IRS Official in Charge of 87,000 New Agents Played Key Role in Obama-Era 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.

In 2014, Flax was among 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 visits to the Obama White House from July 2010 through May 2013.

“Every American should be concerned that a key player in the IRS’ targeting of conservative groups and ensuing cover-up 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.

Nikole Flax, the IRS official in charge of a centralized office for 87,000 new agents, was part of the 2013 scandal exposing IRS targeting of conservative organizations. Pictured: Lois Lerner, then director of IRS’ exempt organizations unit, is sworn in May 22, 2013, before a House committee investigating the scandal. (Chip Somodevilla/Getty Images)

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 said her computer also crashed.

Lerner invoked her Fifth Amendment right not to incriminate herself in testimony before the House Oversight and Reform Committee. After being placed on paid administrative leave, she retired later in 2013.

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, signed into law by President Joe Biden, provides $80 billion for the IRS to add almost 87,000 new agents.

Despite the computer crash during the congressional investigation of IRS targeting, Rettig said that Flax would work with Congress and others in her new role leading the effort.

“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. Previously, she had been deputy commissioner for the division since 2017.

Flax also is a former chief of staff to IRS Commissioner Steve Miller and was assistant deputy IRS commissioner for 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 lawmakers added:

“The fact that Ms. Flax was a frequent visitor to the White House and the Eisenhower Executive Office Building only raises more questions. Who was she visiting at the White House and what were they talking about? Was she updating the White House on the targeting or was she getting orders?

“These are answers we don’t yet have, because—surprise, surprise—a few computers crashed. Plot lines in Hollywood are more believable than what we are getting from this White House and the IRS.”

When testifying before the House Ways and Means Committee in 2014, IRS Commissioner John Koskinen defended Flax, saying she had two IRS computers and that her IRS emails 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 told the committee. “We are not going to dribble out the information and have it played out in the press.”

A string of audits and congressional investigations found that the IRS improperly targeted tea party and other conservative groups during the 2010 and 2012 election cycles by holding up their applications for tax-exempt status.

Chronology of 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.”

That finding prompted investigations by the House Ways and Means Committee and the House Oversight and Reform Committee, which concluded in 2014 that top IRS officials knew of the targeting of conservative groups and decided against informing Congress.

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

“Lerner orchestrated a process that subjected these applicants to multiple levels of review by numerous components within the IRS, thereby ensuring that they would suffer long delays and be required to answer burdensome and unnecessary 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 ultimately settled lawsuits with several tea party and other conservative groups in 2017 and 2018.

In 2016, Congress approved a provision to prevent the IRS from doing anything to target organizations or groups applying for tax-exempt status.

Reprinted by permission from The Daily Signal, a publication of The Heritage Foundation.

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