New targeting allegations leveled against IRS, this time by tax-exempt groups

This is a rush transcript from "On the Record," July 29, 2013. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Tonight, the House Oversight Committee pushing for an investigation into new -- yes, new, and more -- accusations against the IRS. This time, groups who already have tax-exempt status say the IRS targeted them.

One of those groups is the Leadership Institute. Its communications director, Abby Alger, joins us. Nice to see you, Abby.


VAN SUSTEREN: First of all, tell me what your organization is.

ALGER: So the Leadership Institute has been training conservatives since 1979. We have more than 120,000 graduates of our program. And that's why we were so surprised in June 2011 when the IRS kicked off a 13-month audit into our tax-exempt status that cost us more than $50,000 in legal fees and required more than 23,000 pages of paperwork.

VAN SUSTEREN: All right, now, you already had a tax-exempt status. So this was an audit, right? So you were not applying for tax-exempt status, is that correct?

ALGER: Absolutely. Our audit was about our existing tax-exempt status, and I'm sure of interest to the viewers, occurred from the Baltimore office instead of the now infamous Cincinnati IRS office.

VAN SUSTEREN: All right, whether we like it or not, the IRS audits people all the time. Some of it's very legitimate, these audits. So I'm curious, what makes you think that your audit was unfair or it was targeted because you're conservative?

ALGER: Well, there's three things, Greta. The first is the timeline. The audit of us as an existing organization closely parallels the audits of all the new conservative organizations applying for their tax status for the first time.

The second is that a new conservative organization, the Hawaii Tea Party, was specifically asked about their relationship to the Leadership Institute and to turn over the training materials that they received from us.

The third is the nature of the questions that we received from the IRS. So there's either amazing telepathy occurring across the IRS offices or there's something more going on behind the scenes.

VAN SUSTEREN: OK, what were the questions that you thought were inappropriate or made you sort of -- at least made you suspicious this was an inappropriate political targeting?

ALGER: So there were a wide range of questions, and they started with the applications for our summer internships and the physical work locations of our interns, ranging to the ways that we advertised for the more than 300 events that we host every year, to sample correspondence between employers and our staff members for, our free job listings Web site.

VAN SUSTEREN: Do you know of any other organization, conservative or liberal, got questions that are similar to that? Because if there's sort of the -- if liberal groups were targeted and that these are questions liberal groups get, then it would be less alarming. But if you're singled out, that's a big difference.

ALGER: For us, it was the questions, which we haven't heard from another group. But more importantly, that link between us and the Hawaii Tea Party because that shows the link between the Baltimore office, the Cincinnati office, the connection being the Leadership Institute and the timing of the event.

VAN SUSTEREN: How did they hook you up with Hawaii? I mean, that's quite a geographical jump.

ALGER: So we, just like with other conservative organizations, hosted training events in Hawaii with the Hawaii Tea Party. We do that with more than 100 organizations across the country every single year. But in this case, the question of between the Hawaii Tea Party and between the Leadership Institute and how they drew that line, we'd love to know that. And that's why we support the call for further investigation because right now, the IRS has all the cards.

VAN SUSTEREN: Do you intend to push to be part of any of these hearings on Capitol Hill?

ALGER: We've certainly been in communication with Hill staff. If you notice, the open letter today from Congressmen Issa and Jordan included a number of citations of one of our vice presidents, who shared a large amount of information relating to our audit.

So we certainly intend to share our experience to help others learn from it, and more importantly, to stand up for the hundreds of groups, potentially, around the country that are afraid to come forward about their audits.

VAN SUSTEREN: What do you think about the president calling it phony?

ALGER: I think it's incredibly interesting. And I would love to see all the cards laid on the table on behalf of the IRS so we can start seeing what happened, when it happened, and more importantly, who knew what when.

VAN SUSTEREN: And in terms of the fact that he and rest of his -- he's got Jack Lew, essentially, the Treasury secretary, saying -- and also the press secretary -- does that in any way, you know, pique your interest?

ALGER: I think so. And in this case, the question is, for a further investigation, for more information to come out, the only people who potentially benefit are the American taxpayers, who deserve to know what the IRS is doing. The only people who are potentially hurt are the IRS and the Obama administration. So in this case, I'm happy to side with the taxpayers and say that we need to have more information.

VAN SUSTEREN: Abby, thank you, and good luck.

ALGER: Thank you.

VAN SUSTEREN: And it isn't just the Leadership Institute, the president of another conservative group calling its treatment by the IRS pure and simple harassment.

Michelle Easton from the Claire Boothe Luce Policy Institute joins us. Nice to see you.


VAN SUSTEREN: Can you tell me what your organization is?

EASTON: We were formed 20 years ago to prepare and promote conservative women leaders.

VAN SUSTEREN: All right, now, did you -- you've now had an audit. Did you already have an exemption already and then they initiated -- the IRS initiated an audit against your organization?

EASTON: Yes. It was January 2011. I got a call from an agent in Richmond, not Cincinnati, saying they had selected 2008 to audit us. And I had never -- I never thought it was a coincidence, first that they selected 2008, which was the year I took six weeks off, went off the payroll, resigned temporarily to work for Sarah Palin. And I never thought it was a coincidence that they selected 2011, the year so important in the timing of our country's leadership.

And then suddenly, a few months ago, all this information came out about the improper actions of the IRS and the pattern of harassment, and I said, I knew it wasn't a coincidence! I'm an attorney, Greta. I'm extraordinarily careful. I have been for 20 years. And an audit of us, as far as I could see, was pure harassment.

VAN SUSTEREN: You know, as you know as a lawyer, and even as a taxpayer, you know that the IRS audits lots of people at different times. Was there -- what was it, though, that made you think that it was a political targeting besides the timing? Were there any questions that were unusual or any -- did they ask you anything about any organizations?

EASTON: Well, you know, when they tell you they're going to audit you, I said right away, Oh, you know, why? Oh, we can't share that information. Oh, well, did someone file a complaint? Oh, we can't share that information. Was it random? Well, maybe it was random. And they're so secretive about it.

Tell us! Tell us who complained, or if it's random, have a public drawing of the random ones so that groups and individuals don't have that stigma that comes with an IRS audit.

And once we learned the pattern of this, well, then it seemed like it was time to talk about it because people feel so isolated and so stigmatized when they're audited. But now we're learning there was a pattern. There were huge numbers of conservative groups who were denied the exemption, and I believe there's probably large numbers of groups who were audited unfairly, as we were.

There was not any reason in the world to audit the Claire Boothe Luce Policy Institute. And the first thing they asked for, Greta, in the first document request (INAUDIBLE) they asked for the names of all our contributors and the amounts of money they gave. Well, you know they can't get that! That is private information. And we had to fight and fight to secure the privacy of our supporters.

VAN SUSTEREN: And I think there's even actually -- I think there's even case law in the Supreme Court about asking for the names of the membership...

EASTON: There is.

VAN SUSTEREN: ... which -- you know, which prevents it. So there -- at least, that was...


VAN SUSTEREN: ... improper question.

EASTON: Civil Rights case.

VAN SUSTEREN: NAACP versus Alabama was the case.

EASTON: That's correct.

VAN SUSTEREN: All right, now, the president has said that this stuff about the IRS, they're phony -- it's a phony scandal. And you say what?

EASTON: Well, I say our whole tax system in America is based on the cooperation of the American people. But we've seen now -- we've seen that the IRS is really a political institution, and I say the IRS deserves the lack of confidence that American people really have in it now.

VAN SUSTEREN: But the president is rather dismissive. He thinks that, you know, that you and others are just sort of, you know, you're -- you're (INAUDIBLE) and everybody else is talking about it is just drumming this up, that it's just silly and phony.

EASTON: It's not going to work. The IRS is a huge bureaucracy that spreads fear in the hearts of individuals and organizations. And when they gang up on one particular part of people, of conservative people and conservative groups, there's nothing phony about that. It's abuse of governmental power!

VAN SUSTEREN: Michelle, thank you very much. Good luck.

EASTON: Thanks.