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Nonprofit sues IRS for releasing tax exempt application

By   /   August 9, 2013  /   News  /   2 Comments

By Mark Lisheron | Watchdog.org

Citizen Awareness Project, a conservative Denver, Colo. non-profit, is suing the Internal Revenue Service for releasing to a digital news site its pending application for tax exempt status.

UNDER FIRE: Citizens Awareness Project is suing the IRS for releasing its tax exempt status application to a digital news site.

The lawsuit, filed Thursday in U.S. District Court in Colorado, is the first from nine conservative 501(c)(4) organizations whose applications, while bottled up for months by the IRS, were copied to ProPublica in response to an open records request.

IRS officials admitted to ProPublica someone in its organization had erred in releasing the pending applications of the Citizen Awareness Project, Crossroads GPS — the heaviest hitting conservative non-profit involved in the 2012 presidential election — and others including A Better America Now, Americans for Responsible Leadership,  America Is Not Stupid, Freedom Path and Rightchange.com II.

Rather than express contrition, IRS spokeswoman Michelle Eldridge issued a thinly veiled threat that the publisher of those documents could be jailed and fined, according to an account of the exchange published May 13 by ProPublica.

ProPublica published some of the applications after having redacted some of the financial information included in them.

The Citizens Awareness lawsuit contends the IRS violated federal law by disclosing confidential tax return information that might include the assets and liabilities of individuals involved with the group, their attorney, John Zakhem, told Watchdog.org Friday.

The group is asking that a jury give them $1,000 for each time the confidential information was disclosed or seen and asks for a punitive award for damages and legal fees.

Zakhem said, however, the primary purpose of the lawsuit was to determine who was ultimately responsible for the IRS’ concerted effort to harass and impede conservative non-profits.

“We filed this suit to get some discovery, to hold these people accountable, to follow this as far up as it goes,” Zakhem said Friday. “What you have here is a Gestapo-like agency discriminating against particular groups to subjugate a political point of view.”

Watchdog.org late Friday morning contacted Dean Patterson in the office of Michelle Eldridge, head of national media relations for the IRS, asking for comment on the Citizen Awareness lawsuit.

We were still awaiting reply at the time of publication.

According to the lawsuit, Citizen Awareness filed a letter with the IRS Oct. 12, 2012, applying to become a tax exempt, 501(c)(4) non-profit. The IRS would not send a letter approving the application until July 25.

Less than two weeks after filing the application, the Sunlight Foundation, a non-profit government watchdog group underwritten by liberal groups like the Omidyar Foundation and George Soros’ Open Society Foundations, published a story about the group under the headline: Mysterious Colorado group has deep ties to GOP establishment.

The story outlined Citizen Awareness’ effort to use $1 million in donations to defeat President Obama in 2012 and its roots in Republican advocacy in Colorado.

On Nov. 15, 2012, ProPublica, a Pulitzer Prize-winning nonprofit news site founded with liberal money from the Sandler Foundation and ongoing Open Society support, filed an open records request for the applications of 67 non-profits, according to its story.

Unlike its response to the applications themselves, the Cincinnati office of the IRS took just 13 days to provide documents on 31 of the 67 groups. Nine of the applications were pending.

The cover letter sent with the documents was signed by Cindy Thomas, manager of the Exempt Organizations Determination division of the IRS in Cincinnati. The same Cindy Thomas was recently accused of obstructing justice by Darrell Issa, chairman of the House Oversight and Government Reform Committee conducting the IRS targeting investigation.

Of these, ProPublica published redacted versions of six, including the Citizen Awareness application. On Dec. 17, Meghan Biss of the Exempt Organizations Determination division of the IRS in Washington, D.C. notified Citizen Awareness that the agency “may” have released its application to ProPublica, the lawsuit says.

That the IRS had released the application was confirmed on December 27 when a ProPublica reporter called to ask about it.

“What they were giving away were more than the names of individuals and their tax information,” Zakhem said. “What they did intentionally was give away private information beyond what is regularly called for. It was like giving away the secrets in your heart.”

In spite of IRS threats that ProPublica was exposing itself to felony charges, Richard Tofel, now the president of ProPublica, said there was an overriding First Amendment imperative to make the applications public.

The suit does not name ProPublica. Zakhem said he does not blame the news group for its editorial decision, although he said its stories contributed to a perception that what Citizen Awareness and other conservative groups were doing was less than honest and legal.

The responsibility lies squarely with IRS, Zakhem said.

“We’ve been damaged,” he said. “We’re entitled to damages. But we are also entitled to find out and the public needs to find out who was responsible and how high up it goes.”

Contact Mark Lisheron at [email protected]


Mark Lisheron was a former Austin-based reporter for Watchdog.org.

  • 1dahliagirl

    Cindy Thomas is getting promoted.

    “Thomas’s promotion will not be without controversy, given that, in November of last year, she signed off on the illegal release to the left-leaning Pro Publica, of nine pending, confidential applications for tax exemption filed by conservative groups”


  • Prospector69

    What gall. Who appointed or hired these people? A leader is responsible for his people and they are accountable for their conduct to their boss. If you work for me and I think that you may have done wrong, I will seriously be looking into the truth. If true, it is for me to apologize and try to make things right. It is also for me to demote you or to fire you!
    This not how this administration works however!