TaxProf Blog

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

Saturday, October 7, 2017

The IRS Scandal, Day 1612: Inspector General Debunks Ideological Targeting Of Conservative Groups By The IRS

IRS Logo 2New York Times, In Targeting Political Groups, I.R.S. Crossed Party Lines:

A federal watchdog investigating whether the Internal Revenue Service unfairly targeted conservative political groups seeking tax-exempt status said that the agency also scrutinized organizations associated with liberal causes from 2004 to 2013.

The findings by the Treasury Department’s inspector general mark the end of a political firestorm that embroiled the I.R.S. in controversy, led to the ouster of its commissioner and prompted accusations the tax collection agency was being used as a political weapon by the Obama administration.

The exhaustive report, which examined nine years worth of applications for tax-exempt status, comes after a similar audit in 2013 found that groups with conservative names like “Tea Party,” “patriot” or “9/12” were unfairly targeted for further review.

The new report found that the I.R.S. was also inappropriately targeting progressive-leaning groups. While the investigation does not specify the political affiliations of the groups, names that were flagged included the words “Progressive,” “Occupy,” “Green Energy,” and Acorn — the acronym for the now defunct Association of Community Organizations for Reform Now. ...

Ahead of the 2014 midterm elections, Republicans regularly used the scandal to bludgeon Democrats and paint the Obama administration as corrupt. But now it appears that the I.R.S. was an equal offender. “This report shows the I.R.S. deep scrutiny of political groups is in fact bipartisan, it is liberal and conservative groups that the I.R.S. has been targeting,” said Craig Holman, a government affairs lobbyist for the consumer advocacy group Public Citizen.

Rather than condemn the I.R.S. actions, Democrats on Thursday celebrated the findings as evidence that Republicans were wrong to claim bias at the I.R.S. Democrats had previously been critical of the 2013 Treasury report since it only looked at two years of applications. “After years of baseless claims and false accusations it is my hope Republicans will finally put an end to this witch hunt and admit that their attacks on the I.R.S. were nothing but political grandstanding on behalf of special interests at the expense of American taxpayers,” said Senator Ron Wyden of Oregon, the ranking Democrat on the Senate Finance Committee.

Republicans, however, are not prepared to let the I.R.S. off the hook and seized on the report as evidence that the agency must be reformed. “This report reinforces what government watchdogs and congressional investigators have confirmed time and time again: Bureaucrats at the I.R.S., such as Lois Lerner, arbitrarily and haphazardly administered the tax code and targeted taxpayers based on political ideology,” said Representative Kevin Brady of Texas, the Republican chairman of the Ways and Means Committee. “It’s no wonder the American people have lost faith in the I.R.S.”

The controversy over political targeting at the I.R.S. was the genesis of many congressional hearings and probes, and it has continued to haunt its current commissioner, John Koskinen, whom Mr. Obama tapped to stabilize the agency. As recently as April, House members called for the firing of Mr. Koskinen for the “gross mishandling” of its investigation into the targeting of political groups. Despite the uproar from Republicans, President Trump has not taken any steps to fire Mr. Koskinen, whose term ends next month.

Washington Post, Four Years Later, the IRS Tea Party Scandal Looks Very Different. It May Not Even Be a Scandal:

It all seemed to add up. At least it did then.

The Internal Revenue Service, according to outraged Republicans and many media accounts at the time, targeted tea party organizations and other conservative nonprofit groups that were seeking tax-exempt status between 2010 and 2012. Critics said the tax agency had subjected the targeted groups to extra scrutiny, questioning and long delays, largely because their names suggested they would be political opponents of the Obama administration and the Democratic Party.

The allegations formed one of the best-known scandals of former president Barack Obama’s administration and led to months of congressional hearings, official investigations and damning news coverage.

Now, it seems, it wasn’t so simple. ...

The new finding suggests Republicans and the media provided an incomplete or even misleading account of what the IRS was up to when it was reviewing political organizations that sought tax-exempt status. While not of the order of the news media’s credulous (and flawed) reporting about supposed weapons of mass destruction in Iraq before the U.S. invasion in 2003, the report offers a check on the prevailing narrative of the time.

It may also offer a measure of vindication to Obama, at least according to one of his senior advisers. “The Obama administration was often accused of Nixonian wrongdoing,” Eric Schultz, the former president’s spokesman and a deputy White House press secretary under him, said Thursday. “At some point, I lost track of how many Watergates we had. But we live in an environment where the more hyperbolic your allegation is, the more likely it will get headlines, no matter its veracity. This report substantiates our argument that our White House did not politicize the IRS, but those allegations, A1 material at the time, have lived online for four years and now that the public has moved on, they’re proven false.” ...

The issue might have become part of what Dartmouth political scientist Brendan Nyhan has called the “scandal attention cycle” — the rapid surge of attention as reporters race to cover an issue followed by a similar decline as the news media loses interest. “The problem is that it often takes time for the full set of facts to come out,” Nyhan has written. “By that time, the story is old news and the more complex or ambiguous details that often emerge are buried or ignored.”

Philip Hackney (LSU), IRS ‘Targeted’ Liberal Organizations and After All These Years TIGTA is Still Wrong:

The Treasury Inspector General for Tax Administration (TIGTA) just issued a new report four years and five months after rebuking the IRS for using “inappropriate” criteria to select applications for tax exempt status for scrutiny. In the first report, TIGTA rebuked the IRS for pulling the applications of conservative leaning organizations for greater scrutiny.

This time it considers the fact that the IRS over a period of 10 years used liberal leaning names such as ACORN, Emerge, and Progressive as criteria for pulling applications for greater scrutiny. This resulted in the IRS applying greater scrutiny to these organizations. Some might say the IRS targeted these organizations. Those organizations appear to have faced long wait times as well, and sometimes some questions of limited merit.

I write this piece to make two points: (1) had this information been in the initial report, I don’t think we would have had the “scandal” that shook the IRS and the political world of the time; and (2) the TIGTA report built its primary claim on a garbled faux legal postulate. The original report did terrible damage to the IRS and individuals by failing on both of these fronts.

Leandra Lederman (Indiana), The Real IRS Scandal:

[T]he new TIGTA report “identified 146 cases in which the IRS examined groups for suspicion of engaging in disallowed political activity using those criteria.” This finding is not a surprise. The fact that IRS employees were using keywords to identify progressive as well as conservative organizations doing too much political activity to qualify under 501(c)(4) should have been clear to anyone who dug into the public documents. But it wasn’t the message that the House Oversight Committee — and thus many media stories — disseminated. The real scandal was the d amage the resulting witch hunt did to the IRS. I wrote about that in [IRS Reform: Politics As Usual?, 7 Colum. J. Tax L. 36 (2016)] and in a related, short article I published in Tax Notes, The IRS, Politics, and Income Inequality, [150 Tax Notes 1329 (Mar. 14, 2016),] focused in part on IRS underfunding. I hope that TIGTA’s new report helps set the record straight.

http://taxprof.typepad.com/taxprof_blog/2017/10/the-irs-scandal-day-1612-inspector-general-finally-debunks-ideological-targeting-of-conservative-gro.html

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Comments

Leave it to the Times and the Post the conflate fact with opinion and reporting with editorializing. The report is now available here, and I've read portions of it in detail:

https://www.treasury.gov/tigta/auditreports/2017reports/201710054fr.pdf

Nowhere does TIGTA say that the IRS scrutinized so-called liberal groups to the same extent and at the same rate as conservative groups. This point has been fact-checked in the past:

http://www.politifact.com/punditfact/statements/2014/jun/22/donna-brazile/donna-brazile-no-conspiracy-here-irs-targeted-libe/

Just in the period 2010-2012 alone:

"Over the course of two years, 298 total cases were sent to D.C. for greater scrutiny. According to the investigation, 72 of those groups had the name 'tea party,' 13 had 'Patriot' and 11 had '9/12.' The other 202 cases were listed as 'other.' In 160 of these cases, the application remained open between 206 and 1,138 days, while 108 were approved... While 16 groups with 'progressive' in the name showed up among the 298 cases, that represented just 30% of all 'progressive' applications. That is in stark contrast to groups with 'tea party,' 'patriot,' or '9/12' in their name, of which 100% saw their applications held up."

Back to TIGTA's latest report, the devil really is in the details. Some key points there:

Buried in the report, page 80:
"It should be noted that when the Determinations Unit began identifying cases with political issues in Calendar Year 2010, the Tea Party case coordinators did not accept 'progressive' cases for review. Instead, they sent them back to general inventory or the person who referred them because they did not meet the Tea Party criterion. Progressive cases did not appear on the political issues tracking sheet until the advocacy criteria on the Emerging Issues tab of the BOLO listing were changed to a broader definition in July 2011 at the request of the former Director, EO."

According to the Congressional investigation timeline, this was after Lois Lerner discovered that Tea Party and other conservative groups were being targeted specifically because of their names and policy poisitions. So the list was broadened, which in my book means the IRS was engaged in CYA and plausible deniability of the original discriminatory behavior.

Additionally:
"The IRS could not provide a tracking sheet related to the Progressive criterion. As a result, we searched the Determinations Unit’s inventory system for applications from organizations with the criterion 'Progressive' in their names. We identified 381 cases and reviewed the associated case files. Subsequently, we determined that 73 of the 381 cases were political cases. We also identified one additional political case from other IRS-provided documentation... We reviewed case files as well as IRS
e -mails and documents to determine if we could confirm whether the IRS identified the 74 political cases using the Progressive criterion. Based upon this review, we confirmed that the IRS identified four cases in Calendar Years 2005 and 2006 using the Progressive criterion on the TAG listing."

You read that right. The Left and the Press are now claiming vindication of the IRS under the OBAMA administration, which engaged in viewpoint discrimination against 100% of conservative groups according the previous TIGTA report, because the IRS apparently scrutinzed 4 "progressive" cases back in the middle of the BUSH administration.

Absolutely gorgeous... these are the same media outlets that colluded with the Clinton campaign last year during the election, according the Wikileaks. They allowed President Obama to make numerous public statements on the way out that his administration had ZERO scandals whatsoever, which the press treated uncritically. And they're using their 1st Amendment freedom to excuse the bad behavior of a certain political party, which seems to get every benefit of every doubt.

I rest my case!

Posted by: MM | Oct 7, 2017 12:57:01 PM

Well, lets continue to watch the litigation that has ensued from "slow walking" the matter. Clearly, the plaintiffs in these actions have had to slog their way through and the courts have been highly critical of the Service.

Posted by: Tom N. | Oct 7, 2017 1:54:44 PM

Right wing media "scandals" never end, they just faaaaade awaaaaay. Maybe TaxProf Blog should change the digest name from "The IRS Scandal" to something more accurate. Like "The Great IRS Falling Sky."

Posted by: Old Hand | Oct 8, 2017 7:07:54 PM

MM - thank you! In addition, USA Today reported about recent developments in one of the tea party lawsuits against the IRS - https://www.usatoday.com/story/news/politics/2017/09/19/new-details-emerge-tea-party-suit-against-irs/679921001/. Also reported in Cincinnati as http://www.cincinnati.com/story/news/your-watchdog/2017/09/18/new-details-emerge-tea-party-suit-against-irs/676532001/?from=global&sessionKey=&autologin=

From the article:

"Tea party cases 'were definitely treated differently than everything we were trained in,' coordinator Elizabeth Hofacre testified in a deposition quoted in the filings.

"[Hofacre] also instructed IRS agents not to send her cases involving progressive or liberal causes, according to an email included in the filing.

"A second such coordinator position was added in Cincinnati as the number of groups being examined grew. Ronald Bell testified that he understood his role to be 'focused only on conservative groups,' and that he was ordered by management to not work on those cases and not process them.

and:

"The IRS previously reported that Lerner ordered the practice be discontinued at that [July 2011] meeting, findings backed up by investigations by not only the Treasury Department's own inspector general but by Congressional investigators.

"But the filings state that instead of stopping the practice, Lerner instructed staff that they were to continue the practice and provide even more scrutiny. That's while she ordered the names of the 'Tea Party Cases' be changed to 'advocacy cases.'"

and

"[Plaintiffs' attorney Eddie] Greim also said that the IRS removed two Washington agents who had raised questions about the extra scrutiny on the tea party cases.

"'These two found that ideology was indeed being used, raised questions about it and told their superiors about it and that it was going to cause delay,' Greim said. 'And wouldn't you know it, they were moved off the matter soon thereafter.'"

Posted by: Michael L. Wyland | Oct 8, 2017 9:13:24 PM