EXCLUSIVE-Spain's bad bank close to big land sale as disposals pick up
* Sareb close to auctioning 350 mln euro portfolio - source
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 thinking.
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 groups.
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. [ID:nL2N0E20I7]
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 targeted.
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 politics.
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 organizations division.
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 applications.
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 said.
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 president.
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)
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* Sareb close to auctioning 350 mln euro portfolio - source
By Gabriel Stargardter and Elinor Comlay MEXICO CITY, Oct 4 After years in Brazil's shadow, Mexico's stock market is enjoying a listings boom, fueled by hopes of economic reforms and strong demand from pension funds breathing life into a long-stagnant market. From airlines to banks, Mexican companies have raised $9.8 billion this year - more cash than the previous four years combined. That is just $1.1 billion shy of the total issuance in regional powerhouse Brazil, which has