• IRS mishandling of Tea Party reviews still unresolved, audit charges

    Attorney General Eric Holder announced a criminal investigation into the IRS' handling of applications for tax-exempt status by conservative groups. NBC's Lisa Myers reports.

    By M. Alex Johnson, staff writer, NBC News

    Poor management allowed low-level IRS employees to single out Tea Party and other conservative groups seeking tax-exempt status for extra review, and the agency continues to drag its heels on fixing things, according to an inspector general's report obtained Tuesday by NBC News.

    The IRS said in its formal response that it had satisfactorily answered all of the complaints in the audit by the Treasury Department's inspector general for tax administration. But Acting Deputy Inspector General Michael McKenney made it clear in a cover letter accompanying the document that "we do not consider the concerns in this report to be resolved," noting that the IRS objected to two of his office's nine recommendations calling for clearer regulations, stricter processes and better documentation of what the IRS is doing and why.

    President Barack Obama said in a statement Tuesday evening that the report's findings were "intolerable and inexcusable." He said he had ordered Treasury Secretary Jack Lew "to make sure that each of the Inspector General's recommendations are implemented quickly."

    The audit blamed confusion by IRS administrators for the inappropriate reviews, which Attorney General Eric Holder said Tuesday would be focus of a federal criminal investigation.

    The report found that mismanagement led the IRS to ask some groups for unnecessary information — in some cases, it asked groups to list the names and address of future donors — and delayed processing of some groups' requests, some for more than three years.

    The average delay was 13 months, it said.

    Two IRS offices — the Washington headquarters of its Exempt Organizations unit, which is responsible for processing applications for tax-exempt status, and an office in Cincinnati called the Determinations Unit — come in for the brunt of the blame in the 48-page report, parts of which are redacted.

    The audit found that in June 2011, the Cincinnati office distributed an expanded "Be On the Look Out" list of criteria for identifying potential political cases. The so-called BOLO list identified four reasons for officers to give an application special attention:

    • "Tea Party," "Patriots" or "9/12 Project" is referenced in the case file
    • Issues include government spending, government debt or taxes
    • Education of the public by advocacy/lobbying to "make America a better place to live"
    • Statements in the case file criticize how the country is being run

    "The criteria developed by the Determinations Unit gives the appearance that the IRS is not impartial in conducting its mission," the audit concluded. "The criteria focused narrowly on the names and policy positions of organizations instead of tax-exempt laws and Treasury Regulations."

    In its response, the IRS acknowledged "the mistakes outlined in the report," saying they were caused by "the lack of a set process for working the increase in advocacy cases and insufficient sensitivity to the implications of some of the decisions made."

    Related: As applications swell, IRS nonprofit division overloaded, understaffed

    The agency blamed low-level "front line career employees" acting out of what it said was "a desire for efficiency and not out of any political or partisan viewpoint."


    It also claimed that some of the political groups were at fault because their applications were "vague as to the activities the applicants planned to conduct."

    Groups seeking 501(c)(4) tax-exempt status can advocate for particular general political positions, but their primary purpose must be "social welfare," and they are barred from intervening in political campaigns.

    "A number of applications indicated that the organization did not plan to conduct political campaign activity," the IRS said. But elsewhere in their applications, they "described activities that in fact appeared to be such activities," it said.

    Many of the groups "did not understand what activities would constitute political campaign intervention," it said, even as it noted in the same document that "there are no bright-line tests" for what constitutes such activity.

    "As the report discusses, these issues have been resolved," the IRS declared.

    "Meet the Press" moderator David Gregory discusses the IRS's admission that it singled out conservative groups, saying there's frustration more wasn't done to deal with the issue.

    But the audit disagreed, saying: "Although the IRS has taken some action, it will need to do more so that the public has reasonable assurance that applications are processed without unreasonable delay in a fair and impartial manner in the future."

    In a statement late Tuesday, the IRS contended that it didn't act out of any political bias, saying the cases singled out for review in the Cincinnati office since 2010 "included organizations of all political views."

    The audit didn't specifically address allegations that Acting IRS Commissioner Steven Miller misled Congress because he knew about the inappropriate procedures but kept quiet for months before they were made public.

    In a speech on the Senate floor, John Cornyn of Texas, the Republican whip, thundered that Miller "should resign today" if it is established that he "willfully misled Congress when inquiries were made earlier about this sort of scandalous political activity."

    Sen. Orrin Hatch, R-Utah, said that regardless of whether it acted out of political bias, the IRS had made a mess of things.

    "This was either one of the greatest cases of incompetence that I've ever seen or it was the IRS willfully not telling Congress the truth," he said.

    In its statement, the IRS said it never intended to hide the issue. Instead, it said, it waited to say anything until it could see the audit "and we reviewed their findings."

    In what was described as a "tough meeting" Tuesday, Senate Finance Committee Chairman Max Baucus, D-Mont., told Miller that "he is in for some serious questioning" from the committee, sources in the meeting told NBC News' Kelly O'Donnell.

    The Finance Committee is expected to convene a hearing into the controversy, although one hasn't yet been scheduled. Baucus told Miller on Tuesday that the committee would accept nothing less than his "complete cooperation and transparency," one of the sources said.

    Lisa Myers, Kelly O'Donnell and Richard Gardella of NBC News contributed to this report. Follow M. Alex Johnson on Twitter and Facebook.

    More from Open Channel:

    Follow Open Channel from NBCNews.com on Twitter and Facebook

    This story was originally published on Tue May 14, 2013 9:04 PM EDT

  • 5 unanswered questions about the IRS targeting of conservative groups

    Alex Wong / Getty Images

    President Barack Obama speaks during a joint news conference with British Prime Minister David Cameron at White House on Monday.

    By Erin McClam, Staff Writer, NBC News

    Outrage intensified in Washington on Monday over the disclosure that the Internal Revenue Service targeted conservative groups for special scrutiny when they applied for tax-exempt status.

    President Barack Obama, at a White House appearance with the British prime minister, said that he wanted all the facts but used strong terms to condemn the reported conduct.

    “I’ve got no patience with it. I will not tolerate it,” he said. “And we will make sure that we find out exactly what happened on this.”

    The Treasury Department’s inspector general for tax administration will release an audit report later this week. In the meantime, here are five big unanswered questions looming over the IRS.

    How did this start and why?

    In January 2010, a Supreme Court decision known as Citizens United touched off a flood of political spending, much of it classified under a section of tax law known as 501(c)4 that entitles certain “social welfare” groups to tax exemption.

    Two months later, a special unit of the IRS in Cincinnati assigned to screen applications for 501(c)4 status began searching for groups with descriptions that included “Tea Party” and “Patriots,” according to a partial draft of the inspector general’s report obtained by NBC News.

    Lois Lerner, head of the IRS division on tax-exempt organizations, said Friday that the targeting of conservative groups was “inappropriate” but “absolutely not” influenced by the White House. She also said that none of the targeted groups was denied tax-exempt status.

    What has not been spelled out is who in the Cincinnati office decided to search for conservative groups and why.

    At least one Tea Party group called on the administration Monday to appoint a special prosecutor to look into the matter, which it called “un-American and Nixonesque.” One of the articles of impeachment against President Richard Nixon accused him of targeting political opponents for tax audits.

    Both Republicans and Democrats in Congress are determined to investigate.

    “I just don’t buy that this was a couple of rogue IRS employees,” Sen. Susan Collins, R-Maine, said Sunday on the CNN program “State of the Union.”

    Who knew what, and when, higher in the IRS?

    Lerner learned in June 2011 that agents had targeted groups with names including “Tea Party” and “Patriots,” according to the draft obtained by NBC News.

    She “instructed that the criteria immediately be revised,” according to the draft. Ten months later, in March 2012, the IRS commissioner at the time, Douglas Shulman, testified to Congress that the IRS was not targeting tax-exempt groups based on their politics.

    The IRS said over the weekend that senior executives were not aware of the targeting, but it remains unclear who knew what and when. Shulman, who left the agency last fall, has not spoken publicly about the scandal and did not answer a request for comment Monday from NBC News.

    Members of Congress had sent letters to Shulman as early as June 2011 asking specifically about targeting of conservative groups, according to a House Ways and Means Committee summary obtained by NBC News.

    The IRS responded at least six times but made no mention of targeting conservatives, according to the committee’s summary.

    Will anyone be fired?

    Sen. Marco Rubio, R-Fla., on Monday demanded the resignation of the head of the IRS. That is Steven Miller, who is serving as acting commissioner until Obama nominates a replacement.

    The last commissioner was Shulman, who was appointed by President George W. Bush in 2008, left the agency in November and has taken a position as a guest scholar at the Brookings Institution.

    Newt Gingrich, the Republican former House speaker, told MSNBC on Monday that Obama should say “he’s going to fire everybody he can legally fire who’s been involved with this.”

    How will the White House contain the political damage?

    The IRS scandal presents a daunting political challenge for the White House, which is already being forced to defend its handling of the deadly attack on a U.S. diplomatic post in Benghazi, Libya, last September.

    The furor over the IRS has come from both parties. Sen. Max Baucus of Montana, the Democratic chairman of the Senate Finance Committee, said Monday the agency had committed an “outrageous abuse of power” and pledged a grilling.

    “The IRS will now be the ones put under additional scrutiny,” he said.

    Sen. Tim Kaine of Virginia called it inexcusable, and Sen. Joe Manchin of West Virginia said the president “must immediately condemn this attack on our values and find those individuals in his administration who are responsible and fire them.”

    How can this be prevented in the future?

    Rubio, in his letter calling for the resignation of the IRS chief, called the behavior “seemingly unconstitutional and potentially criminal.”

    But under existing law, the worst that can happen to an IRS agent who discriminates against taxpayers is getting fired, said Rep. Mike Turner, an Ohio Republican who sits on the House Oversight Committee.

    Turner introduced a bill Monday to increase the toughest penalty to five years in prison and a $5,000 fine.

    “This is about protecting the rights of all Americans and their ability to freely express their political thoughts,” he said.

    Kelly O’Donnell of NBC News contributed to this report. Reuters and The Associated Press also contributed.

    This story was originally published on Mon May 13, 2013 5:18 PM EDT

  • Florida Congressman Allen West still not conceding defeat in House race

    By Reuters

    Joe Skipper / REUTERS

    Republican U.S. Rep. Allen West, seen here on Oct. 18 during a campaign stop in South Palm Beach, Fla., isn't reacy to concede to Democrat Patrick Murphy.

    Tea Party-backed Republican Congressman Allen West said he was still not ready to concede defeat on Sunday, almost two weeks after the Nov. 6 election, when the clock ran out on a partial recount in South Florida.

    Results showing West trailing Democratic challenger Patrick Murphy by 1,900 votes were now expected to be turned over to the state Division of Elections for official certification.

    West was granted a recount of early ballots in St. Lucie county at the weekend, but officials were unable to complete the process before time ran out at midday on Sunday.

    "Today at noon, it became clear Patrick Murphy will be officially certified as the next congressman from the 18th Congressional District," said Murphy's campaign manager Anthony Kusich. "It is beyond time to put this campaign behind us."

    Under Florida law, in the event of an incomplete recount the original returns are automatically submitted for certification by the state.

    "This is election is far from over," said West's campaign manager, Tim Edson, in a statement calling the results "highly suspect."

    "We will continue to fight on behalf of all voters in District 18 to ensure a fair and accurate count of their votes," he added, without saying how the campaign planned to challenge the result.

    West, 51, a former Army lieutenant colonel, is seeking his second term in the U.S. House of Representatives, where Republicans held onto their majority in the election.   

    With the help of the conservative Tea Party movement, West amassed one of the largest campaign war chests among House Republicans. His supporters include Americans for Prosperity, the conservative political advocacy group funded by the billionaire Koch brothers.   

    Murphy, 29, a political newcomer in his first congressional race, ran a surprisingly well-backed campaign focused on branding West as a divisive right-wing extremist.

  • Marine who criticized Obama on Facebook: I wish I could take it back

    Gregory Bull / AP

    The Marines say Staff Sgt. Gary Stein will be discharged for criticizing President Barack Obama on Facebook. He has since apologized to the president.

    By Isolde Raftery, msnbc.com

    Sgt. Gary Stein, the 26-year-old Marine who learned Wednesday he would be discharged for his online comments criticizing President Barack Obama, wishes he could take it back.


    “People ask me, ‘Would you go back and change those words?’ I would most definitely,” Stein told msnbc.com. “I would articulate my point better.”

    On March 1, Stein wrote on a closed forum for active-duty meteorologists and oceanographers that he would say "Screw Obama" and not follow all orders from him, according to Courthouse News.

    “Obama is the economic enemy,” he wrote in the post. “He is the religious enemy ... He is the ‘fundamentally change’ America enemy … He IS the Domestic Enemy.”

    Marine who criticized President Obama on Facebook to be discharged

    Five minutes later, another Marine took down his post, but not before someone Stein knew took a screen shot and forwarded the comment to Stein’s superiors.

    Stein had already been warned about a Facebook page he had started in 2010, which he named Armed Forces Tea Party.

    “They said, ‘All we ask is that you write that the views are not that of the Marine Corps or the Department of Defense,’” Stein said. He said he put up the disclaimer that day.

    The Facebook page, which had six moderators, including Stein, included posts about contraception, gays in the military, pundit Keith Olbermann and Obama. One post included a photo of Obama with the word, “Jackass” written underneath. Stein said that was not his post.

    Service members are, according to Directive 1344 of the Department of Defense, allowed to express personal opinions on political candidates, but not as representatives of the Armed Forces.

    Last month, a three-member military panel recommended that he be booted from the Marine Corps. On Wednesday, Brig. Gen. Daniel Yoo accepted their recommendation that Stein be dismissed for violating military law.

    Stein said he repeatedly told Marine Corps officials he would shut down the Facebook page and not speak with the press if they allowed him to complete his contract, which ends in three months, but they refused.  

    “I think they’re trying to use me as an example,” Stein said. “Senior officers don’t want to hear, ‘You were the person who let this Gary Stein situation get out of hand. I think there might have been peer pressure among the senior enlisted.”

    Maj. Michael Armistead, a Marine Corps spokesman at Camp Pendleton, could not confirm whether this negotiation took place.

    Stein, an Arizona native, has been a Marine for nine years and was deployed to Iraq from 2005 to 2006. Although he regrets his post, he still believes his online activity should be protected by the First Amendment of the Constitution. Still, he said he would caution other service members to think before posting their opinions.

    “I’m not telling them to zip it up or shut up; be conscious of what you post,” he said. He said he believes the Marine Corps should clearly rewrite the rules for social media in the wake of his dismissal.

    In a phone interview Wednesday, Stein sounded tired. A former weather forecaster, he lost his security clearance and started working as a scheduler on a rifle range at Camp Pendleton. He said his wife’s grandmother died Tuesday night and he was diagnosed Monday with a throat disease. He said the Marine Corps is waiting to discharge him so that he can go through treatment.

    “It’s been a rough day,” Stein said. “I’m disappointed. Not only in the Marine Corps, but in myself.”

    Watch US News videos on msnbc.com

    He said he plans to go through treatment and tend to his wife and 4-year-old daughter. He has been a licensed real estate agent for two years; last night he posted a house for sale on his personal Facebook page.

    He also wrote on Facebook that he would not accept racist or vulgar posts.

    “I will ban you and you will never be on the page again,” he said.

    And he said he has also apologized to the president.

    “If he was in front of me right now, I would salute him, say, ‘Yes, Mr. President, No, Mr. President,’ and when I walked away, I would still disagree with his policies. But those are two separate things.”

    More content from msnbc.com and NBC News:

    Follow US News on msnbc.com on Twitter and Facebook

  • Former Tea Party spokesman Michael Kobulnicky arrested in sex assault case

    By Lauren Steussy, NBCSanDiego.com

    SAN DIEGO -- Police arrested a prominent local political activist in connection to a recent Fiesta Island sex assault on Thursday. Michael Kobulnicky, the public relations spokesperson for the San Diego Tea Party, was arrested Thursday afternoon in front of his home, according to Lt. Anastasia Smith with the San Diego Police Department.

    Kobulnicky is accused of a Feb. 25 abduction and sexual assault of a 56-year-old woman who was walking home near Linda Vista Road in Fiesta Island. The woman was pulled into a car and assaulted, then left on the island, police said.

    Read the original report at NBCSanDiego.com

    Surveillance footage of the area near the assault gave police evidence to pursue a suspect. They released a picture of the suspect to the public, and many identified the suspect as Kobulnicky, police said.

    Kobulnicky was booked into San Diego Central Jail on numerous felony charges, including kidnapping, sexual assault and sex with a foreign object.

    A statement from the San Diego Tea Party said Kabulnicky has been on hiatus since January for personal reasons and has been relieved from his Tea Party duties during legal proceedings.

    "Our hearts and our thoughts go out to the victim," read the statement.

    More content from msnbc.com and NBC News

    Follow US News on msnbc.com on Twitter and Facebook