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Report: McCain Staffer Urged IRS To Conduct ‘Financially Ruinous’ Investigations Of Non-Profits

An IRS employee’s version of a meeting including Lois Lerner says a top staffer for Sen. John McCain urged IRS officials to conduct ‘financially ruinous’ investigations of nonprofit groups. 


Newly public documents indicate that a top staffer for Sen. John McCain urged Internal Revenue Service officials to conduct “financially ruinous” investigations of nonprofit groups.

Judicial Watch just released a batch of internal notes from the IRS which detail a discussion between top IRS officials, including Louis Lerner, and former staff director for McCain and chief counsel on the Senate Homeland Security Permanent Subcommittee Henry Kerner, at a meeting dated April 30, 2013. The notes are an IRS staffer’s version of what happened.

As the coauthor of campaign finance regulations known as McCain-Feingold, McCain has long urged more government restrictions on political speech and activity. He notably criticized the Citizens United rulingcalling it the “most egregious decision of the United States Supreme Court in the 21st century,” because it enabled corporations to spend money on political messaging via independent nonprofit organizations.

In the 11 pages of notes, Kerner reportedly asked the IRS what tools the federal agency had to monitor and crack down on organizations that may be abusing their nonprofit status. Lerner explained that the IRS can revoke an organization’s tax-exempt status if they are abusing it, but that it doesn’t happen overnight, to which Kerner suggested that “maybe the solution is to audit so many that it is financially ruinous.”

Here’s the whole exchange, from page 10 of the IRS employee’s notes.

Henry Kerner asked how to get to the abuse of organizations claiming section 501 (c)(4) but designed to be primarily political. Lois Lerner said the system works, but not in real time. Henry Kerner noted that these organizations don’t disclose donors. Lois Lerner said that if they don’t meet the requirements, we can come in and revoke, but it doesn’t happen timely. Nan Marks said if the concern is that the organizations engaging in this activity don’t disclose donors, then the system doesn’t work. Henry Kerner said that maybe the solution is to audit so many that it is financially ruinous. Nikole noted that we have budget constraints. Elise Bean suggested using the list of organizations that made independent expenditures. Lois Lerner said that it is her job to oversee it all, not just political campaign activity. Lois Lerner said that she does have other tools. When we issue compliance check questionnaires, we are very transparent about it and post the questionnaire on our website.

In 2015, Judicial Watch reported on the same April 30 meeting, but the notes it obtained from the IRS via Freedom of Information Act requests had been blacked out. In response, McCain vehemently denied Judicial Watch’s characterization.

“A recent press release by Judicial Watch sparked a series of online reports falsely claiming that my office was somehow involved in the IRS’s targeting of conservative groups – reports that are demonstrably untrue and totally contradicted by my all of my actions over the past several years on this issue,” the Arizona senator said in a 2015 statement.

McCain also cited a 37-page report in which he disagreed with Senate Democrats’ conclusion that the IRS had not targeted conservative nonprofits. In the 2014 report, McCain insisted that the IRS had abused its powers in order to target conservative-aligned nonprofits by auditing them.

UPDATE: In a statement released Friday, Julie Tarallo, Communications Director for McCain’s senate office, called Judicial Watch’s report “bogus.”

“Judicial Watch’s allegations that Senator McCain was somehow involved in the IRS’s targeting of conservative groups were debunked in 2015 and have no merit,” Tarallo said. “Judicial Watch has once again gone out of its way to smear Senator McCain’s strong record of oversight of IRS practices, and fabricate outlandish conspiracy theories that are totally contradicted by the facts.”