To follow up on the ongoing IRS debacle, the House held hearings earlier this week where members of targeted organizations testified about their experiences. The Denver Business Journal posted an article with a summary of some of this testimony, including that of Karen Kenney, foundation of an organization that gave up on its application after two years:

The IRS asked her group not only about its donors and political stands, but also asked for a list of its “violations of local ordinances, breaches of public order or arrests,” she said. “I think the IRS needs to fix its labeling machine: We’re the San Fernando Valley Patriots, not Occupy Oakland.”

The delays that have been faced by many of these conservative  501(c)(4) organizations are appalling. However, delays for 501(c)(3) organizations are really not that far behind in terms of lag time. In our firm’s experience, we have yet to hear a response from the IRS on multiple applications we filed for clients early last summer (beyond the form letter that merely acknowledges they’ve received the application in the mail). So which organizations are actually getting processed and receiving determinations? And who else may fold or close up shop before they hear back from the IRS?

On a related note, an article in the Wall Street Journal indicated that employees in the Cincinnati office told congressional investigators that IRS officials in Washington had a more active role in the tea-party probe than they let on:

Elizabeth Hofacre said her office in Cincinnati sought help from IRS officials in the Washington unit that oversees tax-exempt organizations after she started getting the tea-party cases in April 2010. Ms. Hofacre said Carter Hull, an IRS lawyer in Washington, closely oversaw her work and suggested some of the questions asked applicants.

“I was essentially a front person, because I had no autonomy or no authority to act on [applications] without Carter Hull’s influence or input,” she said, according to the transcripts.

Ms. Hofacre said she was outraged last month when IRS higher-ups, including Lois Lerner, then the head of the IRS  tax-exempt division, blamed the problem on employees in Cincinnati. “I was furious,” Ms. Hofacre told interviewers. “It looked like Lois Lerner was putting it on us.”

We will continue to monitor and apprise you of developments in the IRS investigation and with processing of applications for exempt status.