On June 1, 2011, LI received notice of an audit of its tax return and activities in 2008.
What followed was a more than year-long investigation of more than 23,430 pages of records and requests for items like:
--- a list of 2008 interns and their future employers;
--- sample emails between employers and LI regarding ConservativeJobs.com; and
--- how LI's more than 300 trainings are advertised.
Ultimately, the IRS accepted the Institute's tax return as filed.
"The IRS’ indefensible behavior is worse than we first thought, as it targeted both new and existing conservative groups in politically motivated attacks," said Morton Blackwell, president of the Leadership Institute. "Fortunately my Leadership Institute had the resources to stand up to the government’s bullying and intimidation. Other groups, including grassroots and tea party groups we’ve helped train, did not. Defending ourselves from the harassing audit cost my organization more than $50,000 in legal fees alone."
Timeline of the Leadership Institute's audit
|Date||LI Audit||IG Report Date|
|6/1/2011||Notice of audit, initial document request|
|6/10/2011||In-office visit requested|
|7/2011||"The EO function decides to develop written guidance for the Determinations Unit to process the potential political cases."|
|1/2012||"Specialists begin issuing additional information request letters to organizations applying for tax-exempt status, requesting that the information be provided in two to three weeks."|
|Additional document request ...................................................|
|5/2012||"A workshop is given to Determinations Unit specialists assigned to potential political cases. Afterwards, a review of all the open cases is completed to recommend whether additional processing is necessary or whether the cases can be closed (as of December 17, 2012, 160 applications were still being processed)."|
|7/26/2012||Audit closed -- tax return accepted as filed|
What the IRS asked the Leadership Institute
Copies of applications for internships and summer programs; to include: lists of those selected for internships and students in 2008.
-- In regards to such internships, please provide information regarding where the interns physically worked and how the placement was arranged.
-- After completing internships and courses, where were the students and interns employed?
Information regarding training programs conducted in 2008.
-- Copies of training materials utilized in 2008 to include syllabi and/or curriculum.
-- How are training sessions/programs advertised?
-- How are students solicited?
-- Are there students in the programs that are not of the conservative viewpoint? If so, please provide documentation of such.
Information regarding instructors of your organization's training programs.
-- Are the instructors employees of your organization? If not, are instructions [sic] contracted from exterior sources?
-- How are instructors solicited?
-- What are the instructors' backgrounds?
Information regarding your organization's job placement program.
-- How is the program facilitated?
-- How are job opportunities provided to your organization and applicants on your organization's job placement website?
-- Samples of correspondence between employers and your organization regarding positions available and to be posted on your job placement website.
This story will be updated continuously as more information is received. For media inquiries, please contact Louise Filkins at 202-237-2519.