In a recent column in the Washington Post Bob Novak reported that on July 8, the Internal Revenue Service [IRS] had “perhaps unknowingly incriminated itself” by releasing a 1,500 page response to Freedom-of-Information requests from Judicial Watch. Novak says the documents show that an IRS audit of Judicial Watch was preceded by an e-mail to President Clinton dated August 14, 1998 from a sender whose name was redacted. It said, “I have received solicitation for funds and a questionnaire from Larry Klayman of Judicial Watch. They have targeted you and the vice president. My question is how can this obviously partisan organization be classified as tax-exempt….”
Exactly a month later, the White House forwarded this message to the IRS, where it was routed to the Commissioner of Internal Revenue, Charles Rossotti. Novak says that the documents show that a phone call was made to another party and that two weeks later, Judicial Watch was notified that it was going to be audited by the IRS.
Four months later, Charles Rangel, the ranking Democrat on the House Ways and Means Committee and a frequent Democratic spokesman on TV, wrote to the IRS to inquire if Judicial Watch was entitled to solicit tax-deductible contributions. He mentioned that Martin Frost, the ranking Democrat on the House Rules Committee, had received a complaint about solicitations from Judicial Watch for contributions.
Rangel’s letter was turned over to Marcus Owens, who was then the IRS director for Exempt Organizations. Owens responded, “We have forwarded the information you provided to the key district with examination jurisdiction over these organizations. Novak says two Democratic Senators and another Congressman joined in applying pressure on the IRS .
Judicial watch, headed by Larry Klayman, has vigorously protested the politically motivated IRS audit. Under Clinton, many tax exempt organizations critical of Clinton were targeted by the IRS. Very few of them publicized the fact that they were being audited. One exception was the Western Journalism Center (WJC), which was run by Joseph Farah, who now directs the popular Web site, WorldNetDaily. A Clinton supporter sent a letter to the White House complaining about a full-page ad about the death of Vince Foster placed by the WJC . That letter got sent to the IRS, and an audit was soon initiated.
Farah says the IRS investigators who first visited the WJC offices said that the audit was politically motivated. WJC was eventually cleared, and Judicial Watch has filed suit against the IRS on its behalf. The charge that Judicial Watch should be denied tax-exempt status because it is partisan has been blunted over the past year. It has sued Vice President Cheney to force disclosure of the members of his transition energy task force and over questioned accounting practices at his former firm, Halliburton. It has also challenged President Bush’s claim that his sale of his Harken stock in 1990 was not influenced by insider information.