00 file, that all becomes part of the PARC file with respect to that referral?

A Yes. Yeah. It will all go in the file.

Q Okay. And that's electronically, as well, or just the hard copies?

A No, it will all be put in the electronic file.

Q So it will be loaded up into that system we were discussing?

A Uh-huh.

Q And can any one person override a PARC decision?

A No. No.

Q So once the PARC makes a decision one way or the other, no one can come in and say --

A No. And I would expect -- I don't think you were in here when I talked about this. I would expect if anybody tried to do that, they would turn that in to TIGTA. We are not allowed to do that.

Q Okay.

Mr. Armstrong. Well, right now, we're at an hour. Do you want to take a break?

Mr. Kaiser. Your call.

Mr. Armstrong. It's up to you.

Ms. Downing. I'm okay.

Mr. Armstrong. Okay. Great.

RPTS COCHRAN

Q Okay.

A I don't know of any -- I don't know what, if any, work my team may have done with respect to specific cases.

Q Prior. Okay.

Mr. Carlo. Chris, may I?

Mr. Armstrong. Yes.

BY MR. CARLO:

Q I think you said that it was in the spring of 2012 that you discussed with Ms. Lerner a Crossroads GPS case and she gave you advance notice that that might be a denial. Is that correct?

A That's the best of my recollection. And I don't know if I would characterize it as discuss as opposed to she told me that --

Q That you had some --

A A heads-up about it.

Q And that you didn't recall having any discussions with her about any other Tea Party-type cases?

A The one thing I recall discussing with her was whether there were other cases as well and whether the cases that were coming reflected different sides of the political spectrum.

Q Okay. And what did she tell you?

A She told me they did.

Q They did. What was it about Crossroads that made that the subject of this conversation? If there were other cases, other Tea Party cases, other cases on the other side of the political

 

* * * *

 

 

 

 

 

 

 

 

 

From: Lerner Lois G

Right now, the Obama campaign site includes info about this new org, featuring a blog from the new executive director who is leaving the White House to run it from Chicago. They'll also have a DC office.

Since Priorities USA did not file a 1024, I would think they would follow the same self-declaring path here. But maybe not.

From: Lerner Lois G

From: Lerner Lois G

2 -- IRS Denies Organization for Benefitting Musicians and Music Companies

1 -- New (c)(4) to Supersede DNC?

Dem Officials Fret over New Obama Nonprofit

State party leaders grumbled Tuesday at the Democratic National Committee's meeting in Washington about a lack of detail on how exactly the new tax -exempt advocacy organization will work. "It's still a big question mark right now," said Minnesota Democratic chairman Ken Martin. "We were told before the end of this campaign that all of that [the Obama campaign machinery] would fold into state parties. Now we're being told something different, which is they're going to set up this 501(c)(4)."

Martin backs the idea of the new structure in theory but worries that the organizations responsible for actually electing Democrats will get left behind in the chase for donors and activists. "I'm not a dummy," he said. "I understand post-Citizens United the necessity to set up vehicles for different types of money to flow, but the reality is you can't strip the party bare and expect in four years that we're going to be able to pick up the pieces and get a Democrat elected president if you've completely stopped building capacity within the party."

Obama's White House intends for OFA to serve as a perpetual grass -roots arm, energizing supporters in favor of the president's policies. Rather than focus on fundraising and candidates, leaders said last week that they will engage -- at least initially -- in harnessing Obama's network of supporters and volunteers. Nonprofit status allows Obama to raise unlimited money from both individuals and corporations, which the DNC and individual state parties cannot do. But it prevents OFA from directly participating in elections.

"People are very concerned. They don't know where it will lead," sa id North Carolina Democratic Party Chairman David Parker. "The concerns vary. Nothing in particular, and everything in general. . . . There's always a question of what does a successful reelection campaign do after the show is over. Is there another play to be involved with? Or what? And we're in the 'or what' stage?"

"I would love to know," he added. "It's like the three wise men come to [King] Herod, and Herod says, 'Well, this is really cool. After you find the baby Jesus, come back and tell me where he is so that I too may go worship,'" Parker added. "Now, was he acting in good faith or did he kill all the children in Bethlehem? I don't know how the story ends."

Other Democratic leaders huddling at the Omni Shoreham Hotel would not go so far on the record the day after the president's inauguration, but they view the post -election shuffle with just as much apprehension. "Essentially, it's an end run around the DNC and state parties," said a third state chairman. "For the long-term health of our party, I don't think it is the way to go. I don't think fighting for donors is the way to do it. . . . We've won five of the last six popular votes in the general elections, so something's working.

"The simple truth of the matter is that OFA 4.0, or whatever it is now, is not going to work to elect our local legislators," the chairman added. "It's not going to work to elect our local governors. It's going to work to push the president's agenda. I come from a state where the president's not very popular. My elected Democrats are not always going to line up with him, and getting the activists all juiced up over it doesn't help elect Democrats."

On Sunday, the new group welcomed thousands of Obama supporters to another Washington hotel for a "Legacy Conference" to discuss ways they might support the president's legislative agenda. Indiana Democratic Chairman Dan Parker welcomes any outside help. He also notes that parties have unique functions that cannot be replicated, including direct coordination with party nominees. "In each state, it's going to be interesting to see how they work with the parties because I don't know if they can," he said.

DNC Chairwoman Debbie Wasserman Schultz, who was reelected unanimously at Tuesday afternoon's meeting, pronounced herself "thrilled" by the new arrangement and pledged to "work closely" with OFA. "Organizing for Action will enable us to keep our volunteers engaged through issue advocacy [and] to help pass the president's legislative agenda while training the next generation of grass -roots organizers and leaders," she said. "We will march forward with OFA to build the strongest progressive beachhead ever seen by electing leaders across the country whose values match our hearts and whose determination needs our commitment."

Behind the scenes, though, the new incarnation of OFA will undoubtedly diminish the DNC's relevance and overshadow Wasserman Schultz. Many insiders believe Obama's decision to allow her to stay on as chairman for another term suggests a lack of interest in the party as much as a vote of confidence in her leadership.

Separating OFA and the DNC allows the White House to avoid relying on the Florida congresswoman as a spokeswoman. A poll conducted for the Obama campaign last year ranked Wasserman Schultz dead last as an effective surrogate. The new model allows those who are actually in Obama's inner circle to speak for him, including Jim Messina (Obama's former campaign manager who will chair the group), Jon Carson and David Plouffe. An OFA spokeswoman did not respond to a request for comment.

Many rank-and-file committee members, especially those who do not chair state parties, were much more positive about the new endeavor. Gus Bickford, a Massachusetts national committeeman, noted that OFA and his state party worked together well during the 2012 election. That was true, he said, even though the Obama campaign was focused on winning neighboring New Hampshire while the state party's priority was electing Elizabeth Warren to the Senate. "We didn't fight against each other," he said.

He does not expect infighting for limited resources. "I'm not naive as to how political fundraising works," said Bickford. "From what I do know . . . I don't think so . . . I'm not a person to say it's a bad thing."

Oregon national committeewoman Laura Calvo said local Democrats already have lots of experience partnering with outside advocacy organizations like labor or abortion rights groups. "So far, it's so brand new that the word really hasn't trickled down to something that's concrete, that you can sit down and read. Personally, I think it's pretty exciting," she said. "Sometimes the structure and the logistics and the priorities don't quite match up. . . . So that causes what I would call hiccups, but there's never been a major problem as far as I can see."

She said her state party, because Oregon's not a swing state, has a stable structure that could win without national help in 2012. "We were pretty much left to our own devices, and the party really pulled through," said Calvo. "The more progressive voices there are out there, the better off we are."

2 -- IRS Denies Organization for Benefitting Musicians and Music Companies

I recognize that, because of the section 7428 declaratory judgment provisions, the IRS feels compelled to make all possible arguments in denial letters to (c)(3) applicants, hoping that on judicial review a judge will find an argument for denial he or she agrees with.

In denial letter 201303018, reprinted below, the IRS's National Office cites 13 revenue rulings (all from the sixties and seventies -- the golden age of EO revenue rulings) and four court cases, but did the IRS make its case? (Aside: why many organizations don't protest remains a mystery.)

To me the underlying issue, based on the facts set forth, is whether the applicant is engaged in some sort of commercial endeavor or something else. Also, I'd like to know more about its funding, which is described thusly: "Your primary source of income is from gifts, grants, and contributions. You also receive some income from membership, consulting, and other fees." That doesn't sound like your typical commercial endeavor, unless the focus is on consulting income. An important factor here may be the statement that "Although Y software is free, you will charge a flat fee for your hosting services." Are the hosting services a significant source of revenue?

In its rationale for denying the applicant, the IRS states: "You do not conduct any public discussion groups, forums, panels, lectures or similar programs; all of your educational instruction occurs online on your website and blog." While this may be true, is the IRS saying more traditional educational program s are favored over websites and blogs? Surely not. I suppose this sentence needs to be read in context with the next sentence, which states: "These activities are best described as providing product information and are analogous to a product manual, which does not rise to the level of educational as required under I.R.C § 501(c)(3)." But this raises another question: is the IRS saying providing product information is not educational? Are product manuals not educational and presumably commercial endeavors? If these two sentences are not head -scratching enough, the next sentence states: "Furthermore, you are not described in I.R.C. § 501(c)(3) as a charitable

From: Lerner Lois G

RPTS HUMISTON

Q Okay.

A You know, hypothetically, if, you know, somebody had come to me with --

Mr. Pollack. I wouldn't even give a hypothetical. The answer is you don't recall it ever happening.

Mr. Lyons. Let's let him answer.

Mr. Grant. I never did it.

Mr. Lyons. Counsel.

Mr. Grant. That's fine. I just never had occasion to do that.

BY MR. ARMSTRONG:

Q Sure. That's fair?

A I suppose some set of circumstances could be put together where, you know, I might have felt a need to do that, but I never did.

Q Are you aware of an instance where -- where an executive at the IRS did that?

A No.

Q Would it be appropriate for a manager at IRS to refer a specific taxpayer to Exams or to intervene on their own on -- I mean, their own volition to Derms?

A I believe it would be completely -- it would not be appropriate to intervene on their own. So -- and I'm not aware of that occurring.

Q Rather than passing along.

• If it appears that a return has not been filed because the organization has not been operating more than a year, the case is returned to the Classification Referrals manager to set up as a future-year referral. The case will be resent to the ROO unit when the return is filed or becomes delinquent. (Note: The Referrals Manager runs a monthly Future-Year Referrals Report and processes the required returns).

These referrals are sent to ROO.

Step 4

The referrals are researched by Classification-Referrals to determine whether the entity was examined previously under the Political Activity Compliance Initiative (PACI), and the result of that examination. If it has been examined, the prior case file is retrieved and forwarded to the ROO for consideration along with the current allegation.

Step 5

The ROO secures the filed Form 990 along with any other relevant returns, such as Form 990-T and Form 1120-POL.

Step 6

The ROO tests the organization's Form 990 against the risk models using a check sheet to see whether the risk models would have identified the alleged violation, (If no return has been filed, this step is skipped). ROO also completes a lead sheet on the case.

Step 7

The case file (including the referral) is returned to Classification-Referrals for updating the referral database and is forwarded for review by a Political Activities Referral Committee (PARC).

Step 8

The PARC reviews the case file and determines whether the case should be one of the following:

• Future Year Referral

• Not selected for Examination

• Selected for Compliance Check

• Selected for Examination (OCEP)

• Selected for Examination (field)

• Selected for Examination (not political)

• Transfer to ROO (for additional research)

Step 9

If the case is Selected for Examination, the PARC determines whether the case is a "high priority", which results in the case being forwarded to Case Selection and Delivery (CS&D) for immediate assignment to a group (See Step 10), or "other," which results in the case being retained in Classification pending receipt of a case order.

If the IRS concluded in a prior examination that a 501(c)(3) organization had intervened in a political campaign, the case will automatically be classified as "high priority."

Otherwise the PARC considers the following factors to determine whether it should be categorized as a "high priority":

• The amount of money expended (measured either in absolute terms or in relation to the organization's other activities).

• The size of the audience exposed to the alleged intervention. For instance, whether the audience consisted of thousands of people versus 100 or fewer.

• The significance of the political campaign. For instance, whether the election was for a national office in a closely contested race.

• The frequency of the alleged intervention. For instance, whether the intervention occurred five or more times, versus a one-time event.

• The degree of specificity used to identify the candidate or the support/opposition. For instance, whether it was very clear whom the exempt organization was supporting or opposing.

• The degree of candidate participation in the alleged intervention. For instance, whether the candidate was an officer or director of the exempt organization and used the organization's resources to promote his or her candidacy.

• The degree to which the organization is soliciting contributions to support its political campaign intervention. For instance, whether the organization constructed a mechanism to solicit political contributions, versus a one-time donation by the organization.

• Any other relevant factors.

1. Apparently Appeals is going through a Lean Six Sigma process. One thing they brought to our attention is that Appeals believes the time between when a TP first requests to go to Appeals and the time the case gets to Appeals is too long. They have provided us with data, but also told us they think it isn't very good -- so we're not sure of their basis for the claim that things are taking too long. They have spoken to some of our managers about the process, but without data that we can look at and an explanation about how they are going about this, it is hard to understand where the starting point is and where the pain points may be. They have not met with either Holly and Nan, who are the Directors of the programs they are looking at, and who I believe could save them a lot of time. Thought you might want a briefing on this from them -- you may be perfectly OK with their approach, but we are baffled.

2. During the meeting I gave them a heads up that, in the next few months we believe they will get a lot of business from our TPs regarding denials on 501(c)(4) applications. I explained the issue is whether they are primarily involved in social welfare activities and whether their political intervention activities, along with other non-social welfare activities mean they don't meet the c4 requirements. I explained the issue was very sensitive and visible and there is a lot of interest -- Congress, press, political groups, you name it. I personally have been up to the Hill at least 8 times this past year to explain the complexities of the rules -- they are not black and white and they are not always intuitive. I offered a general tutorial session (non -case-related)on the law and the complexities because -- as I pointed out -- this is a new issue driven by a recent Supreme Court case expanding spending in elections to corporations, and a desire of some to make the expenditures without having their names show up on Federal Election Reports. The fact that these orgs can do some of this activity and still be a c4 further complicates the issue. I told them this is a place where we have worked very hard to be consistent and have all our cases worked by one group, and suggested they might want to do something similar. (PS we are under audit by TIGTA because of allegations of political bias on these cases) If I were you, this is definitely something I'd want to be aware of and have a high level person overseeing and reporting regularly to me. You were in TEGE long enough to understand how dangerous what we do can be.

From the call, I could tell you have a lot of acting folks who will be coming and going over the next year -- I feel that pain. But, from my perspective, that only makes high level involvement more imperative, if you think it would be useful to have a meeting on this -- let me know.

Hope this doesn't should like I'm trying to run your shop -- have enough trouble with my own. ( - :

No. To the best of my knowledge, no individual or organization outside the IRS influenced the creation of these criteria.

2. To the best of your knowledge, did IRS or Tax Exempt and Government Entities Division management sanction the use of criteria targeting applications for tax exemption that mention: 1) the "Tea Party," "Patriots," or the "9/12 Project", 2) government spending, government debt or taxes, 3) education of the public by advocacy/lobbying to "make America a better place to live", or 4) criticizing how the country is being run?

3. When did you become aware the IRS was targeting applications for tax exemption that mention: 1) the "Tea Party," "Patriots," or the "9/12 Project", 2) government spending, government debt or taxes, 3) education of the public by advocacy/lobbying to "make America a better place to live", or 4) criticizing how the country is being run?

In early 2010, EO Determinations witnessed an uptick in the number of applications for § 501(c)(3) or 501(c)(4) status that contained indicators of potentially significant amounts of political campaign intervention ("advocacy organizations"). EO Determinations first became of aware of this uptick in February 2010, when an EO Determinations screener identified a § 501(c)(4) applicant that planned to spend a significant amount of its budget on influencing elections, which he believed was like organizations that had been receiving media attention for purportedly seeking classification as § 501(c)(4) social welfare organizations but operating like § 527 political organizations. He alerted his manager of the potential "emerging issue."

To ensure consistent treatment of applications, EO Determinations had long been alerting its specialists to emerging issues by sending emails describing particular issues or factual situations warranting additional review or coordinated processing. Because it was difficult to keep track of all of these separate email alerts, EO Determinations staff requested a consolidated list of all such alerts. EO Determinations was developing the Be On the Lookout (BOLO) list in early 2010. The BOLO, which is an Excel spreadsheet, provides a centralized source of regularly updated information to EO Determinations specialists about potentially abusive organizations or fraud issues, issues and cases requiring coordinated processing, emerging issues and issues for which to watch. The BOLO currently includes four tabs: (1) Potential Abusive, (2) Emerging Issues, (3) Coordinated Processing, and (4) Watch List.

The first BOLO list contained the following entry on the Emerging Issues tab: "These case involve various local organizations in the Tea Party movement are applying for exemption under 501(c)(3) or 501(c)(4) [sic]." That description was added to the BOLO to help specialists identify cases involving potentially significant political campaign intervention for assignment to a particular Determinations group so that they could be consistently processed in accordance with advice provided by EO Technical. The language used on the BOLO was selected by Determinations specialists with the involvement of a front-line manager in EO Determinations. At this time, the language was not reviewed or approved by executive management.

As the number of advocacy cases grew, the Acting Director, EO Rulings & Agreements wanted to ensure that EO Determinations was not being over-inclusive in identifying such cases (including organizations that were solely engaged in lobbying or policy education with no apparent political campaign intervention). In addition, in light of the diversity of applications selected under this "tea party" label (e.g., some had "tea party" in their name but others did not, some stated that they were affiliated with the "tea party" movement while others stated they were affiliated with the Democratic or Republican party, etc.), the Acting Director, EO Rulings & Agreements sought clarification as to the criteria being used to identify these cases. In preparation for briefing me, the Acting Director, EO Rulings & Agreements asked the EO Determinations Program Manager what criteria Determinations was using to determine whether a case was a "tea party" case. Because the BOLO only contained a brief reference to "Organizations involved with the Tea Party movement applying for exemption under 501(c)(3) and 501(c)(4)" in June 2011, the EO Determinations Program Manager asked the manager of the screening group what criteria were being used to label "tea party" cases ("Do the applications specify/state ' tea party'? If not, how do we know applicant is involved with the tea party movement?"). The manager of the screening group responded that, "The following are issues that could indicate a case to be considered a potential 'tea party' case and sent to Group 7822 for secondary screening. 1, Tea Party', 'Patriots' or '9/12 Project' is referenced in the case file. 2. Issues include government spending, government debt and taxes. 3. Educate the public through advocacy/legislative activities to make America a better place to live. 4. Statements in the case file that are critical of the how the country is being run."

As TIGTA's interviews with EO Determinations employees revealed the BOLO description and the above-referenced list of criteria used by EO Determinations to determine which cases fell under the BOLO description were their shorthand way of referring to the group of advocacy cases rather than targeting any particular group. Applications that did not contain these terms, but that contained indicators of potentially significant political campaign intervention, were also referred to the group assigned to work such cases.

I first became aware that the BOLO referenced "tea party" organizations and EO Determinations was using the above criteria to determine what organizations met that description when I was briefed on these cases on June 29 2011. I immediately directed that the BOLO be revised to eliminate the reference to "tea party organizations and refer instead more generally to advocacy organizations. The BOLO was revised on July 11, 2011; the "issue name" was changed from "Tea Party" to "Advocacy Orgs", and the "Issue Description" was changed to "Organizations involved with political, lobbying, or advocacy for exemption under 501(c)(3) or 501(c)(4)."

Unbeknownst to me, EO Determinations further revised the BOLO issue description on January 25, 2012 to "political action type organizations involved in limiting/expanding government, educating on the Constitution and Bill of Rights, social economic reform/movement." When I learned of this change, I directed that the BOLO description level be revised. EO Determinations management explained that the group working the advocacy cases had made the change because they were receiving a substantial number of 501(c)(4) applications that only involved lobbying activity, which is a permissible activity, and no indication of political campaign activity. They were trying to edit the description to avoid capturing these organizations. Per my direction, the BOLO was updated on May 17, 2012. The separate entries for Occupy groups and ACORN successors were deleted and the advocacy organization description was revised to read 501(c)(3), 501(c)(4), 501(c)(5), and 501(c)(6) organizations with indicators of significant amounts of political campaign intervention (raising questions as to exempt purpose and/or excess private benefit). Note: advocacy action types issues (e.g., lobbying) that are currently listed on the Case Assignment Guide (CAG) do not meet this criteria."

At the same time that I directed the BOLO be revised, I also directed the Acting Director of EO Rulings & Agreements implement procedures for updating the BOLO that included executive-level approval. On May 17, 2012, the Acting Director of EO Rulings & Agreements issued a memorandum that set forth such procedures, which require that all additions and changes to the BOLO be approved by the manager of the emerging issues coordinator, the EO Determinations Program Manager, and the Director, Rulings & Agreements.

From: Lerner Lois G

From: Lerner Lois G

----------- Original Message ------------

----------- Original Message ------------

From Boustany -- c4 applications

From: Lerner Lois G

Lois G. Lerner --------------------------- Sent from my BlackBerry

Can Steve get a chart like this first one with exam numbers -- c3s, c4s, and totals or each of the years listed? Thanks

From: Park Nalee

First, under Legal Requirements, I added a few suggested (tracked) changes, including a couple bullets. Feel free to ignore or accept.

Regarding the reference to c4 application numbers in the first bullet under Background, see comment [NLP4]. Comment is referring to the second attachment here, which is a summary on the numbers of applications received for c3s and c4s, total app closures (including specifically c4 apps), and application approvals for c3s and c4s -- starting from FY 2008. All these numbers were provided in Boustany responses, except for FY 2012 data through June 30th (which were collected as part of hearing preparations -- i.e., Descriptions for Updated Stats 7/3/2012) and unless otherwise noted (i. e., in Issa). You/STM should already have all this data in the hearing prep binders, but I just consolidated them into this one-sheeter for an easier trend/comparison read.

Also, as Holly pointed out in her comment, we do not have a reliable method for tracking data by issue such as political activity. This is consistent with our congressional responses where we had explained we would have to manually go through each application, etc.

Because of the above points, the first bullet that presently reads as:

Starting in 2010, EO observed an increase in the number of section 501(c)(3) and section 501(c)(4) determination applications from organizations that appeared to be potentially engaged in political advocacy activities.

Recommend it be revised (i.e., along the lines of the following):

For about the past five years [alternative verbiage: From FY 2008 through June 30th of FY 2012], EO has observed an increase in the number of section 501(c)(4) determination applications filed, as well as a general upward trend in section 501(c)(3) application filings.

Of note, we added one new SCR concerning 2 Tea Party cases that are being worked here in DC. Currently, there are 13 Tea Party cases out in EO Determinations and we are coordinating with them to provide direction as to how to develop those cases based on our development of the ones in DC. We also closed one significant case last month -- American Pakistan Foundation -- providing relief to displaced persons in Pakistan.

EO Technical

 

Significant Case Report

 

(April 28, 2010)

 

 

 

 

 

----------- Original Message ------------

----------- Original Message ------------

The tea party cases, like the others on the list, are the subject of an SCR, and I customarily give Rob a heads up, but of course can let you know as well before anything happens.

As to MANA, I had spoken with Ted about the case, and he did mention that Joe had a different view as to whether to request information about the unindicte d coconspirator.

I called the FTC and spoke with them about the possibility of an MOU and that we were interested in starting discussions. Leah Frasier, the FTC point of contact, said that she would speak with her bosses and get back to me.

From: Lerner Lois G

April in EO Technical

Statistics

Cases Received

----------- Original Message Truncated ------------

EO Technical

 

Significant Case Report

 

(January 31, 2011)

 

 

 

 

 

 

 

Attached is the SCR table and the SCRs. The SCRs that went to Mike Daly ends with "MD." I will forward the other SCRs that didn't went Mike as fyi.

These reports are for your eyes only . . . not to be distributed.

I'll get with Nan Marks on the delta Dental piece.

I'm just antsy on the churchy stuff -- Judy -- thoughts on whether we should go to Counsel early on this -- seems to me we may want to answer all questions they may have earlier rather than later, but I may be being too touchy. I'll defer to you and Judy.

Z Street -- I thought the elevated to TEGE Commish related to whether we ever had -- that's why I asked. Perhaps the block is wrong -- maybe what we need is some notation that the issue is one we would elevate?

I hear you about you and Mike keeping track, but I would like a running history. that's the only way I can speak to what we're doing and progress in a larger way. Plus we've learned from Exam -- if they know I'm looking, they don't want to have to explain -- so they move things along. the 'clean" sheet doesn't give me any sense unless I go back to previous SCRs.

I've added Sharon so she can see what kinds of things I'm interested in.

HMO case (Delta Dental) -- When you say to push for the next Counsel meeting, with whom in Counsel are you referring? The plan had been for Sarah to meet with Wilkins and Nan on this. We think this has not happened but have not heard directly (unless Sarah has responded to your recent email on this case). I don't know that we at this level can drive that meeting.

NRRIT-I will reach out to Phil to see if Nan has seen it. She was involved in the past but I don't know about recently.

On United Order (religious order), proposed denials typically do not go to Counsel. Proposed denial goes out, we have conference, then final adverse goes to Counsel before that goes out. We can alter that in this case and brief you after we have Counsel's thoughts.

Z Street was not elevated at Mike Daly's direction. He had us elevate it twice after the litigation commenced but said not to continue after that unless we are changing course on the application front and going forward with processing it.

Ground Zero mosque (Park 51) -- Our general criteria as to whether or not to elevate an SCR to Sarah/Joseph and on up is to only elevate when there has been action. Park 51 was elevated this month because it was just received. We will now begin to review the 1023 but won't have anything to report for sometime. We will elevate again once we have staked out a position and are seeking executive concurrence.

We (Mike and I) keep track of whether estimated completion dates are being moved by means of a track changes version of the spread sheet. When next steps are not reflected as met by the estimated time, we follow up with the appropriate managers or Counsel to determine the cause for the delay and agree on a due date.

From: Lerner Lois G

Question -- if you have an estimated due date and the person doesn't make it, how is that reflected? My concern is that when Exam first did these, they just changed the date so we always looked current, rather than providing a history of what occurred, perhaps it would help to sit down with me and Sue Lehman -- she helped develop the report they now use.

From: Seto Michael C

From: Lerner Lois G

Background: We interviewed EO function officials to understand how applications are processed for organizations seeking tax-exempt status. We learned that there was an increase in the number of organizations applying for Section (§) 501(c)(3) or 501(c)(4) whose applications contained indicators of potentially significant amounts of political campaign intervention. In February 2010, an EO Determinations screener identified a § 501(c)(4) case that he believed was similar to organizations that had recently been the subject of much media attention for purportedly seeking classification as § 501(c)(4) social welfare organizations but operating like § 527 political organizations. The screener noted that this applicant indicated that it intended to spend a significant amount of its budget on influencing elections. The screener elevated his concerns about this case through the management chain. The EO Determinations Program Manager raised the issue with the Acting Manager of EO Technical who requested that this case be transferred to EO Technical. It is EO Rulings & Agreements' standard practice with emerging issues (including credit counseling and mortgage foreclosure) as well as these advocacy organizations to work some of the applications in EO Technical in order to get a better sense of the issues. EO Technical is then better able to advise EO Determinations on the processing of such cases and determine the most appropriate form of advice, which may range from verbal or written advice on a particular application or applications to template development letters, template denial letters, guide sheets etc. In addition to seeking advice from and coordinating with EO Technical, the unusual number of applications with potential political campaign intervention by organization seeking § 501(c)(3) or 501(c)(4) exempt status also prompted the EO function to isolate these types of cases as an emerging issue warranting scrutiny by a particular Determinations group to ensure consistent processing.

In order to help specialists identify cases involving potentially significant political campaign intervention for assignment to a particular Determinations group so that they could be consistently processed in accordance with advice provided by EO Technical, a description was included on the Be On the Lookout (BOLO) list. To ensure consistent treatment of applications, EO Determinations had long been alerting its specialists to emerging issues by sending emails describing particular issues or factual situations warranting additional review or coordinated processing. Because it was difficult to keep track of all of these separate email alerts, EO Determinations staff requested a consolidated list of all such alerts. EO Determinations was developing the Be On the Lookout (BOLO) list in early 2010. The BOLO, which is an Excel spreadsheet, provides a centralized source of regularly updated information to EO Determinations specialists about potentially abusive organizations or fraud issues, issues and cases requiring coordinated processing, emerging issues and issues for which to watch. The BOLO currently includes four tabs: (1) Potential Abusive, (2) Emerging Issues, (3) Coordinated Processing, and (4) Watch List.

The first BOLO list contained the following entry on the Emerging Issues tab: "These case involve various local organizations in the Tea Party¹ movement are applying for exemption under 501(c)(3) or 501(c)(4) [sic]." The language used on the BOLO was selected by Determinations specialists with the involvement of a front-line manager in EO Determinations. At this time, the language was not reviewed or approved by executive management.

As the number of advocacy cases grew, the Acting Director, EO Rulings & Agreements wanted to ensure that EO Determinations was not being over-inclusive in identifying such cases (including organizations that were solely engaged in lobbying or policy education with no apparent political campaign intervention). In addition, in light of the diversity of applications selected under this "tea party" label (e.g., some had "tea party" in their name but others did not, some stated that they were affiliated with the "tea party" movement while others stated they were affiliated with the Democratic or Republican party, etc.), the Acting Director, EO Rulings & Agreements sought clarification as to the criteria being used to identify these cases. In preparation for briefing me, the Acting Director, EO Rulings & Agreements asked the EO Determinations Program Manager what criteria Determinations was using to determine whether a case was a "tea party" case. Because the BOLO only contained a brief reference to "Organizations involved with the Tea Party movement applying for exemption under 501(c)(3) and 501(c)(4)" in June 2011, the EO Determinations Program Manager asked the manager of the screening group what criteria were being used to label "tea party" cases ("Do the applications specify/state 'tea party'? If not, how do we know applicant is involved with the tea party,movement?"). The manager of the screening group responded that, "The following are issues that could indicate a case to be considered a potential 'tea party' case and sent to Group 7822 for secondary screening. 1. 'Tea Party', 'Patriots' or '9/12 Project' is referenced in the case file. 2. Issues include government spending, government debt and taxes. 3. Educate the public through advocacy/legislative activities to make America a better place to live. 4. Statements in the case file, that are critical of the how the country is being run."

As interviews with EO Determinations employees revealed, the BOLO description and the above referenced list of criteria used by EO Determinations to determine which cases fell under the BOLO description were their shorthand way of referring to the group of advocacy cases rather than targeting any particular group. Applications that did not contain these terms, but that contained indicators of potentially significant political campaign intervention, were also referred to the group assigned to work such cases.

Additional information was gathered during fieldwork to develop a timeline of events that chronologically details the evolution of the advocacy emerging issue, including the officials who participated or were informed about key events. This information is summarized in the Results section table below.

Criteria: We reviewed applicable EO Internal Revenue Manuals (IRMs) and supplemental guidance to determine if there are procedures to ensure approval by appropriate management officials when the criteria is revised for emerging issues associated with applications for tax-exempt status. We did not identify any guidelines. Discussions with the EO Director, Rulings and Agreements, confirmed that no procedures existed prior to May 17, 2012, but controls were subsequently instituted to ensure that any criterion that is established or edited is reviewed and approved at a higher level in the EO function. Moreover, we were informed that EO Determinations began revising IRM 7.20.4 (Emerging Issues) in October 2011, and we were provided with a draft of that IRM section, which contains procedures regarding the BOLO. All affected stakeholders have provided comments on the draft IRM, which are currently being incorporated, and the exhibits to the IRM are under review by the IRS Office of Taxpayer Correspondence.

Results: The initial case that started the emerging issue development was identified in February 2010. The EO Determinations office requested assistance from the EO Technical office on how to process the cases. The Acting Manager EO Technical requested that this § 501(c)(4) case be transferred to EO Technical. In May 2010, EO Determinations specialists were told to coordinate "tea party" cases with a particular Determinations group. From April 2010 to October 2010, an EO Technical Tax Law Specialist, worked with a Determinations specialist to develop the cases not transferred from Determinations to EO Technical. In October 2010, while waiting for guidance from the EO Technical office, the Specialist assigned the emerging issue cases stopped processing them. In June 2011, the EO Director was briefed on the issue, and she raised concerns about the criteria being used to identify the cases and immediately directed that they be revised. The criteria were revised in July 2011. In November 2011, the EO Technical office provided draft guidance for processing the cases to the EO Determinations office. In January 2012, additional information request letters were issued to many of the organizations. This resulted in media and Congressional attention due to the amount and types of information being requested. In May 2012, training was given to the Specialists processing the cases. A review of all the cases identified to date was also completed to determine if any could be closed.

Conclusion: The initial criteria developed by the EO Determinations office referred to Tea Party organizations. In addition, the EO Technical office more than 20 months (March 2010 - November 2011) to provide written guidance on processing these cases to the EO Determinations office.

 

END OF FOOTNOTE

 

 

Timeline of Events for the Political Advocacy Emerging Issue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

From: Biss Meghan R

Attached is a summary of the entire application from One Fund Boston. It includes the information from their initial 1023, our development letter, and their May 3 response. In it, I also point out situations where the revenue rulings they cite aren't exactly on point. Additionally, where they reference other victim compensation funds, I included the information we have on those funds from internet research.

As a note, the Aurora compensation fund may be an issue for the community foundation that made the payments. The CF is large enough (171 million on 2011 Form 990) that a 5 million payment to victims shouldn't jeopardize their exemption. But we won't know anything for sure until their 2012 Form 990 is filed.

Also, this article re funds distributing money to victims is interesting: http://www.motherjones.com/politics/2013/04/where-does-money-donated-victims-mass-shootings-go

After you have had a chance to look over this document, we can have a discussion about it and any questions prior to your meeting with Steve.