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Sunday, July 21, 2024 | Back issues
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IRS Defeats Suits Over Tax-Exempt Analyses

(CN) - A federal judge nixed claims that political bias led to unfair scrutiny on the tax-exempt status of dozens of conservative Tea Party groups.

Houston-based True the Vote and 41 conservative groups led by Franklin, Tenn.-based Linchpins of Liberty filed their separate lawsuits against the Internal Revenue Service in the weeks after an IRS official's May 2013 public apology before the American Bar Association "for a pattern of misconduct whereby the IRS intentionally and systematically targeted."

They claimed that the IRS and its officers had violated their First Amendment and Administrative Procedure Act in delaying and singling-out their applications for tax-exempt status beginning in February 2010.

Citing an "IRS Action Plan" that announced the suspension "of 'be-on-the-lookout,' or BOLO, lists in the application process for tax exempt status," U.S. District Judge Reggie Walton in Washington, D.C., dismissed both suits as moot Thursday.

Walton noted that the defendants "publicly announced that they suspended the unconstitutional conduct complained of by the plaintiffs and implemented changes to the tax-exempt review process to assure the public that the conduct will not recur."

"Thus, the allegedly unconstitutional governmental conduct, which had delayed the processing of the plaintiffs' tax-exempt applications and spawned this litigation, is no longer impacting the plaintiffs," the 23-page page opinion in the Linchpins case states.

Compounding these changes is the subsequent approval by the IRS of the groups' applications, the court found.

"The defendants' grant of tax exempt status to the plaintiff, and the defendants' suspension of the alleged IRS targeting scheme during the tax-exempt application process, including remedial steps to address the alleged conduct, coupled with the reduced 'concern about the recurrence of objectionable behavior' by government actors convinces the court the 'voluntary cessation' exception is not applicable here," Walton wrote.

True the Vote founder Catherine Engelbrecht noted that she is "stunned" by Walton's ruling.

"The notion that the IRS can target Americans for years because of their political beliefs is reprehensible," Engelbrecht said in a statement Sunday. "The court acknowledges in its opinion that the IRS did in fact target True the Vote for our perceived political beliefs, but then it holds that neither the agency nor the individual IRS agents or officers are responsible for this unconstitutional conduct. Right now, we are considering all legal options and will announce our next steps very soon."

Freedom Path filed a similar federal complaint in Dallas regarding the "additional and unconstitutional scrutiny" of conservative groups based on their policy positions.

In a bid to dismiss the group's First and Fifth Amendment claims against her last month, Lois Lerner, former head of the Exempt Organizations Unit with the IRS, told U.S. District Judge Sidney Fitzwater that Freedom Path failed to allege any contact between her and Texas.

Fitzwater has yet to rule on Lerner's motion.

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