TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Saturday, January 23, 2016

The IRS Scandal, Day 989

IRS Logo 2Washington Examiner editorial, The Dog Keeps Eating IRS Hard Drives:

In Oscar Wilde's comedy, "The Importance of Being Earnest," Lady Bracknell is indignant to hear that Jack Worthing is an orphan. "To lose one parent, Mr. Worthing, may be regarded as a misfortune; to lose both looks like carelessness."

If only one could enjoy a similar belly laugh over President Obama's IRS repeatedly losing hard drives loaded with data related to scandals at the agency. To lose one might be regarded as suspicious happenstance; to lose two looks like conspiracy.

The most famous case is that of Lois Lerner, whose division became notorious for targeting conservative groups applying for nonprofit status. Her computer hard drive malfunctioned before that scandal broke, around the same time Congress was looking for information on a separate IRS targeting scheme aimed at conservative donors.

One of Lerner's emails to colleagues, which was finally retrieved from data tapes after roughly two years of congressional demands, stated, "No one will ever believe that both your hard drive and mine crashed within a week of each other."

The newest case of IRS hard drive trouble happened last April, but came to light only this month. Law 360, a subscription-based trade publication, reported this week that the IRS has notified the Justice Department that it erased a hard drive after being ordered not to do so by a federal judge.

In this case, the missing communications are those of a former IRS official named Samuel Maruca in the Large Business and International division. He is believed to have been among the senior IRS employees who made the unusual and possibly illegal decision in May 2014 to hire the outside law firm Quinn Emanuel to help conduct an audit of Microsoft Corporation. ...

Another reason Congress is upset about this law firm's $2.2 million contract is that it came at the expense of IRS customer service. Ever since the Lerner scandal, IRS leadership has moaned incessantly about cuts to their budget. In an effort to gain public sympathy, they made a big deal of the fact that the cuts would diminish the agency's capacity to provide taxpayer assistance during spring 2015.

But at the same time, the IRS was using funds to pay executive bonuses and to hire this outside law firm, even though the agency has many qualified tax attorneys and auditors on staff capable of investigating Microsoft

House Oversight & Government Reform Committee Press Release, Chaffetz, Jordan Letter to IRS Commissioner Regarding Destroyed Documents:

Today, House Oversight and Government Reform Committee Chairman Jason Chaffetz (R-UT) and Health Care, Benefits, and Administrative Rules Subcommittee Chairman Jim Jordan (R-OH) sent a letter to Internal Revenue Service (IRS) Commissioner John Koskinen after learning the IRS destroyed documents covered by a federal district court’s preservation order. The preservation order was issued in response to a Freedom of Information Act lawsuit filed by Microsoft relating to the potentially wasteful hiring of an outside law firm by the IRS to assist in auditing Microsoft.

Key excerpts from the letter:

“The destruction of evidence subject to preservation orders and subpoenas has been an ongoing problem under your leadership at the IRS. …

“It is stunning to see that the IRS still does not take reasonable care to preserve documents that it is legally required to protect. …

 “It is now apparent that the IRS has not solved the management problems that have led once again to the destruction of documents in contravention of its legal obligations.”

The letter requests documents from the IRS so that the Committee can better understand the IRS’s policies.

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Comments

I believe it's time for the FBI to go in and confiscate all the hard drives at the IRS, make copies of them, and then return them. Shut the agency down for a couple of weeks and get this done. The whole planet knows they're lying about this but Republicans refuse to do the right thing. It's time for some outside source to do the right thing. Perhaps the judge, who is all upset about this, will demand the hard drives and hire some forensic experts to look into them.

Posted by: bflat879 | Jan 23, 2016 8:05:49 AM

Like the congressional request for information on IRS information retention procedures is going to get anywhere, all that data was lost in the floods of 1967.

Posted by: max | Jan 23, 2016 9:42:55 AM

There are probably a number of causes for the IRS' two known (so far) litigation hold failures. Sufficient resources should be dedicated by the IRS and DOJ to determining the primary causes and proposing remedies. That being said, one thing is certain. It isn't going to get better by further cutting the IRS budget.

Posted by: Publius Novus | Jan 25, 2016 7:44:57 AM