WASHINGTON — In 2010, a tiny Palestinian-rights group called Minnesota Break the Bonds applied to the Internal Revenue Service for tax-exempt status. Two years and a lot of prodding later, the IRS sent the group’s leaders a series of questions and requests almost identical to the ones it was sending to Tea Party groups.
The controversy surrounding the IRS that erupted in May has focused on an ideological question: Were conservative groups singled out for special treatment based on their politics, or did the IRS equally target liberal groups? But a closer look suggests the problem was less about ideology and more about how a process instructing reviewers to “be on the lookout” for selected terms was applied to any group that mentioned certain words in its application.
Sylvia Schwarz, a co-director of the Break the Bonds group, shrugged at the treatment meted out by the IRS. She was used to rough scrutiny in a country that tilts against the Palestinians, she said. But the same questions, asked of conservative groups, led to the dismissals of top IRS officials, prompting criminal and congressional investigations and eliciting charges that the White House used the agency to pursue its political opponents.
Two months of investigation by Congress and the IRS has produced new documents that have clouded much of the debate’s narrative. In the more complicated picture now emerging, many organizations other than conservative ones were singled out: “progressive” organizations, medical marijuana purveyors, groups formed to carry out President Barack Obama’s health law.
According to the Treasury inspector general for tax administration, the IRS received 73,319 applications for tax-exempt status, of which about 22,000 were not approved in the initial review. The inspector general looked at 296 applications flagged as potentially being from political groups. That means most of the applications pulled aside for further scrutiny had nothing to do with politics.
Most Republicans see no reason to back off, but some have tempered statements. “We haven’t proved political motivation,” said Representative Charles Boustany Jr., Republican of Louisiana and chairman of the House Ways and Means Subcommittee on Oversight.