TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Friday, November 18, 2016

The IRS Scandal, Day 1289:  Federal Judge To IRS—‘Strong Showing’ Of Discrimination Against Tea Party Group

IRS Logo 2USA Today, Judge to IRS: ‘Strong Showing’ on Tea Party Bias Claim:

A federal judge ruled this month in a lawsuit in the ongoing IRS-Tea Party saga that there was "a strong showing" that the agency had discriminated against conservative groups because of their political stances.

And U.S. District Court Judge Michael R. Barrett wrote in a decision that a particular group suing the IRS "has made a strong showing of a likelihood of success" on its claim that its free speech rights were violated by the delay in processing the application.

He ordered the IRS to continue processing the application from the group, called the Texas Patriots Tea Party, even as the IRS fights the group’s lawsuit.

"The Government appears not to see the forest through the trees when it uses the existence of this lawsuit as grounds to continue the delay that is the subject of this lawsuit," Barrett wrote in his Nov. 4 decision. "The evidence strongly suggests that the IRS initiated the delay" because the Texas group was affiliated with the tea party. ...

The latest ruling could set a precedent in the ongoing saga over alleged unfair treatment of such organizations and make it easier for them to go through the non-profit application process, lawyers in the case say. That's because it could force the IRS to speed up and reconfigure how it determines whether such groups can get nonprofit status throughout its system, and not just for the individual Texas group.

"We are suing in part for what we think is a violation of our First Amendment right to free speech, and we feel this ruling gives us that," said Kansas City-based lawyer Eddie Greim who is one of the lead lawyers for the Tea Party groups in the case. "If it holds up, this could establish the basic principle that the IRS will be judged on in the future."

The IRS declined comment on the case Thursday, citing its policy not to discuss any litigation against the agency.

The Texas Patriots lawsuit reached class action status in January and now includes several other conservative groups. A total of four lawsuits against the IRS are still alive nationally, including two filed in Washington, D.C. The latest ruling involves the Texas organization alone.

All the suits were filed shortly after IRS officials in 2013 acknowledged they had singled out conservative-leaning "public interest" groups for extra attention while reviewing their applications for nonprofit status. Such a designation allows people to donate with no tax penalty, and such groups can conduct some political activity as long as it is not "the majority" of their actions.

Conservative groups claimed that the slow process put a chill on such contributions during the 2012 election cycle, raising the possibility that the scrutiny was a way to slow down fundraising and campaigning by conservatives by the Obama administration.

That led to a major scandal and several investigations by Congress, the Justice Department and even with the IRS itself. It also caused the resignations or firings of several top IRS officials, including then-Commissioner Steven Miller as well as other administrators tied to the targeting.

An FBI and Justice Department investigation found in 2015 that the IRS's nonprofit approval system was rife with mismanagement and poor judgment, but that there wasn't enough evidence to prove that IRS agents acted in political ways or should be criminally prosecuted.

But the IRS completely stopped processing the Texas group's nonprofit application that was originally filed in 2012 once the suit was filed, saying it had lost jurisdiction because of the ongoing case.

Barrett ruled that process should continue, but also that the IRS could use neither the previous process it used for such conservative groups nor the expedited replacement system the agency offered after the scandal broke. ...

It's unclear how these cases will be handled by the incoming Trump administration, although one conservative watchdog group is asking that investigations into the scandal be resumed once President-elect Trump takes office. ...

Judicial Watch this week released more than a thousand new documents obtained through a Freedom of Information Act lawsuit that show officials in Cincinnati and Washington knew IRS agents in Cincinnati were targeting conservative groups by their party affiliations and by "guilt by association." ...

"We're getting document after document showing the IRS both in Washington and Cincinnati knew that people were doing things outside the rules," Judicial Watch's Finton said. "If they were asking inappropriate questions based on guilt by association or party affiliations, then I don't know what more you need to show that something inappropriate was going on, if not illegal."

http://taxprof.typepad.com/taxprof_blog/2016/11/the-irs-scandal-day-1289federal-judge-to-irsstrong-showing-of-discrimination-against-tea-party-group.html

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Comments

Where's Publius Nadler when we really need a dissenting viewpoint? Otherwise, there's nobody left around here to deny the facts of the case...

Posted by: MM | Nov 18, 2016 6:54:12 AM

I thought we were assured by the President of the United States that there was "not even of smidgen of corruption" at the IRS, and that this was a fake problem cooked up by Republicans and Fox News.

Posted by: ThomasA | Nov 18, 2016 8:09:31 AM

Professor Caron, what are the prospects for President Trump to waive privilege in these cases? I had assumed that Clinton would win and that the only way truth could leak out would be the nerve of independent Article III judges. Now I assume that Trump and/or his AG can waive privilege and open up the files. Can anyone comment on that?

Posted by: anon | Nov 18, 2016 9:43:44 AM

So... we can do the same to the Brady Campaign and Planned Parenthood?
Just asking.
For a friend.

Posted by: James Crum | Nov 18, 2016 11:26:55 AM

One of President Trump's (I LOVE writing that) first acts should be to appoint a special prosecutor to investigate the IRS. Hope Ms. Lerner has a lot of money for attorneys.

Posted by: VoteOutIncumbents | Nov 18, 2016 12:43:31 PM

Who was this judge appointed by? A conservative president. This judge is biased.

Posted by: Scott | Nov 21, 2016 6:00:01 AM