[Congressional Record (Bound Edition), Volume 161 (2015), Part 10]
[Senate]
[Pages 13625-13632]
[From the U.S. Government Publishing Office, www.gpo.gov]




       FINANCE COMMITTEE'S REPORT ON ITS INVESTIGATION OF THE IRS

  Mr. HATCH. Mr. President, earlier today, the Senate Finance Committee 
finally and at long last issued its report on its bipartisan 
investigation of the IRS's treatment of organizations applying for tax-
exempt status.
  As you will recall, this investigation began 2 years and 2 months ago 
after we became aware of allegations that the IRS had targeted certain 
organizations for extra and undue scrutiny based on the groups' names 
and political views.
  These were serious allegations. Indeed, they struck at the very heart 
of the principle--one that everyone should agree on--that our Nation's 
tax laws should be administered fairly and without regard to politics 
or partisanship. Despite the inherently political nature of these 
allegations, the Finance Committee, which has exclusive legislative 
jurisdiction and primary oversight jurisdiction over the IRS, 
immediately opened a full bipartisan investigation into this matter.
  The investigation officially began on May 21, 2013, under the 
direction of former Chairman Max Baucus and myself, when I was the 
ranking member. When Senator Wyden assumed the leadership of the 
committee last year, he agreed to continue the bipartisan work we had 
begun, and I am very grateful to him. This bipartisan cooperation has 
continued unabated since I became chairman in January of this year. 
That investigation concludes today with the release of our report.
  While much has been reported about the IRS's political targeting over 
the last 2 years, it is important to note that the Senate Finance 
Committee has conducted the only bipartisan investigation into the 
matter. Consequently, I believe the report we have issued today will 
serve as the definitive account of the personal political biases, 
management failures, and other factors that led the IRS to unfairly 
target certain organizations applying for tax-exempt status.
  Once again, the public has a right to expect that the IRS will 
administer the Tax Code with integrity and fairness in every context. 
Yet, for many conservative organizations that applied for tax-exempt 
status during the last 5 years, the IRS fell woefully short of that 
standard. The committee's bipartisan report examined these events in 
great detail.
  Let's take a look at what we now know after 2 years of exhaustive 
investigation. We know that the White House's focus on activities of 
tax-exempt organizations intensified after the Supreme Court issued its 
Citizens United decision in January 2010, culminating in many ways with 
President Obama's wrongheaded castigation of the Court in his State of 
the Union Address and continuing throughout 2010 until the midterm 
elections.
  The Finance Committee's report contains clear evidence that the IRS 
and other agencies heeded the President's call. For example, just a few 
weeks after the President's speech before Congress, the IRS made a 
pivotal decision to set aside all incoming tea party applications for 
special processing--a decision that would subject these organizations 
to long delays, burdensome questions, and would ultimately prove fatal 
to some of their applications.
  Around that same time, the Department of Justice was considering 
whether it could bring criminal charges against 501(c)(4) organizations 
that engaged in political activities. The Federal Election Commission 
had also opened investigations into conservative organizations that 
aired political ads.
  The IRS met with both agencies, providing input on the proposals of 
Department of Justice and information to the Federal Election 
Commission on organizations that were under investigation. These 
actions leave little doubt that, when Congress did not pass legislation 
to reduce spending on political speech, the administration sought 
alternative ways to accomplish the same goal.
  Regardless of whether an explicit directive was given, the President 
gave the order to target conservative groups at every opportunity--the 
State of the Union, in press conferences, and in TV interviews. He did 
not send a smoking gun email because he did not need to. He gave the 
order for everyone to hear, and his political allies at the IRS 
followed those orders.

[[Page 13626]]

  The report clearly shows that conservative groups were singled out 
because of their political beliefs, and gross mismanagement at the IRS 
allowed this practice to continue for years.
  We know the IRS systematically selected tea party and other 
conservative organizations for heightened scrutiny, in a manner wholly 
different from how the IRS processed applications submitted by left-
leaning and nonpartisan organizations. Although the IRS knew that the 
tea party applications were too dissimilar to be grouped under a common 
template, it continued to segregate them for screening and processing 
based on the presence of certain key words or phrases in the 
applicants' names or applications, such as ``Tea Party,'' ``9/12,'' and 
``Patriots,'' as well as indicators of political views that included 
being concerned with government debt, government spending or taxes, 
educating the public via advocacy, lobbying ``to make America a better 
place to live'' or being critical of how the country was being run.
  Some tried to mitigate these facts, claiming that the IRS similarly 
targeted left-leaning groups. Indeed, this argument is posited in the 
additional Democratic views.
  However, as our investigation made clear, the IRS's treatment of 
conservative organizations was without question different from that 
given to left-leaning and nonpartisan organizations.
  True enough, some liberal organizations were also denied tax-exempt 
status during this period. However, with one exception that affected 
just two organizations, all left-leaning organizations that were, 
according to the Democratic views, improperly treated had participated 
in activities that legitimately called their tax-exempt status into 
question.
  The IRS did not target these groups based on their names or ideology. 
Instead, it evaluated their actual activities that were known to the 
IRS--activities that, in many cases, properly resulted in denial or 
revocation of tax-exempt status.
  That same deference and attention to detail was not offered to tea 
party groups and other organizations. As a result, many of the tea 
party applicant groups gave up on the process, and some of these groups 
ceased to exist entirely, based, at least in part, on the failure to 
obtain tax-exempt status.
  Once again, we know all this happened. It is spelled out in great 
detail in the committee's report. On top of all of this, our 
investigation revealed an environment at the IRS where the political 
bias of individual employees such as Lois Lerner--who was, once again, 
the Director of the Exempt Organizations unit--was allowed to influence 
agency decisionmaking.
  The IRS's upper management gave Ms. Lerner free rein to manage 
applications for tax-exempt status. During our investigation, the 
Finance Committee found evidence that Lerner's personal political views 
directly resulted in disparate treatment for applicants affiliated with 
the tea party and other conservative causes.
  Ms. Lerner orchestrated a process that subjected applicants to 
multiple levels of review by numerous components within the IRS, 
thereby ensuring they would suffer long delays and be required to 
answer burdensome and unnecessary questions. Lerner showed little 
concern for conservative applicants, even when Members of Congress 
inquired on their behalf, allowing their applications to languish in 
the IRS bureaucracy for as long as 2 years with little or no action. 
The IRS began to resolve these applications only after some of the 
problems became public in 2012, but, of course, by that time the damage 
had been done.
  Our investigation also uncovered a pattern at the IRS of continually 
misleading Congress about its handling of applications submitted by tea 
party organizations. Specifically, top IRS officials, including Doug 
Shulman, Steve Miller, and, of course, Lois Lerner, made numerous 
misrepresentations to Congress in 2012 and 2013 regarding the IRS's 
mistreatment of these groups. As if that wasn't bad enough, the IRS 
impeded congressional investigations--including our investigation--by 
failing to properly preserve a significant portion of Ms. Lerner's 
emails and then concealing the fact that the emails had been lost from 
the committee for months.
  Long before these allegations surfaced, the IRS was already one of 
the most feared and loathed agencies of the Federal Government. 
Virtually all Americans had some level of either apprehension or 
animosity toward the IRS, due in large part to the power it had to 
impact the lives of everyday, hard-working taxpayers. Then, beginning 
at least in 2010, if not sooner, the IRS made things even worse, 
demonstrating a pattern of incompetence, mismanagement, political bias, 
and obstruction toward congressional oversight. As a result, the agency 
has in many respects lost the public's confidence.
  There is a lot of work that needs to be done if the agency is ever 
going to restore that confidence and regain the public's trust. I 
believe the Finance Committee's report gives the best account we have 
of how that trust was broken. It spells out in great detail the 
organizational and personnel problems that plagued the agency and 
allowed partisan agendas and political tribalism to influence important 
decisions. I hope all of my colleagues will take the time to examine 
this report and its findings. The report itself is over 400 pages long 
and includes roughly 5,000 pages of additional supporting documents. In 
other words, all of my colleagues have a lot of reading to do over the 
August recess. I hope we will take a close look at the events detailed 
in the report and come together to work on legislative solutions that 
will prevent this kind of misconduct from happening again in the 
future.
  In closing, I want to acknowledge the hard work and countless hours 
of time spent by the Finance Committee staff who worked on this report. 
All told, they conducted over 30 exhaustive interviews and reviewed 
more than 1.5 million pages of documents. They also drafted numerous 
versions of this report and performed countless other tasks necessary 
to bring this investigation to a close. The bipartisan committee staff 
whose diligence and devotion to duty made this investigation and report 
possible include the following: John Angell, Kimberly Brandt, John 
Carlo, Austin Coon, Michael Evans, Daniel Goshorn, Christopher Law, Jim 
Lyons, Todd Metcalf, Harrison Moore, Mark Prater and Tiffany Smith. All 
of them deserve our gratitude for the work they have put in.
  I also thank former Chairman Baucus for his work in starting this 
investigation, as well as my colleague Senator Wyden, who once again 
continued to work with us in a bipartisan fashion to get us to this 
point. I personally appreciate both of those gentlemen very much. I 
have to say it wasn't easy for them to sit through some of this stuff. 
Nevertheless, it has been a privilege to work with them.
  This is the first of a number of speeches I will probably give on 
this subject. Hopefully it gives everybody a little bit of an 
understanding as to why we are so upset and a little bit of 
understanding about the report we have issued today and have put on the 
Web page.
  With that, I yield the floor.
  The PRESIDING OFFICER. The Senator from Oregon.
  Mr. WYDEN. Mr. President, I want to thank the distinguished chairman 
from Utah. As Members will see from the views I am going to articulate, 
we have some strong differences about how the facts ought to be 
interpreted, but we worked very closely together to ensure that there 
would be one bipartisan compilation of the underlying facts. The two of 
us certainly agree that there is evidence of vast bureaucratic bumbling 
at the IRS.
  I will also say that a review of 1.5 million pages of emails and 
documents and interviews with more than 30 IRS officials does not point 
to a single shred of political interference. I think as colleagues look 
at particularly the majority views and the minority views--set them 
aside for a moment; the fact is, the facts of the report show that no 
order--no order was ever given to target political groups.
  I am very pleased that we now have a bipartisan report that was 
conducted

[[Page 13627]]

here in the Congress. That is why the bipartisan findings are 
especially important. As I have stated, the findings contain absolutely 
no evidence to support the narrative that has been advanced by other 
committees and some in the media that tea party groups were targeted by 
the IRS because of their political views.
  My own view is that groups on the progressive side and groups on the 
conservative side--both of them were handled in a fashion that was 
unacceptable. Both were handled badly. So as we kind of get into these 
issues--as I say, I think it was a very thorough and professional 
effort that was conducted to get at the facts. I want to kind of set 
the stage with some background.
  Under our Federal tax laws, people can establish various types of 
tax-exempt groups. There are different rules for each type. Under 
Section 501(c)(4), an organization can be established as a social 
welfare organization. One of the rules for these social welfare 
organizations is they have to be operated exclusively for social 
welfare purposes. That has been interpreted since 1959 to mean, among 
other things, that the organization can engage in some political 
campaign activity, but that cannot be its primary activity. There is no 
precise meaning of ``primary'' for this purpose, and exactly what 
constitutes ``political campaign activity'' is similarly unclear.
  Another type of tax-exempt organization is established under section 
527. A 527 organization can engage in an unlimited amount of political 
campaign activity, but there is an important distinction because a 527 
organization has to disclose the identity of its donors.
  Finally, the type of tax-exempt entity Americans are most familiar 
with--501(c)(3)s are not allowed to engage in any political campaign 
activity.
  So now, with that as some legal background, let's unpack the events 
we looked at.
  In February of 2010, the IRS Exempt Organizations Determinations 
Office, located in Cincinnati, began processing the first application 
for 501(c)(4) status from a tea party group. Before long, the office 
was--as one IRS employee was quoted as saying, they were inundated with 
applications from tea party groups, other conservative groups, and some 
progressive-leaning organizations. The additional Republican views 
estimate that a total of 547 applications were the focus of our 
investigation; 65 percent were from tea party or conservative groups; 
19 percent were from progressive organizations. To the IRS employees in 
the tax-exempt organizations division, these applications raised 
questions about whether the organizations were planning to engage in 
more political campaign activity than the 501(c)(4) law allowed.
  We also tried to assess the cause of the surge in applications, and I 
think it would be fair to say no one really knows what was behind that. 
It may have been related to the Supreme Court's Citizens United 
decision in January of 2010 which knocked down some of the key limits 
on political campaign spending. It may have been related to the rise in 
citizen activism embodied in the tea party movement, the Occupy 
movement. In any event, there was a surge in applications.
  Now let's fast forward to May of 2013. At the conclusion of her 
remarks at an American Bar Association conference, the Director of the 
IRS tax-exempt organizations division, Lois Lerner, disclosed that IRS 
employees had selected 501(c)(4) applications by groups with terms like 
``tea party'' and ``patriot'' in their name for further reviews. She 
stated that the IRS employees had done so simply because the 
applications had those names in the title. Lerner described this 
process of selecting cases for review because of a particular name as 
``wrong,'' ``insensitive,'' ``inappropriate.''
  A few days later, the Treasury Inspector General For Tax 
Administration, who is known as TIGTA, released a report finding that 
the IRS ``used inappropriate criteria that identified for rebuke Tea 
Party and other organizations applying for tax-exempt status based on 
their names or policy positions instead of indications of potential 
political campaign intervention.''
  At the time of these disclosures from the IRS and the inspector 
general, there was a very serious concern that the singling out of 
conservative groups by name may have been a consequence of political 
bias or motivation on the part of IRS employees, possibly at the 
direction of political appointees at the IRS, the Treasury Department, 
or the White House. Although the inspector general report found no 
evidence of political bias or targeting by the IRS, this was obviously 
a serious matter.
  The then-chairman of the Finance Committee, Chairman Baucus, and the 
then-ranking member of the committee, now our chairman, Senator Hatch, 
began an in-depth, bipartisan investigation to assess the facts. The 
investigation continued after I became chairman of the committee, and 
it has gone forward under Chairman Hatch this year. So our bipartisan 
inquiry has been underway for more than 2 years. In the course of the 
investigation, the bipartisan committee staff has reviewed more than 
1.5 million pages of documents and interviewed 32 witnesses.
  At the committee's request, the inspector general has undertaken 
several related but separate investigations. The results of the 
investigation are in the report the Finance Committee submitted to the 
Senate today. That consists of a bipartisan report prepared by the 
committee staff and represents the views of Chairman Hatch and myself; 
additional views of Chairman Hatch's prepared by the majority staff, 
which I will refer to as the additional Republican views; and my own 
additional views, prepared by the minority staff, which I will refer to 
as the additional Democratic views.
  In total, the principal parts of the report are 318 pages long, plus 
a 90-page chronology of events and another 5,000 or so pages of 
attached exhibits.
  I certainly hope the report is going to clear away some of the smoke 
and cut through some of the rhetoric to ensure that all sides can see 
what really happened. The report also makes a series of 
recommendations, including bipartisan recommendations, about how to 
initiate reforms going forward.
  I would like to now describe the main conclusions that I draw from 
the report. First and foremost, the IRS's handling of this matter was 
an unmitigated bureaucratic disaster. There were some extenuating 
circumstances.
  The Citizens United decision had opened the floodgates to millions of 
dollars flowing into political activities, with 501(c)(4) organizations 
seeming to be one of the favored vehicles. As a result, the IRS was 
facing a dramatic increase in the number and complexity of applications 
for 501(c)(4) status. At the same time, the IRS was working with vague 
regulatory standards that have not been updated since 1959. So the 
staff at the IRS exempt organizations division has one tough job. They 
were racing against a late-model Mustang in a 1959 jalopy.
  Even taking that into account, the IRS handled the situation badly. 
Essentially, the IRS froze. The bipartisan report shows that for more 
than 2 years, officials in the tax-exempt organizations division in 
both Cincinnati and Washington failed to develop a good system for 
processing 501(c)(4) applications that seemed to present issues about 
the group's potential involvement in political campaign activity.
  During that time, the IRS staff and managers tried a variety of 
different approaches. They asked one of their experts on tax-exempt 
organization law to focus on two test cases--in effect, models. That 
took more than 8 months, and nothing really came of it.
  Then they set up task forces, and they tried what has come to be 
known as the infamous BOLO or ``be on the lookout'' list. They tried to 
get more information from applicants by asking a long list of detailed 
questions. This approach actually backfired because of the volume and 
the inappropriate nature of the questions.
  The bumbling and the bureaucratic paralysis just went on and on. By 
my count, there were seven different efforts over more than 2 years to 
figure out how to handle these applications, and the first six were for 
naught. By December 2011, a total of 290 applications for 501(c)(4) 
status had been set

[[Page 13628]]

aside for further review. Two of these applications have been 
successfully resolved, not 202. It wasn't until the late spring of 
2012--more than 26 months after the first tea party application had 
arrived in Cincinnati--that the IRS finally started to get its act 
together, setting up a triage group that was able to work through the 
backlog of applications more quickly.
  This process could and should have been handled better. Senior IRS 
leadership should have recognized or been made aware of the problem and 
should have stepped in much earlier to develop a system that provided 
fair and expeditious processing of these applications.
  In light of all of this, the bipartisan report concludes that 
``between 2010 and 2013, the IRS failed to fulfill its obligation to 
administer the tax law with integrity and fairness to all.''
  At a time of rising political activity and under increased political 
scrutiny and pressure after the Citizens United decision:

       Senior IRS executives, including Lerner, failed to properly 
     manage political advocacy cases with the sensitivity and 
     promptness that the applicants deserve. Other employees in 
     the IRS failed to handle the cases with a proper level of 
     urgency, which was symptomatic of the overall culture within 
     the IRS where customer service was not prioritized.

  These are all findings of the bipartisan report.
  Further, and I wish to make this clear, most of the applications 
caught up in this mismanagement were tea party or other conservative 
groups, including in some cases small and relatively unsophisticated 
groups who didn't have the resources to engage in a protracted review 
with the IRS. And I think we ought to make no mistake about it--these 
groups deserve much better treatment from their government.
  If there is any good news in all of this, the Democratic view notes 
that there have been some positive steps. Four key employees in the IRS 
who failed to manage properly have been removed from their positions, 
the backlog of applications has largely been eliminated, and all but 10 
of the applications have now been resolved.
  The bipartisan report recommends several further steps that should be 
taken. It makes 16 recommendations, including such reforms promulgating 
objective criteria to trigger special review, prohibiting requests for 
donor lists, creating a position in the taxpayer advocate dedicated to 
assisting applicants for tax-exempt status, and improving the system 
for tracking resolution of pending applications, with a target of 
resolving applications within 270 days.
  Now let me turn to this question of political influence. Beyond the 
indisputable gross management, another important focus of our 
investigation was to deal with these speculative charges and issues 
with respect to political influence. When the original inspector 
general report was issued in 2013, there was a concern that it looked 
like most of the groups that were caught up in all of this were 
conservative-leaning groups, such as those with ``tea party'' in their 
names. In light of this, there was concern that we might be looking at 
something that was much worse than bureaucratic bungling. The concern 
was that there might have been an attempt to exert inappropriate 
political influence over the process of reviewing applications for tax-
exempt status by disfavoring certain applications because of their 
perceived political views.
  In my view, that would constitute a grave and completely legitimate 
concern not just for Republicans, not just for conservatives, but for 
every American. Among the fundamental principles underpinning our 
system of government are equal treatment for all and an inviolate right 
to freedom of speech and expression. Both of these principles are 
especially important when it comes to the IRS, which has great power 
that must be exercised in an evenhanded fashion. Of perhaps equal 
importance to an evenhanded exercise of its authority, it is incumbent 
on the IRS to take great care to ensure against any perception that it 
is acting because of bias, political or otherwise.
  In the committee's investigation--which, as Chairman Hatch has noted, 
went for more than 2 years--the bipartisan staff carefully reviewed the 
evidence, and in contrast to the bipartisan analysis and 
recommendations I have just described, in this instance, the Democratic 
and Republican views have come to different conclusions. The additional 
Democratic views conclude that there is absolutely no evidence that 
there was an attempt to exert political influence. The additional 
Republican views--in contrast, in the 120 pages--are trying to make the 
case that there somehow, someway, must have been political interference 
involved but without identifying any direct evidence, documentary or 
otherwise, to support the case.
  I wish to explain first by laying out the basic facts and then by 
responding to the main points in the additional Republican view.
  First, on the facts, according to the report, the staff found no 
evidence of involvement by the White House or by Treasury Department 
political officials. None. The staff found no evidence that any 
political appointee in the Obama administration was involved in the 
review of applications or in the establishment of standards for their 
review. None.
  As a side note, during most of the relevant period, the IRS 
Commissioner was Mr. Douglas Shulman, who was appointed by President 
Bush, and the principal official responsible for the management of the 
relevant IRS activities, Lois Lerner, was a career civil servant who 
was named to her position as Director of the tax-exempt organizations 
division by IRS Commissioner Mark Everson, who also was appointed by 
President Bush.
  In addition to finding no emails, no memos, and no other documents 
indicating there was an attempt to exert political influence, the 
report indicates that the staff asked every IRS employee who was 
directly involved in the review of the applications whether there had 
been any attempt to exert political influence over the handling of 
applications or whether they saw anyone else processing applications in 
a politically biased way. The staff asked 25 people. Every single one 
of them said there was no political bias.
  In addition, the inspector general audit that spurred the 
investigation also found no evidence of targeting or political bias. 
Let me repeat that because there have obviously been some 
misconceptions. The 2013 inspector general audit found no evidence of 
political bias in 501(c)(4) processing. This is discussed further in 
the committee's report, including an email from the deputy inspector 
general at the office stating: ``There was no indication that pulling 
these applications was politically motivated.'' There is an email from 
the inspector general chief counsel stating that the tea party was not 
targeted. The inspector general himself testified before our committee 
that no political motivation was found, and his office further stated 
that no relevant communications were found coming from the White House 
or Treasury.
  Further, although more conservative-leaning than progressive-leaning 
groups were affected, several progressive organizations were subject to 
the same kind of gross mismanagement, long delays, and inappropriate 
information requests that were experienced by the conservative 
organizations. The bipartisan report notes that terms such as 
``progressive'' and ``ACORN,'' as well as terms intended to capture the 
various Occupy Wall Street groups, were included with ``tea party'' and 
``9/12'' on the IRS BOLO list. Again, ``progressive'' appeared on the 
same BOLO list as ``tea party'' from day one. The report also shows 
that progressive groups were subject to mismanagement, delays, and 
intrusive questions from the IRS.
  I also would like to respond to several other particulars to the 
additional Republican views. Notwithstanding the plain fact that there 
is no evidence of any attempt to exert political influence over the 
process, the additional Republican views strive over the course of 120 
pages to make the case that somehow, someway, somewhere, there was 
something sinister going on. This is done through a combination of 
innuendo, speculation, and unjustified inference.

[[Page 13629]]

  The additional Republican views make much of the fact that the head 
of the tax-exempt organizations division and the principal person 
responsible for the management issues involved, Lois Lerner, appears to 
have been a Democrat with liberal views about some issues. Much is also 
made of the fact that the President and some congressional Democrats 
wanted to impose tighter restrictions on campaign spending. Put these 
two facts together--say, Republicans--and it becomes clear in their 
view that the fix was in.
  However, the actual evidence to support this theory is nonexistent. 
For example, the Republican views quote an email from Ms. Lerner's 
husband in which on election day he told her he had written in the 
names of Socialist Labor candidates on his ballot. They quote an email 
from Ms. Lerner--an email she wrote--celebrating Maryland's approval of 
same-sex marriage. And they note what they apparently consider to be 
particularly suspicious: that in the 1.5 million pages of documents, 
the Republican staff found no instance in which Ms. Lerner, members of 
her family, or her friends ``expressed positive sentiments about the 
Republican Party, a specific Republican candidate, or the Tea Party.''
  So what we have is that Ms. Lerner's husband voted for Socialists, 
she is a Democrat, she supports same-sex marriage, and she apparently 
doesn't have a lot of Republican supporters among her family. You just 
have to ask yourself, what is this supposed to prove? There is no 
evidence that any of these views were brought to the actual review of 
the application process, and that, to me, is what is paramount.
  Granted, the Republican views also quote various other emails in 
which Ms. Lerner expresses support for President Obama or is critical--
sometimes harshly so--of the Republican Party and specific Republican 
officials. To my mind, this is pretty much irrelevant chitchat. It is 
gossip. It is coffee-shop talk, locker-room talk. As the Democratic 
views puts it, ``There is no evidence that Lois Lerner allowed her 
political belief to affect how she carried out her duties as a manager 
of the Exempt Organizations office.''
  The Republican views also highlight Ms. Lerner's views about the 
Supreme Court Citizens United decision. It is pretty obvious she didn't 
like it. She thought it threatened to unleash a flood of unregulated 
money in the Federal campaign. The Republican views even suggests that 
it was somehow nefarious that Ms. Lerner was closely following the 
Citizens United decision.
  All of this tells us nothing. She was the head of the IRS division 
responsible for applying the law regarding the appropriate level of 
political campaign activity undertaken by 501(c)(4) organizations. It 
would be odd, in my view, if she weren't closely following Citizens 
United. It was an important decision with major implications for 
political campaign spending.
  It is not surprising to me that she didn't like the decision. Eighty 
percent of Americans felt the same way. I am one of them.
  The Republicans also were exercised that President Obama, various 
congressional Democrats, and the Democratic Party in general opposed 
the Citizens United decision and supported tighter limits on campaign 
spending. No question that is true. But the Republican views make a 
remarkable leap. They say:

       Overall, it is apparent that the need for an explicit 
     Presidential directive to target the Tea Party and 
     conservative organizations was rendered unnecessary by the 
     White House's frequent public statements condemning political 
     spending. Government agencies were acutely aware of the 
     President's wishes and responded accordingly.

  So said the majority in their views.
  Now, just think about that. Just kind of put your arms around that. 
The President wanted to limit campaign spending. So the Republicans on 
the committee would have us conclude that various relatively low-level 
career government officials, without any direct intervention whatsoever 
from the White House, from the Treasury Department or from anybody else 
in a position of political authority, just sprang into action and 
engaged in a conspiracy of some sort to harass conservative groups. I 
guess it was almost conspiracy by osmosis. I find these extraordinary 
leaps to just defy logic.
  Federal civil servants are allowed to have a political opinion. The 
President of the United States and Members of Congress are allowed to 
express their views about the campaign finance system. Certainly some 
of Ms. Lerner's personal emails were in poor taste, and it may have 
been bad judgment for someone in her position to be sending emails to 
her friends on her office computer expressing political opinions, but 
the only pertinent question here--the only pertinent question--is 
whether the political views of Ms. Lerner or other officials influenced 
the evenhanded administration of the law. Although the majority points 
to numerous embarrassing emails from Ms. Lerner, they cannot point to 
even a single one where she directed or encouraged employees to 
exercise political bias.
  The majority views also make another argument. They assert that 
significantly more conservative-leaning groups than progressive-leaning 
groups were affected by the dysfunction at the IRS and that this, in 
and of itself, proves there was a bias against conservatives. This is a 
more serious argument, but when you unpack this one, it, too, falls 
short. As I have said before, it appears from the report that most of 
the groups affected were conservative, but progressive groups were 
affected too. The bipartisan report indicates that progressive was on 
the BOLO list, along with ACORN and other terms such as ``Occupy'' that 
were considered to indicate progressive or Democratic-leaning political 
engagement.
  The report also shows the IRS conducted workshops directing employees 
to look for terms such as ``progressive'' and ``Emerge'' as well as 
``tea party.'' Again, these groups suffered from the same sort of 
delays and intrusive questions that tea party and other conservative 
groups suffered from.
  Nonetheless, Republicans on the committee insist the fact that more 
conservative than progressive groups were caught up in the IRS 
dysfunction necessarily means there was bias. However, this inference 
can be only drawn if there were equal volumes of applications coming 
into the IRS from conservative and progressive groups. There is just no 
evidence this was the case.
  Moreover, there is good reason to believe that in the wake of 
Citizens United, the increasing volume of applications--particularly 
applications that raised serious issues about involvement in political 
campaign activity--came primarily from conservative-leaning groups. 
Independent watchdogs have determined that 80 percent of political 
campaign spending by 501(c)(4)s was supported by conservatives, and the 
IRS staff said they were inundated with tea party applications. If that 
is the case, it would be unsurprising that most of the delays and other 
problems included conservative groups. They were mostly the ones who 
were applying.
  Again, I am not trying in any way to justify the poor treatment 
received by conservative groups, but the report found no evidence that 
the typical conservative application was any more likely to be 
mistreated than the typical progressive application, and without such 
evidence it is inappropriate to infer there was bias.
  A third argument the Republican views assert, which also falls short, 
is that there was a double standard: on one hand the treatment of the 
conservative groups caught up in the 501(c)(4) dysfunction and on the 
other hand the treatment of some nonprofit groups supported by 
Democratic Senators. The Republican views cite three cases in which 
Democratic Senators asked that the review of applications for tax-
exempt status be expedited and where that apparently was done. They 
contrast the relatively quick resolution of these cases to the delays 
experienced by tea party and other conservative applicants for 
501(c)(4) status.
  On the face of it, the facts the three cases relied on do not support 
the Republican inference there was a double standard. In the first 
place, according to the information in the report, the three groups 
supported by Democratic

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Senators had applied for 501(c)(3) status, under which they can engage 
in no political activity. Further, in two of the three cases there is 
nothing in the report indicating the cases were particularly difficult 
or controversial.
  In the Democratic views, it is noted the third case was a request for 
the expeditious consideration of an application for tax-exempt status 
by the One Boston Foundation in order to facilitate fundraising and 
assistance to those who were the victims of the Boston Marathon 
terrorist attacks in April of 2013. In that case, it appears from 
public reporting there was an unusual legal issue and that in part at 
the request of various public officials, the IRS did in fact cut 
through some redtape and resolve the issue so this organization could 
get up and running quickly.
  As far as I know, there are no allegations that the One Boston 
Foundation was anything remotely like a political organization, and I 
am not aware of any partisan or other controversy surrounding it. I was 
surprised by the Republican views that apparently thought it was 
inappropriate or unfair for public officials to encourage the IRS to 
help get the organization up and running or that the IRS did anything 
wrong by handling this case well. To put it more pointedly, I was 
surprised this was considered to be in any way relevant to our 
investigation.
  As the bipartisan report makes clear, the IRS took far too long to 
review 501(c)(4) applications from tea party and other groups, and it 
subjected many of the groups to unnecessary delay and inappropriate 
questioning, but the fact that the IRS was able to handle a few very 
different cases reasonably well does not show a double standard. In 
effect, the Republican views compare apples and oranges.
  Before closing, I want to briefly address several other matters 
covered in our report. The first is the crash of Lois Lerner's hard 
drive in 2011 which resulted in the loss of some emails that may have 
been relevant to our inquiry.
  Senator Hatch and I learned about the hard drive crash in June 2014, 
just before we were originally planning to release the committee's 
report. The two of us immediately asked the inspector general to 
investigate to determine whether there was evidence of intentional 
wrongdoing and whether any of the lost emails could be recovered from 
other sources.
  The inspector general conducted a thorough investigation, which took 
more than 1 year. Here is what the inspector general found, as 
explained in the report: Although we do not know why her hard drive 
crashed, there is no evidence it was crashed intentionally. The 
inspector general was able to recover about 1,300 additional emails, 
and the inspector general found that some potentially relevant backup 
tapes had been unintentionally mishandled and then destroyed, contrary 
to the document retention policy the IRS put in place after our 
investigation began. These findings have led to a significant amount of 
criticism about the current IRS Commissioner, Mr. John Koskinen.
  Before closing, I want to make a couple of points in response to the 
criticism of Commissioner Koskinen. First, it is important to remember 
that the principal problems we have been talking about--in other words, 
Chairman Hatch and I have been talking about these issues here for 
probably close to an hour regarding the IRS handling of applications 
for section 501(c)(4) status--all occurred before Mr. Koskinen came on 
board as IRS Commissioner in December of 2013. In fact, during the 
entire period covered by the original 2013 inspector general 
investigation, the IRS Commissioner was Mr. Doug Shulman, as I stated, 
appointed by President Bush. Although Mr. Koskinen inherited these 
problems, he did not create them.
  Second, looking at how the IRS handled the hard drive crash, I do 
think Mr. Koskinen waited too long to inform the Committee on Finance 
and that the senior IRS leadership could have done a better job keeping 
track of the backup tapes. That said, there is zero evidence that these 
mistakes were politically motivated, and there is no reason to believe 
the potential loss of some of Lois Lerner's emails compromised the 
investigation.
  We recovered thousands of emails covering this period from the 
relevant people corresponding with Ms. Lerner. Even taking the 
potential loss of some emails into account, the bipartisan report 
concludes that ``the large volume of information we have received gives 
us a high degree of confidence in the accuracy of the conclusions 
reached during our investigation.''
  Looking forward, Commissioner Koskinen is a skilled and experienced 
leader. I am confident he is going to work closely and cooperatively 
with Chairman Hatch, with myself, with Democrats and Republicans on the 
Committee on Finance to continue to improve the operation of the IRS 
Exempt Organizations Division.
  We also asked the inspector general to investigate four other cases 
in which there have been allegations of political motivation by the 
IRS. One involved a White House official who referred to a specific 
company when criticizing the use of tax loopholes. The question was 
whether he had received inside information from the IRS, and of course 
that would be a serious violation of the law.
  The other cases involved conservative groups that unfortunately had 
some of their confidential tax information inappropriately made public. 
These cases have generated intense congressional interest and lawsuits. 
The underlying concern, similar to the concern about the handling of 
the 501(c)(4) applications, was the serious and legitimate worry as to 
whether there had been an effort to exert political influence over the 
IRS--in effect, to use the IRS as a weapon against conservatives.
  Here, based on the information in the report, the inspector general's 
investigations have led to clear conclusions. The inspector general 
investigation of the White House official found he did not receive any 
confidential information from the IRS. He apparently was just shooting 
from the hip, which may be bad judgment, but it is not a crime. In the 
three cases where confidential taxpayer information was inappropriately 
disclosed, it was because of unintentional mistakes by low-level IRS 
employees, some of whom have been subject to administrative discipline.
  These mistakes were regrettable, and the staff has made bipartisan 
recommendations to prevent them from recurring, but the bottom line is 
that in each of these cases there was no effort to exert political 
pressure.
  In summary, our report tells a regrettable story. Many applicants for 
tax-exempt status were treated badly. They were treated in an 
unacceptable way, and they deserved better service from their 
government, but in the end this is a story about gross bureaucratic 
dysfunction. It is not about an attempt to exert political influence 
over or inject political bias into how the IRS does its job.
  Further, the main culprits are gone, the system has been improved, 
the committee has made a series of bipartisan recommendations to 
improve it further, and I think it is fair to say that both Democrats 
and Republicans on the Senate Committee on Finance--Chairman Hatch has 
worked very closely with me on this--are committed to making sure 
nothing like this vast bureaucratic bungling ever happens again.
  So we here in the Senate have more to do. We are going to have to do 
some hard thinking about one of the underlying issues, which is the 
money and politics, including in the context of tax-exempt 
organizations that are not supposed to be engaged primarily in 
political activity.
  As part of this--and I respect the views of Chairman Hatch and others 
who may disagree--I think the Congress has to come up with better 
standards. We ought to set--again, in a bipartisan way--to overhaul the 
1959 regulatory jalopy. Just put our arms around that one. Here we are 
in the digital world with so many changes in our country, and we still 
have the basic 1959 approach to regulating these issues. We ought to 
establish rules of the road that fully respect First Amendment rights 
and also give all organizations--be they progressive, conservative or 
in between; whatever they

[[Page 13631]]

are--better guidance about what they can and cannot do given their tax-
exempt status.
  My own view is, when it comes to money and politics, we really can't 
get enough transparency. I hope we will be able to work on those issues 
in the future. In fact, the last time we had a bipartisan bill here was 
in the last Congress, when Senator Murkowski, our colleague from 
Alaska, joined me on a bill that said all major spending from 
everywhere--wherever you were; progressive, conservative--essentially 
had to be disclosed. So my own view is that we need more transparency, 
not less.
  Mr. President, I have some brief remarks to make on another subject, 
unless our chairman wants to make further comments. I will yield on 
this topic and let the chairman comment. Then after the chairman is 
done speaking, I will ask unanimous consent--and be certainly no more 
than 10 minutes on another subject--to speak after the chairman has had 
a chance.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. Mr. President, I thank my colleague.
  Look, people can make up their own minds about this. Read the doggone 
report. We cannot read it and just say: Brush it off; there is just one 
rogue employee there. There are all kinds of employees that are 
mentioned in the report. We can't just wipe it off because we were 
unable to interview the Treasury Department or the White House. We 
can't just wipe it off, when we look at all the information there, and 
just say: Well, this was a bad apple in the IRS, and it was just an 
ordinary course of events. They mistreated liberal groups or 
progressive groups, so-called, as much as they did the conservative 
groups.
  There is no question they didn't. There were very few progressive 
groups, and it was easy to understand which ones they were looking at. 
My gosh, some of those have had criminal accusations against them. 
There are only a few of them, compared to the wide group of people on 
the conservative side--that they knew were conservatives and they put 
on the BOLO list, the ``be on the lookout'' list.
  Now, yes, we weren't able to get into the Treasury Department, and we 
weren't able to get into the White House and what they did or didn't do 
in these areas. I don't think we can read this report and conclude that 
this is just a terribly dysfunctional IRS. I think we can agree that we 
all knew that before we had this report. But this is a very serious 
report.
  By the way, the report is signed off by both Democrats and 
Republicans. We can't just wipe it away and say: Well, this is just a 
bunch of bad apples at the IRS.
  Lois Lerner took the Fifth Amendment. She refused to testify in front 
of the House. Now, she had a right to do that, and I would be the first 
to stand for that right. But why would she do that?
  The fact of the matter is that it was a dysfunctional IRS, and it was 
being managed by people who were bright enough to not be dysfunctional.
  I am not going to say much more because we will answer every one of 
the distinguished Senator's approaches here this evening. I would just 
suggest: Read the report. It is signed off by Democrats and 
Republicans. We can't just blow it off by saying this was just the 
dysfunction at the IRS. We all know the IRS is dysfunctional, and part 
of the reason it is is that the IRS is supposed to represent every 
citizen in this country in a fair and balanced way. But it is governed 
by a union. They can't even fire somebody at the IRS without going 
through all kinds of hoops, and then they are going to have a rough 
time firing them no matter how bad they are. We all know that. We have 
seen it year after year here. To just brush this off like it is just 
one bad apple there--there are more apples there than Lois Lerner.
  All I can say is this report is a very serious report. It can't be 
just brushed away. It is a serious report for many reasons.
  One reason is that conservative groups, by a vast majority, were 
mistreated--and mistreated in election years, where they were trying to 
make a difference. I am not saying I agree with them. All I can say is 
they had a right to get their 501(c)(4) status determined and not just 
dragged out past the election.
  That alone is something that ought to cause everybody in this country 
to be a little bit frightened that the IRS can do that. I don't want it 
done for liberal groups that way. If the Republicans were ever totally 
in control of the White House, the Justice Department, the IRS, and the 
Treasury, I wouldn't want anybody treated like these conservative 
groups were treated. I would probably differ with some of those 
conservative groups, myself. But they deserve to be treated with 
respect and with dignity and under the law. And they were not. And we 
can't just brush it off on just one person being out of line.
  I am very concerned about it. I suggest people read the report. Read 
the report.
  There were some things we weren't able to look into. I wish we had 
been able. I think we might have been able to more definitively lay 
this out. But to make a long story short, read the report--something 
that my colleagues on the other side agreed to. Then read the minority 
views, then read the majority views, and see what you think. But I will 
tell you this: You have to be alarmed.
  The most dangerous agency in our government happens to be the IRS, 
the Internal Revenue Service. They can break anybody overnight. People 
are afraid of the IRS, and with good cause. When we see what happened 
here, they are going to have to be even more fearful--unless we can 
straighten this mess up. I intend to see that it is straighten up--or 
straightened out, may be a better way of saying it.
  I am very concerned about this. We had people who were mistreated. I 
might not agree with them, but they were mistreated, in comparison with 
the liberal groups, which you would have questions about them anyway--
some of them.
  Well, I am sure we will debate this even more. I don't want to take 
more of the Senate's time tonight. But I am extremely concerned because 
I don't think there is an agency in government that causes more fear in 
the hearts of people than the IRS. And when we see the mess they did, 
we can't just chalk it up to just a few rogue employees there at the 
IRS. When we see the mess they did, we have to stop and think: My, 
gosh, is this the way our country is run? Is this the way the IRS is 
run? Can we do anything about it? Or do we just have to, as citizens, 
sit back and forget about it?
  Well, we are not going to let them forget about it. This is a very, 
very important report. I think the majority and minority views are 
worth reading. I don't see how we can conclude at the end of it that 
there is not a tremendous problem there.
  Keep in mind that when the inspector general investigates and if he 
doesn't find an absolute, they say he doesn't find anything. They are 
not going to pick on anybody. I have a lot of respect for the inspector 
general at the IRS. I remember his being criticized because apparently 
he is a Republican. But he is not going to accuse anybody if he doesn't 
have the evidence.
  In this case, there is a whole accumulation of evidence that we 
cannot ignore and just brush away under the guise that this is just a 
rogue person. There were other people there as well who caused this 
calamitous set of events, and we have to not just brush it away. We 
have to look at it, and we have to find a way of straightening out the 
IRS so it is not a partisan institution--which most Americans believe 
it is, and almost every conservative believes it is.
  Now, we are making some strides here, and I am going to continue to 
push on to see that we make strides. But I have to say, ask the 
American people out there what they think. Read the report, and then we 
will talk about it some more.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Oregon.
  Mr. WYDEN. Mr. President, I will be very brief. I thank my colleague 
from Arkansas for his patience. I know he has things he has to have 
done as well.

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