TaxProf Blog

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

Tuesday, March 1, 2016

The IRS Scandal, Day 1027

IRS Logo 2The Daily Caller op-ed:  Would Lois Lerner Make A Good Senator?, by Mark Fitzgibbons:

California Attorney General Kamala Harris had a full schedule last week. To quell heady rumors, she told the anxious press that she does not wish to be considered for nomination by her ideological twin President Obama to replace the late Justice Antonin Scalia on the Supreme Court. Then Ms. Harris officially filed papers to run for Senate after campaigning and raising millions for the race since January last year, and was endorsed Saturday by her state’s Democrat Party.

At a federal courthouse in Los Angeles, however, one of Ms. Harris’ deputy attorneys general was receiving far less exhilarating treatment from Judge Manuel Real in a case brought by American for Prosperity Foundation, a 501(c)(3) nonprofit organization founded by billionaires Charles and David Koch.

AFPF sued Harris after she started demanding that all organizations registering with her office to solicit contributions from Californians first provide her the names and addresses of donors listed on a federal tax return schedule filed confidentially with the IRS. Judge Real said the demands, which sidestep federal tax code protocols protecting donor names, appear to be “laziness.”

The problems with Harris’ demands appear to be more serious than a case of laziness. Ms. Harris may be exposing members of her staff to fines and even jail sentences under post-Watergate reforms to the Internal Revenue Code. Statements by one her top deputies even lead to a reasonable conclusion that the attorney general’s office opted for purposeful evasion of federal law.

By way of background, charities are required by law to make their tax returns available to the public. Key donors listed on Schedule B to those returns, however, are deemed confidential tax return information. In the years before the Lois Lerner scandal at the IRS, the California Registry of Charitable Trusts, which is part of the attorney general’s office, required charities to file their tax returns as part of the charitable solicitation registration process, but donor names and addresses on Schedule B were redacted by the filers.

Post-Watergate reforms to the tax code instituted protections for confidential tax return information, and provide civil and even criminal penalties for certain disclosures or inspections by government officials, including those in the states. Government officials are prohibited from willfully disclosing or inspecting tax return information unless expressly authorized under the Internal Revenue Code. ...

California’s violations, however, appear more like purposeful evasion of the law than laziness. One now-retired senior lawyer for Harris co-authored an article in 2013 describing how federal law “severely restricts the authority of the IRS to share information with state charity regulators.” This lawyer and her colleagues in the National Association of State Charity Officials (NASCO) worked with IRS officials to seek legislation to loosen the rules, but did not succeed. Disgraced former IRS official Lois Lerner was one of those collaborating with NASCO. Indeed, one NASCO official described Lerner as their “partner in the regulation of charities.” ...

AFPF argues in its litigation that Ms. Harris’ recent demands for donor names violate the First Amendment and the principles of the 1958 landmark case NAACP v. Alabama, in which the Democrat Alabama attorney general tried to shut down the civil rights movement in his state by obtaining member names though coercive government means. The Supreme Court blocked the Alabama AG’s attempts, acknowledging that the right to private association is harmed when the government knows an organization’s adherents and financial supporters.

Conservative organizations and their donors are terrified not just that uber-liberal Harris will leak this confidential information to their opponents and her allies, putting donors at risk of physical or other danger when highly charged issues are in play, but that Ms. Harris may use her position of government power to target them for investigations, audits or other unfair officious treatment.

Even Harris-supporting Democrats who are in-the-closet opponents to the liberal orthodoxy on any issue – abortion, guns, marriage, climate change . . . you name it – will also be intimidated, and their donations to those causes are quite likely to dry up. The point of the post-Watergate reforms keeping tax return information confidential was that government officials can be the problem.

Lois Lerner misused and abused the tax code as a political weapon. One of her comrades in lawlessness now wants to be in the United State Senate, leaving behind underlings who could face jail for her acts and ambitions.

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