CINCINNATI (Legal Newsline) – Lois Lerner, whose testimony about Internal Revenue Service’s crackdown on Tea Party groups has come out from under seal, said she couldn’t remember stating that Lincoln was our worst president.
Under questioning at a deposition in 2017, Kansas City lawyer Edward Greim read an email Lerner wrote in 2014.
“He should have let the South go,” Lerner wrote.
“We really do seem to have two totally different mindsets.”
Lerner, who served as director of the IRS division that oversees nonprofit groups, told Greim, who represented Tea Party groups accusing the IRS and Lerner of targeting them for delays and rejections, said she didn’t remember writing those statements.
On Aug. 1, the IRS and lead plaintiff in class action litigation NorCal Tea Party, as well as other groups, jointly posted depositions of Lerner and other witnesses, following an order from District Judge Michael Barrett of Cincinnati. Lerner’s deposition has been sealed since 2017.
Like the Watergate burglary, the active hostility of IRS toward Tea Party groups didn’t catch enough public attention until after the election.
IRS placed Lerner on paid leave in 2013.
When Congress called her before a committee, she refused to answer on grounds that she might incriminate herself.
She soon resigned.
Some plaintiffs claimed the IRS released confidential information to news organizations.
In 2016, Chief District Judge Susan Dlott certified a class for groups that met IRS targeting criteria.
Dlott defined the criteria as using the Tea Party name, referring to taxes, lobbying to make America a better place to live, and criticizing how the country is run.
She defined an “unnecessary request” subclass for groups that provided answers to questions the IRS had no right to ask.
Together the classes included about 400 groups.
After three years on the case, Dlott recused herself, and Barrett took charge.
At Lerner’s deposition in 2017, she told Greim she worked at Federal Election Commission from 1981 to 2001.
He read a statement she made in 2010, about a Supreme Court decision in Citizens United v. Federal Election Commission.
“I don’t think that changes our legal position that tax exemption is a privilege and if you want the privilege you have to play by the rules,” Greim read. “I do think we need to be prepared to respond to inquiries about C3 and C4 spending in elections.”
Greim asked about her concern, and she said the decision impacted spending.
“We had organizations that fell within the corporate piece of it and there could be confusion between the case being directed at Federal Election Commission organizations that fell under the First Amendment and organizations that fell under the tax structure,” Lerner said.
He asked how it impacted spending, and she said it indicated corporations could spend in elections as long as they didn’t coordinate with candidates.
“We had already heard questions when we were out speaking, does this change the rules?” she said.
She said she attended a meeting at New York University where academics spoke on both sides, and she assumed it would be taken to court.
Greim read an article about a social welfare conference where she said there were many calls for IRS to immediately shut organizations down.
He asked where the calls came from and she said newspapers, speeches, letters to IRS, and Congress on both sides of the aisle.
He asked if there was a difference between the missions of IRS and Federal Election Commission, and on advice of counsel she didn’t answer.
He asked if it concerned her that cases were handled as a block and she said no.
She said where the law wasn’t settled she assigned blocks of cases to a group for purposes of consistency and learning curve.
He read her email from 2011, stating the Tea Party matter was very “dangerous.”
He asked what she meant, and she said, “The Tea Party case could be the vehicle to go to the Supreme Court…We had to be very careful that we had developed the case correctly, dotted all the I’s, crossed all the T’s, and made sure that we had a good case to take to court if that’s what was going to happen.”
He read her email stating, “Even if we go with a four on the Tea Party cases, they may want to argue they should be threes. It would be great if we can get there without saying the only reason they don’t get a three is political activity.”
The references to "three" and "four" were to IRS tax exempt tax codes: 501(c)(3), commonly referred to as charitable organizations and 501 (c)(4), referred to as social welfare organizations.
Lerner told Greim, “What is political for the IRS and what political means for the general public are very different.”
He asked why she believed all the cases implicated political activity and she said she was told this.
He asked who told her before April 7, 2011, and she said, “I just remember I was told things.”
He asked what “bolo” stood for and she said she believed it was “be on the lookout.”
He read email she received about bolo stating, “Organizations involved with the Tea Party movement applying for exemption.”
He asked if she recalled it, and she said she never saw a bolo list.
He asked if she gave directives at a meeting, and she said she directed everybody to quit referring to cases as Tea Party cases.
He asked why, and she said, “Because they were using it as shorthand for a much broader group of cases and it could be misunderstood.”
He read email she received in 2012, about a Fox News interview with the leader of Liberty Defense Foundation.
He read her reply, “What’s the plan? Is this group already C4 or is it applying?”
He asked what she had in mind, and she said she didn’t recall what she meant.
“Did you believe that the IRS should have some plan for dealing with groups that were formed to combat the IRS?” Greim asked.
She said, “I don’t believe that’s what that meant.”
He asked if anything was wrong with criteria that were used, and she said the way they originally selected cases was not the best way.
“We corrected the procedures and at the end of the day many people that might have been pulled into this were determined to be approved so therefore the IRS was not being political about this,” Lerner said.
He asked if the number of C4 applications in 2009 was 1,571, and she said yes.
He asked if the number for 2010 was 1,591, and she said yes.
He asked how she understood there was a spike in applications in 2010.
“That’s when they started talking to me about applications that were coming in with advocacy issues,” she said. “We had been talking about the numbers going up after Citizens United for a while.”
He asked if it was important to put advocacy cases in the context of Citizens United and she said it made for better understanding of what occurred.
At that point, in the sixth hour of Lerner’s deposition, Greim probed deeper.
He read email she received about a National Public Radio article under a headline of “Democrats say anonymous donors unfairly influencing Senate races.”
He read her reply, “Perhaps the FEC will save the day,” and asked if she hoped the commission would stop groups from spending against Democrats.
She said no, and he asked how the commission would save the day.
She said if an organization’s major purpose was political, it fell under the commission rather than IRS, “diminishing my inventory.”
He read email she sent in 2012, stating, “Citizens United is by far the worst thing that has ever happened to this country.”
“We are witnessing the end of America,” she wrote.
“There has always been a struggle between the capitalistic ideals and the humanistic ideals.
“Religion has usually tempered the selfishness of capitalism, but the rabid hellfire piece of religion has hijacked the game and in the end we will all lose out.”
He asked if he read it correctly and she said "yeah."
He read email she received after the election stating, “Democrats have a majority of the Senate and Republicans have a majority in the House.”
He read her reply, “Whoo-hoo. It was important to keep the Senate.”
“We don’t need to worry about alien terrorists,” she wrote.
“It’s our own crazies that will take us down.”
He read her email stating she took the Fifth before Congress “because they had been so evil and dishonest in my lawyer’s dealing with them.”
She trashed Lincoln and the South.
Greim asked if personal disagreement with a political position espoused by a taxpayer entity affected the way she treated that entity.
She said absolutely not.
She said IRS doesn’t keep track of whether organizations are liberal or conservative and it would be improper if they did.
He asked why and she said, “Because we’re supposed to treat all taxpayers alike regardless of race, creed, national origin, political affiliation.”
Lerner moved to seal her deposition and Barrett granted it.
Plaintiffs and IRS agreed to settle in 2017, and Barrett granted approval for $3.5 million in 2018.
Plaintiffs moved to unseal depositions and Barrett made no ruling.
This April, plaintiffs petitioned the Sixth Circuit appellate court to issue a writ of mandamus for Barrett to grant the motion.
He moved faster than the appellate court and granted it in May.