By Patrick Temple-West
WASHINGTON, June 3 Internal Revenue Service
staff have a long history of discouraging applications for
tax-exempt status from controversial groups by burying them in
complicated questionnaires, according to former IRS officials.
Among other reasons, they said, the tactic was sometimes used to
persuade groups to drop their applications so the IRS could
avoid making a ruling.
This approach - allegedly used in the recent IRS targeting
of Tea Party and other conservative groups - has been around for
decades, the officials said, citing lengthy questionnaires sent
to applicants including religious and gay-rights organizations
and a children's summer camp group that promotes atheist
The recollections of these former officials indicate the
recent scandal concerning Tea Party applications may be only the
tip of the iceberg, and that IRS workers have long resorted to
this unwritten, word-of-mouth tactic towards a wide range of
The IRS has no guidelines or limits regarding questionnaires
sent to applicants for tax-exempt status, the former officials
said, and no management approval is needed.
“It becomes abusive if every time you’re answering a
question there’s five more,” said Marvin Friedlander, a former
official in the IRS exempt-organization unit who spent 40 years
at the IRS before retiring in 2009. “I don’t believe it should
be used. I’ve seen it used,” he said, describing what he called
"kitchen sink" questioning.
The IRS said using long questionnaires to discourage
applications for exemption was not sanctioned practice. "It is
not IRS policy to encourage organizations to withdraw their
applications during the determination process," the agency said
in a written statement, which added that about 70 percent of
applications are finished within 120 days.
"There are often instances where additional information and
due diligence is necessary to determine if the organization
meets the complex tax-exempt requirements.”
IRS staffers have wide discretion to ask questions of
tax-exempt applicants, making it unclear when a questionnaire
crosses the line from an appropriate, back-and-forth inquiry
into something more harassing.
Some former IRS officials defended the use of
questionnaires. "The policy certainly was that questions asked
should be for purposes of resolving ambiguities in an
application," said Marcus Owens, a former head of the IRS
division tax-exempt division and now a partner with law firm
Caplin & Drysdale.
A pattern of rigorous questionnaires grew out of tax law
reforms in the late 1970s following Nixon-era scandals, said
Bill Brockner, who retired as a lawyer working for the IRS
tax-exempt group in 2006 after a 30-year IRS career.
Nixon's attempts to use the IRS for political revenge
triggered a number of taxpayer protection laws. Now, the IRS
must rule on a tax-exempt application within 270 days, as long
as the group takes all steps to secure its determination.
Brockner said he saw lengthy questionnaires starting in the
late 1970s and early 1980s when cases from field offices across
the country came to the IRS's Washington office for review. IRS
staffers could delay having to approve or deny controversial
groups' applications "with the object they would never answer
the thing," he said.
It was a template of questions that nobody could ever
answer, he said. “It was pretty deliberate.”
He said the tactic was never endorsed by IRS higher-ups but
that workers shared the tip with colleagues.
"They just give up. That's the end," he said about
controversial groups subjected to the questionnaires. "The same
thing applies to what they were doing in Cincinnati."
The Cincinnati office of the IRS was tasked with reviewing
applications for 501(c)4 status, which has particular appeal
because it allows non-profits to keep donors anonymous, as long
as these groups do not "primarily" engage in political activity.
A Treasury Department watchdog report released last month
described how Cincinnati office staff developed criteria such as
"Tea Party" and "Patriots" to pick out groups for additional
screening starting in 2010. In 2012, the IRS used long
questionnaires with such groups.
Conservative groups are suing the IRS for damages resulting
from its 501(c)4 targeting. The suits include groups that
abandoned their application as a result of the questionnaires.
The House of Representatives Ways and Means Committee will
hold a hearing on Tuesday to hear from organizations that say
they were targeted by the IRS based on their personal beliefs.
SECULAR SUMMER CAMP
While conservative groups are currently grabbing headlines,
a range of charitable non-profits say they too were unfairly
When considering tax-exempt applications, IRS workers are
confronted with having to make political or social judgments to
decide whether non-profits' activity disqualifies them.
Tax-exempt 501(c)3 charities cannot engage in any political
activity. Applicants for 501(c)4 status must show they are
"primarily" engaged in promoting social welfare, and not
In October 2011, Camp Quest Inc, an Ohio-based Atheist group
that organizes one-week adventure getaways for 8- to
17-year-olds, had its charitable, 501(c)3 tax-exempt application
subjected to an IRS questionnaire, former IRS official
Friedlander said. The organization describes itself as a place
for free thought and a "summer camp beyond belief.”
Amanda Metskas, the group's executive director, was
confronted with a list of 20 time-consuming questions, including
requests about education, activities and all curriculum
materials, she said.
"I would have given up," without legal help, she said. Camp
Quest's application was approved in January 2012.
The IRS declined to comment on specific applications.
More traditional charities such as boy- and girl-scout
troops breezed through the application process, said Charlie
Anderson, who worked for 24 years in the IRS tax-exempt
A Boy Scouts of America spokesman said the group had not
encountered issues with tax-exempt status. The Girl Scouts said
individual councils filed applications many years ago, and no
one around now could recall if there were problems with those
For some politically-hot groups, the questionnaires served
as a tool to slow down the process.
"The strategy was not to deny any tax-exempt status, but
just find any way possible not to rule positively," Anderson
A pro-Israel group, Pennsylvania-based Z Street, is suing
the IRS, alleging it applied a discriminatory review to its
501(c)3 application. The IRS asked repeated questions of board
members' backgrounds, said Lori Lowenthal Marcus, Z Street's
She discontinued the group in 2011, but she is still
pursuing the lawsuit. Z Street is arguing, in part, that its
tax-exempt status was delayed because of IRS “special policies”
and “particularly intense scrutiny” for applications involving
support for Israel. “Detailed personal information about each Z
Street board member had to be supplied to the IRS three times,”
according to its 2010 complaint.
The federal district court in Washington will hear an IRS
motion to dismiss on July 2.
Courts have generally sided with the IRS when tax-exempt
applicants did not fully comply with IRS information requests,
said Bruce Hopkins, a partner with law firm Polsinelli PC, who
has written a book about tax-exempt organizations.
The targets of the rigorous questionnaires change based on
shifting trends in U.S. political and social advocacy that spawn
new types of tax-exempt applicants, said Paul Streckfus, a
former IRS tax-exempt division employee. He currently publishes
the EO Tax Journal, which writes about tax-exempt organizations.
New gay rights groups, for example, have objected to what
they have described as intrusive questionnaires, he said. "The
complaints have been going on for years," Streckfus said.
TEDDY BEAR EVIDENCE
The Treasury watchdog report said 28 of 296 Tea Party and
other conservative groups that got extra tax-exempt scrutiny
withdrew their applications.
Ginny Rapini, a Tea Party leader from Northern California,
said she received in January 2012 an IRS request for 97 pieces
of information when applying for 501(c)4 status.
Rapini said she responded in full to the IRS questionnaire,
including sending the agency a teddy bear her Tea Party group
made as part of its marketing. The IRS granted her Tea Party
group tax-exempt status about seven months later in August 2012.
Four Tea Party groups that she knows of gave up their
applications when hit with the questionnaires, Rapini said.
Groups that gave up after receiving the questionnaires can
argue the IRS suppressed their free speech, said Mark Meckler, a
co-founder of the Tea Party Patriots who is now president of an
organization funding Tea Party groups' lawsuit against the IRS
for its application targeting.
"They were damaged because they gave up," he said.
(Reporting By Patrick Temple-West; Editing by Karey Van Hall,
Martin Howell, Kevin Drawbaugh)
Keywords: USA IRS/APPLICATIONS
(C) Reuters 2012. All rights reserved. Republication or redistribution of
Reuters content, including by caching, framing, or similar means, is
expressly prohibited without the prior written consent of Reuters. Reuters
and the Reuters sphere logo are registered trademarks and trademarks of
the Reuters group of companies around the world.