John McCain staffer Henry Kerner urged IRS to financially ruin people with audits


This post first appeared at Fellowship of the Minds

Remember how the IRS under the Obama administration maliciously targeted conservatives, for which IRS officials like Lois Lerner were never held accountable?

Judicial Watch, the nonpartisan citizens’ watchdog group, has uncovered evidence that it wasn’t just Democrats: Republican Senator John McCain (Arizona) also urged the IRS to politically target individuals and non-profit groups for special auditing, for the express purpose of ruining them financially.

Cover photo of The Atlantic, October 2008.

Yesterday, June 21, 2018, Judicial Watch issued this stunning press release:

Judicial Watch today released newly obtained internal IRSdocuments, including material revealing that Sen. John McCain’s former staff director and chief counsel on the Senate Homeland Security Permanent Subcommittee, Henry Kerner, urged top IRS officials, includingthen-director of exempt organizations Lois Lerner, to “audit so many that it becomes financially ruinous.” Kerner was appointed by President Trump as Special Counsel for the United States Office of Special Counsel.

The explosive exchange was contained in notes taken by IRS employees at an April 30, 2013, meeting between Kerner, Lerner, and other high-ranking IRS officials. Just ten days following the meeting, former IRS director of exempt organizations Lois Lerner admitted that the IRS had a policy of improperly and deliberately delaying applications for tax-exempt status from conservative non-profit groups.

Lerner and other IRS officials met with select top staffers from the Senate Governmental Affairs Committee in a “marathon” meeting to discuss concerns raised by both Sen. Carl Levin (D-MI) and Sen. John McCain (R-AZ) that the IRS was not reining in political advocacy groups in response to the Supreme Court’s Citizens United decision.  Senator McCain had been the chief sponsor of the McCain-Feingold Act and called the Citizens United decision, which overturned portions of the Act, one of the “worst decisions I have ever seen.”

[Note: Citizens United v. Federal Election Commission558 U.S. 310 (2010), is a landmark U.S. constitutional law, campaign finance, and corporate law case dealing with regulation of political campaign spending by organizations. On January 21, 2010, the Supreme Court ruled (5–4) that the free speech clause of the First Amendment to the Constitution prohibits the government from restricting independent expenditures for communications by nonprofit groups,  for-profit corporations, labor unions, and other associations.]

In the full notes of an April 30 meeting, McCain’s high-ranking staffer Kerner recommends harassing non-profit groups until they are unable to continue operating. Kerner tells Lerner, Steve Miller, then chief of staff to IRS commissioner, Nikole Flax, and other IRS officials, “Maybe the solution is to audit so many that it is financially ruinous.” In response, Lerner responded that “it is her job to oversee it all:”

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 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.

Judicial Watch previously reported on the 2013 meeting.  Senator McCain then issued a statement decrying “false reports claiming that his office was somehow involved in IRS targeting of conservative groups.”  The IRS previously blacked out the notes of the meeting but Judicial Watch found the notes among subsequent documents released by the agency.

Judicial Watch separately uncovered that Lerner was under significant pressure from both Democrats in Congress and the Obama DOJ and FBI to prosecute and jail the groups the IRS was already improperly targeting. In discussing pressurefrom Senator Sheldon Whitehouse (Democrat-Rhode Island) to prosecute these “political groups,” Lerner admitted, “it is ALL about 501(c)(4) orgs and political activity.”

The April 30, 2013 meeting came just under two weeks prior to Lerner’s admission during an ABA meeting that the IRS had “inappropriately” targeted conservative groups. In her May 2013 answer to a planted question, in which she admitted to the “absolutely incorrect, insensitive, and inappropriate” targeting of Tea Party and conservative groups, Lerner suggested the IRS targeting occurred due to an “uptick” in 501 (c)(4) applications to the IRS but in actuality, there had been a decrease in such applications in 2010.

On May 14, 2013, a report by Treasury Inspector General for Tax Administration revealed: “Early in Calendar Year 2010, the IRS began using inappropriate criteria to identify organizations applying for tax-exempt status” (e.g., lists of past and future donors). The illegal IRS reviews continued “for more than 18 months” and “delayed processing of targeted groups’ applications” in advance of the 2012 presidential election.

All these documents were forced out of the IRS as a result of an October 2013 Judicial Watch Freedom of Information (FOIA) lawsuitfiled against the IRS after it failed to respond adequately to four FOIA requests sent in May 2013 (Judicial Watch, Inc. v. Internal Revenue Service (No. 1:13-cv-01559)). Judicial Watch is seeking:

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  • All records related to the number of applications received or related to communications between the IRS and members of the U.S. House of Representatives or the U.S. Senate regarding the review process for organizations applying for tax exempt status under 501(c)(4);
  • All records concerning communications between the IRS and the Executive Branch or any other government agency regarding the review process for organizations applying for tax exempt status under 501(c)(4);
  • Copies of any questionnaires and all records related to the preparation of questionnaires sent to organizations applying for 501(c)(4) tax exempt status.
  • All records related to Lois Lerner’s communication with other IRS employees, as well as government or private entity outside the IRS regarding the review and approval process for 501 (c)(4) applicant organizations.

The Obama IRS scandal is bipartisan – McCain and Democrats who wanted to regulate political speech lost at the Supreme Court, so they sought to use the IRS to harass innocent Americans,” said Judicial Watch President Tom Fitton. “The Obama IRS scandal is not over – as Judicial Watch continues to uncover smoking gun documents that raise questions about how the Obama administration weaponized the IRS, the FEC, FBI, and DOJ to target the First Amendment rights of Americans.

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