TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Friday, September 4, 2015

The IRS Scandal, Day 848

IRS Logo 2Powerline, Obama’s Stonewall Tactics: A Case Study:

The Obama administration has proved to be the least transparent in our modern history. To an unprecedented degree, the administration is staffed by scofflaws who flout their legal obligations. When confronted with requests for information, let alone actual investigations, Obama’s habitual response is to stonewall. This strategy has been remarkably successful in avoiding accountability, in part because legal processes are so slow.

We have seen this pattern dozens of times. One instance, which is highlighted by a federal court order issued on Friday, illustrates how the administration has operated from the beginning of Obama’s term in office.

The story, which we have written about several times, begins in August 2010. Austin Goolsbee, who directed Obama’s Economic Recovery Advisory Board and later chaired his Council of Economic Advisers, delivered a press briefing in which he discussed corporate income taxes. He casually asserted that Koch Industries, one of America’s largest privately-owned companies, doesn’t pay any income taxes:

So in this country we have partnerships, we have S corps, we have LLCs, we have a series of entities that do not pay corporate income tax. Some of which are really giant firms, you know Koch Industries is a multibillion dollar businesses. So that creates a narrower base because we’ve literally got something like 50 percent of the business income in the U.S. is going to businesses that don’t pay any corporate income tax.

If Koch Industries is an S corp, then its owners (principally Charles and David Koch) pay individual income taxes on the company’s profits, making them by far the largest individual taxpayers in the United States. Be that as it may, one of two things must be true: either Goolsbee had illegally accessed Koch Industries’ tax returns, or he made it up. So Koch asked the administration whether someone had been illegally scrutinizing its tax returns. The administration refused to answer.

That led to a Freedom of Information Act request, which was served by a group called Cause of Action on October 9, 2012. ...

Cause of Action wanted to know whether Goolsbee, whose office fell within the Executive Office of the President, or someone working under him, had asked for taxpayer “return information.” The administration eventually produced a handful of irrelevant documents and a comprehensive list of objections. Obama’s key objection was that the IRS is legally prohibited from producing documents responsive to requests 3 and 4 because doing so would violate the taxpayer’s–Koch Industries’–privacy.

The fact that a legal position is ludicrous never prevents the Obama administration from asserting it. Having exhausted its administrative remedies, Cause of Action commenced a FOIA lawsuit against the IRS. Cause of Action and the IRS made cross-motions for summary judgment, briefing on which was completed in August 2014. On Friday, almost exactly one year later, Federal Judge Amy Jackson issued an order in which she overruled the Obama administration’s claim that it couldn’t say whether the White House had broken the law by accessing taxpayer information:

Congress amended section 6103 in 1976 “in the wake of Watergate and White House efforts to harass those on its ‘enemies list,’” in order to “restrict[] government officers and employees from revealing ‘any return’ or ‘return information,’” id. at 611, and its “core purpose” is to “protect[] taxpayer privacy.” Id. at 615. So, this Court questions whether section 6103 should or would shield records that indicate that confidential taxpayer information was misused, or that government officials made an improper attempt to access that information.

The IRS argues that “section 6103’s definition of ‘return information’ . . . makes no distinction based on the purpose for which a person might seek disclosure of the documents.” Def.’s Reply at 15. But accepting this argument would require a finding that even requests for return information that could involve a violation of section 6103 constitute “return information” that is exempt from disclosure under FOIA Exemption 3 and section 6103. The Court is unwilling to stretch the statute so far, and it cannot conclude that section 6103 may be used to shield the very misconduct it was enacted to prohibit.

So someday–not any time soon–the IRS will finally be forced to answer the question that Koch Industries asked it five years ago, in 2010. The Obama administration’s strategy is always the same–stonewall, assert every possible theory, no matter how frivolous, and try to run out the clock. Whether an honest answer to the question will be given, years after the fact, is of course another question.

The Obama administration’s lawlessness is perhaps its most repellent legacy.

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September 4, 2015 in IRS News, IRS Scandal | Permalink | Comments (0)

Thursday, September 3, 2015

The IRS Scandal, Day 847

IRS Logo 2Wall Street Journal, Miles From Nowhere: An Update on the IRS Scandal, by James Taranto:

Hillary Clinton is not the only official of the Obama administration to have engaged in email shenanigans. While we were away last week, as the Washington Times reported, a court filing from the Internal Revenue Service revealed that “Lois Lerner had yet another personal email account used to conduct some IRS business”: ...

“In addition to emails to or from an email account denominated ‘Lois G. Lerner‘ or ‘Lois Home,’ some emails responsive to Judicial Watch’s request may have been sent to or received from a personal email account denominated ‘Toby Miles,’ ” ... 

At first we wondered why Lerner would use a masculine pseudonym. Then we realized Toby is an epicene name and we’d been thinking of Toby Flenderson, the officious bureaucrat from NBC’s “The Office.” At any rate, Fox News appears to have come up with the explanation: “Two sources told Fox News that Toby Miles is the name of Lerner’s dog.” Confusingly, Lerner’s canine shares a surname with her husband, and Fox adds that “Lerner’s husband Michael Miles also reportedly may have been linked to the account.” ...

This week, as blogger William Jacobson reports, yet another fake Lerner email address came to light:

In . . . an August 31, 2015 Status Report, the IRS revealed that Lerner also used “a second personal email account” that, unlike the Toby Miles account, “does not appear to be associated with a denomination; only the email address itself appears.” The IRS refuses to disclose the email address for either the Toby Miles or the newly discovered account. ...

Why Lerner needed so many email addresses is something of a mystery, but she’s not alone among Obama administration officials. ...

The Washington Times reports on yet another thwarted IRS attempt to evade public scrutiny:

A federal judge Friday ordered the IRS to turn over the records of any requests from the White House seeking taxpayers’ private information from the tax agency, delivering a victory to a group that for two years has been trying to pry the data loose.

It’s not clear that there were any such requests—but Judge Amy Berman Jackson said the IRS cannot just refuse to say so by citing taxpayer confidentiality laws, known as section 6103 of the tax code.

Richard Pollock, then of the Washington Examiner, explained the background in a 2013 piece:

Treasury Department investigators completed but never released a 2011 law enforcement probe of White House economic advisor Austan Goolsbee, The Washington Examiner has learned.

The investigation by the Treasury Department Inspector-General for Tax Administration was sparked by Goolsbee’s remarks during an Aug. 27, 2010, White House news briefing in which he appeared to possess confidential tax information on Koch Industries, the private conglomerate controlled by the Koch brothers, Charles and David. ...

Six senators requested an investigation of Goolsbee’s remark under Section 6103 of the Internal Revenue Code, which protects taxpayers’ privacy. The IRS conducted the probe, then refused to reveal its findings, including to the senators and the Kochs—because, it said, they included taxpayer information that was confidential under Section 6103.

A group called Cause of Action filed the FOIA lawsuit seeking, among other things, “any communications by or from anyone in the Executive Office of the President constituting requests for taxpayer or ‘return information’ ” protected by Section 6103. Again, the IRS balked, saying such requests were private under Section 6103. That was the claim Judge Jackson rejected. ...

Whether the IRS is concealing misconduct is unknown; it’s possible, for instance, that the Goolsbee report found nothing amiss and its suppression was a product of mere bureaucratic monomania. Similarly, it’s possible Mrs. Clinton actually did turn over printouts of all her work-related emails to the State Department, but we may never know. In any case, it’s unreasonable for government officials to expect us to trust their assurances when they take such pains to prevent their verification.

On a happier note, it’s worth mentioning that the judges in both these cases were Democratic appointees. Emmet Sullivan was nominated by Bill Clinton in 1994 and Amy Jackson by Barack Obama in 2011. Independence and integrity are not dead, at least in the judicial branch.

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September 3, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Wednesday, September 2, 2015

The IRS Scandal, Day 846

IRS Logo 2Wall Street Journal editorial, The Off-Grid Administration: The Many Ways Obama Officials Have Ducked Public Accountability:

In a famous remark two years ago during a Google Plus Hangout, President Obama boasted that “this is the most transparent administration in history.” This is belied by Administration officials, from Hillary Clinton on down, who have run their communications off the government grid. A bipartisan consensus has long held that a healthy democracy requires a significant measure of government transparency. That is why since 1950 Washington has operated under the Federal Records Act, which requires the government to preserve documents about its decisions.

Since the 1960s the government has been subject to the Freedom of Information Act (FOIA), giving citizens the right to view those records. In 2009 the National Archives issued rules requiring agencies to preserve employee work on nonofficial accounts in a government record-keeping system. Then came the Obama Administration, whose modus operandi has been to hide from this legal regime. ...

Last Monday the IRS was forced to acknowledge to a federal court that it recently discovered that Lois Lerner (of political targeting fame) used a second, private email to conduct government work. The account was set up under the name “ Toby Miles,” and the IRS still can’t account for its contents.

It has been two years since Congress first subpoenaed Ms. Lerner’s emails. In 2013 when Mrs. Lerner was still directing the IRS’s Exempt Organizations unit, she cautioned colleagues to be careful what they said on email; then she inquired whether the agency’s instant-messaging system was archived. Told it wasn’t, she responded by email: "Perfect."

Last week a federal court subpoenaed former EPA official Phillip North after a complaint by a mining concern called the Pebble Partnership. Mr. North worked from inside the EPA with outside activists to scuttle Pebble’s proposed Alaskan mining project, and he did so on private email.

The Lerner and North cases also highlight the Administration’s sloppy, or willfully obstructionist, approach to recordkeeping. Recall the crash of Ms. Lerner’s hard drive, and the IRS’s claim for months it had no backup of her work. Treasury’s Inspector General would later find some. Mr. North’s hard drive also crashed, and Pebble claims that key North emails and documents have gone missing from EPA’s official record. ...

Government officials need some modicum of privacy to get work done. But this Administration’s evasion goes way past a reasonable standard of conduct. Why shouldn’t the public conclude that officials serving in the Obama Administration are flouting the disclosure system because they are engaged in practices they wish to hide from public knowledge and debate?

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September 2, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Tuesday, September 1, 2015

The IRS Scandal, Day 845

IRS Logo 2Forbes:  Court Orders IRS To Reveal White House Requests About Taxpayers, by Robert W. Wood:

A federal judge has ordered the IRS to reveal all requests the White House made for private taxpayer data. It is a potentially explosive line of inquiry, and the IRS fought the court ruling hard. But now, the IRS must hand them over. It could mean another bombshell in the long simmering IRS scandal that has dogged the Obama administration for over two years.

Recently, the IRS revealed–two years late–that firebrand Lois Lerner had a secret email account under her dog’s name for IRS business. There have been multiple federal investigations for several years, and Ms. Lerner has refused to cooperate or testify. So, one might assume that American taxpayers would know about all of her emails by now. Indeed, IRS documents previously revealed a Lois Lerner email that warned IRS staffers about revealing too much information to Congress.

You might assume that the information would be handed over willingly from the IRS and other agencies. Yet prying each tidbit of information out of a notoriously opaque Obama administration has not been easy. Now, federal Judge Amy Berman Jackson issued her opinion requiring the IRS to reveal whatever the White House requested.

Amazingly, the chief IRS defense in this case—which presumably the White House would support—is that the IRS cannot hand over White House requests and any private taxpayer data the IRS gave the White House in response, because those records are private taxpayer data. We have to protect that taxpayer data, said the IRS! We can’t reveal that is was revealed in violation of the law, because we must protect it!

Finally, though, the court ruled that the IRS cannot hide behind a law used to shield the very misconduct it was enacted to prohibit. The court noted that:

Congress amended section 6103 in 1976 “in the wake of Watergate and White House efforts to harass those on its ‘enemies list,’” in order to “restrict[] government officers and employees from revealing ‘any return’ or ‘return information,’” and its “core purpose” is to “protect[] taxpayer privacy.” So, this Court questions whether section 6103 should or would shield records that indicate that confidential taxpayer information was misused, or that government officials made an improper attempt to access that information. The IRS argues that “section 6103’s definition of ‘return information’ . . . makes no distinction based on the purpose for which a person might seek disclosure of the documents.” But accepting this argument would require a finding that even requests for return information that could involve a violation of section 6103 constitute “return information” that is exempt from disclosure under FOIA Exemption 3 and section 6103. The Court is unwilling to stretch the statute so far, and it cannot conclude that section 6103 may be used to shield the very misconduct it was enacted to prohibit.”

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September 1, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Monday, August 31, 2015

The IRS Scandal, Day 844

IRS Logo 2National Review:  How Obama Officials Dodge the Freedom of Information Act, by John Fund:

During the Watergate era, delaying tactics by government officials were dubbed “stonewalling.” Obama-administration officials seem to have added an element of farce to their cover-ups by literally going to the dogs.

This week, the IRS admitted in court, in response to a Freedom of Information Act lawsuit brought by the watchdog group Judicial Watch, that Lois Lerner was even more secretive than we thought. Lerner, the IRS official who resigned in 2013 after allegedly discriminating against applications for nonprofit status from conservative groups, conducted much of her IRS business on a personal e-mail account in the name of her dog, Toby Miles.

Tom Fitton, the president of Judicial Watch, says there is evidence that the Obama Justice Department and the IRS have known about the Toby Miles account for some time but chose not to tell the court. A House committee months ago urged that a criminal inquiry of Lerner be initiated by the Justice Department, but so far it has been ignored. ...

“Transparency and the rule of law will be the touchstones of this administration,” President Obama declared back in 2009. Rarely has there been a greater gap between what a politician said and what he did.

Freedom of Information Act requests have been censored or outright denied on countless occasions. Lois Lerner sent an e-mail that warned IRS staffers to avoid public scrutiny by using instant messaging that automatically deletes office communications. Judge Emmet Sullivan, a Bill Clinton appointee, has become so frustrated with the IRS’s foot-dragging that last month he called the government’s slow-walking behavior “indefensible, ridiculous, and absurd” and asked, “why shouldn’t the Court hold the Commissioner of the IRS in contempt?”

The Obama administration has responded to all this by cracking down on the one internal government group of officials specifically charged with tracking down malfeasance: the 72 inspectors general who oversee federal agencies.

The Council of the Inspectors General on Integrity and Efficiency sent a letter to Congress this month warning that a recent ruling by the Obama Justice Department, which now requires inspectors general to get permission from agencies they monitor for investigative information, is a “serious threat” to their independence. They urged that Congress should “promptly pass” a law affirming their oversight authority.

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August 31, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Sunday, August 30, 2015

The IRS Scandal, 843

IRS Logo 2Washington Examiner, Judge: IRS Must Hand Over White House Record Requests:

The Internal Revenue Service must turn over any White House requests for taxpayers' private information, a federal judge ruled Friday.

The IRS cannot cite taxpayer confidentiality laws to avoid turning over the information requested by Cause of Action, Judge Amy Berman Jackson ruled. Cause of Action has waged a two-year battle to discover whether Obama administration officials had any hand in the IRS' targeting of conservative non-profits.

The IRS cannot cite privacy protection "to shield the very misconduct it was enacted to prohibit," the judge said Friday, according to the Washington Times.

"This court questions whether section 6103 [of the tax code] should or would shield records that indicate confidential taxpayer information was misused, or that government officials made an improper attempt to access that information," wrote Jackson.

Questions about whether the White House directed the IRS' targeting of conservative nonprofits have dogged the administration since the scandal first broke. At one point "then-White House chief economist seemed to describe the tax structure of Koch Industries during a briefing with reporters," increasing speculation, reports the Washington Times.

So far there is no evidence pointing to White House involvement — in part because the IRS has blocked the release of the necessary documents. The agency refused to turn over even administration requests for records since they were first requested in 2013.

Friday's ruling in favor of Cause of Action will change all that.

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August 30, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Saturday, August 29, 2015

The IRS Scandal, Day 842

IRS Logo 2Town Hall, Lois Lerner May Have Committed a Crime With Use of Private Email at IRS:

In case you missed it yesterday the Washington Times reported former IRS official Lois Lerner, the woman at the center of the IRS targeting controversy, used a private email account under her dog's name to conduct official government business. ...

Now, Judicial Watch President Tom Fitton is responding to the new revelation and notes Lerner may have broken the law if she shared confidential tax information on her private account. ...

It should also be noted using a private email account is against government policy and potentially violates federal records laws as it allows officials to skirt the Freedom of Information Act. Further, use of private email to conduct government business makes it difficult for Congress to make proper inquiries about official communications during investigations.

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August 29, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Friday, August 28, 2015

The IRS Scandal, Day 841

IRS Logo 2Robert W. Wood (Forbes), IRS Reveals Lois Lerner's Secret Email Account Named For Her Dog:

The IRS dropped a bombshell in federal court, admitting that firebrand Lois Lerner also used a personal email account for IRS business. She used her dog’s name, Toby Miles. The Washington Times broke the story from the Judicial Watch lawsuit that is still seeking IRS targeting emails. It puts the IRS in another awkward spot. Why wasn’t this revealed by the IRS sooner, you might ask?

Good question. Since there have been multiple probes for several years now, one might assume that American taxpayers would know about this by now. IRS documents previously revealed a Lois Lerner email that warned IRS staffers about revealing too much information to Congress. Forget email, Ms. Lerner had warned. Instead, use instant messaging that automatically deletes office communications. House Oversight Committee documentation suggested that this ruse was used deliberately by IRS officials to evade public scrutiny. ...

The latest email issue came in the Judicial Watch case. The IRS says it “discovered” the Lerner dog email account, in addition to her official account and personal email accounts. There was already an official IRS email account, and Lerner’s own private email account that the IRS had labeled ‘Lois Home.’ But now, the ‘Toby Miles’ account also shows up.

Toby is the dog, and Michael Miles is Ms. Lerner’s husband. The IRS says it may need to re-release additional documents. You think? The IRS notes that a House Ways and Means Committee criminal referral in 2014 mentioned the Toby Miles email address, identified as tobomatic@msn.com. This email address was included on an email that also had Lerner’s official email account. At that time, the committee linked the Toby Miles address to Ms. Lerner’s husband, Michael Miles. ...

What does the dog say about all this? Maybe he’ll take the Fifth too.

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August 28, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Thursday, August 27, 2015

The IRS Scandal, Day 840

IRS Logo 2New York Post editorial, The IRS Scandal Goes to the Dogs:

Move over, Carlos Danger, there’s a new alias in town: Toby Miles, an electronic front for Lois Lerner.

Lerner famously took the Fifth rather than testify about how the Internal Revenue Service came to target right-leaning advocacy nonprofits in the run-up to the 2012 election.

Ever since, the IRS has blocked congressional efforts to get to the facts, while the Justice Department’s “probe” was a joke even before the president declared there’s “not a smidgen of corruption” in the affair.

Happily, the public-interest group Judicial Watch is on the job, pushing to get the facts out. On Monday, it forced an IRS attorney to admit Lerner had used a personal email account under the “Toby Miles” name to conduct official government business.

This is her second private email account — though the first was under her own name.

Mind you, it’s been two-plus years since the scandal broke, yet the agency that promised to clean up its act is only now revealing this fresh evidence.

No doubt the IRS will take months to fork over any of “Toby’s” emails. As Judicial Watch President Tom Fitton says, “This is the latest in a parade of obstruction from the IRS and the Department of Justice on these issues.” ...

The capper: One Lerner acquaintance says “Toby Miles” is the name of Lerner’s dog.

Nothing quite says truth and transparency like doing Uncle Sam’s work under your dog’s name.

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August 27, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Wednesday, August 26, 2015

The IRS Scandal, Day 839

IRS Logo 2National Review, Who’s Toby Miles?, by Eliana Johnson:

The IRS disclosed in a court filing on Monday that former agency official Lois Lerner used a second personal e-mail operated under the alias “Toby Miles” to conduct IRS business.

Her use of the mysterious account has prompted speculation into the source of the name. “Toby Miles,” according to a former Lerner colleague, is the name of Lerner’s dog: Toby is the dog’s name, and Miles is the surname of Lerner’s husband, Michael Miles.

The IRS disclosed the existence of the second account in a legal filing as part of its ongoing battle with the right-leaning investigative group Judicial Watch. “In addition to e-mails to or from an e-mail account denominated ‘Lois G. Lerner’ or ‘Lois Home,’ some e-mails responsive to Judicial Watch’s’s request may have been sent to or received from a personal e-mail account denominated ‘Toby Miles,’” a lawyer for the agency told Federal District Court Judge Emmet G. Sullivan.

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August 26, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Tuesday, August 25, 2015

The IRS Scandal, Day 838

IRS Logo 2Washington Times, IRS Finds Yet Another Lois Lerner Email Account:

Lois Lerner had yet another personal email account used to conduct some IRS business, the tax agency confirmed in a new court filing late Monday that further complicates the administration’s efforts to be transparent about Ms. Lerner’s actions during the tea party targeting scandal.

The admission came in an open-records lawsuit filed by Judicial Watch, a conservative public interest law firm that has sued to get a look at emails Ms. Lerner sent during the targeting.

IRS lawyer Geoffrey J. Klimas told the court that as the agency was putting together a set of documents to turn over to Judicial Watch, it realized Ms. Lerner had used yet another email account, in addition to her official one and another personal one already known to the agency.

“In addition to emails to or from an email account denominated ‘Lois G. Lerner‘ or ‘Lois Home,’ some emails responsive to Judicial Watch’s request may have been sent to or received from a personal email account denominated ‘Toby Miles,’” Mr. Klimas told Judge Emmet G. Sullivan, who is hearing the case.

It is unclear who Toby Miles is, but Mr. Klimas said the IRS has concluded that was “a personal email account used by Lerner.”

Tom Fitton, president of Judicial Watch, said it was stunning the agency was just now admitting the existence of the address.

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August 25, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Monday, August 24, 2015

The IRS Scandal, Day 837

IRS Logo 2Fox News, Gov't Watchdogs Urge Congress to Reverse Obama Administration IG Crackdown:

Nearly six-dozen watchdog agencies are asking Congress to step in after the Obama administration clamped down on access to government records they say are vital for their investigations into waste, fraud and abuse. 

The Council of the Inspectors General on Integrity and Efficiency sent an Aug. 3 letter to congressional leaders ahead of a hearing scheduled for Wednesday where they will ask lawmakers to pass legislation reversing a controversial decision made July 20 by the Department of Justice’s Office of Legal Counsel. The OLC is now requiring investigators to get permission to review sensitive documents from the very agencies they are monitoring.

This decision, the letter said, "represents a serious threat to the independent authority" of all inspectors general. 

IGs are assigned to audit and conduct internal reviews of federal agencies, and recently have been responsible for investigating the IRS targeting scandal, TSA security gaps, personal email use at the State Department and other issues. 

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August 24, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Sunday, August 23, 2015

The IRS Scandal, Day 836

IRS Logo 2Washington Examiner: Is This Woman the New Lois Lerner?:

As some at the Federal Election Commission seek to broaden the power of the agency, critics are arguing that it's beginning to look increasingly like the Internal Revenue Service under Lois Lerner, who has been accused of using her office for partisan purposes.

They take special aim at the commission's Democratic chairwoman, Ann Ravel, who also served as chairwoman of California's equivalent to the FEC, the Fair Political Practices Commission, before coming to Washington in 2013. Ravel has lambasted the commission as "dysfunctional" because votes on enforcement issues have often resulted in ties, and she has said the commission should go beyond its role of enforcing election laws by doing more to get women and minorities elected to political office. She has complained that super PACs are "95 percent run by white men," and that as a result, "the people who get the money are generally also white men."

To remedy those problems, Ravel sponsored a forum at the FEC in June to talk about getting more women involved in the political process. She has also proposed broadening disclosure laws to diminish the role of outside spending, and suggested that the FEC should claim authority to regulate political content on the Web. She's also voiced support for eliminating one member of the commission in order to create a partisan majority that doesn't have tie votes, saying in an interview with Roll Call, "I think it would help."

Hans von Spakovsky, who served on the FEC from 2006-2008, takes issue with Ravel's effort to go beyond the traditional purview of the commission's functions. "The FEC has one duty, and one duty only — to enforce the existing campaign finance laws. It has no business trying to 'encourage' or 'discourage' folks to get involved in politics, no matter who they are, minority or otherwise," Spakovsky told the Washington Examiner. ...

Wall Street Journal's editorial board has compared Ravel to the IRS' Lerner, who's also been accused of using her office to push a political agenda. "We'll take our chances with donations freely given than with the arbitrary and partisan rulings of Lois Lerner at the IRS or Ann Ravel at the Federal Election Commission," the editorial board wrote.

Spakovsky also referred to a June 2013 interview with Ravel in which she appeared to express support for Lerner's targeting of conservative organizations. In the interview, Ravel said, "The IRS has apparently sent some letters to a number of 501(c)(4)s [nonprofit, tax-exempt organizations] asking them to justify that they are in fact social welfare organizations, but so far there is no evidence that the IRS has taken any action against these organizations." She went on to say, "It is very important that it happen."

Asked about the comments, Ravel's office stated that she "was responding to a question and by stating 'apparently' made plain that she based her remarks on publicly available media reports, not on personal knowledge," and that "she was not referring to any particular cases."

Lerner had apologized the preceding May for the discovery that, under her leadership, the IRS had targeted groups with words such as "tea party" and "patriot" in their names. Lerner resigned the following September.

Ravel, Spakovsky said, "does not see her role as enforcing campaign finance laws," but rather "to use her government authority as a partisan weapon, particularly against the same type of conservative groups that Lois Lerner targeted."

Cleta Mitchell, a Republican campaign finance attorney in Washington, voiced a similar sentiment. "She and Lois Lerner are peas in a pod," Mitchell said. "She wants to weaponize government agencies to shut down and chill free political speech," which, she continued, is "a very odd position for someone who swore to uphold the Constitution."

Yet Ravel has supporters, and if she fails at the FEC, others have advocated using the IRS to accomplish some of her policy objectives.

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August 23, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Saturday, August 22, 2015

The IRS Scandal, Day 835

IRS Logo 2Statement of NTEU National President Tony Reardon:

IRS employees are dedicated and committed public servants who perform vital work for our country. No bipartisan report, including the bipartisan Senate Finance Committee report and reports by the Treasury Inspector General, has ever found any evidence of political motivation on the part of IRS employees.

Treasury Inspector General J. Russell George, the author of the TIGTA report, testified repeatedly under oath that the TIGTA report found no evidence of partisan motive or intentional wrongdoing on the part of IRS employees in the tax-exempt division. The report also noted that IRS officials stated that the criteria used to evaluate tax-exempt applications were not influenced by any individual or organization outside the IRS.

The frontline employees at IRS are represented by NTEU as part of the IRS bargaining unit. NTEU does not represent management officials, such as Lois Lerner.

NTEU members participated throughout the investigation, testified voluntarily in congressional hearings and were thanked by the chair and Republican members of the House Oversight and Government Reform Committee for their assistance and patriotism.

Oversight Committee Chairman Darryl Issa publicly told two frontline IRS employees at a hearing: "I just want to take a moment to say that I appreciate that both of you are not political folks, and that it is appropriate that, no surprise, you did everything as far as we know, very professionally." And Congressman Turner at the same hearing stated: "I want to thank both of you, because you're coming forward and being honest."

Without collective bargaining rights, frontline employees would have little protection against retaliation by senior management when reporting wrongdoing. This is not the first time eliminating collective bargaining rights has been proposed by Sen. Hatch. He has previously called for eliminating collective bargaining rights at IRS and other agencies long before this report was issued.

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August 22, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Friday, August 21, 2015

The IRS Scandal, Day 834

IRS Logo 2Fox News op-ed:  IRS Targeting Scheme Is a Scandal With No End in Sight, by Jay Sekulow (American Center for Law and Justice) :

When the Senate Finance Committee released its findings on the Internal Revenue Service scheme targeting conservative organizations a couple of weeks ago, the initial determination was clear.

As I reported earlier: The findings of the bi-partisan report revealed gross mismanagement at the IRS. But more than that, the evidence shows partisan political animus resulted in the unwarranted targeting of conservative groups because of their political beliefs.

But in the weeks since, as we have dug further into the lengthy report, some important and disturbing comments by former top IRS official Lois Lerner, who served as director of the Exempt Organizations Unit, have come to light.

Remember, it was Lerner who tried to blame this scandal on low-level employees at the IRS in a faux apology issued May 2013 – a flawed attempt to get out in front of an explosive inspector general’s report about the targeting scheme released just days later.

Now we are learning more of the disturbing details about Lerner’s beliefs and behavior thanks to new emails released in conjunction with a two-year probe by the Senate Finance Committee.

The picture is not a pretty one. ...

The findings of the Senate Finance Committee – along with the ongoing probes by other congressional committees – ensure that we will continue to learn more about the depth and breadth of this scheme implemented by Lois Lerner and others.

But, unfortunately, we are no closer to holding those responsible for this unlawful targeting scheme accountable.

And that must become a priority.

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August 21, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Thursday, August 20, 2015

The IRS Scandal, Day 833

IRS Logo 2Waterbury Republican American, IRS Scandal's Emerging Facts:

Sen. Ron Wyden, D-Ore., recently claimed there was nothing nefarious about the Obama Internal Revenue Service's 2010-12 scrutiny of conservative groups. Referencing a report from the Senate Finance Committee — of which he is ranking member — Sen. Wyden said, "The results of this in-depth, bipartisan investigation showcase pure bureaucratic mismanagement without any evidence of political interference."

The senator is dishonest or delusional. The facts of "IRSgate" leave no doubt there was intentional, systematic harassment. Indeed, the affair constitutes one of President Obama's biggest betrayals of Americans who bought the "hope" and "change" lines from 2008.

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August 20, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Wednesday, August 19, 2015

The IRS Scandal, Day 832

Tuesday, August 18, 2015

The IRS Scandal, Day 831

Monday, August 17, 2015

The IRS Scandal, Day 830

IRS Logo 2 Forbes:  Gross Mismanagement At IRS, Says Senate Report, by Robert W. Wood:

After a long wait, the Finance Committee has released a bipartisan report on the IRS scandal. Since some private taxpayer information was at issue, there have been closed door sessions and interviews leading up to the report. The IRS wasn’t really targeting, it was just incompetent, the report seems to suggest. Top IRS managers did not stay informed about the applications involving possible political advocacy.

And management, top management at least, didn’t really monitor things. Lois Lerner was on top of the issues as early as 2010, but failed to tell her superiors, the report suggests. In fact, the report says that under Ms. Lerner’s leadership, the IRS Exempt Organizations unit launched seven initiatives to handle applications from Tea Party and other groups for tax-exempt status. Each of the seven initiatives failed.

That meant long delays—as long as five years—for some organizations awaiting decisions on IRS tax exemption applications. What’s more, the report says IRS employees handling exemption applications did not appear to be worried about delays or customer service. In some cases, organizations got tired of waiting and disbanded. For others, the delays meant forgone grants.

This report was delayed for over a year after the IRS belatedly informed the Senate Finance Committee that the IRS could not recover large numbers of potentially responsive documents. They were lost when Lois Lerner’s hard drive crashed in 2011. 

The report acknowledges that the IRS functioned in a politicized atmosphere following the the Supreme Court’s Citizens United decision. ...

“Undoubtedly,” the report says ”these events will erode public confidence and sow doubt about the impartiality of the IRS. The lack of candor by IRS management about the circumstances surrounding Lois Lerner’s missing emails may only serve to reinforce those doubts.” It is hard to argue with that.

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August 17, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Sunday, August 16, 2015

The IRS Scandal, Day 829

IRS Logo 2Renew America, True the Vote Still Pursuing IRS, Lois Lerner and Election Integrity:

Sometimes turn around IS fair play.

Especially when a fair count of legitimate votes is at issue.

IRS targets True the Vote and its founder-president Catherine Engelbrecht are still pursuing the Internal Revenue Service, Lois Lerner, now retired in disgrace, and election integrity.

True the Vote's latest weekly email declared:

Just When You Thought the IRS Targeting Scheme Couldn't Get More Twisted...

You would think that TTV would eventually become jaded after years of bombshells in the wake of Lois Lerner's infamous May 2013 admission to targeting organizations presumed to be conservative. In recent days, however, we have come to understand new wrinkles in the case that offer a whole new dimension of insight. The Wall Street Journalrecently reported that Lerner was working directly with the chief officer of the Wisconsin Government Accountability Board – the public entity charged with enforcing election and campaign finance laws – during the targeting period. According to the report, "Emails we've seen show that between 2011 and 2013 the two were in contact on multiple occasions, sharing articles on topics including greater donor disclosure and Wisconsin's recall elections ... This timing is significant because those were the years when the IRS increased its harassment of conservative groups and Wisconsin prosecutors gathered information that would lead to the John Doe probe that officially opened in September 2012." This revelation helps make sense of the fact that multiple IRS targets were questioned about what they knew of TTV's involvement in the 2012 Verify the Recall effort in Wisconsin. The hits just keep on coming."

The Wisconsin Supreme Court just terminated the John Doe probe as baseless in law and reason.

The obviously political IRS targeting of conservative organizations and Engelbrecht personally may have been motivated by the desire to have President Obama reelected, but don't expect the Obama Justice Department to pursue that.

Fortunately, True the Vote remains on the case.

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August 16, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Saturday, August 15, 2015

The IRS Scandal, Day 828

IRS Logo 2 MSNBC, The Rachel Maddow Show/The MaddowBlog:

Fox News’ Martha MacCallum posed a question to Louisiana Gov. Bobby Jindal (R), which he seemed eager to answer. From the transcript:

MACCALLUM: On the same topic, let’s go to Governor Jindal. Carly Fiorina, also on the stage, said that she would go so far as to shut down the government over the issue of defunding Planned Parenthood. Would you do that? Would you be willing to shut down the government when it comes to defunding this group?

JINDAL: Well, a couple of things. Planned Parenthood had better hope that Hillary Clinton wins this election, because I guarantee under President Jindal, January 2017, the Department of Justice and the IRS and everybody else that we can send from the federal government will be going in to Planned Parenthood.

This generated no real follow-up, which is a shame because it was an amazing answer. According to Jindal, his administration would dispatch the Internal Revenue Service to target Planned Parenthood because, well, Bobby Jindal doesn’t like Planned Parenthood.

But there’s a small problem with idea: it’s brazenly illegal.

Remember, Richard Nixon, among other things, tried to use the IRS as a political weapon to target his political foes – and had he not resigned in disgrace, Nixon would have been impeached for having done so. More recently, Republicans and much of the Beltway media accused President Obama of using the IRS to punish far-right Tea Party groups. The allegations proved baseless, but for a short while, Republicans saw this as a devastating scandal involving an abusive, out-of-control White House using the IRS as a political weapon.

And yet, there was Jindal – according to some, one of the smarter GOP officials on the national scene – offering a striking example of a presidential candidate vowing to commit impeachable offenses before the election even happens.

Mother Jones, Bobby Jindal Thinks the IRS Shouldn't Be Used to Target Political Enemies, Except For His

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August 15, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Friday, August 14, 2015

The IRS Scandal, Day 827

IRS Logo 2 Politico, Lerner Slammed ‘Evil and Dishonest’ GOP Inquisitors:

At the height of the scandal over the IRS’ handling of political nonprofits, Lois Lerner privately let loose at her Republican tormentors, saying she invoked the Fifth Amendment because they had been “evil and dishonest” and accusing them of “hate mongering.”

A POLITICO examination of thousands of pages of emails and other material recently released by the Senate Finance Committee found previously unreported comments from Lerner, the central figure in the controversy, on everything from the inability of career IRS agents to handle “the sensitive stuff” to her views on the fiscal cliff.

When she was under investigation by Congress, she offered a blistering critique of her inquisitors. In a March 6, 2014, email, Lerner told a friend: “They called me back to testify on the IRS ‘scandal,’ and I too[k] the 5th again because they had been so evil and dishonest in my lawyer’s dealings with them.” ...

Republicans see a clear link between Lerner’s comments and the agency’s actions; Democrats don’t. The lack of ironclad proof that agents deliberately targeted groups because of political bias — or that they didn’t — means neither party can separate itself from the narrative it has held to for two years.

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August 14, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Thursday, August 13, 2015

The IRS Scandal, Day 826

IRS Logo 2 Investor's Business Daily op-ed, Jailtime For IRS' Political Hacks:

Corruption: After a year's stalling by the IRS, the Senate Finance Committee has released its bipartisan report, denouncing the tax-collection agency's partisanship and incompetence. When are these people going to jail?

The Senate report wasn't entirely satisfactory, given that its criticism was primarily in the compromise language of "gross mismanagement" to describe the agency's targeting of Tea Party dissident groups.

Using legal technicalities to silence and repress political dissent under the color of the nation's most feared enforcement agency isn't mismanagement. It's a crime.

It's incompatible with democracy and it shatters public confidence in the rule of law. It's the very crime the State Department is now condemning in Venezuela: the use of legal technicalities to halt popular opposition candidates from running for office. Until now, this kind of activity has had no precedent in our country, and it must be stopped before it becomes the standard.

This is far from mere incompetence or gross mismanagement. It was a highly competent operation to silence dissent. Yet no one has been sanctioned or punished, despite there being laws on the books dating back to the beginning of a professional civil service, that forbid and punish partisan motives in what should be impartial law. Already some observers believe the IRS swung the last election for the Democrats with these activities.

Not only did the IRS target Tea Party groups with unconscionable delays and intrusive questions, it went for their families, too. Young Bristol Palin learned yesterday that just being the daughter of former Alaska Gov. and Tea Party favorite Sarah Palin put her in the IRS' sights. Sarah Palin's father was targeted, too.

The agency also obstructed justice, first falsely claiming that its illegal targeting was only the work of rogue agents in its Cincinnati office. Then, as that lie fell apart, IRS moved to destroy evidence in the thousands of missing emails on IRS tax exempt organizations chief Lois Lerner's computer. Conveniently for them, it was declared lost forever in a hard drive crash — until it wasn't.

Now it's relying on its allies in the Senate and among anti-Tea Party Democrats in the House for cover, having them declare it incompetence, not a crime.

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August 13, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Wednesday, August 12, 2015

The IRS Scandal, Day 825

IRS Logo 2 Forbes:  Bristol Palin At Heart Of IRS Scandal - Who Knew?, by Peter J. Reilly:

What Does Bristol Plain Have To Do With The IRS Scandal?
The section of the report where this revelation is included is titled “Lois Lerner’s Management of the EO Examination Unit Reveal Her Political Bias Against Conservative Organization”. In the subsection “Lois Lerner Intervened in Audit Decisions Involving Political Organizations” we have

Teen Pregnancy Organization Affiliated With Bristol Palin
Another example of Lerner’s interest in conservative organizations occurred in 2011, when Lerner considered opening an audit of a group with ties to Bristol Palin.  There were reports that Palin received $332,500 in compensation from the Candie’s Foundation, a nonprofit organization that seeks to prevent teen pregnancy. Upon receiving an article containing this information, Lerner took the initiative to ask her senior advisors if the IRS should open an audit of the organization:

“Thoughts on the Bristol Palin issue? I’m curious that a [private foundation] can pay any amount to someone who is not a [disqualified person]? It is a [private foundation] right? Even if it were a [public charity] – would that be private benefit – what are the consequences? I’m asking because I don’t know whether to send to Exam as a referral”.

Lerner’s willingness to act on this particular news article – among many that reached her inbox each day – shows that she was paying close attention to conservative politicians and organizations. In its review of nearly 1,500,000 pages of documents provided by the IRS, Majority staff did not find any instances where Lerner referred a progressive organization for audit based on a news article.

Whatever her faults might be Lois Lerner is up on the intersection of pop culture with tax law, although there is some indication that she is either not a careful reader or discerning in her choices of where to read, because she clearly did not grasp what was going on. It seems that her inference was that the Palin clan had started a teen pregnancy foundation, since they had some experience with it. That was not at all what had happened.  You actually don’t have to go beyond forbes.com to get the story behind the story. ...

What Does This Say About Lois Lerner?
I think the Republicans have busted her on this one.  That email really is evidence of reflexive anti-conservatism. Certain liberals have a Pavlovian response to the Palin clan. The only thing that gets them to jump up and bark better is mention of the Koch brothers, but there does not seem to be anything funny about them.  Conservatives seem to have more triggers – Jesse Jackson, Hillary Clinton, Benghazi, but the same principle is at work.

What Does This Say About The Scandal?
So what we have is a reflexive anit-conservative appointed to head the IRS Exempt Group during the Bush administration by an IRS Commissioner appointed by Bush.  Is it possible that the big money Republicans figured that they had the IRS exempt group outgunned, but that a reflexive anti-conservative in that position would be tough on the more conservative part of the party. The other thing that the report mentions is that during the whole period of the scandal no audits of exempts were initiated over the political spending issue.  So the established dark money organizations were let off scot-free.  All the grief went to the Tea Party insurgents who were least able to cope with it.

Remember Lois Lerner Is Not The IRS
The other thing that comes out in the report is that Lois Lerner did not like the line IRS people who were doing the mundane work of the agency and they did not feel supported by her.

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August 12, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Tuesday, August 11, 2015

The IRS Scandal, Day 824

Monday, August 10, 2015

The IRS Scandal, Day 823

IRS Logo 2Forbes:  The Republicans Might Be Right About IRS Commissioner John Koskinen, by Jeremy Scott:

On July 27, House Oversight and Government Reform Committee Chair Jason Chaffetz said President Obama should remove IRS Commissioner John Koskinen, and he made it clear that if the president doesn’t act, Congress could consider contempt charges and even impeachment. On the one hand, Chaffetz’s threats seem like just the latest escalation in a long conflict between congressional Republicans, the IRS, and the White House. But the reality is that Koskinen has so lost the confidence of the lawmakers in charge of his budget and oversight that it might be time for yet another change of leadership at the agency.

The call for Koskinen’s removal comes on the heels of a revelation that the IRS destroyed 422 backup tapes containing 24,000 e-mails from former IRS exempt organizations director Lois Lerner three weeks before Koskinen testified before Congress and promised to deliver all of Lerner’s e-mails to investigators. ... Koskinen probably didn’t know about the destruction of the tapes before he testified to Congress. But the loss of the tapes is the latest in a pattern of questionable IRS practices throughout this entire process. It disturbingly mirrors IRS officials’ testimony before Congress after the 2010 elections, assuring lawmakers that conservative groups were not being targeted when in fact the IRS admitted in 2013 that they were. It was also not clear in 2010 who knew what and when, but it was fairly clear that the testimony given to lawmakers didn’t accurately describe what was going on at the Service. Acting IRS Commissioner Steven Miller was asked to resign by Obama after the scandal became known. Was Miller really more responsible for the initial targeting than Koskinen has been for the IRS’s handling of the crisis since December 2013?

Engaging with House Republicans can be tough. They are out to score political points and have been determined to derail the Obama administration since they retook the chamber in 2010. But it’s the IRS commissioner’s job to deal with lawmakers, and Koskinen was supposed to improve the agency’s disjointed response to the EO scandal. Instead, he has doubled down on its stonewalling. He has been unresponsive, evasive, and even combative at hearings. House Ways and Means Chair Paul Ryan, hardly a conservative hothead, has flat-out accused the commissioner of lying. The commissioner’s relationship with the majority party has steadily worsened since he took office.

The IRS needs a leader who can restore its morale, fix the management mess that led to the EO scandal in the first place, and convince Congress that the agency needs and can be trusted with a bigger budget. Even if you think Koskinen can succeed at the first two (and that’s far from clear), there is no way he can accomplish the last. And the IRS can’t settle for two out of three right now. That’s why Koskinen is no longer the right leader for the IRS. Obama should do the same thing to Koskinen that he did to Miller, and he should prioritize working with Republicans to make sure they support his pick for the next commissioner.

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August 10, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Sunday, August 9, 2015

The IRS Scandal, Day 822

IRS Logo 2Forbes:  Judicial Watch Reveals That They Read Tax Blogs At IRS, by Peter J. Reilly:

Overall, this particular document dump seems to support the President’s view that what is scandalous is the confusing nature of the law. There is certainly no evidence of political appointees mucking around in the details of IRS operations.

At the time Joe Kristan thought that the IRS was wrong to raise the issue and that Senators were right to call the Service to account about it. And this is the part of the document dump that I found most interesting.  Paul Caron summarized Joe’s post and that was apparently printed out numerous times at the IRS as there are multiple copies in the document dump. At 4889 in the dump James Hogan writes to Leslie Finlow

I know you’ve been sucked into this particular morass – thought you might find this useful.

The only problem is that Paul Caron is a pretty good looking guy, but if you take the picture then used on TaxProf, print it out, photo copy it and then scan it, he looks a little villainous.

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August 9, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Saturday, August 8, 2015

The IRS Scandal, Day 821

IRS Logo 2Forbes:  Dear IRS Employees: Emails Go To Congress, So Let's Text, by Robert W. Wood:

For more than two years, President Obama has denied there is an IRS problem, quipping that there is not a smidgen of corruption at the IRS. He has long claimed that any missteps were innocent, entirely the fault of bonehead decisions in local offices. ...

Yet it is harder and harder to believe. IRS documents have revealed a Lois Lerner email about teaching IRS staffers to understand the potential pitfalls of revealing too much information to Congress. Forget email. Instead, the IRS used a neat instant messaging system that automatically deleted office communications. House Oversight Committee documentation suggests it was used deliberately by IRS officials to evade public scrutiny. The fact that the IRS use instant messaging to hide internal communications came out more than a year ago, yet it is still pooh poohed by the administration. ...

Some of the real juice may be in text or instant messages. In 2013, when the IRS targeting scandal was brewing, Ms. Lerner asked an IRS IT specialist if the IRS saved texts? The response was music to Ms. Lerner’s ears. No, they are not automatically saved, was IT’s response. The IT person went on to say that saving them was possible, though, so be careful. “Perfect,” was Ms. Lerner’s reply. And remember all those many millions of dollars of taxpayer money the IRS spent looking?

Yet House Members were recently told by the Inspector General that the IT staff of the IRS said they were never even asked for backup tapes to find Lerner’s emails. Deputy Inspector General Tim Camus said finding the emails was easy. “They were right where you would expect them to be,” he told the Oversight Committee. ...

Mr. Koskinen has testified before Congress numerous times. On March 26, 2014, he pledged that the IRS would produce all of Ms. Lerner’s emails. Yet he knew there were big problems, and the ‘facts’ and dates just don’t line up. Mr. Koskinen lamented the lost or destroyed backup tapes. Mr. Koskinen testified he had “confirmed” that all of the tapes were unrecoverable.

In fact, approximately 700 backup tapes had not been erased and contained relevant information. The inspector general said the 700 still-good backup tapes recovered were found within 15 days of the IRS’s informing Congress they were not recoverable! What was so difficult? The inspector general’s staff simply drove to Martinsburg, WV and asked for the tapes. The IRS had never even asked whether the tapes existed. Well, maybe they sent a text.

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August 8, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Friday, August 7, 2015

The IRS Scandal, Day 820

IRS Logo 2New York Times, Senate Report Cites I.R.S. Mismanagement in Targeting of Tea Party Groups:

A Senate committee on Wednesday closed a two-year investigation with unanimous agreement that mismanagement at the Internal Revenue Service led it to improperly target conservative groups seeking tax-exempt status. But a report by the panel did not suggest that any laws were broken, and Republicans and Democrats were divided over whether White House politics was behind the problems.

“This bipartisan investigation shows gross mismanagement at the highest levels of the I.R.S. and confirms an unacceptable truth: that the I.R.S. is prone to abuse,” Senator Orrin G. Hatch, Republican of Utah and the chairman of the Senate Finance Committee, said in a statement after his panel voted behind closed doors to release the report of more than 400 pages.

An I.R.S. official acknowledged the agency had singled out nonprofit applicants with “Tea Party” or “patriots” in their titles.

Mr. Hatch added that “the committee found evidence that the administration’s political agenda guided the I.R.S.’s actions with respect to their treatment of conservative groups.” But the committee’s senior Democrat, Senator Ron Wyden of Oregon, said in the same news release that the inquiry had found “pure bureaucratic mismanagement without any evidence of political interference.”

“Groups on both sides of the political spectrum were treated equally in their efforts to secure tax-exempt status,” Mr. Wyden said.

The two parties’ differences of interpretation left them where they began more than two years ago, after Republicans and conservative groups first accused the I.R.S. of singling out applications of Tea Party-affiliated organizations seeking tax-exempt status for extra scrutiny and delays. Even so, the overall bipartisanship of the conduct and the conclusions of the Finance Committee investigation was notable given both the charged nature of the allegations and the more partisan parallel inquiries in the Republican-controlled House.

“Our investigation found that from 2010 to 2013, I.R.S. management was delinquent in its responsibility to provide effective control, guidance and direction over the processing of applications for tax-exempt status filed by Tea Party and other political advocacy organizations,” the committee concluded.

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August 7, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Thursday, August 6, 2015

The IRS Scandal, Day 819

IRS Logo 2Senate Finance Committee, Bipartisan Investigative Report on the IRS's Processing of 501(c)(3) and 501(c)(4) Applications for Tax-Exempt Status Submitted by "Political Advocacy" Organizations From 2010-2013 (145 pages):

While much has been reported about the alleged political targeting over the last two years, it is important to stress that this Committee has conducted the only bipartisan investigation into the matter. Consequently, this report will perhaps serve as the definitive account of events transpiring at the IRS and the management failures and other causes that were at the root of the IRS's actions. Hopefully, this report will provide a roadmap for how Congress and the public can act to make sure this type of conduct does not happen again. ...

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August 6, 2015 in Congressional News, IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Wednesday, August 5, 2015

The IRS Scandal, Day 818

IRS Logo 2Judicial Watch v. U.S. Department of Justice, No. 14-1024 (July 31, 2015):

The plaintiff submitted a FOIA request to the defendant, seeking “[a]ll Justice Department records from the Interactive Case Management System detailing the number of hours DOJ Attorney Barbara Bosserman expended on the investigation of the Internal Revenue Service targeting of conservative organizations seeking tax-exempt status in the 2010 and 2012 election cycles.” After failing to respond to the plaintiff’s request, or advise the plaintiff of its ability to appeal such a non-response, the plaintiff initiated the instant suit. ...

[T]he Court finds that the time records contain protected attorney work product and that disclosure under FOIA is not required. ...

In the present case, the defendant’s time records contain “Ms. Bosserman’s accounts of the tasks as she performed them, including notes about locations visited, persons consulted, staff briefings, and other case developments.” This material was prepared in contemplation of an ongoing criminal investigation and provided to supervisors to assist them in overseeing the investigation and potential prosecution of certain IRS employees. As a result, according to the defendant, the time records provide “a roadmap of [the DOJ’s] investigative plans” and their disclosure would “prematurely reveal the scope and focus of the investigation.” Thus, “in light of the nature of the document and the factual situation in the particular case, the document can fairly be said to have been prepared or obtained because of the prospect of litigation.’” 

Consistent with the great weight of authority at both the federal and state level, the portions of Ms. Bosserman’s time records detailing the locations visited, persons contacted, staff briefings, and other case developments are protected from disclosure as attorney work product.

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August 5, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Tuesday, August 4, 2015

The IRS Scandal, Day 817

IRS Logo 2New York Observer:  Judge Slams Hillary and Huma, Orders Answers, by Sidney Powell:

Judge Sullivan has chipped away at the IRS and its lies and obstruction. ... A hero for his dismissal of the indictment against Senator Ted Stevens and his appointment of a special prosecutor—as told in my non-fiction thriller LICENSED TO LIE: Exposing Corruption in the Department of Justice—Judge Sullivan is proving to be more and more like Judge John Sirica who kept asking questions until the Watergate scandal was fully exposed. Judge Sullivan also has the Freedom of Information Act suit by Judicial Watch against the IRS, about which we have often written. It’s because of Judge Sullivan that more and more emails have come to light—along with exposing the lies of Internal Revenue Service Commissioner Koskinen and assorted acts of destruction of evidence. Only Wednesday of this week, Judge Sullivan dismantled counsel for the Department of Justice and the IRS for their “absurd and ridiculous” stalling tactics in revealing the emails evidencing the Lois Lerner scandal and raised the specter of holding Commissioner Koskinen in contempt. Thanks to Judge Sullivan, Judge Leon, and other Article III judges like them, the country has a chance of learning the truth.

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August 4, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Monday, August 3, 2015

The IRS Scandal, Day 816

IRS Logo 2Forbes:  Watchdog Finds Deficient IRS Controls Leave Room For Targeting, by Robert W. Wood:

Should you be audited based on your religion? Your political beliefs? How about which charities you support? Plainly, the answer to all these questions is no. Yet there are still questions how our tax system measures up, especially when it comes to the still-in-the-news topic of exempt organization targeting. In his recent appearance on The Daily Show, President Obama still denies any targeting.

For more than two years, we have seen a long list of excuses with no one taking responsibility. There was no targeting, we were told. Well, if there was, it was organic, like that spontaneous demonstration from an internet video in Benghazi. Any targeting was not directed, it was those rogue IRS employees in Cincinnati who did it entirely on their own.

Besides, emails show there was no directive about targeting. Sorry, it turns out some of our emails are missing. Hey, hard drives crash. We recycle them too. Liberals got targeted too. There’s no smidgen of corruption. Cash bonuses? Those are unrelated. And the latest in the long line of excuses: it was all the Republicans’ fault.

Actually it turns out that the U.S. Government Accountability Office–the GAO–reports that the part of the IRS that reviews tax exemptions is really at risk for targeting activities. The GAO is an independent, nonpartisan agency working for Congress, often called the congressional watchdog. The GAO, headed by the Comptroller General of the United States, investigates how the federal government spends taxpayer dollars.

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August 3, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Sunday, August 2, 2015

The IRS Scandal, Day 815

IRS Logo 2Forbes:  19 Facts On IRS Targeting President Obama Can't Blame On Republicans, by Robert W. Wood:

On The Daily Show, President Obama blamed Republicans for the IRS scandal:

“You’ve got this back office, and they’re going after the Tea Party. Well, it turned out, no, Congress had passed a crummy law that didn’t give people guidance in terms of what it was they were trying to do. They did it poorly and stupidly. The truth of the matter is that there was not some big conspiracy there. They were trying to sort out these conflicting demands. You don’t want all this money pouring through non-for- profits, but you also want to make sure everybody is being treated fairly.”

Really, Mr. President? For effect, perhaps he should reprise his testy “not even a smidgen of corruption” remark to Fox News. The President keeps claiming there is no evidence the IRS was used for political targeting. You be the judge:

[List of 19 facts about the targeting scandal.]

Washington Examiner, IRS Back Under Fire on Tea Party Targeting:

A series of new revelations Wednesday and Thursday put the Internal Revenue Service back under fire for its alleged efforts to curtail the power of conservative nonprofits.

First, the Government Accountability Office uncovered evidence that holes in the tax agency's procedure for selecting nonprofit groups to be audited could allow bias to seep into the process.

Then, during a heated House Ways and Means Committee hearing Thursday morning, lawmakers exposed the lack of safeguards that could prevent IRS officials from going after groups with which they disagreed.

Meanwhile, the conservative watchdog Judicial Watch released documents Wednesday that suggested the IRS targeted the donors of certain tax-exempt organizations.

The controversies focused renewed scrutiny on the embattled agency, which has been fending off allegations of discrimination against conservatives since 2013.

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August 2, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Saturday, August 1, 2015

The IRS Scandal, Day 814

IRS Logo 2New York Post editorial, Obama’s Pathetic Attempt to Spin the IRS Scandal:

No sooner did President Obama claim last week the IRS scandal was just a mirage than new evidence emerged to show it was anything but.

The conservative group Judicial Watch says documents it obtained “confirm” the agency targeted the donors of certain tax-exempt organizations. And the Government Accountability Office faulted IRS procedures, saying they failed to prevent bias in the selection of nonprofits for audits. That’s key, since the agency has been accused of targeting conservative groups. ...

Of course, the biggest scandal of all is that Team Obama has managed to stonewall and leave the public hanging. And that no one has been held accountable.

Forbes:  President Obama Challenges IRS Scandal Narrative, by Peter J. Reilly:

So the latest in the interminable IRS scandal now on Day [810] by TaxProf Count is that President Obama has said in an interview with Jon Stewart on the Daily Show that there is no scandal involving the targeting of conservatives.  What he sees as scandalous is the underfunding of the IRS which allows people to avoid paying taxes they legitimately owe and the complexity of the Tax Code which allows multinational corporations to entirely avoid paying federal income tax.

The President’s explanation of the targeting scandal is that Congress had passed a crummy law that did not give good guidance and that people did a poor job of trying to sort out conflicting demands.   After all government is a human enterprise.

The President’s statement has drawn some sharp reaction.  The Daily Caller headline is “Obama Lies To Jon Stewart’s Face About IRS”. I had to check this out. ...

Supporters of the scandal narrative can, of course, point out many particulars that are not addressed in the President’s statement – hard drives, the TIGTA report that indicated inappropriate criteria were used.  On the other hand they have yet to come up with that really great smoking gun piece of evidence that links the President to all the tsoris that Lois Lerner and the Cincinnati gang that couldn’t sort straight dished out to Tea Party applicants for exempt status. Too bad that the President watched the Watergate hearings when he was a kid and knows better than to have damning tapes like the one I imagined back in January.

If the smoking gun is actually ever found, this interview might go down in history as Obama’s “I did not have sexual relation with that woman” moment.

Wall Street Journal, Notable & Quotable: Contempt and the IRS; A Federal Judge Asks Why the IRS Commissioner Shouldn’t be Held in Contempt for Failing to Comply with a Court Order to Produce Lois Lerner’s Emails.

From a hearing before U.S. District Court Judge Emmet G. Sullivan in Washington on Wednesday. The judge is questioning Justice Department attorney Geoffrey Klimas about his explanation of why the government hadn’t filed a motion for him to reconsider his order to produce the emails of former IRS official Lois Lerner being sought by the watchdog group Judicial Watch:

The Court: Wait a minute. Why would it have been inappropriate if you said it’s clear that the Court had issued an oral order? And we’ve said that—I’ve said that four times. If it was clear that there was an order outstanding, why would it have been inappropriate for the government to file a motion to reconsider that clear oral order? I don’t get it.

Mr. Klimas: To clarify, it was our understanding that there was a directive from the Court that was going to be followed up with a written order. It appears—

The Court: An order to be followed up by an order?

Mr. Klimas: It appears that the understanding was misplaced.

The Court: So you needed two orders to have a clearly enforceable order? You don’t need two orders to have a clearly enforceable order, do you?

Mr. Klimas: No, Your Honor.

The Court: So there’s no reason for not complying. This is ridiculous. This is absurd. I thought you were going to say that you didn’t think the Court had issued an oral order, but that’s not what you’re saying. It’s clear from the transcript that the Court had clearly ordered rolling production on a weekly 11 a.m. basis. So why shouldn’t the Court hold the Commissioner of the IRS in contempt for not having complied with a clearly enforceable order?

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August 1, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Friday, July 31, 2015

The IRS Scandal, Day 813

IRS Logo 2Wall Street Journal editorial, The Taxman’s Politics: New Evidence That IRS Bias May Have Extended to Tax Audits:

The Obama Administration has made a two-year career of dismissing concern about IRS policies targeting conservative tax-exempt groups. That evasion just got harder. New information shows the agency may have shown similar bias in tax audits.

A new Government Accountability Office report says protocols in place at the IRS Exempt Organizations unit made it possible for groups to be unfairly targeted for audit “based on the organization’s religious, educational, political, or other views.” That’s our emphasis. The report also shows a process that allowed reviewers to wield significant discretion over whether certain groups were selected for scrutiny. ...

The IRS is dismissing the findings as hypothetical. At a House Ways and Means hearing Thursday, IRS Commissioner John Koskinen told Rep. Peter Roskam that “at this point we do not have indications that anyone improperly was selected for an exam.” But information from Treasury Inspector General for Tax Administration J. Russell George suggests IRS audit selection has already led to improperly selected audits.

In fiscal years 2013 through 2015, Mr. George initiated 102 internal investigations based on complaints by tax-exempt groups and individuals who say they were unfairly targeted for audit. It’s not public how many of those 102 may have been improperly targeted. But according to the House Ways and Means Committee, 12 presented facts so egregious that the IRS referred them to the Justice Department for criminal prosecution. Not for tax evasion, mind you, but for improper conduct by IRS employees.  

A criminal referral is a big step, suggesting the audit selections met a high bar of evidence that IRS employees may have knowingly violated the law when choosing an audit target. Thursday’s hearing also included testimony from groups that believe they were improperly audited. ...

Mr. Koskinen, the IRS director, has already shown through his previous stonewalling that his assurances can’t be trusted. We hope Congress keeps digging into the growing evidence of a politicized tax agency.

New York Times editorial, The I.R.S. Gives Up on ‘Dark Money’:

The federal government has all but surrendered to the powerful, rich donors whose anonymous contributions threaten to undermine the 2016 elections. The commissioner of the Internal Revenue Service, John Koskinen, signaled as much on Thursday when he told a House committee that there would be no change in the tax code in 2016 to end its growing abuse by political operatives using nonprofit “social welfare” institutions to disguise the identities of affluent campaign contributors.

“I don’t want people thinking we are trying to get these regs done so we can influence the election,” Mr. Koskinen declared later to reporters. The statement was remarkable for blessing further procrastination at the I.R.S., whose clear obligation is to enforce existing law in a way that would end the current flood of “dark money” financing politics. The commissioner said the earliest that tighter rules could take effect would be 2017. The I.R.S. has been increasingly timorous on this issue ever since House Republicans opened partisan hearings into complaints that I.R.S. officials have been biased against conservative political groups that claim tax exemptions as nonprofit social welfare groups.

The fact is, the I.R.S. should be dedicated to enforcing the law against phony social welfare claims by all political schemers, from the right or the left. This abuse of the tax law mushroomed after the Supreme Court’s reckless Citizens United decision in 2010 that ended limits on campaign spending by corporations and unions. Since 2006, when only $5.2 million was spent by exempt organizations that do not disclose donors, spending increased 60-fold, to more than $300 million in the 2012 presidential cycle, according to the Center for Responsive Politics. An even bigger infusion is expected in 2016 from big-money donors shielded by the social welfare fiction. ...

It is a gross insult to taxpayers to make them underwrite the brazen evasions of campaign operatives bundling dark money. The abuse is compounded by the latest I.R.S. retreat from its responsibility.

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July 31, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Thursday, July 30, 2015

The IRS Scandal, Day 812

IRS Logo 2Wall Street Journal, Federal Judge Threatens to Hold IRS Chief in Contempt:

A federal judge threatened to hold Internal Revenue Service Commissioner John Koskinen in contempt of court on Wednesday, after the agency didn’t comply with an order to provide documents in a case about its alleged targeting of conservative groups. 

Washington Times, Obama Digs In, Refuses to Fire IRS Commissioner:

President Obama has no intention of firing IRS Commissioner John Koskinen, the White House said Wednesday in response to Republican lawmakers calling for his ouster.

Mr. Koskinen “is a man of the highest integrity,” said White House deputy press secretary Eric Schultz, who called him “the right person to lead this agency.”

Senate Judiciary Subcommittee on Oversight, Federal Agency Action, Federal Rights and Federal Courts Hearing:

Panel #1:  John Koskinen (IRS Commissioner)

Panel #2:

  • Cleta Mitchell (Foley & Lardner, Washington , D.C. ) (Testimony)
  • Stephen Spaulding (Common Cause Washington , D.C. ) (Testimony)
  • Edward Greim (Graves Garret, Kansas City) (Testimony)
  • Lawrence Noble (George Washington University Law School) (Testimony)
  • Toby Marie Walker (Waco Tea Party, Waco , TX) (Testimony)
  • Diana Aviv (Independent Sector, Washington , D.C. ) (Testimony)
  • Jenny Beth Martin (Tea Party Patriots, Woodstock , GA) (Testimony)
  • Gregory Colvin (Public Citizen, Washington , D.C. ) (Testimony)
  • Jay Sekulow (American Center for Law and Justice, Washington , D.C.) (Testimony)

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July 30, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Wednesday, July 29, 2015

The IRS Scandal, Day 811

IRS Logo 2Judicial Watch Press Release, IRS Produces Recovered Lerner Emails:

Judicial Watch released 906 pages of newly recovered Lois Lerner emails from the IRS that are believed to recently have been recovered by the IRS’ internal watchdog – the Treasury Inspector General for Tax Administration (TIGTA).  The IRS released the emails under a court order by U.S. District Court Judge Emmet Sullivan.  The new documents show that Lois Lerner and other top officials in the Exempt Organizations Unit of the Internal Revenue Service (IRS), including soon-to-be Acting IRS Commissioner Steve Miller, closely monitored and approved the controversial handling of tax-exempt applications by Tea Party organizations.  The documents also show that at least one group received an inquiry from the IRS in order to buy time and keep the organization from contacting Congress. ...

“These recovered Lois Lerner emails had to be dragged out of the Obama IRS, which is still resisting a federal court order requiring disclosure of Lerner’s ‘lost’ emails,” said Judicial Watch President Tom Fitton.  “This material shows that the IRS’ cover-up began years ago.  We now have smoking-gun proof that top officials in the Obama IRS unlawfully harassed taxpayers just to keep them from complaining to Congress about IRS’ targeting and abuse.  No wonder the Obama IRS has had such little interest in preserving or finding Lois Lerner’s emails.”

Americans for Tax Reform, IRS Used Instant Messaging System to Hide Internal Communications:

The IRS used a “wholly separate” instant messaging system that automatically deleted office communications, according to documentation released by the House Oversight Committee on Monday. The system appears to have been purposefully used by agency officials responsible for the targeting of conservative non-profits, in order to evade public scrutiny.

MSNBC (The Maddow Blog), House Republicans Pretend IRS ‘Scandal’ Still Exists:

It’s been about two years since Republicans and much of the Beltway media thought it had finally uncovered a real White House “scandal.” According to the narrative, the Obama administration used the Internal Revenue Service to “target” conservatives, which represented an outrageous abuse of power.

For about a week, it looked like a serious, proper controversy, worthy of outrage. Soon after, however, the whole thing collapsed – the tax agency scrutinized liberal, conservative, and non-ideological groups, effectively ending the story. Every allegation, including conspiracy theories about White House involvement, evaporated into nothing. For two years, GOP lawmakers looked for evidence of wrongdoing, and for two years they found no proof to bolster their apoplexy.

It came as a bit of a surprise, then, to see 21 House Republicans hold a press conference late yesterday, trying anew to breathe life into a discredited story. ...

Just so we’re clear, these House Republicans still haven’t uncovered any evidence of official wrongdoing, and they didn’t accuse Koskinen of having any role in “targeting” anyone. Rather, the GOP lawmakers are convinced Koskinen hasn’t done enough to help them find evidence to substantiate allegations that fell apart two years ago.

Or put another way, they want to fire the IRS guy who replaced the other IRS guy who was fired over a “scandal” that never really existed in the first place. ...

[Y]yesterday’s press conference appeared to be an example of House Republicans throwing a tantrum just for the sake of throwing a tantrum – they still have no evidence of an actual scandal and they offered literally nothing new yesterday other than their own misplaced outrage.

This isn’t even a close call. Cummings pointed to the recent release of a report from the IRS inspector general’s office, which made explicitly clear to the Oversight Committee that there’s just nothing here. Republicans accused Lois Lerner of deliberately crashing a hard drive; the inspector general found the opposite. Republicans said back-up tapes were intentionally destroyed; the inspector general found the opposite. Republicans said Koskinen tried to hide information from Congress; the inspector general found the opposite. Republicans said the IRS hid damaging emails; the inspector general found the opposite.

Why GOP lawmakers even bothered with yesterday’s press conference is something of a mystery. Maybe they were bored. Maybe someone needed a pretense for a new fundraising letter. Whatever the reasoning, there’s still no reason to take any of this nonsense seriously.

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July 29, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Tuesday, July 28, 2015

The IRS Scandal, Day 810

IRS Logo 2Jason Chaffetz, Chair of the House Committee on Oversight and Government Reform, and 20 Republican members of the committee, have sent this 32-page letter to President Obama, requesting that he remove IRS Commissioner John Koskinen for obstructing the congressional investigation into the IRS's targeting of conservative groups by (1) failing to comply with a congressional subpoena, (2) failing to testify truthfully, and (3) failing to preserve and produce up to 24,000 emails relevant to the investigation.

(Click on YouTube button on bottom right to view video directly on YouTube to avoid interruption caused by blog's refresh rate.)

Wall Street Journal op-ed:  The Stonewall at the Top of the IRS, by Ron DeSantis (Chair, House Oversight and Government Reform Subcommittee on National Security) & Jim Jordan (Chair, House Oversight and Government Reform Subcommittee on Health Care, Benefits and Administrative Rules):

Internal Revenue Service Commissioner John Koskinen needs to go.

When it was revealed in 2013 that the IRS had targeted conservative groups for exercising their First Amendment rights, President Obama correctly called the policy “inexcusable” and pledged accountability. He even fired the then-acting IRS commissioner because he said it was necessary to have “new leadership that can help restore confidence going forward.”

Unfortunately, Commissioner Koskinen, who took over in the wake of the IRS targeting scandal, has failed the American people by frustrating Congress’s attempts to ascertain the truth. A taxpayer would never get away with treating an IRS audit the way that IRS officials have treated the congressional investigation. Civil officers like Mr. Koskinen have historically been held to a higher standard than private citizens because they have fiduciary obligations to the public. ...

If the president doesn’t remove Mr. Koskinen from his post, then Congress should remove him through impeachment. The impeachment power is a political check that, as Alexander Hamilton wrote in Federalist No. 65 in 1788, protects the public against “the abuse or violation of some public trust.”

Supreme Court Justice Joseph Story echoed Hamilton in 1833 when he distinguished impeachable offenses from criminal offenses, noting that they “are aptly termed political offenses, growing out of personal misconduct or gross neglect, or usurpation, or habitual disregard for the public interests . . . They must be examined upon very broad and comprehensive principles of public policy and duty.”

John Koskinen has violated the public trust, breached his fiduciary obligations and demonstrated his unfitness to serve. Mr. President, it’s time for Commissioner Koskinen to go. If you don’t act, we will.

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July 28, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Monday, July 27, 2015

The IRS Scandal, Day 809

IRS Logo 2Rasmussen Reports, Voters Aren’t Buying Obama’s Story About IRS Scandal:

President Obama told comedian Jon Stewart earlier this week that the Internal Revenue Service didn’t target Tea Party and other conservative groups on his watch and that a lack of funding by Congress was to blame for any problems at the tax-collecting agency. But voters still think something criminal was going on and are even more suspicious of what the president knew about it.

Fifty-two percent (52%) of Likely U.S. Voters continue to believe the IRS broke the law when it targeted the groups, according to the latest Rasmussen Reports national telephone survey. Just 24% say the IRS didn’t break the law when it went after Tea Party and other conservative groups, while just as many (24%) are not sure.

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July 27, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Sunday, July 26, 2015

The IRS Scandal, Day 808

IRS Logo 2Newsmax, Jason Chaffetz: Expect News on Probe of IRS 'As Early As Next Week':

Rep. Jason Chaffetz asserts there is evidence that the IRS intentionally targeted conservative groups under Lois Lerner, the former director of the Exempt Organizations Unit at the agency, and said "there will be news … as early as next week."

Chaffetz, the chairman of the House Oversight and Government Reform Committee, is leading the congressional investigation into the IRS scandal. On Thursday, he told a group at the Ripon Society in Washington, D.C., the IRS destroyed documents requested by the committee in March 2014.

"Probably the biggest thing our committee is looking at is the IRS," the Utah Republican said. "You have political targeting that is factual at this point. There are no ifs, ands or buts. You had groups within the IRS who were politically targeting conservatives and impeding their First Amendment rights. You're going to continue to hear more about this. Because when the targeting became evident, the Oversight and Government Reform Committee put in place a subpoena for the documents — a small window of Lois Lerner's emails.

"Internally, the IRS put a preservation order in place — don't destroy or get rid of any of these documents. These documents and emails were in the possession of the IRS. And on March 4, 2014, they destroyed them." ...

Chaffetz said during his address at the Ripon Society the IRS deliberately defied orders by destroying the documents.

"Imagine if the IRS had given you a summons for you to produce documents," Chaffetz added. "You had them in your possession, and then you destroyed them. What would happen to you? Do you think they would say, 'Oh, darn it!' No, which is why Congress has to stand up for itself. You cannot — with a duly issued subpoena and eternal preservation order in place — go out and destroy documents and say there is no consequence to that; nobody's going to be held accountable, and nobody is at fault.

Washington Examiner, House Chairman: Documents Prove IRS 'Political Targeting' of Conservatives:

The chairman of the top House committee probing the IRS political witch hunt of President Obama's foes said documents prove that the agency targeted conservatives and then tried to destroy the evidence and he promised "news" on the panel's investigation next week.

"I promise you – there will be news on the IRS side as early as next week. So stay tuned," said Rep. Jason Chaffetz, chair of the House Oversight and Government Reform Committee.

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July 26, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Saturday, July 25, 2015

The IRS Scandal, Day 807

IRS Logo 2Judicial Watch Press Release, New Documents Show IRS Used Donor Lists to Target Audits:

Judicial Watch announced today that it has obtained documents from the Internal Revenue Service (IRS) that confirm that the IRS used donor lists to tax-exempt organizations to target those donors for audits.  The documents also show IRS officials specifically highlighted how the U.S. Chamber of Commerce may come under “high scrutiny” from the IRS.  The IRS produced the records in a Freedom of Information lawsuit seeking documents about selection of individuals for audit-based application information on donor lists submitted by Tea Party and other 501(c)(4) tax-exempt organizations (Judicial Watch v. Internal Revenue Service (No. 1:15-cv-00220)).

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July 25, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Friday, July 24, 2015

The IRS Scandal, Day 806

IRS Logo 2GAO, IRS Should Strengthen Internal Controls for Exempt Organization Selection (GAO-15-753T):

There are several areas where EO's controls were not well designed or implemented. The control deficiencies GAO found increase the risk that EO could select organizations for examination in an unfair manner—for example, based on an organization's religious, educational, political, or other views. Examples of internal control deficiencies GAO found include the following:

Staff could deviate from procedures for some selection processes without executive management approval. GAO found that procedures for some processes—such as applying selection criteria to organizations under consideration for review—are not included in the IRM, as required by IRS policy. As a result, staff are not required to obtain executive management approval to deviate from these procedures. This increases the risk of unfair selection of organizations' returns for examination.

EO management does not consistently monitor selection decisions. GAO found that IRS does not consistently monitor examinations and database files to ensure that selection decisions are documented and approved, to help ensure fairness. GAO's review of examination files found that approval of some selection decisions was not documented, as required by EO procedures. For example, GAO's analysis of a sample of files suggests that an estimated 12 to 34 percent of cases where staff initially selected an organization for examination, but ultimately decided not to perform the examination, were missing the indication of management approval of the final decision, as required in the IRM. Continuous monitoring is an element of internal control; EO management has not been conducting sufficient monitoring to ensure that required approvals were taking place.

House Committee on Ways and Means Subcommittee on Oversight Hearing, IRS Audit Selection Process (July 23, 2015):

Subcommittee Chairman Peter Roskam, Opening Statement:

Welcome, everyone. Today we’re going to review a new report from the independent Government Accountability Office, or GAO, about how the IRS decides to audit tax-exempt organizations.

Two years ago, we learned that the IRS was targeting conservative organizations that were applying for tax-exempt status. The Exempt Organizations division, under Lois Lerner’s direction, had a checklist of reasons to select certain groups for extra scrutiny. That checklist included criteria such as whether an organization’s application referred to conservative buzzwords like ‘Tea Party,’ or ‘Patriots,’ or if the groups criticized how the country was being run. Targeted groups were subjected to intrusive and burdensome questionnaires. An Iowa pro-life group was outrageously instructed to tell the IRS about their prayers. Many of these groups had to wait for years to get an answer from the IRS on their applications—if they got one at all. We’re here today because some of those groups, in addition to all of that scrutiny, also got audited.

To date, the IRS has basically tried to assure this committee and the American people that this won’t happen again simply by saying ‘Lois Lerner doesn’t work here anymore.’ But after we learned about the targeting of non-profit applicants, this committee asked GAO to review whether the problem was much bigger than that. We asked: can the IRS target tax-exempt groups in the audit process?

GAO released that report today. It says:

The control deficiencies GAO found increase the risk that [the Exempt Organizations unit] could select organizations for examination in an unfair manner—for example, based on an organization’s religious, educational, political, or other views.

GAO found many examples where the IRS failed to follow its own internal controls or document audit selection decisions. Failure to document is a real problem because where there is no documentation, there is no way to know if an audit was commenced based on merit or bias. There is also no way to hold someone accountable for bad acts.

I’m deeply concerned about how the IRS decides which organizations to audit in the first place. Many times when a non-profit organization is audited, it’s because a computer program flags problems with an organization’s paperwork. But about 20 percent of audits are set in motion because the IRS gets a complaint about an organization. These so-called referrals can come from an individual, from the news media or even from someone’s political adversary.

When the IRS receives a complaint, an employee looks to see if there is a likely tax violation. There are only five IRS employees who serve as these gatekeepers of the audit process, and they each cover only one issue area. The gatekeeper reviewing political activity complaints has been there since 2009. That means that for the past 6 years, only one person in the entire IRS has been reviewing political activity referrals to decide if they should move on in the audit process.  

If one of these gatekeepers decides there is audit potential, the complaint is sent to a referral committee with disturbingly lax standards. What’s worse, over 25 percent of audits GAO reviewed that were started because of a complaint had no description of the allegation in the file—that is, one in four audits GAO looked at had no explanation of the reason for the audit. In some instances, GAO found that entire case files were missing. This means no one can go back and determine if the audit was begun for a fair reason, or an unfair reason.

It is stunning that in response to these findings, the IRS said that ‘although the report states that a hypothetical risk exists that returns could be selected unfairly, the draft report did not find any evidence that this has happened.’

As we will show today, that’s just not true. The Inspector General tells this committee they have referred multiple cases of improper audit selection to the Justice Department for criminal prosecution in 2014 alone.  There’s nothing hypothetical about that.

And I’ll remind my colleagues that in 2013, after the Inspector General concluded the IRS unfairly targeted groups applying for non-profit status, the IRS response was very similar. They said, ‘[W]e have not found evidence of intentional wrongdoing by IRS personnel.’

To the contrary, this Committee uncovered evidence showing Ms. Lerner acted in defiance of internal controls that were supposed to prevent any one IRS employee from blocking a group’s application or sending them to audit. Ms. Lerner was not only familiar with these internal controls, but these were policies she created and spoke of publicly as a way of commending the agency’s impartiality. The evidence shows that Ms. Lerner maliciously and intentionally bypassed these controls, reaching into her division and directing specific organizations be subjected to audit, something IRS rules said she could not do.

It is disappointing that over two years later, it is still possible that the IRS can select groups for adverse treatment based on their personal political, religious, or educational beliefs. There isn’t proper documentation of allegations or decisions to audit; there are a handful of gatekeepers with sweeping authority and broad discretion; and there is a broken referral committee process.

The IRS has been entrusted with powerful authority to review and audit organizations, and with that comes a very serious responsibility to the American people. The IRS must acknowledge these problems and take concrete action to ensure a Lois Lerner 2.0 situation cannot happen. This committee will continue to work to reform this broken system and ensure the IRS treats all Americans fairly and equally.

House Committee on Ways & Means Oversight Subcommittee on Oversight, Watchdog Report: IRS Audit Process at Risk of Abuse, Targeting

Today, the Government Accountability Office (GAO) released a report detailing striking flaws in the IRS audit selection process that could lead to targeting of organizations based on their political beliefs and other First Amendment protected views. In the wake of the Lois Lerner scandal—which revealed that the IRS targeted conservative groups—the Ways and Means Committee asked GAO to look into the IRS audit process for tax-exempt organizations. The committee feared that the IRS could use its vast auditing power to target groups the same way. These fears were confirmed in today’s report. 

GAO’s final report shows that the current audit process indeed is ripe for improper targeting. According to GAO, “the control deficiencies GAO found increase the risk that EO (Exempt Organizations unit) could select organizations for examination in an unfair manner—for example, based on an organization’s religious, educational, political, or other views.”

The GAO report’s supporting findings include:

  • IRS’s audit procedures are not sufficiently documented or followed, and in some instances, GAO found that even the IRS did not have a record of why certain cases were selected for audit.
  • The same small group of people have been reviewing audit referrals, which are essentially third-party complaints made to IRS, for years without sufficient review or oversight of their decisions.
  • Management within IRS does not consistently monitor selection decisions, which could allow people with bias to unfairly select organizations for audit.

These weaknesses undermine the agency’s commitment to serving taxpayers, as well as the integrity of tax administration as a whole. Audits can cost a huge amount of time and money—and can devastate a non-profit organization. After all that has taken place, it is astonishing that the IRS still operates in a way that allows the targeting of people based on their beliefs to go unchecked.

Panel #1:

  • Jay McTigue (Director, Strategic Issues, Government Accountability Office) (Testimony)
  • John Koskinen (Commissioner, IRS) (Testimony)

Panel #2:

  • Michelle Easton (President, Clare Boothe Luce Policy Institute) (Testimony)
  • Joseph R. Metzger (Vice President, Leadership Institute) (Testimony)
  • Elizabeth J. Kingsley (Partner, Harmon, Curran, Spielberg & Eisenberg) (Testimony)

Press and blogosphere coverage:

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July 24, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Thursday, July 23, 2015

The IRS Scandal, Day 805

IRS Logo 2Washington Examiner, Obama to Jon Stewart: IRS Never Targeted Conservatives:

President Obama in a taped appearance with the Daily's Shows Jon Stewart Tuesday denied that IRS targeted conservatives, an assertion that Stewart then appeared to ridicule him for making. ...

[President Obama noted] that Stewart and others had jumped on a story that employees had been targeting conservatives.

"It turns out," Obama said, that wasn't true. He said Congress "passed a crummy law" that provided vague guidance to the people who worked at the IRS. And he said that employees implemented the law "poorly and stupidly."

"Boy, you really do have only a year left," Stewart interjected.

But Obama jumped back in, blaming Congress for not providing enough funds for both the IRS and the Department of Veterans Affairs to work properly.

The real scandal around the IRS, he said, "is that they have been so poorly funded that they cannot go after these folks who are deliberately avoiding tax payments."

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July 23, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Wednesday, July 22, 2015

The IRS Scandal, Day 804

IRS Logo 2Senate Finance Committee Press Release, Finance Committee to Review IRS Report in Closed Session:

The Senate Finance Committee today voted to hold an upcoming executive session, which is required to be closed, to review findings from the Committee’s bipartisan investigation into the Internal Revenue Service (IRS) treatment of organizations applying for tax-exempt status and discuss release of the final report. In the closed session, as required by law, members will be briefed by Committee staff with 6103 authority to review private taxpayer information. This vote follows the completion of the Treasury Inspector General for Tax Administration (TIGTA) investigation into the cause of Lois Lerner’s hard drive crash, and TIGTA’s efforts to recover any emails that may have been lost as a result of the crash.”

“With TIGTA’s investigation completed, we are now able to move forward with the Committee’s bipartisan report into the IRS’s treatment of tax-exempt organizations,” Hatch and Wyden said. “Throughout this process, we have been committed to ensuring a complete and thorough investigation, and this closed session will give members an opportunity to review our findings and vote to submit the report to the full Senate if they choose.” 

The date for the closed session has not been announced but is expected to occur before the Senate breaks for the August state work period.

BACKGROUND

On May 20, 2013, the leaders of the Senate Finance Committee sent a detailed, 41-question document request to the Internal Revenue Service (IRS) seeking information about the alleged targeting by the IRS of certain social welfare organizations applying for tax-exempt status based on those organizations’ presumed political activities. That letter marked the beginning of a bipartisan investigation by the Committee into the IRS’ activities related to the review of tax-exempt applications and related issues raised by the Treasury Inspector General for Tax Administration (TIGTA) in his May 14, 2013, report. 

To date, Committee investigators have interviewed more than 30 current and former IRS and Treasury employees and have reviewed nearly 1.5 million pages of documents. In June 2014, the Committee learned that the IRS was not able to produce all emails originating from Lois Lerner and other IRS officials needed to complete the Senate Finance Committee investigation. As a result, Chairman Hatch and Ranking Member Wyden asked TIGTA to investigate the matter. Specifically, TIGTA looked into: 1) what records the IRS lost; 2) if there was any attempt to deliberately destroy records, or otherwise impede congressional and federal investigations; and 3) whether any of the missing information can be recovered.

TIGTA provided their findings to the Committee on June 30, 2015.

The Hill, Senate Finance to Discuss IRS in Secret:

The Senate Finance Committee is going to meet in secret in the coming weeks to delve into the panel's bipartisan inquiry into the IRS's improper treatment of Tea Party groups.

Finance Chairman Orrin Hatch (R-Utah) and the committee's top Democrat, Sen. Ron Wyden (D-Ore.), have said that they want to release the report before the Senate goes on its August recess, but have yet to set a date for the closed session. The committee needs to close the session over its IRS report to protect taxpayer information, the Finance panel said Tuesday.

Fox News, Senate Finance Working to Release IRS Targeting Report

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July 22, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Tuesday, July 21, 2015

The IRS Scandal, Day 803

IRS Logo 2Forbes:  IRS Denies Exempt Status To Group Helping Undocumented Aliens Leave USA, by Peter J. Reilly:

I have been something of a skeptic of the narrative of the IRS Exempt Division targeting conservative organizations. As a matter of fact, one of my less than attentive commenters recently accused me of being, if you will excuse the expression, a Democrat. So when I see something, otherwise unremarked, that might support the narrative, I’m going to take notice. Such is Private Letter Ruling 201527043. The PLR is a denial of exempt status to an organization that I will call Ticket Back Home (TBH). (The public version of a private letter ruling does not include identifying information, so when I write about them I try to make up an appropriate name.)

TBH is concerned with illegal immigration, which is one of the Tea Party’s biggest issues. Being descended from some of the huddled masses yearning to breathe free, famine refugees no less, I have a hard time connecting emotionally with the Tea Party animus toward the undocumented. Even if he is breaking the law, I just can’t get mad at somebody who is shaping up at the Home Depot to go hang drywall or do some landscaping so he can send money home to the Old Country. ...

I have been unable to penetrate the redaction on this ruling, so I have no candidates for the particular organization that was denied exempt status by this ruling. Reading between the lines of the ruling, it does seem to be coming from a place of right-wing populism, that I am not really that sympathetic with. Nonetheless, I think the IRS case for denying exempt status is on the weak side.

One thing that I have noted about the exempt organization controversy is that a lot of noise is made about all the hoops that organizations have to jump through to get exempt status, but there is little attention paid when there is an outright denial. This ruling, which has received no other coverage I could find is another example of that phenomenon.

I can’t rule out that there is something altogether unsavory about this group that would cause me to sympathize with IRS in turning them down, but the rationale in the ruling does not really stand up.

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July 21, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Monday, July 20, 2015

The IRS Scandal, Day 802

IRS Logo 2IJReview, New Documents Link Justice Department to IRS Scandal, But How Ted Cruz Reacted is the Big Surprise:

Has Senator Ted Cruz lost his bark?

When the news broke in mid-2013 that the Internal Revenue Service (IRS) had spent much of the past three years singling out conservative groups for extra scrutiny in their nonprofit applications, Cruz was among the first to call for a special prosecutor to investigate the scandal rather than the Department of Justice (DOJ).

But now that a slew of new documents has come to light this week, revealing that the DOJ, along with the FBI, actually played a much more hands-on role with IRS than previously thought, Cruz has gone mum. ...

Since the release of Judicial Watch’s documents, Cruz has not commented on the documents or released an official press statement. Cruz’s office did not return multiple requests for comment on whether the Republican presidential candidate would call for Loretta Lynch, the current attorney general, to appoint a special prosecutor.

A DOJ spokesman told IJReview only that the “investigation into the IRS’ handling of applications by tax-exempt organizations” is ongoing and declined to comment further.

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July 20, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Sunday, July 19, 2015

The IRS Scandal, Day 801

IRS Logo 2The Daily Signal, How the IRS, FBI and Justice Department Are Agents of Modern American Tyranny:

Imagine having a vision for your country.

You worked hard to start an organization to promote the ideas and values that you believe can fix our nation.

When you apply for tax-exempt status, which should be a simple matter of paperwork, you face repeated delays and demands from the government that stretch the process across months and years.

Then you learn—not from the government, but from an outside source—that your private information was shared with multiple government agencies, all of whom wanted to “piece together” criminal charges against you.

Imagine being awakened in the middle of the night by a gang of police, shouting and waving their weapons at you. They turn your house inside-out, steal your laptop and phone, then order you not to tell anyone they were there.

All this happened because your political beliefs landed on the wrong side of those officials in power.

This is not a scenario from China, Russia, or Iran.

Welcome to the very real tyranny of modern America.

Think it can’t happen here? Just do some reading on the John Doe proceedings in Wisconsin, or the IRS targeting scandal.

As documents slowly begin to trickle out, the scandal of the IRS targeting conservative political organizations only grows bigger.

We learned a year ago that the IRS was helping the Department of Justice trump up charges on conservative groups by 2013.

New documents show this was in the works as early as 2010.

These two dates perfectly bookend the period of time that conservative groups were intentionally harassed and their applications for tax-exempt status delayed. From the first reaction to Citizens United to the week of Lois Lerner’s misleading admission of targeting, multiple government agencies were in on it together. ...

We have now entered a time in America when citizens can be labeled as “political dissident” and targeted by their own government for harassment and prosecution.

Abuse that formerly only went on in places like China, Russia, and Iran has repeatedly happened right here within the USA. This is not the nation we used to know and love.

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July 19, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Saturday, July 18, 2015

The IRS Scandal, Days 701-800

July 18, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

The IRS Scandal, Day 800

IRS Logo 2Forbes:  Court Agrees Lois Lerner's Group Did Not Trigger Individual Audits, by Peter J. Reilly:

The perennial never-ending IRS scandal now on Day 795 by TaxProf count , in part, is a search for smoking guns.  Sometimes it turns out that all that can be found is unloaded, never fired guns. The response of those promoting the scandal narrative is that, you have to look harder.  Enough is never enough. Sometimes the courts agree that the IRS must search its records more assiduously. Earlier this month, though the DC District issued an enough is enough ruling on one of Judicial Watch’s Freedom of Information Requests.

The FOIA request concerned Lois Lerner’s Cincinnati gang that couldn’t sort straight causing individuals connected in one way or another to the exempt applications to have their individual returns audited.  There is anecdotal evidence that this sort of thing was going on.  Various Tea Party people came forward and indicated that they were audited for the first time after they became involved.  The problem with that type of anecdotal evidence is that every year some number of people are going to be audited for the first time.  You would expect that some number of those audited in say 2011 were active in the Tea Party or similar groups.

You are never going to convince most of those people that it was just luck of the draw.  It would be very hard to make a statistical inference about whether Tea Party affiliation or something like that affected individual audit probability, since it is hard to define the group that the sample is being drawn from and it is possible, even likely, that the people who became involved in the conservative causes were people who already had a higher than average probability of being audited. ...

Certainly Judicial Watch thinks so.  They brought up indications that IRS had communicated with DOJ about prosecuting people for lying on 501(c)(4) exemption applications.  That particular assertion has created some media excitement.  I haven’t figured out what is scandalous about it, particularly since it appears nobody was ever prosecuted.  Those applications are signed under penalties of perjury and there is some indication that on some of them people were kind of shading the truth just a bit.  The Court noted, though, that the communication to DOJ had nothing to do with audit referrals. ...

I suspect that the IRS scandal will keep going at least through the upcoming Presidential election, since it allows Republicans to run against Lois Lerner.  It is apparently also pretty good for fundraising.  According to its 2013 Form 990, Judicial Watch raised over $20 million just shy of $6 million of that was spent on fundraising.  I didn’t see any mention of this DC District decision on their website in the weekly updates.

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July 18, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)