Lois Lerner of IRS sought audit of Grassley, emails say

Congressional investigators say they uncovered emails Wednesday showing that a former Internal Revenue Service official sought an audit involving U.S. Sen. Chuck Grassley of Iowa in 2012.

Republicans quickly viewed former IRS official Lois Lerner's actions as an attempt to initiate a baseless IRS examination against a sitting Republican senator. Grassley called the situation "very troubling" and said it's the kind of thing that fuels deep concerns about political targeting by the IRS.

The emails show Lerner mistakenly received an invitation to an event that was meant to go to Grassley, a Republican.

The event organizer apparently offered to pay for Grassley's wife to attend the event.

Instead of forwarding the invitation to Grassley's office, Lerner emailed another IRS official to suggest referring the matter for an audit, saying it might be inappropriate for the group to pay for his wife.

"Perhaps we should refer to exam?" Lerner wrote.

It was unclear from the emails whether Lerner was suggesting that Grassley or the group be audited — or both.

The other IRS official, Matthew Giuliano, waived her off, saying an audit would be premature because Grassley hadn't even accepted the invitation. "It would be Grassley who would need to report the income," Giuliano said in one of the emails.

The name of the event organizer was blacked out on copies of the emails released by the U.S. House Ways and Means Committee because they were considered confidential taxpayer information. Grassley and his wife signed waivers allowing their names to be released.

Lerner headed the IRS division that processes applications for tax-exempt status. The IRS has acknowledged that agents improperly scrutinized applications by tea party and other conservative groups before the 2010 and 2012 elections. Documents show that some liberal groups were singled out, too.

In a written statement about today's disclosure, Grassley said: "This kind of thing fuels the deep concerns many people have about political targeting by the IRS and by officials at the highest levels. It's very troubling that a simple clerical mix-up could get a taxpayer immediately referred for an IRS exam without any due diligence from agency officials."

Grassley learned of the emails from the Ways and Means Committee, aides said. He didn't accept the invitation referred to in the emails, and he didn't receive Lerner's invitation, they said.

The IRS said in a statement that it could not comment on the specifics of the case "due to taxpayer confidentiality provisions."

"As a general matter, the IRS has checks and balances in place to ensure the fairness and integrity of the audit process," the IRS statement said. "Audits cannot be initiated solely by personal requests or suggestions by any one individual inside the IRS."

The IRS says it has lost an untold numbers of Lerner's emails because her computer crashed in 2011, sparking outrage among Republican lawmakers who have accused the tax agency of a cover-up. The emails released Wednesday were among the thousands that have been turned over to congressional investigators.

"We have seen a lot of unbelievable things in this investigation, but the fact that Lois Lerner attempted to initiate an apparently baseless IRS examination against a sitting Republican United States senator is shocking," Rep. Dave Camp, R-Mich., chairman of the Ways and Means Committee, said. "At every turn, Lerner was using the IRS as a tool for political purposes in defiance of taxpayer rights."

Iowa Republican Joni Ernst sought to use the news to focus blame on her Democratic opponent in the U.S. Senate race, U.S. Rep. Bruce Braley. Ernst noted that Braley was one of the members of Congress who wrote a letter in 2012 to encourage the IRS to investigate whether any social welfare organizations were improperly engaged in political campaign activity.

Ernst campaign spokesman Gretchen Hamel said in a statement: "Braley needs to repudiate the IRS and apologize to Senator Chuck Grassley once again and turn over all correspondence he and his office have shared with the IRS. While Lois Lerner's email may have been 'lost,' surely the congressman's have not."

Braley in May 2013 called on Lerner to be fired and requested an independent investigation into what happened at the IRS.

One Iowa Democrat cautioned against overreactions.

"Everybody needs to take a deep breath and get the facts and let the people involved do their jobs," Democratic state Sen. Rob Hogg, a Cedar Rapids lawyer, said in an interview with the Register this evening.

Grassley had been an outspoken critic of the way the IRS policed tax-exempt groups even before the tea party controversy erupted last year.

In one email, Lerner indicates that she won't attend the event. "Don't think I want to be on the stage with Grassley on this issue," she wrote.

Ways and Means is one of three congressional committees investigating the way the IRS processed applications for tax-exempt status. The Justice Department is also investigating.

Also Wednesday, a group of Republican senators — including Grassley — said they want to expand a Senate investigation to look more closely at how the agency lost the emails.

Republican members of the Senate Finance Committee said they want know why the Treasury Department and the White House were told about the lost emails more than a month before Congress was told. They have asked committee chairman Ron Wyden, D-Ore., to schedule a hearing with IRS Commissioner John Koskinen.

Wyden's office was noncommittal Wednesday, saying he hadn't seen the request.

The Republicans, led by Sen. Orrin Hatch of Utah, are also asking the Treasury and Justice departments, and the Federal Election Commission, to turn over any emails they might have from Lerner.

"The IRS' failure to inform the committee months or even weeks ago about the missing emails raises serious questions about its commitment to cooperate with this investigation," the letter said.

In testimony before a House panel this week, Koskinen said the IRS waited to tell Congress until officials knew the full extent of the email loss.

Koskinen said the Treasury Department has agreed to turn over emails it has from Lerner. The White House said last week it has found no emails between anyone in the executive office of the president and Lerner.

At the time of Lerner's computer crash in June 2011 the IRS had a policy of backing up emails on computer tapes, but the tapes were recycled every six months, Koskinen said. He said Lerner's hard drive was recycled and presumably destroyed.

The IRS was able to generate 24,000 Lerner emails from the 2009 to 2011 period because she had copied in other IRS employees. Overall, the IRS said it was producing a total of 67,000 emails to and from Lerner, covering the period from 2009 to 2013.

- Register staff writer Jennifer Jacobs contributed to this report.