Have IRS audits become political

0 Comments | Insight on the News, April 7, 1997 | by David Wagner

Several conservative groups have been audited after opposing Clinton administration policy issues. There is growing suspicion that the impetus for these audits is coming from high government officials.

The pattern by now is disturbingly familiar. A conservative organization takes a high profile in opposition to a Clinton administration initiative or perhaps opposing the Clintons themselves. A few weeks later, IRS agents turn up at the organization's front door, announcing an audit.

Reports in the Washington Times the Wall Street Journal and the Chicago Tribune have noted this pattern, along with an apparent absence of any similar IRS attention to liberal or left-leaning organizations.

John van Kannon, vice president and treasurer of the Heritage Foundation, seen by many as the leading conservative policy shop in Washington, confirmed to Insight that Heritage is being audited by the IRS. However, he cautions against leaping to conclusions. "We view it as routine. Heritage has been audited twice before, once in 1977 and once in the mid-eighties, and the current audit is actually less intrusive than those."

Nonetheless, there are thought-provoking coincidences in the current Heritage Foundation case. "Last summer," says van Kannon, "the Knight-Ridder papers did a story charging that Heritage had given the Dole campaign its mailing list in exchange for Dole signing a fund-raising letter for us. In fact, we had given the campaign what's known in the list business as a one-time use. This is completely legal and common; we've been doing it for years, with the IRS' knowledge. Nonetheless, [Colorado Democrat] Rep. David Skaggs read the Knight-Ridder story into the Congressional Record and, shortly thereafter, the auditors showed up. Then, just after the election, the scope of the audit was widened."

Skaggs' office provided Insight with a copy of a press release from May 31, 1996, in which the liberal congressman "called for an inquiry into transactions reported in a recent Miami Herald article involving efforts by the Heritage Foundation, Citizens Against Government Waste and other [sections] 501 (c) (3) nonprofits to assist the Dole presidential campaign that may have violated the law prohibiting campaign-type political activity by nonprofits." Skaggs' request was directed to two House committees, not to the IRS. One of the House bodies named by Skaggs was the Government Reform and Over-sight subcommittee on National Economic Growth, Natural Resources and Regulatory Affairs, whose chairman Indiana Republican David McIntosh, was at that time looking into alleged illegal lobbying by liberal groups that receive direct federal grants.

Another conservative group that received unsought visitors from the IRS is the National Center for Public Policy Research, or NCPPR. "We got audited in 1995," says NCPPR President Amy Moritz Ridenour. "The agents were here for two weeks, and the whole thing was over in two months, so I can't complain that they took up too much of our time." Others have not been so lucky The National Rifle Association's ordeal has been a marathon, and the organization has budgeted $1 million in 1997 just for audit-related expenses.

Did NCPPR do anything to provoke wrath in high places? "We were very active in opposing the Clinton health-care plan and in criticizing Hillary Clinton's role in it," Ridenour tells Insight. "That was a two-year project, 1993-94. Then, in 1994, we actively opposed a lobbying-reform bill. Ralph Nader and other liberal activists who supported it blamed me personally for defeating it, and it seemed kind of an emotional thing for them."

What made Ridenour decide to go public about her organization's experience, she tells Insight, is a conversation she had with the auditor. "I asked why we were being audited, and the auditor said, 'You must have made someone mad.' He then added that he doesn't know why people are audited -- he's not in the room when those decisions are made. It could mean nothing, but I thought it was remarkable that an IRS employee would say that."

Other conservative audit targets during the Clinton years include attorney Kent Masterson Brown, who handled the lawsuit that forced the administration to open the records of the secret Health Care Task Force; National Review, the most widely subscribed conservative opinion journal; American Spectator, the muckraking conservative magazine that exposed then-Gov. Clinton's use of Arkansas state troopers to secure dates; the Western Journalism Center, named by an internal White House memo as part of an alleged right-wing media conspiracy against the Clintons; and Citizens Against Government Waste.

Stan Welli, a 34-year veteran of the IRS' elite Inspection Service, the agency's internal watchdog, tells Insight: "The IRS would not do this on its own. If they're doing politically motivated audits, it would be because they've been asked to at a very, very high level."

The key question, of course, is not so much whether conservative groups are being audited -- all tax-exempt organizations, like all taxpayers, are theoretically subject to audit from time to time -- but whether they are being audited disproportionately as compared with liberal organizations. The answer is not easy to nail down. Reporters have tried to do so by calling liberal organizations and asking whether they're being audited. The answer has been uniformly negative. This may be evidence of political bias in the IRS' audits -- or it may be evidence that liberal nonprofits fear the fund-raising consequences of any admission that they are being audited.