Mich. tea party groups to share IRS scrutiny settlement

Melissa Nann Burke
The Detroit News
The exterior of the Internal Revenue Service building in Washington.

Washington — Four Michigan tea party groups will share in a $3.5 million class-action settlement reached with the Internal Revenue Service after five years of litigation, according to the lead attorney for the plaintiffs.

A judge signed off on the settlement between the IRS and hundreds of tea party groups last week over what the groups said was improper scrutiny and illegal targeting for political purposes during the tax-exemption application process.

The IRS has said it made changes so that similar targeting won’t happen in the future.

It’s still unclear how much the Michigan groups each would receive.

The judge must still rule on a motion for reimbursement of attorneys fee and incentive payments for the five class representatives, said Edward D. Greim, attorney for the class of more than 400 members.

Greim said several Michigan groups were part of the class, and four of those submitted claims and will be receiving part of the settlement:

  • Foundation for Michigan Freedom
  • Gadsden Center Inc.
  • Independents for Responsible Government (formerly the Independent Tea Party Patriots)
  • ProgressNow

"The settlement shows that when a government agency decides to target citizens based on their viewpoints, a price will be paid," Greim said. 

The case arose after a treasury inspector general’s audit found in 2013 that groups with “tea party” or “patriot” in their names received greater scrutiny during consideration of their applications for tax-exempt status starting in 2010. 

The matter blew up into a firestorm on Capitol Hill, prompting congressional hearings, a Justice Department inquiry and the resignations of the then-acting commissioner of the IRS Steven T. Miller and that of Lois Lerner, who had been as director of the IRS exempt organizations division.

Republicans claimed the administration was weaponizing the IRS for political gain, while the White House argued the agency ran independent of political oversight. 

The settlement did not resolve certain outstanding issues in the litigation, such whether to grant a motion to unseal a transcript of Lerner's deposition and place it in the public record.

The plaintiffs had alleged violations of the the First and Fifth Amendments to the U.S. Constitution and the statute that protects the confidentiality of tax-return information.

In announcing the settlement last fall, Attorney General Jeff Sessions said the First Amendment prohibits the federal government from treating groups differently based solely on their viewpoint or ideology.

"The IRS’s use of these criteria as a basis for heightened scrutiny was wrong and should never have occurred," Sessions said in a statement at the time. 

"There is no excuse for this conduct. Hundreds of organizations were affected by these actions, and they deserve an apology from the IRS. We hope that today’s settlement makes clear that this abuse of power will not be tolerated.”

The Justice Department also settled a separate, related suit but won't pay damages in that case.