IRS Enemies List: Agency admits to targeting conservatives

This is a rush transcript from "Hannity," May 10, 2013. This copy may not be in its final form and may be updated.

HANNITY: And welcome back to "Hannity". Breaking news out of Washington, a bombshell admission by the IRS, the tax agency is officially apologizing for subjecting conservative groups to additional scrutiny during the 2012 election. Now, on a statement released today, The IRS admitted quote, "Mistakes were made initially but they were in no way, due to any political or partisan rationale."

Now, in reality according to an IRS official, organizations that specifically included the words, quote, "Tea Party" or "patriot" in their tax exempt status were faced with additional reviews. Now, that seems pretty political to me. Now, House Majority Leader Eric Cantor released a statement earlier today, vowing to investigate. Now, that reads in part, quote, "The IRS cannot target or intimidate any individual or organization based on their political beliefs. The House will investigate this matter."

And when asked about the IRS's admission earlier today, Press Secretary, he's back, Jay Carney, he did what the Obama White House does best and that is blame the previous administration. What a shocker. Now, fortunately he went on to say action, well, might be taken.


JAY CARNEY, WHITE HOUSE PRESS SECRETARY: Two things need to be noted which is IRS is an independent enforcement agency. Which I believe as I understand it contains only two political appointees within it. The individual who was running the IRS at the time was actually an appointee from the previous administration. But separate from that, there is no question that if this activity took place, it is inappropriate and there needs to be action taken and the President would expect that it be thoroughly investigated and action would be taken.

HANNITY: It's Bush's fault. Now, excuse me. Mr. Carney, the IRS is not an independent agency. It is part of the treasury and why they're investigating, they might want to look into exactly those people that have been working at the IRS because the official dealing with the issue made another admission today. This one about her poor math skills. I can't believe this one. Watch this.


REPORTER: You are saying a quarter of the 300 were associated with Tea Party or Republican issues, correct?

LOIS LERNER, IRS DIRECTOR: No, I said that about a quarter of the cases that were selected for full developments had either Tea Party or patriot in their name.

REPORTER: OK. Sorry. Thank you for the clarification. But that would be a quarter of the 300 then so we are talking 75 or so?

LERNER: That's correct. Is that a quarter? That's correct. Thank you. I'm not good at math. That's correct.

REPORTER: You are with the IRS. Thank you.

LERNER: But I'm a lawyer. I'm not an accountant, sorry.



HANNITY: Really? An employee at the IRS can't do math. You better do your math right or else they will put you in handcuffs and perp-walk you and take you off jail.

Here with reaction, the co-host of "The Five," Kimberly Guilfoyle, from the American Center for Law and Justice, Jay Sekulow. And he's been handling the Tea Party side of that case. The IRS apologized about today. That apology not accepted, Jay?

JAY SEKULOW, AMERICAN CENTER FOR LAW AND JUSTICE: No, it's not accepted because you can say, you are sorry all you want. But what they need to say, it's not only was it wrong and inappropriate but it was unconstitutional, unlawful and illegal. And Jay Carney trying to argue that the Treasury Department, the Internal Revenue Service, which is the enforcement division and treasury is not part of the executive branch of government is absurd.

The Commission of Internal Revenue Service is appointed by the president with advising consent of the Senate and the chief counsel, office I used to work in of the Internal Revenue Service is also appointed by the President of the United States with advice and consent. So, Sean, you know, all this I'm sorry, it shouldn't have happened it was wrong. Remember what they were all saying just a year ago.

There is no way this was partisan and even today, the IRS says, yes, we did pick them up based on their name and they were put under more more scrutiny including membership lists, donor data. Things they are completely not entitled to under the law but they say it is not partisan. This is absurd. So, there needs to be an investigation by oversight committees of the House and Senate.

HANNITY: It's outrageous.

SEKULOW: But somebody has to be held accountable here, Sean. This is outrageous.

HANNITY: It's an effort to intimidate and literally --


HANNITY: It's pretty hostile now. I know you were working with the Tea Party groups. My buddy, Mark Levin over at the Landmark Legal Foundation now back in March of 2012, he sent out a letter to the treasury inspector general, which he had told me today led to him being interviewed about this particular issue. And when you look he had a list in his complaint in the letter of the questions that they are asking. Have you ever done any media? I mean really that intrusive into people's lives?

KIMBERLY GUILFOYLE: Well, it is inappropriate. The IRS are the biggest profilers in the business and if you have any kind of conservative leaning, background affiliation, they will target you and come after you. This isn't speculation. They are admitting it. There should be further investigation into this to see how pervasive it is.

What other groups et cetera were profiled and regardless of partisan politics, no American group or political association or affiliation should be targeted because of their beliefs and then taxed unjustly because of it. That is unconstitutional. It is immoral and frankly, unconscionable.

HANNITY: Yes, I got to tell you. You know, imagine if this was George W. Bush, Jay, imagine if this is a Republican, Nixon by the way was accused of it --

SEKULOW: Let me tell you something else here. You're right. Duplicity is unreal. This is not over. We are sending out a letter to the Internal Revenue Service demanding that the remainder of our clients affiliated with Tea Party groups or conservative organizations be granted their exemption immediately.

Let me tell you something else. We are looking at a cause of action against the treasury for what they have done here. They don't get away with this. They should not be allowed to get away with it. So this is far from over. Apology not accepted.

HANNITY: You know, Kimberly, to me the inquiries about personal associations and viewpoints not only inappropriate, but we have constitutionally protected rights here, freedoms, freedom of the press and freedom of association and freedom of speech. You know, all of those things are in play here --

GUILFOYLE: They're being trampled on though by the IRS because the rules don't apply to them and apparently they are above and beyond the constitution. Jay is right. This ties right back into the administration. This department should be scrutinized.

HANNITY: The IRS spokesperson that is admitting that they can't do math. TurboTax, Tim Geithner all over it. If you don't do your math right, look, little old Sean Hannity, little talk show host. If I don't do my math right, I'm going to be handcuffed, perp-walked and put into jail probably in 30 minutes. I will be calling both of you as my lawyers.

SEKULOW: She was in -- is in charge of the tax exempt division of the IRS, a big position.

HANNITY: Unbelievable. Alright, we're going to stay on this. They are now claiming it is low level people. Throw them under the bus. They probably won't even fire anybody as a result until we push for an investigation. Guys, thank you. Good to see you and we do need that as well as everything else.

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