Tea party groups call IRS process 'nightmare'

WASHINGTON (AP) -- Anger over President Barack Obama's policies drove businessman Tom Zawistowski to file paperwork with the Internal Revenue Service nearly three years ago to create the Ohio Liberty Coalition.

His nonprofit organization largely attracted conservatives who were new to politics but concerned about the growth of government, fiscal issues and perceived threats to Americans' constitutional protections. It eventually swelled to more than 20,000 members, becoming one of the region's largest groups affiliated with the national tea party movement that emerged in the early months of Obama's first term.

Over the next few years, the Ohio Liberty Coalition would raise thousands of dollars to bus activists to rallies, run phone banks, rent a tent at a local fair, and knock on roughly 40,000 doors across Ohio to challenge the president and his fellow Democrats in the 2012 elections.

All the while, the organization was locked in a battle with the nation's tax enforcement agency over whether it should be granted tax-exempt status.

"They expected me to turn over the names of our members to the IRS. You'd have to kill me to get me to do that," said Zawistowski, who was among the first tea party leaders to formally protest the agency's actions last year. "I wouldn't accept tyranny."

It often takes a year for "social welfare organizations" to get tax-exempt status, which requires them to prove they're not primarily devoted to politics. But the IRS acknowledged last week that it inappropriately applied heightened scrutiny to conservative groups even though it's supposed to regulate the nation's tax laws without political interference. The revelation drew criticism from Republicans and Democrats, sparked a Justice Department investigation and prompted Obama to call the allegations "outrageous" if true.

The episode has pumped new energy into the tea party movement after a disappointing 2012 election season and created a bipartisan political headache for Obama at a critical time as he looks to get as much of his agenda passed as possible before all the focus shifts to next year's midterm congressional elections.

Zawistowski's experience is not uncommon among tea party and conservative groups.

As it did with other conservative groups, the IRS largely ignored Zawistowski's application for a year and a half and then refused to approve his nonprofit status unless he revealed the identity of the group's members, times and location of group activities and printouts of its website and Facebook pages, according to IRS correspondence reviewed by The Associated Press.

The IRS also requested "detailed contents of the speeches or forums, names of the speakers or panels and their credentials" for all future and past public events, according to one of the IRS letters.

"The intent of this was to hurt the ability of tea party groups to function in an election year. They were successful to a degree," said Zawistowski, a 57-year-old businessman who had virtually no political experience before joining the tea party movement. "It took an enormous amount of time and energy for me to handle this."

The IRS has refused to discuss individual cases, but it has apologized for "inappropriate" targeting of conservative political groups during the 2012 election to see whether they were violating their tax-exempt status. The agency blamed low-level employees in a Cincinnati office for targeting applications with words such as "tea party" and "patriot." In January 2012, the criteria for additional screening were updated to include references to the Constitution or the Bill of Rights.

In some cases, the IRS acknowledged, agents inappropriately asked for lists of donors.

There is no definitive listing of the hundreds of tea party groups that sprung up across the nation in the past four years, but an AP analysis of 93 organizations that describe themselves as "tea party" or "patriot" groups found that many, like Zawistowski's, appear to have operated on small budgets.

Just two dozen of those organizations raised more than $20,000 in a single year, according to tax returns submitted by tea party groups between 2009 and 2011.

The Richmond Tea Party, based in Richmond, Va., began its application for tax-exempt status in December 2009 but didn't receive the status until July 2012, after more than two years had passed.

The group's executive director, Laurence Nordvig, called the experience "like your worst audit nightmare."

"I liken it to the movie 'Groundhog Day.' It's Groundhog Day every day," he said, referring to the 1993 Bill Murray movie in which a man relives the same day over and over. "Dealing with this was like dealing with tax day every day for two and a half years. It was like a cloud that hung over the organization."

The controversy partly is rooted in the patchwork oversight by federal agencies over the rapidly evolving realm of national political spending. In recent years, interest groups across the political spectrum have taken advantage of the tax code to set up tax-exempt organizations able to shield their donors' identities while scooping up millions of dollars in donations to pay for massive election-year media campaigns and voter information efforts.

The IRS typically treats these nonprofit operations as "social welfare" groups, allowing them to raise unlimited amounts of donations and keep their donors' identities secret, as long as they show that they do not primarily engage in political activities.

The 2012 national elections were dominated by free-spending political operations that blended the use of nonprofit advocacy groups with a separate new breed of "super" political action committees, or super PACs, spawned by a series of court cases, including the Supreme Court's 2010 Citizens United decision.

Good government groups and several Democratic senators, notably Sen. Chuck Schumer, D-N.Y., have pressed the IRS recently to look more skeptically at the nonprofits' internal operations, claiming some groups were far more politically active than they let on. But lawyers for tea party groups say many low-budget grass-roots conservative organizations ended up being swept up in IRS audits instead of the larger nonprofits.

The most well-funded nonprofit tea party group targeted by the IRS appears to be the Tea Party Patriots, a Georgia-based organization that grew dramatically between 2009 and 2011. The group raised $706,000 in 2009, but revenues surged to $12.2 million in 2010 and $20.2 million in 2011, according to tax filings.

The sources of the group's sudden largess are unknown because donors' identities remain secret under IRS rules.

Alan Dye, an attorney for the Tea Party Patriots, said the IRS has been "very vague" about the rules governing social welfare organizations. "You shouldn't have to guess about the rules," said Dye, who represents six groups that fielded invasive questions from IRS agents.

While some of his clients were asked and subsequently refused to reveal donors, he said groups have been most affected by the lengthy delays in IRS' processing. Standard tax-exempt applications generally take about a year to process, he said. The Tea Party Patriots has already been waiting 30 months for its approval.

The Ohio Liberty Coalition first applied in June 2010 and had its tax-exempt status approved exactly one month and one day after Obama won re-election in 2012. While waiting, Zawistowski said, his and his wife's personal finances were audited.

"The question is, how do we stop this from happening again?" he said. "How do you stop the IRS from being used as a weapon against the American people? I don't know how you make a rule to do that."

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Peoples reported from Boston. Associated Press writer Henry C. Jackson in Washington contributed to this report.