$3.5M IRS Tax Bias Class Action Settlement Initially Approved

Top Class Actions’s website and social media posts use affiliate links. If you make a purchase using such links, we may receive a commission, but it will not result in any additional charges to you. Please review our Affiliate Link Disclosure for more information.

A $3.5 million settlement has been preliminarily approved in a class action alleging that the IRS illegally targeted conservative groups.

U.S. District Judge Michael Barrett made the initial approval of the IRS class action settlement last week. The final fairness hearing is scheduled for July 10.

U.S. Attorney General Jeff Sessions announced the settlement in October 2017. “There is no excuse for this conduct,” Sessions said. “Hundreds of organizations were affected by these actions, and they deserve an apology from the IRS. We hope that today’s settlement makes clear that this abuse of power will not be tolerated.”

Although the Justice Department made the choice to settle the lawsuit, an audit done by the Treasury Inspector General for Tax Administration concluded there was no bias involved in the IRS’ reviews of tax-exempt applications.

The class action lawsuit was filed in 2013 by the NorCal Tea Party Patriots. 428 other groups ultimately joined the IRS class action which alleged that the Internal Revenue Service illegally targeted conservative and tea party-affiliated groups applying for nonprofit status.

NorCal Tea Party Patriots claims that they suffered years of delay and expense while waiting for a decision on their tax exemption applications. The group also says they were forced to made illegal admissions about their beliefs and activities, which violated their right to privacy. The plaintiffs believe that liberal and progressive groups were not subjected to the same treatment as conservative groups were when applying for tax-exempt status.

“One tactic used by the IRS to harass, intimidate and discriminate against conservative and libertarian groups critical of the government was to demand massive disclosure of information not authorized by the Internal Revenue Code or any other federal law,” the IRS class action lawsuit states.

The Tea Party class action names the IRS Determinations Unit in Cincinnati as the specific branch in the center of the political controversy. NorCal Tea Party Patriots argues that the IRS employed people with political biases against conservative political groups and that these individuals requested extensive and intrusive documentation and information while reviewing applications for tax-exempt status. NorCal Tea Party Patriots claim that the political discrimination was motivated by a new internal IRS policy which was designed to target conservative groups.

NorCal Tea Party Patriots seek to represent a Class of all conservative and libertarian groups targeted for additional scrutiny by the IRS from March 1, 2010 through May 15, 2012. The IRS class action lawsuit seeks damages for violation of the Privacy Act, compensation for lost donations and the costs of unreasonable documentation requests, as well as an injunction barring the IRS from further political discrimination.

The plaintiffs are represented by Edward D. Greim, Todd P. Graves and Dane C. Martin of Graves Garrett LLC, Christopher P. Finney of Finney Law Firm LLC, David R. Langdon and Joshua B. Bolinger of Langdon Law LLC, and Bill Randles and Bev Randles of Randles & Splittgerber LLP.

The IRS Tea Party Class Action Lawsuit is NorCal Tea Party Patriots, et al. v. Internal Revenue Service, et al., Case No. 1:13-cv-00341, in the U.S. District Court for the Southern District of Ohio.