Wednesday, May 15, 2013
Phillip Hackney (LSU), The TIGTA Report on the IRS Scandal: Be on the Lookout for False Partisan Witchunts:
The TIGTA report on the IRS Teaparty scandal pretty much confirmed my expectations which is that the claim that the IRS "targeted" conservative groups to the exclusion of others is false. This is the most explosive charge that everyone had been expecting. Additionally, the IRS did not single out conservative groups alone to send ridiculously long and inappropriate questions -- it did it to everyone caught in the net of political advocacy. Interestingly, the report identifies that 96 of 298 cases were related to conservative tea party, patriot or 9/12 groups. I don't know what that leaves for the allegiances of the other 68%, but it would have been nice to know. If the other greater than 2/3s amount had liberal or democratic allegiances, we have a much different scandal on our hands -- Obama is targeting liberals, why? -- but TIGTA does not provide this information.
The report is well-written and gives some good recommendations, but it acts like a knee surgeon examining an elderly sick patient. The doctor tells her that her problem is a bad knee and if he gives her a new knee, she will be like new again. It's all good and well to tell the IRS to beef up its work on political advocacy, but that ignores the real problem, which is that it gets in over 60,000 paper applications a year that it somehow has to both quickly and with accuracy review with too small of a staff.
The types of applications the IRS faces are changing continuously leaving little ability for the high level standard setting TIGTA calls for. As soon as it develops one set of standards developed organically from watching the applications coming into the office, a new type of organization arises. Meanwhile the IRS EO office is trying to meet the twin aims to be fast and accurate. They are impossibilities. To be fast, you must eliminate much in the way of higher level review. To be accurate you must involve higher level review. To do higher level review you need more seasoned knowledgeable attorneys that can make these calls. Such money will not be allocated to this office ever. Better recommendations might be to force the application process to become electronic and to use some social science methods to determine applications that are most likely in need of a review, but the office would need a lot more money for that.
At the end of the day -- yes to inept management, but that does not acknowledge the ridiculous challenge that office faces -- but, No to Intentional partisan conservative hunting on the part of the IRS. What happened here is simply endemic of this office.Any organization that applies for exemption presenting a type of organization that the office has the time and inclination to try to focus on at the moment will face similar challenges in timing and ridiculously broad inquiries. This is the agents, who are not lawyers but good people trying to do their job, muddling through the best they can getting slow frustrating legal advice from the folks above them like me when I was there. The report notes that the average time for other types of organizations flagged for review was much less than faced by the political advocacy cases -- very simple explanation -- this is an average and probably a lot of the other types of organizations had methods developed for handling such matters -- the IRS was faced with a wave of social welfare organization applications engaged in political advocacy in a way that the office had not really faced or thought through before (social welfare organizations had even recently been referred to as the trash bin of exempt organizations by the IRS). Any time the IRS faces a new issue, it is very slow and very deliberate in the way it works to handle such applications and they tend to be handled from bottom up rather than top down as we witnessed in this case. This means they will probably get some calls wrong during the early stage of the development of a wave of new organizations, but quickly like bees in a beehive they will make corrections to more properly handle the situation.
Critically, note that all the worst IRS inquiries to the political advocacy organizations that the public has been most concerned about were ultimately overruled when subjected to actual review at a higher level. The TIGTA report for instance demonstrates that the IRS found that the request for lists of donors was an inappropriate request and they devised a way to ensure that these donor lists were not disclosed and in fact destroyed. This is slower than we might have liked, but it is very common for this office because of the challenges it faces in handling its workload. It often works from bottom to top rather than the other way around because of necessity.
The biggest problem is the IRS's inept handling of the politics of the whole affair, and its bizarre means of communicating its failures in this instance. This led to the IRS losing control of the message, even to Jon Stewart and The Daily Show, with the public thinking the worst of the IRS. I remain concerned regarding the apparently deficient disclosure to Congress when high level officials were asked apparently direct questions that I would have thought would have led to disclosure of the review of the Tea Party organizations. There may be a good explanation for those failures and hopefully we will hear those when Steve Miller testifies soon.
Nevertheless, other than the disclosure problems, this TIGTA review gives an accurate picture of an organization that I came to know and love when I worked there. Good people trying to do good work, but set for failure because provided poor clay in the Internal Revenue Code provisions on exempt organizations and too little staff and money to carry out the twin aims of accuracy and speed in molding that poor clay into a consistent good product.