Lois Lerner sent confidential IRS data to FBI

WASHINGTON—More than a year after Lois Lerner, former head of the Internal Revenue Service’s tax-exempt division, first invoked her Fifth Amendment right not to testify before Congress, some of the reasons why are now coming into focus. This week, the House Oversight and Government Reform Committee revealed that one month before the 2010 midterm elections, Lerner sent a 1.1 million-page database to the FBI. It contained confidential tax information from 501(c)(4) social welfare organizations.

Despite the the committee’s long-running investigation into IRS targeting of conservative groups, Lerner’s huge—and allegedly illegal—data transfer only came to light last month during a closed-door interview with Department of Justice (DOJ) employee Richard Pilger. In response to a subpoena, the DOJ turned over the database to the Oversight committee last week.

“We were extremely troubled by this new information, and by the fact that the IRS has withheld it from the committee for over a year,” wrote Oversight chairman Rep. Darrell Issa, R-Calif., and subcommittee chairman Rep. Jim Jordan, R-Ohio, in a letter to IRS Commissioner John Koskinen. They demanded the IRS turn over all documents related to the data transfer and suggested Koskinen’s failure to already supply such “highly relevant material” suggests he is obstructing the panel’s investigation.

According to the Republican-controlled committee, in an October 2010 email Lerner asked Pilger, who works with DOJ’s election crimes branch, about his formatting preference for the 21 disks containing taxpayer information. Pilger forwarded the question to an FBI agent, then responded: “Thanks Lois—FBI says Raw format is best because they can put it into their systems like excel.”

The information “suggests that the IRS considered the political speech activities of nonprofits to be worthy of investigation by federal law-enforcement officials,” Issa and Jordan wrote to Koskinen. “The IRS apparently considered political speech by nonprofit groups to be so troublesome that it illegally assisted federal law-enforcement officials in assembling a massive database of the lawful political speech of thousands of American citizens.”

In a letter Tuesday to Attorney General Eric Holder, Issa and Jordan included evidence that Lerner and other top IRS officials were trying to influence public opinion about 501(c)(4) tax-exempt organizations exercising political speech. Lerner spoke on background to a New York Times reporter who wrote a September 2010 story on the issue. “I do think it came out pretty well,” wrote IRS official Sarah Ingram in an email to Lerner and others. “The ‘secret donor’ theme will continue—see Obama salvo and Diane Rheem (sp). At least SS [Times reporter Stephanie Strom] started the idea that we don’t have the law to do something …"

Lerner has refused to cooperate with the committee’s investigation and the House last month voted to hold her in contempt of Congress. Issa and Jordan renewed their call for a special prosecutor, saying the revelation that the DOJ worked with the IRS on the illegal data transfer creates multiple conflicts of interest.

The FBI has acknowledged it should not have the data and plans to return it to the IRS. Evidence suggests the agency may have used it to launch probes into some nonprofit groups: Texas businesswoman Catherine Engelbrecht in February told Congress the FBI was one of several federal agencies that began investigating her after she applied for tax exempt status for her two grassroots organizations, True the Vote and King Street Patriots.

This incident is not the first known instance of the IRS illegally releasing confidential taxpayer information: The National Organization for Marriage (NOM), a group advocating for traditional marriage, in October sued the IRS after someone at the agency in 2012 released NOM’s private tax return to the Human Rights Campaign—its chief political foe. The IRS recently admitted wrongdoing in the case, and a judge has set a June 30 court date to take evidence on damages.

“The IRS now says this was a case of mere negligence, that it was simply an innocent mistake, and all they should have to pay for their error is $1,000,” said John Eastman, NOM’s chairman. “But the court has cleared the way for us to recover our actual damages, which, excluding lost donations that resulted from the illegal disclosure, exceed $50,000, as well as attorneys fees and other costs of the litigation. We are looking forward to holding the IRS accountable.”