Lois Lerner is toxic — and she knows it. | M.Scott Mahaskey/POLITICO Lerner speaks

Employers won’t hire her. She’s been berated with epithets like “dirty Jew.” Federal agents have guarded her house because of death threats. And she’s spent hundreds of thousands of dollars defending herself against accusations she orchestrated a coverup in a scandal that has come to represent everything Americans hate about the IRS.

Lois Lerner is toxic — and she knows it. But she refuses to recede into anonymity or beg for forgiveness for her role in the IRS tea party-targeting scandal.


“I didn’t do anything wrong,” Lerner said in her first press interview since the scandal broke 16 months ago. “I’m proud of my career and the job I did for this country.”

( GRAPHIC: IRS scandal timeline)

Lerner, who sat down with POLITICO in an exclusive two-hour session, has been painted in one dimension: as a powerful bureaucrat scheming with the Obama administration to cripple right-leaning nonprofits. Interviews with about 20 of her colleagues, friends and critics and a survey of emails and other IRS documents, however, reveal a much more complicated figure than the caricature she’s become in the public eye.

The portrait that emerges shows Lerner is, indeed, fierce, unapologetic and perhaps even tone-deaf when she says things that show her Democratic leanings. She had a quick temper and may have intimidated co-workers who could have helped her out of this mess. It’s easy to see how Republicans have seized on the image of a devilish figure cracking down on conservative nonprofits.

( Also on POLITICO: Lerner on Lerner: More from the former IRS official)

“We followed the trail where it leads, and we saw it lead to Lois Lerner,” House Oversight and Government Reform Chairman Darrell Issa (R-Calif.) said at a hearing Thursday. “She refers with disdain to conservatives; she’s an active liberal; and it’s clear her actions were set out to be detrimental to conservatives.”

Yet Lerner is also described as “apolitical” and fair. Some say she was a generous boss who inspired loyalty, baking brownies and handing out lottery tickets to managers to raise morale. She’s putting her babysitter’s son through college and in 2005 flew to New Orleans after Hurricane Katrina to rescue animals.

And she’s a savvy lawyer: She studiously avoided answering fundamental questions about her role in the IRS scandal that could land her in deeper trouble with Congress. During her POLITICO interview, flanked by her husband, a partner at a national law firm, and two of her personal attorneys, she opened up about her life as a pariah, joked about horrible news photos and advice that she disguise herself with a blond wig, and cried when expressing gratitude for her legal team’s friendship.

( Also on POLITICO: Timeline of IRS scandal)

Very few details of Lerner’s personal history, professional background or life since her fall have been detailed in the news media. One thing is clear: She doesn’t seem poised to back down or give her Republican critics in Congress any satisfaction.

“Regardless of whatever else happens, I know I did the best I could under the circumstances and am not sorry for anything I did,” the 63-year-old said.

An apology and a firestorm

On May 22, 2013, Lerner returned to the seeming safety of her IRS office after invoking the Fifth Amendment and being chased down a Capitol Hill hallway by the Washington press corps.

Instead, she was summoned by the human resources department and ordered to resign or clean out her desk by 2 p.m. and be escorted from the building on indefinite administrative leave. She refused to resign.

( Also on POLITICO: Carl Levin slams IRS watchdog over tea party report)

It was a startling turnabout for the woman whose alumni magazine said she had “rock star status” in the tax world and who was a recipient of a government service award for ethics. She thought she was months away from a quiet retirement after 33 years working for Uncle Sam.

“Under both Republican and Democratic administrations, she got these amazing ratings and bonuses. … And once she retired, she would have gone out with bells and whistles, and the IRS commissioner would have made a speech. … It went from that to: You’re under criminal investigation, and your career is ruined, in a week,” said Lerner’s husband, Michael Miles, who sat to her right during the interview.

The beginning of the end started a few days earlier, when acting IRS Commissioner Steven Miller asked her to get ahead of a damning inspector general report due the following week. It detailed IRS agents giving heightened scrutiny to nonprofits using words like “tea party,” “patriot” and “limited government spending,” and asking the groups inappropriate questions about their donors and political affiliations.

( POLITICO's full coverage of tax policy)

Lerner, then head of the division handling organizations claiming tax-exempt status, obliged and dropped what turned out to be a political bombshell at an American Bar Association conference, using a planted question to apologize for the treatment of right-leaning nonprofits from IRS “front-line people” in Cincinnati.

Within days, lawmakers in both parties were calling for her resignation, furious that IRS leaders, including Lerner, had withheld information when asked by lawmakers for months about the matter. Top officials also blamed Cincinnati, when, in fact, Washington was also handling the cases.

Called to testify before the House Oversight Committee, Lerner decided to take the Fifth and read a defiant speech declaring her innocence — one that Republicans argued waived her rights. She says she’d do it again.

( Also on POLITICO: More IRS employees lost emails)

“By taking the Fifth, Lois put a sign on her back: Kick me,” said Paul Streckfus, editor of the EO Tax Journal. “To the average person, that sounds like, ‘Oh my God, she must be hiding something!’”

Lerner, for her part, assumes she is at the center of the storm because “I was the person who announced it. I assume the other part of it is because I declined to talk, and once I declined to talk, they could say anything they wanted, and they knew I couldn’t say anything back.”

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Accusations pile up

Republicans, who earlier this year held her in contempt of Congress, accuse Lerner of using her position to push for audits and denial of tax-exempt status to Karl Rove’s Crossroads and other GOP groups.

They’ve released partial emails, including one after President Barack Obama’s reelection in which she and Miles bemoan far-right conservative talk radio, calling them “crazies” and “a—holes.”

The couple said the exchange was taken entirely out of context. Miles wrote the email after listening to callers on the “Mark Levin Show” rant about stockpiling food and guns to fight because Obama was going to run the country into the ground. Lerner, then in London, responded from her work email about hearing chatter about the U.S. being a broken system for its fiscal brinkmanship over the debt ceiling.

Lerner said she is “not a political person,” has voted for candidates of both parties and that the only campaign contribution she ever made was $25 to a fellow law school student running for judge.

She’s a registered Democrat, but her lawyer, Bill Taylor of Zuckerman Spaeder, said people should “consider whether being a registered member of one political party should disqualify people for government service, and if so, who would we get to run the government?”

Friends and colleagues say Lerner didn’t talk much about politics and note that while Democrats have defended the IRS and the White House, they’ve steered clear of backing Lerner — suggesting she and her husband don’t have many heavyweight Democratic connections.

But Republicans contend her skepticism of the Supreme Court’s Citizens United decision lifting limits on corporate political contributions is damning. They point to emails, including one from June 11, 2012, about how states responded to the case by creating their own disclosure rules. Lerner wrote to the author: “You done good! Now, if you can only fix the darn law!”

In another email, Lerner commented on an IRS group email circulating Democratic Rep. Chris Van Hollen’s legislation requiring more disclosure of political groups getting tax breaks. She wrote: “Wouldn’t that be great?”

Although she wouldn’t discuss these issues at the behest of her lawyers, Lerner said it is unrealistic to expect public servants not to have opinions: “What matters is that my personal opinions have never affected my work.”

Not everyone is convinced. Reagan-appointed former Federal Election Commission Commissioner Lee Ann Elliott and Craig Engle, a former executive assistant to a GOP commissioner, who worked alongside Lerner in her role prosecuting campaign finance violations at the FEC, think she was biased against big political spenders. They say she was tough on certain groups because she didn’t like them influencing elections.

“Lois’ ideology is against money in politics, is ‘anti-contribution’; that’s her bias,” said Engle, an Arent Fox partner. “Her ideology inhibited fair administration of the law.”

But any action Lerner brought had to be approved by the bipartisan commission.

Larry Noble, Lerner’s friend and former FEC boss, says she was never partisan. He nominated her for a government service award she won in 2008 by arguing she stayed above the fray.

Several Lerner allies said she was so focused on enforcement that she failed to see the sensitivity of bringing cases against incumbents running for reelection.

But Republicans continue to point to emails in which Lerner inquired about Crossroads specifically, asking her colleagues why the group hadn’t been audited and suggesting the group’s application should be denied. And just weeks before the tea party news broke, after she had seen a draft of the damning inspector general report, she asked colleagues if internal IRS instant messages are tracked and could be requested by Congress.

They’re also suspicious that two years’ worth of her emails disappeared in a 2011 computer crash, a huge kerfuffle the IRS only revealed to Congress in June — a year after the saga began.

Lerner scoffed at the notion that she would crash her own computer to hide emails: “How would I know two years ahead of time that it would be important for me to destroy emails, and if I did know that, why wouldn’t I have destroyed the other ones they keep releasing?”

‘Her fuse was short’

A decade ago, Lerner’s name incited roaring applause at Las Vegas’ Caesars Palace, where a stage of celebrities including Robin Williams and Whoopi Goldberg honored her for rescuing animals abandoned during Hurricane Katrina. It was part of the 2006 Comic Relief fundraiser that aired on TBS and HBO.

Lerner had taken unpaid leave to fly to New Orleans after the storm, going door to door to save some of the 50,000 stranded animals. She fostered one collie that had been without food and water for a month, watching him for a year before finding his owners.

Before she took the stage with her foster pet, HBO showed a video depicting an emotional Lerner crying because “we were too late” to save thousands of animals who had drowned or starved while waiting for their owners to return.

It’s not the only charitable act defenders eagerly recounted: Lerner and Miles are funding college tuition for their former babysitter’s son, and they let an unemployed friend live at their house for two years while he got back on his feet.

But her former co-workers and some friends say she could be a stern boss, short-tempered and prone to brash comments. IRS employees either really loved her big personality and loud bark — or really didn’t.

“Lois had the personality where she said what she thought immediately,” Nikole Flax, Miller’s chief of staff, told House Oversight investigators, later adding: “We didn’t always get along. … We would have occasions when I would, you know, call her, and she could scream for a minute.”

Lerner chuckled in the interview, acknowledging that she can get a little passionate — but she said she never holds grudges.

Rocky IRS start

Lerner started her career far away from tax policy, as a dental hygienist. She quickly switched gears and went to law school, graduating cum laude. After a stint at the Justice Department, she spent 20 years at the FEC before heading to the IRS in 2001.

Her start was rocky at the tax agency, where employees scoffed at her lack of knowledge of tax law and IRS operations. Some gossiped behind her back; one boss dismissed her ideas in meetings, according to former co-workers.

Because of that, some say, Lerner became defensive.

“Her fuse was short, and if you come to the IRS, you better be able to sit and listen and ask questions and absorb and rethink, and she had a hard time doing that,” said Debra Kawecki, a senior attorney who worked with Lerner before retiring in 2006.

Lerner eventually built an inner circle, including former IRS exempt organizations manager Marvin Friedlander, who said she got up to speed quickly. But in recent years, she lost some of her most trusted staff to retirement.

Marc Owens, who had Lerner’s position at the IRS during the 1990s, thinks her limited tax knowledge may have contributed to the tea party incident: “When managers are not familiar with the laws they are enforcing, they make bad decisions.”

Eventually, Lerner won over employees with her chatty personality and smart jokes — and by showing them her gratitude with little things, like doling out lottery tickets and treating them to lunch or dinner. She loved to talk fashion, and she’d ask how people were doing, not just at work, but in their personal lives.

But some people still feared her. Some said she played favorites, “snapped to judgment quickly” and froze people out, including those she felt were too cocky or very opinionated.

“This business of getting very angry and closing that person off, I didn’t think that was smart because you never know when you’re going to need that person again,” Friedlander said, suggesting Lerner may have done herself a “disservice” by alienating people. But he generally praised her as a boss and colleague.

Up the ladder

By 2006, Lerner had become the head of the exempt organizations division.

While her detractors said she rode on Miller’s coattails, many practitioners said she accomplished much, including streamlining a complicated tax form for exempt organizations, creating a user-friendly website and jump-starting big projects that yielded reports on complicated areas, like nonprofit hospitals and universities.

Practitioners said she would sometimes give out her personal phone number at conferences so lawyers could call her as needed. She’d spend a few minutes each day phoning one of her 900 subordinates to ask how things were going.

She created a new approach to classifying potential problem areas, pulling together a team of 40 specialized agents to research emerging issues or suspect groups by scanning websites and court cases and reviewing tax forms to see whether the subjects merited a full audit.

While some saw it as a smart use of limited resources, others, including Owens, thought her projects were a “major contributing factor” to the massive backlog in applications that accumulated under Lerner’s rule. Nonprofits went from getting approval in a matter of weeks or months to multiple years.

The surveillance group also found itself in hot water with House Republicans who said conservatives composed 80 percent of those flagged for watch.

Lerner has also been criticized for an IRS move to delegate more responsibility, including to Cincinnati-based IRS agents examining nonprofit applications, while not issuing enough guidance on how to do the job. Her division’s training budget was slashed 96 percent between 2009 and 2013, according to the IRS Taxpayer Advocate, an internal watchdog.

Lerner also stopped publishing a popular annual IRS manual, which most likely would have included a segment on political social welfare groups that could have helped clarify nonprofit policies, Owens said.

In that vein, numerous emails show Cincinnati-based IRS employees begging for guidance on the tea party matter from Washington — probably why many were furious that she and the IRS blamed the situation on Ohio when the news first broke.

Some tax lawyers said it became impossible to get answers from the division in recent years. Many also got the impression that Lerner and her unit were fearful of screwing up, calling them “too cautious” and slow-moving.

“The irony is she and Steve Miller were so extremely cautious, and yet their caution blew up in their face,” Streckfus said.

Unanswered questions

As head of the division where it all began, Lerner certainly bears some of the blame for the selective scrutiny of tea party applications, and numerous emails understandably raise eyebrows.

Emails released by Congress suggest Lerner knew about the tea party groups being flagged in 2010 and put a stop to the inappropriate “be on the lookout” criteria right when she learned about it in summer 2011. But she didn’t follow up to ensure agents stopped using politically charged words. They actually went right back to the practice.

She also seemed well aware that these groups had been waiting for years to get an answer from the IRS. As early as mid-2011, she asked IRS lawyers how to get the applications wrapped up.

Yet it’s also clear that she wasn’t the only one who made missteps — she’s just the only name leading headlines.

For example, it was advisers in the IRS chief counsel’s office who requested that agents seek more information on conservative groups’ 2010 campaign activity, even after the organizations were waiting for exempt status for more than a year, according to Democratic congressional reports.

There were also multiple managers on these cases, and former IRS staffers told POLITICO that the IRS commissioners probably knew what was going on because they were always appraised of “hot-button issues.”

Still, none of her former IRS colleagues thought Lerner was working for the White House or biased.

Rather, in general, they say she lost control of her division — and that the GOP is taking advantage of it.

“You could take her out of there and just stand in a different person, and no matter who it is, we would have the same result,” said Karen Gries, a tax lawyer who worked with Lerner. “I don’t believe this is reflective of Lois the individual or Lois the professional.”

Her sympathizers note that she was in a tough spot because many sunlight groups and lawmakers were alleging that big-name nonprofits, like Crossroads, were making hundreds of millions in secret campaign contributions, exceeding IRS limits for campaign activity for tax-exempt groups. Lerner’s division had to enforce the law, they say.

But was the law applied equally to all political persuasions?

Emails show Lerner was looking at political activities of affiliates of liberal group Emerge, which won tax exemptions that were later revoked by her division after Lerner asked “how in the world” they got approved. But the number of conservative groups that were put on hold for years and asked inappropriate questions still far outnumber liberal ones.

Democrats, meanwhile, are still furious that Lerner didn’t tell Congress about the situation sooner.

Eventually, the IRS, Lerner’s employer for more than a decade, would turn 180 degrees against her. After she went on leave, acting IRS chief Danny Werfel tasked his investigators to build the case to fire Lerner, according to a former IRS official who was working on that probe.

But Lerner retired in September before the IRS could fire her.

‘Worst person ever’

Lerner and Miles, a partner with Sutherland Asbill & Brennan, said they’ve spent “hundreds of thousands of dollars” on legal bills as she has been investigated by Congress and the FBI and sued by multiple conservative groups.

The couple, who live in a $2.5 million house in Bethesda, Maryland, where BMWs sit in neighboring driveways surrounded by lush yards and security cameras, are clearly well off. But now they’re more conscious of money, postponing Miles’ retirement, for example.

Lerner wants to work to help pay for her defense bills, though a source working on the congressional investigation said she’s receiving a $100,000 annual pension. But while even Miller, fired by Obama in the wake of the scandal, has landed on his feet at a Washington-based consulting group, Lerner is still untouchable.

Her closest friends can’t help her land a job, and she’s been snubbed by at least one international organization that works on elections in Third World countries and a voluntary position in a county outside Washington.

So she passes the time gardening, walking her dogs and volunteering occasionally with a local arts nonprofit where she edits grant applications. She won’t specify where, exactly, because “I feel like having my name attached does nothing but cause issues for people.”

Some of her friends feel that way, too. While many have been supportive, even raising small donations to help her pay her legal bills, others have been too fearful to visit or even save her information in their contacts lists: They’re petrified of Issa’s subpoenas.

Lerner said she tunes out the news reports centered on her. “I probably would have lost my mind if I had read it all, because your reaction when this happens is, ‘Wait a minute, let me explain to you what happened,’” she said.

Instead, her husband — who looks more tired than Lerner herself — sifts through the scandal headlines, sometimes tearing out stories about her in the paper so she won’t see them.

Miles also receives the bulk of hate mail and death threats at work. A July threat was so bad that federal agents had to protect Lerner at her home. Some have threatened their two daughters; even her 86-year-old mother-in-law in Ohio has gotten hate calls.

Among the hate mail, Lerner’s “favorite” is one that says she’ll “go down in history as the worst person ever in the United States.”

“I just thought, ‘Boy, worse than Jeffrey Dahmer?’” she asks, her face crinkling up, eyebrows pinching together in disbelief.

When POLITICO asks about coping, Miles jests: “Oh, the tattoo?”

But Lerner tears up describing how her legal team has become friends, willing to listen to her vent.

Then, in a flash, she’s defiant again, saying she’s “not going to let them ruin my life.”

They refuse to move from their home. And when Lerner leaves the house, she doesn’t try to hide by wearing sunglasses or a headscarf, though “someone told me maybe I should get a blond wig.”

Of course, that also means she can’t escape public humiliation when she is recognized. She’s been berated by strangers and told she is “going to be put away in the deepest, darkest dungeon, and they were going to lock me up and throw away the key.”

Maybe someday she’ll write a book. Maybe not. She doesn’t know when, or if, she’ll tell the full story of what happened, though she assures POLITICO that “you don’t hear half of what happened because they are picking and choosing.”

Asked what she’d say if she could tell the world anything, she reiterated her innocence. Then, as she starts to get up to walk away from the interview, she added: “And, oh, one more thing: I’m doing just fine.”