Congress to Probe IRS Audits of Conservative Nonprofits

Congress is opening an investigation into whether the Internal Revenue Service targeted conservative nonprofit groups for audits.

It’s the first time since the Watergate scandal that the Joint Committee on Taxation has been ordered to investigate charges that the IRS has a political bent to its enforcement efforts, according to staff members of the House Ways and Means and Senate Finance committees. The Joint Committee on Taxation conducts research for the House and Senate tax-writing panels.

“We are troubled by recent reports alleging politically motivated treatment of certain tax-exempt organizations and individuals by the Internal Revenue Service,” Rep. Bill Archer (R-Texas), the Ways and Means chairman, and Sen. William V. Roth Jr. (R-Del.), chairman of the Finance Committee, said in a letter.

The letter, dated Monday, also was signed by the panels’ senior Democrats, Sen. Daniel Patrick Moynihan and Rep. Charles B. Rangel, both of New York.

In recent months, several published reports have accused the IRS of targeting conservative groups to see if they were engaging in political activities, which is unlawful for nonprofits with 501(c)(3) tax-exempt status. The Heritage Foundation, Citizens Against Government Waste and others have confirmed they were being audited.

IRS Commissioner Margaret Milner Richardson said she was “delighted” at word of the probe.

“I continue to believe that these reports are inaccurate and misleading and could erode the public confidence in the integrity of our self-assessment system,” Richardson said in a statement.

There are two dozen types of tax-exempt organizations, but 501(c)(3) charities can’t engage in partisan politics or provide benefits to any individual or group. Contributions to such groups are tax deductible.

The investigation also will target audits of 501(c)(4) groups, which are created to promote “social welfare.” There were nearly 740,000 such groups in 1995.

Questions about the IRS’ impartiality arose during the House Ethics Committee investigation of Speaker Newt Gingrich (R-Ga.), who was ordered to pay a $300,000 penalty after making misleading statements about the financing of a college course he taught.