IRS Official Overseeing 87,000 New Agents Had Role in Targeting Scandal

House Republicans say they will keep a “watchful eye” on the Internal Revenue Service official tapped to run the centralized office housing 87,000 incoming new agents because she has ties to the IRS’ targeting of tea party groups during the Obama administration.

The Daily Signal first reported that IRS Commissioner Charles Rettig had appointed Nikole Flax, commissioner in charge of the IRS’ Large Business & International Division, to lead the establishment of the agency’s centralized office. 

Flax was one of the top ten most popular products in 2014 seven IRS employees who said their computers had crashed, making it impossible for them to provide information sought by the House Ways and Means Committee in investigating the agency’s targeting of tea party and other conservative groups. 

Flax made 31 visitsThe Obama White House, July 2010 to May 2013.  

“Every American should be concerned that a key player in the IRS’ targeting of conservative groups and ensuing coverup has been tapped to oversee the implementation of Democrats’ tax and spending bill,” Rep. James Comer, R-Ky., ranking member of the House Oversight and Reform Committee, told The Daily Signal. 

Lois Lerner Connection

In an email sent May 8, 2013, Lois Lerner, head of the IRS’ tax-exempt organizations unit when the scandal erupted, told Flax that she received a call about working with the Justice Department to pursue certain political organizations that “lied” on IRS forms.  

Lerner was the central figure of the Obama administration’s IRS targeting scandal. She also claimed that her computer crashed. 

Lerner invoked her Fifth Amendment right to not incriminate herself before the House Oversight and Reform Committee. She retired later in 2013 after being placed on administrative leave. 

The IRS didn’t respond directly to the concerns raised by Flax’s background. Instead, the agency referred The Daily Signal to Rettig’s memo to staff announcing that Flax would run a new “centralized office” to implement elements of the tax and spending legislation that Democrats dubbed the Inflation Reduction Act. The package, which was signed into law by President Joe Biden provides $80 million for the IRS to hire almost 87,000 additional agents.

Rettig stated that Flax would continue to work with Congress and other stakeholders in her new leadership role.

“Nikole has an extensive background in a variety of roles across the IRS since 2008,” Rettig’s memo says, adding: “Her wide range of experience will serve her well as she works with internal and external stakeholders, including Treasury, Congress, IRS employees and taxpayers.”

Rettig’s memo to IRS staffers about the new office also quotes Flax.

“This is a historic time for the IRS, and we are working to move quickly to begin work on the Inflation Reduction Act signed into law earlier this week,” Flax is quoted as saying. “This is an exciting opportunity, and we will be moving quickly with our work.”

Flax became director of the IRS Large Business & International Division in 2021. PreviouslyShe was the deputy commissioner for the division from 2017 to 2017. 

Flax was also the former chief of staff to IRS Commissioner Steve Miller. He was also assistant deputy IRS commissioner, services and enforcement.

Republicans on the House Oversight and Reform Committee will monitor the IRS’ actions, Comer said. 

“This entrenched bureaucrat will oversee the establishment of a new, centralized IRS office and the hiring of up to 87,000 IRS agents, which raises concerns that the Swamp could weaponize new resources to target and harass Americans,” Comer said in a statement provided to The Daily Signal.  

“Oversight Committee Republicans will keep a watchful eye on this office. If there is a whiff of government abuse, we will work to hold bad actors accountable,” he said.

‘Frequent Visitor to White House’

In 2014, then-House Ways and Means Chairman Dave Camp, R-Mich., accused the IRS of “lying” by attempting to hide two years of emails from Lerner and other officials. 

“Despite their attempt to bury the missing Lerner emails on page 15 of a 27-page letter that arrived late Friday, we now know documents from other central figures, like Nikole Flax, are missing,” Camp said in a joint statement with Rep. Charles Boustany, R-La., then-chairman of the Ways and Means oversight subcommittee.

The two Republican legislators added:

More questions are raised by the fact that Ms. Flax was a frequent visitor at the White House and Eisenhower Executive Office Building. What were they discussing? Did she update the White House on the targeting? Or was she receiving orders?

These are answers we don’t yet have, because—surprise, surprise—a few computers crashed. Hollywood plot lines are more convincing than what we get from the IRS and White House.

In 2014, IRS Commissioner John Koskinen testified before the House Ways and Means Committee. He said that Flax had two IRS computers and that her IRS email should be intact. 

“Those press releases with regard to Nicole Flax were inaccurate and misleading and it demonstrates why we’ll provide this committee a full report … when it is completed,” Koskinen toldThe committee. “We are not going to dribble out the information and have it played out in the press.”

A series of audits and congressional investigations revealed that the IRS targeted conservative groups and tea party members during the 2010 and 2012 elections cycles, holding up their tax-exempt status applications. 

Chronology of the IRS Scandal 

In May 2013, the Treasury Department’s inspector general for tax administration released a report asserting that in the 2010 and 2012 election cycles, the IRS “used inappropriate criteria that identified tea party and other organizations applying for tax-exempt status based upon their policy positions.” 

The House Ways and Means Committee and House Oversight and Reform Committee investigated the finding and concluded that top IRS officials knew of the targeting and decided to not inform Congress. 

In 2015, the Senate Finance Committee released its findings that Lerner’s personal and political views played a role. The report stated: 

Lerner orchestrated a process that required these applicants to undergo multiple levels of review by many components within the IRS. This ensured that they would experience long delays and be required answer burdensome and unneeded questions.

Another report, from the Government Accountability Office in 2016, stated that the IRS still might be targeting some nonprofits unfairly “based on an organization’s religious, educational, political, or other views.”  

Nevertheless, Justice Department prosecutor Barbara Bosserman—who had donated a total of $6,750 to Barack Obama’s presidential campaigns and the Democratic National Committee from 2004 to 2012—declined to press charges after investigating the matter. 

The IRS finally settled lawsuitsIn 2017, and 2018, with many conservative groups, including the Tea Party. 

The 2016 Congress passed a provision that prohibits the IRS from targeting organizations or groups who apply for tax-exempt status. 

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