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Editor: Paul L. Caron
Pepperdine University School of Law

Wednesday, December 21, 2016

The IRS Scandal, Day 1322: Government Denies That It Continues To Harass Tea Party Group

IRS Logo 2Following up on my previous posts on NorCal Tea Party Patriots v. IRS, No 1:13-cv-00341 (S.D. Ohio):

United States' Response to Plaintiff's Motion to Clarify Preliminary Injunction (Dec. 14, 2016) (citations & footnotes omitted):

In its Motion, Plaintiff Texas Patriots Tea Party states that the relief it seeks is for the IRS to “finish developing TPTP as it was prepared to do in 2013 with any additional inquiry limited to (1) what the IRS had then identified as new issues raised in, or still to be clarified from, TPTP’s response to the second development letter; and (2) facts regarding TPTP’s activities on or before March 2013.” Prior to the filing of this Motion, TPTP did not inform the United States of the relief sought. Had TPTP done so, the United States would have been amenable to that relief and the parties likely would have been able to resolve the issue extra-judicially. In fact, on November 14, 2016, during a meet-and-confer telephone call regarding the TPTP development questions, counsel for the United States inquired whether TPTP’s concerns may be addressed by limiting the time frame of the questions to lessen the burden on TPTP. TPTP’s counsel dismissed the suggestion and, prior to the filing of the Motion, did not indicate any renewed interest in pursuing that avenue of resolution. However, the United States is still amenable to resolving this issue by limiting the requested information to the time period prior to March 2013. The United States is also amenable to resolving this matter by agreeing to allow TPTP to submit the additional information it believes would be relevant to establish whether it is entitled to tax exempt status. While the IRS issued the development letter in the ordinary course, TPTP can decide whether to respond fully, incompletely, or with different information. However, the United States requests that any Court order along those lines clarify that it is not in the ordinary course but is an accommodation for TPTP and require that any additional information be submitted within 30 days.

In the event TPTP is not amenable to the accommodations the United States is willing to make to resolve this Motion, the IRS is justified in pursuing answers to the questions it has posed to TPTP. TPTP argues that, by seeking additional information, the IRS is not processing its application in the “ordinary course,” but this argument rests on two faulty assumptions: (1) that TPTP’s application was complete and “on the path to approval” in August 2013 and (2) that the IRS does not ordinarily ask applicants to provide information about their activities covering a time frame of more than six to nine months. Neither of these assumptions is correct. Prior to the stay requested by TPTP, the IRS was processing its application in the ordinary course, and contrary to TPTP’s assertions, TPTP now seeks extraordinary treatment.

TPTP also seeks to poison the well by misrepresenting the facts of its case and falsely implying, without any basis, that Department of Justice (DOJ) counsel and IRS Chief Counsel (IRS Counsel) attorneys improperly influenced the processing of TPTP’s application. Plaintiff’s allegations break down under the weight of false assumptions and misleading recitations. Specifically, whether by design or mistake, TPTP makes two fundamentally incorrect factual assertions in telling its story. First, TPTP erroneously claims that it was “on the path to approval” in August 2013. This claim is based on a mischaracterization of the roles of Tax Law Specialist Emily Mangrum and IRS Counsel Preston Quesenberry in processing TPTP’s application and ignores the then-current process used to review applications. Second, and more disturbingly, TPTP makes false assumptions regarding material withheld under the attorney-client and work product privileges, incorrectly filling in the gaps to infer that the IRS Office of Chief Counsel and the Department of Justice inappropriately attempted to influence the processing of TPTP’s application. These inferences are demonstrably false. As a result of the severity of these accusations, the United States is compelled to release the unredacted documents, as the actual redacted text is both banal and consistent with the government’s position throughout this litigation. Reviewing these materials in their entirety establishes that TPTP’s interpretation of the timeline is without any basis in fact. Furthermore, TPTP’s argument that it was “on the path to approval” does not withstand scrutiny in light of the merits of TPTP’s application under 26 U.S.C. § 501(c)(4). Simply put, TPTP has not met its burden of showing that its campaign intervention activity falls within permissible limits, and that it qualifies for tax exempt status under § 501(c)(4). As a result, the IRS is within its rights to seek additional information to determine whether TPTP qualifies for tax exempt status. Finally, both the scope of the development questions and the nature of the timeframe are adapted from the template questions that the IRS uses for all organizations that raise issues similar to those raised by TPTP’s application. The IRS is processing TPTP’s application in the ordinary course and in compliance with this Court’s Order on TPTP’s Motion for Preliminary Injunction. No further “clarification” is needed. ...

TPTP bases its arguments on false assumptions bolstered by improper and demonstrably false insinuations of inappropriate involvement by DOJ and IRS counsel attorneys. However, the facts show that the IRS’s development questions are in the ordinary course. Accordingly, the IRS is in the process of complying with this Court’s Order to process TPTP’s application in the ordinary course. The United States is amenable to resolving this issue by limiting the time period of the information requested. The United States is also amenable to resolving this matter by agreeing to allow TPTP to submit the additional information it believes would be relevant to establish whether it is entitled to tax exempt status. While the IRS issued the development letter in the ordinary course, TPTP can decide whether to respond fully, incompletely, or with different information. However, the United States requests that any Court order along those lines clarify that this is an accommodation for TPTP, not the ordinary course, and require that TPTP submit any additional information within 30 days.

http://taxprof.typepad.com/taxprof_blog/2016/12/the-irs-scandal-day-1322-government-denies-that-it-continues-to-harass-tea-party-group.html

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Comments

Well...let's allow a special prosecutor to figure it all out.

Posted by: VoteOutIncumbents | Dec 21, 2016 8:38:25 AM

This filing conclusively demonstrates that there was no improper conduct of the sort alleged by TPTP. It also suggests, however, that the attorney-client privilege was being applied incorrectly. Viewing the highlighted material from the emails--information that was previously redacted on grounds of attorney-client privilege--I fail to see the application of the privilege. Note to DOJ counsel: the a-c privilege applies to facts, not advice; it applies to facts communicated by the client to the lawyer, acting in the capacity of a lawyer. IRS technical specialists may be lawyers, but they are “Commissioner’s side” employees who do not act in the capacity of lawyers. (In federal HR bureacratese, they are not “905s”.) Communications between non-lawyer employees, including employees who happen to be lawyers but are not acting in the capacity of lawyers, are not privileged communications under the a-c privilege. Finally, confidential facts “regurgitated” by the lawyer to the client in the course of providing legal advice may be covered by the privilege, if all of the other eight criteria of the a-c privilege are satisfied. But the emails in questions do not appear to qualify. Bottom line: I think DOJ should be more circumspect in asserting the attorney-client privilege in these cases. A-c privilege assertions should be limited to communications between lawyers-qua-lawyers (“905s”) and clients. That means limiting the application of the a-c privilege to communications between IRS employees and Chief Counsel lawyers (905s); communications between Chief Counsel lawyers (905s) and DOJ lawyers (905s); and between IRS employees and DOJ lawyers (905s). There is no a-c privilege that covers communications between one IRS employee (“Commissioner’s side”) and another IRS employee (“Commissioner’s side”).

Posted by: Publius Novus | Dec 21, 2016 8:51:39 AM

Once again Publius rushes to defend illegal actions claimed to have been stopped years and years ago but continue on into the end of 2016.

Posted by: wodun | Dec 22, 2016 1:49:50 AM

Leaving aside the particulars of this lawsuit, could anyone cite past precedent where the DOJ and IRS worked together to investigate tax-exempt applicants of a very particular political orientation, and coordinated the unauthorized disclosure en mass of millions of pages of tax return information absent any formal requests or referrals, unconnected to any specific criminal investigation that has ever been made public?

Because if not, then this affair beginning in 2011 and continuing to the present, looks, talks, and walks exactly like a politically-oriented witch-hunt. There's some satisfying irony in the Oversight Committee beating the IRS over the head with this, considering the agency conducted itself in a very similar manner...

Posted by: MM | Dec 22, 2016 11:37:30 AM