TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Saturday, February 6, 2016

The IRS Scandal, Day 1003

IRS Logo 2Joe  Kristan (Tax Update Blog), 1000 Days of TaxProf Scandal Coverage:

Thanks to Paul Caron for his persistence in paying attention to the past and continuing IRS abuse of power. 

Peter J. Reilly (Forbes), IRS And The Tea Party — Scandal Enters A New Millennium:

Big milestone over at the Tax Prof yesterday.  The IRS Scandal, a day by day chronicle, has hit 1,000.  The event is marked by a an article in The College Fix titled — “The IRS Scandal, Day 1000: Every single day for nearly three years prof chronicles IRS scandal”-. ...

My objections to the day by day scandal narrative is that the string has often been maintained by stories that barely have a tenuous relationship to what I call the “core scandal” – delays and excessive questioning in the handling of tax-exempt applications of Tea Party and similar groups.  ...

What the scandal true believers really yearn for is absolute proof of President Obama ordering his IRS hit squad to go after conservatives. ... Instead they are left with a tone at the top argument in which the President’s statements about Citizens United and untraced money flooding into politics was a kind of dog whistle signal to go after conservatives. ...

Two lines of litigation that keep churning out new material for the day by day IRS scandal are NorCal Tea Party Patriots v IRS, which seeks damages for the delays and abusive inquiries, and FOIA requests by Judicial Watch.  The NorCal litigation is being funded by Citizens for Self Governance, which appears to have Koch connections.  If you look at the 2014 Form 990 of the Sarah Scaife Foundation, to which Richard Scaife gave $364 million in 2014, you will find $225,000 being given to Judicial Watch for general operating support. ...

Much of the coverage of the Tea Party scandal is taking snippets from the vast document dumps and making a big deal out of them – things like Lois Lerner wondering if somebody should investigate Bristol Palin.  If you really dig into the stuff, you can understand how there is material there to construct a variety of narratives.

In one of the narratives. you could write Lois Lerner as a tragic flawed hero, who saw great wrong being done, but was unable to get anyone to act.  She tried to get Justice interested in prosecuting people for lying on their exempt applications and got nowhere.  The gift tax initiative went nowhere (although I’m not sure she was that involved in that one).  And then there is this batch of exempt applications.  She knows they are up to no good and here she has leverage.  She can slow them down by not doing something, which is a lot easier than doing something. Instead of accomplishing something in stemming the flow of dark money, Lois Lerner ends up crippling the IRS, which is fine with libertarian billionaires.  They don’t want the IRS to do its job at all.

The narrative that seems most plausible to me is Lois Lerner as the Agent From Hell.  AFH is my term for a certain type of IRS agent that I have thankfully only encountered a couple of times in my career.  AFH is not that technically astute, but AFH is dogged.  And AFH is certain that your client is up to no good.  AFH just hasn’t quite figured out what that no good is.  That was Lois Lerner and the Tea Party applications, only she had to do her work through minions.  Lois Lerner was passionate about the dark money issue and nobody else seemed to care. So she tortured her line agents to get them to torture bewildered applicants who were already pumped up on conspiracy theories. A perfect storm of bureaucratic bumbling coming across as brilliantly subtle conspiracy.

On To The Next Millenium

And of course the brilliantly subtle conspiracy is the narrative that works best for those still interested in the scandal, so that is what will tend to predominate in the day by day as we move along.

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February 6, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Friday, February 5, 2016

The IRS Scandal, Day 1002

IRS Logo 2Letter From John Koskinen to Orrin Hatch (Feb. 3, 2016)

Politico, The IRS’s No Good Day:

A once lost hard drive was suddenly found — sort of. In fact, the agency did junk former official Samuel Maruca’s hard drive, which it was supposed to preserve for the IRS’s court battle with Microsoft over an audit of the computer giant. But Koskinen told Senate Finance leaders on Wednesday that the agency actually copied the hard drive before it was wiped clean. "This event reflected a shortcoming in our document controls,” Koskinen wrote, adding that he’s ordered the agency to stop recycling employee devices while the IRS examines its preservation standards.

On those points at least, Senate Finance Chairman Orrin Hatch seemed to agree with Koskinen. Both Hatch and the committee’s top Democrat, Sen. Ron Wyden, had expressed concern about the IRS’s document retention efforts in the wake of the latest hard drive issue. "Through sheer coincidence, the IRS's mishandling of critical information caused less damage than initially stated by the Justice Department,” Hatch said, while insisting “these seemingly routine disappearing acts make clear that the agency's recordkeeping practices have fallen woefully short.”

Washington Times, IRS Admits to Mistake For Court Case, Promises to Stop Erasing Hard Drives:

The IRS has put an emergency stay on deleting its computer hard drives and devices such as BlackBerrys, with the commissioner saying in a letter to Congress on Wednesday that the agency goofed in deleting a key hard drive last year that was supposed to be preserved as part of a court case.

Commissioner John Koskinen also said the agency has discovered a backup for that hard drive and may be able to find records critical to the court case. But he said that was a “fortunate” occurrence and vowed to try to reform the tax agency’s practices.

“I have ordered a halt to the erasure and recycling of all employee devices, including hard drives and mobile devices, for all current and departing employees,” he said in a letter to Senate Finance Committee Chairman Orrin G. Hatch, Utah Republican.

He also said the IRS is changing its procedures for when it is required to hold documents for court cases: It will preserve the records not only of the person in question, but his or her supervisor’s records as well.

In the longer term, the IRS is trying to ditch computer hard drives for storage altogether and to require that records be saved on the agency’s main network.

“It has long been our view — validated, unfortunately, by the events of recent years — that the service’s reliance on employee hard drives as an archival records store is suboptimal, not least because they are vulnerable to equipment failure resulting in data loss,” he wrote.

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February 5, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Thursday, February 4, 2016

The IRS Scandal, Day 1001

IRS Logo 2U.S. Department of justice Status Report, Judicial Watch Inc. v. IRS, No. 1:13-cv-01559m (D.C. D.C. Feb. 1, 2016):

On February 1, 2016, the Internal Revenue Service (“Service”) released to Judicial Watch, Inc., a CD containing documents responsive to the portion of Judicial Watch’s final Freedom of Information Act (“FOIA”) request for documents regarding the preparation of development letters.

The Service has now released to Judicial Watch over 32,600 pages of documents responsive to the FOIA requests at issue in this case. Those pages have been redacted for exemptions in accordance with 5 U.S.C. § 552(b) as appropriate.

IRS Chief Counsel attorneys have represented to the undersigned attorneys that the Treasury Inspector General for Tax Administration (“TIGTA”) has not provided any forensically-recovered emails to the Service since the Service submitted its Status Report on January 22, 2016. On January 29, 2016, TIGTA turned over to Chief Counsel 13 Lois Lerner emails (without any associated attachments) and one handwritten note. TIGTA has communicated to Chief Counsel that it believes that these documents have not been previously produced to Congress in prior document productions. These 14 documents were found in papers that TIGTA retrieved from Lois Lerner’s office in August of 2013. The 14 documents are being loaded in Clearwell, Chief Counsel’s document review platform, and will be searched to determine if any of the documents are responsive to the FOIA requests at issue in this case. The Service has agreed to prioritize its review of the 14 documents and the Service will provide a date by which it will expect to turnover any non-exempt, responsive documents in its weekly status report due February 8, 2016.

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February 4, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Wednesday, February 3, 2016

The IRS Scandal, Day 1000

1000 Days

The College Fix, The IRS Scandal, Day 1,000: Every Single Day For Nearly Three Years Prof Chronicles IRS Scandal:

A Pepperdine University School of Law professor has chronicled all the developments in the IRS scandal since Day One through a blog he tirelessly updates every day.

Every. Single. Day.

And today — Wednesday, Feb. 3 — marks Day 1,000 in tax law Professor Paul Caron’s apparently never-ending quest to keep tabs on the latest in the IRS scandal on his “TaxProf Blog.”

The feat itself is impressive in its size and scope, and something Caron said he could have never predicted when revelations that the agency targeted conservative groups came to light in May 2013.

“My goal for TaxProf Blog is to comprehensively cover the major tax and legal education issues of the day,” Caron said in an email to The College Fix. “So when the IRS scandal broke, I naturally covered it on the blog. After a week, it was clear that this would be a major, long-running story, so I decided to do a daily roundup of news of the IRS Scandal each day. I never dreamt it would still be going strong 1,000 days later.”

Caron’s dedication to the effort is evidenced by the fact that he posts updates to his blog on the scandal every day, including weekends and holidays: “There has always been something new to cover,” he said.

Over the years, Caron said perhaps one of the most troublesome aspects of the scandal is “the arrogance of IRS Commissioner John Koskinen and President Obama, and … the ineptitude of the House Republicans.”

“I set out my views in a USA Today op-ed on Day 369 and still think I pretty much nailed it,” Caron said. In that op-ed, he details the scandal’s major developments and calls for better media scrutiny and Congressional oversight.

Today, as the IRS scandal wanes from the public eye — especially in light of the 2016 presidential elections — questions on whether anyone will ever be held accountable for the unlawful actions remain. But it’s clear Americans are still upset over what went down.

When Caron polled his regular readers last year on whether he should continue the IRS news round up, he said the answer was overwhelmingly in the affirmative.

“Almost 1,000 of my readers voted in the poll, and 90 percent asked me to continue the daily coverage,” he said. “Several academics and practitioners have praised my coverage and stated that it will provide an important permanent resource when historians write about the scandal.” ...

The effort has not been without controversy in and of itself.

“I will say that I have received more professional flak about this than anything I have done in my 25 years as a tax professor,” Caron said in his email to The College Fix. “My goal throughout the 1,000 days has been to link to every single press report about the scandal – from both the right and the left. Because the right covers the scandal much more than the left, I have linked to many more stories from the right than from the left. Check out Day 883.”

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February 3, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

The IRS Scandal, Days 901-1000

February 3, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, February 2, 2016

The IRS Scandal, Day 999

IRS Logo 2Albuquerque Journal op-ed: IRS Continues to Target Conservative Groups, by Rick Harbaugh (Albuquerque Tea Party):

Lois Lerner, the former head of the IRS, was forced into early retirement because of this issue. Holly Paz also disappeared off the rolls of the IRS over this issue.

The current head of the IRS is under fire for lying that this issue has been resolved.

Why am I bringing up ancient history about the IRS targeting of conservative groups several years ago? After all, those issues have been resolved. Right?

Not hardly!

This month marks the sixth anniversary of the Albuquerque Tea Party’s application to the IRS for a 501c4 tax exempt status. To date, the IRS has still not responded to that application – even though the current head of the IRS has said that the issue has been resolved. Not so. ...

It is way past time for this issue to be addressed. The IRS needs to give a thumbs up or a thumbs down on our request.

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February 2, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Monday, February 1, 2016

The IRS Scandal, Day 998

IRS Logo 2Peter J. Reilly (Forbes), NorCal Tea Party Patriots V IRS - Grassroots Or Astroturf?:

The news about a preliminary victory against the IRS in a suit by not-for-profits broke last week making it Day 986 of the TaxProf’s IRS Scandal.  I didn’t make it into my inbox till last weekend, because the ruling required redaction. Judge Susan Dlott of the United States District for the Southern Division of Ohio ruled in NorCal Tea Party Patriots, et al v IRS that the various groups that believe they were targeted by the IRS will be recognized as a class.

Beginning in 2010, Plaintiffs applied to the IRS for exemption from federal taxation pursuant to the Internal Revenue Code, 26 U.S.C. §§ 501(c)(3) and/or 501(c)(4). Plaintiffs allege that the IRS targeted them and other dissenting groups by segregating their tax-exemption applications because their names included terms such as “Tea Party,” “Patriots,” or “9/12 Project” or because their focus included issues such as government spending. Plaintiffs allege that the IRS subjected the applications from these dissenting groups to delays and increased scrutiny. They further allege, with respect to a certain subset of dissenting groups, that the IRS requested and then inspected information not relevant to the tax-exemption application process. ...

The hundreds of Tea Party and the like groups that were harmed by the IRS slow walking their applications and aggravating them with unnecessary questions are not holding bake sales and spaghetti suppers to pay for lawyers to vindicate them.  Rather a group whose exempt status was not challenged is bankrolling the effort.

As noted the litigation is being funded by Citizens For Self-Governance.  The suit gets prominent play on CSG’s website. One of the things that flashes up is that CSG filed the only class action lawsuit against the federal government to defend the law-abiding citizens who were harassed by the IRS. ...

Sourcewatch working in the opposite direction (from disclosures of donors) has identified a few of the larger donors including $2.5 million from the Vanguard Charitable Endowment Program (a donor advised fund) and $691,916.16 from DonorsTrust. DonorsTrust is essentially a donor advised fund dedicated to supporting conservative causes “… to insure the intent of donors who are dedicated to the ideals of limited government, personal responsibility, and free enterprise.”

So CSG is starting to looking like part of the Kochtopus.  Board member, Eric O’Keefe is reputed to have Koch connections. ...

It seems that CSG is embarking on a program of extremely radical change.  The promoters of the IRS scandal narrative have been talking about the Obama administration, somehow through Bush era appointees, weaponizing the IRS.  A counter argument might be that groups like ALEC and CSG are part of an effort to weaponize philanthropy and they will brook no interference.

At least for the upcoming election cycle, they have pretty well defanged the IRS, but it may be that this litigation is meant to be part of stomping on it and grinding it into the dust.

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February 1, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Sunday, January 31, 2016

The IRS Scandal, Day 997

IRS Logo 2The Daily Caller News Foundation, IRS’s New Ethics Chief Once Ordered Records Be Illegally Destroyed:

The new head of the Internal Revenue Service’s (IRS) ethics office once oversaw the illegal shredding of documents sought by the federal tax agency’s inspector general (IG), and allegedly retaliated on the colleague he believed snitched on him about it.

Stephen Whitlock was named director of the IRS Office of Professional Responsibility (OPR) in August 2015. The OPR supports “effective tax administration by ensuring all tax practitioners, tax-preparers, and other third parties in the tax system adhere to professional standards and follow the law,” according to the agency’s web site.

Whitlock’s chief of operations was, until recently, a former tax enforcement agent who attempted to avoid government payments by declaring bankruptcy and who even lost his official sidearm in a bar fight.

Additionally, in this newly-appointed 7-person leadership team are two of Lois Lerner’s former top deputies, at least one of whom was involved in the targeting of conservative and Tea Party non-profit applicants. Records of those activities also mysteriously disappeared after Congress began investigations in 2013. ...

Currently under Whitlock are section manager Elizabeth Kastenberg and legal analysis chief Garrett Gluth, both of whom previously worked closely with Lois Lerner in the IRS’s nonprofit tax office. Congressional testimony shows that Kastenberg was in charge of reviewing the audits of conservative-leaning nonprofits and was in the room when major decisions on the political audits were made.

Lerner was subsequently held in contempt of Congress after refusing to answer questions from congressional investigators. The IRS said the records showing her actions in the case had mysteriously disappeared.

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January 31, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Saturday, January 30, 2016

The IRS Scandal, Day 996

Friday, January 29, 2016

The IRS Scandal, Day 995

IRS Logo 2The Daily Caller, California AG Threatens Non-Profit Donors' First Amendment Rights:

California Attorney General Kamala Harris is being deluged with requests from non-profit officials to withdraw her “unconstitutional” demand for public disclosure of donor names because it creates a “back door” around the U.S. Supreme Court’s decision in Citizens United.

Harris’ critics claim her demand violates the First Amendment and privacy laws, compromises donor privacy and security, and makes it easier for government officials and agencies to pressure dissenting groups challenging particular policies and programs. ...

“This is a back-door way these liberal Democrats to get around the Citizens United decision,” Mark Fitzgibbons, a Northern Virginia lawyer who represents individuals and businesses against government abuses, told The Daily Caller News Foundation.

Nonprofit groups with a 501(c)4 status already have to submit the names of people who donate more than $5,000 on Schedule B of their annual 990 filings with the Internal Revenue Service (IRS), Fitzgibbons said. When those groups submit tax paperwork at the state level, they redact those names. Harris wants to see those names.

A former FEC commissioner agreed with Fitzgibbons.

“It’s very clear that groups on the left, particularly the Democratic Party, they hated the Citizens United decision,” Hans von Spakovsky, a senior legal fellow with the conservative Heritage Foundation, told TheDCNF.

“Their way around it is to force donor disclosure, so they can scare off donors and dry up the resources these organizations use to get their messages out the way they are entitled to under Citizens United. So I think this is a backdoor way of getting around that case,” said von Spakowsky, who served on the FEC via a recess appointment by President George W. Bush in 2006. ...

“It has a big chilling effect,” von Spakovsky said. “You can pull up all kinds of articles about the Tea Party organizations who were subjected to the scrutiny by Lois Lerner and the IRS, and many of them talk about how their donors started drying up.”

Critics worry that if state officials obtain donor names, it could lead to another scandal like the IRS targeting violations.

“What happens is, you get what the IRS did with Lois Lerner, where they started targeting conservative organizations and conservative donors, and I bet that is what Harris is doing,” von Spakovsky said. “She is one of the most political attorneys general in the country.”

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January 29, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Thursday, January 28, 2016

The IRS Scandal, Day 994

IRS Logo 2The Fiscal Times, Here We Go Again … IRS Destroys Another Hard Drive:

The Internal Revenue Service appears to have violated a court order once again requiring the preservation of evidence needed by investigators looking into questionable practices at the agency. In a case sure to stir up memories of the Lois Lerner investigation, which saw IRS Commissioner John Koskinen dragged before Congress for multiple hearings, the agency destroyed a computer hard drive belonging to an IRS official connected to the subject of a Congressional query.

Earlier this year, the IRS was ordered by a federal judge to preserve documents – including electronic documents – that were possibly related to an ongoing dispute between the agency and Microsoft. ...

The computer hard drive the IRS destroyed belonged to Samuel Maruca, who oversaw the transfer pricing section at the agency’s Large Business and International division. ...

The revelation that the agency had destroyed a hard drive that Congressional investigators viewed as central to an ongoing inquiry infuriated House Oversight and Investigations Committee Chairman Jason Chaffetz (R-Utah).

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January 28, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Wednesday, January 27, 2016

The IRS Scandal, Day 993

IRS Logo 2Citizens Against Government Waste, CAGW Names IRS Commissioner John Koskinen 2015 Porker of the Year:

Today, Citizens Against Government Waste (CAGW) announced the results of its online poll for the 2015 Porker of the Year.  Last year produced a wealth of ludicrous moments in taxpayer gouging and government overreach, but in the end, the “winner” was never in doubt.  The dishonor went to Internal Revenue Service (IRS) Commissioner John Koskinen with 43 percent of the vote.

Commissioner Koskinen’s sins against taxpayers have been well-publicized, which makes his receiving this award all the more appropriate.  CAGW named Koskinen Porker of the Month in August 2015 for his long litany of incompetence and obstruction as head of the reviled agency.  Over the course of several hearings investigating the IRS targeting of conservative groups, Commissioner Koskinen repeatedly stonewalled and mislead members of Congress during the search for Lois Lerner’s emails, while refusing to ensure that IRS targeting would never happen again.  His agency, in the face of a congressional subpoena, erased backup tapes containing as many as 24,000 emails from Lerner.  Worse yet, a July 23, 2015 Government Accountability Office report found that more than two years after the scandal gained national attention, “the IRS has not taken sufficient steps to prevent targeting Americans based on their personal beliefs.”  On October 27, 2015, 19 members of the House Oversight and Government Reform Committee, led by Chairman Jason Chaffetz (R-Utah), introduced a resolution to impeach the commissioner for his conduct during the investigation.  ...

CAGW President Tom Schatz said, “While I did not envy the choice online voters had to make, I believe they picked the most deserving Porker.  Commissioner Koskinen’s extensive and dubious track record of evasive, incompetent, and hostile behavior to taxpayers and their representatives has been unmistakable and unacceptable.  It is long past time that Commissioner Koskinen be replaced with an individual who respects taxpayers and their interests.”

For his dreadful tenure as head of the IRS, CAGW names John Koskinen its 2015 Porker of the Year.

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January 27, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, January 26, 2016

The IRS Scandal, Day 992

IRS Logo 2Forbes:  IRS Lax Controls Enable Targeting Based On Religion + Politics, Claims Report, by Robert W. Wood:

Everyone seems to agree that you should not be audited based on your religion or political beliefs, nor based on which charities you support. Yet there are still questions about how our tax system measures up. Despite all the protestations that there was never any IRS targeting (even some that Republicans made it up), the weak response to the last two years remains disquieting. There seemed to be bonuses and rewards, not discipline or prosecution.

Now, a new government report says lax IRS controls of audit criteria mean the agency is still able to target based on religious and political views. This time, it is a U.S. Government Accountability Office (GAO) report, stating that: “The control deficiencies increase the risk of selecting organizations for audit in an unfair manner — for example, based on an organization’s religious, educational, political, or other views.” Precisely how much such inappropriate criteria are being used is being debated, as the IRS scandal reaches day 982Some Republicans have assumed the worst, while naysayers claim there is still no scandal and still no targeting. ...

The GAO identified what it calls control deficiencies within the IRS system. These flaws open the system to risk that the IRS uses political and religious beliefs as selection criteria for audit. There was already concern about tax exempt organizations, and it could extend to who gets audited too. The GAO concluded that the lack of strong control procedures increases the risk of targeting. The IRS, however, responded in a statement that ... The IRS stresses that audits of tax returns are based on the information contained on the taxpayer’s return and the underlying tax law – nothing else. Politics play no factor in audit selection. ...

This seems to echo The Daily Show appearance by President Obama when he denied any targeting. At the very least, some of the denials have been dissembling. If there was any targeting, we heard, it was rogue IRS employees in Cincinnati. Besides, emails showed there was no directive about targeting. The emails are missing? Hard drives crash and must be quickly recycled. There’s no smidgen of corruption. Cash bonuses? Unrelated.

And the top of the IRS has remained elusive, despite calls to impeach the IRS Chief from Republicans. ...

The IRS is one of most important agencies there is. Our tax system still runs primarily by self-assessment, and taxpayer faith in the system is key. The vast majority of its employees are fair and doing their best. But the agency needs real accountable leadership to get the government’s work done.

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January 26, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Monday, January 25, 2016

The IRS Scandal, Day 991

IRS Logo 2House Ways & Means Committee Press Release, Brady, Roskam Demand Answers After IRS Admits to Destroying More Hard Drives:

After recent news that the Internal Revenue Service (IRS) has destroyed more protected documents, House Ways and Means Committee Chairman Kevin Brady (R-TX) and Oversight Subcommittee Chairman Peter Roskam (R-IL) sent a letter today to IRS Commissioner John Koskinen.

The Chairmen called for information regarding the IRS’s document retention policies and its troubling record of destroying protected records. They also requested documents about the IRS’s alarming admission that it erased a hard drive that contained information relevant to an ongoing lawsuit against the agency:

This is not the first time the IRS has lost key records that were subject to a document hold.  In the course of this Committee’s investigation into the IRS’s targeting of conservative organizations, the IRS disclosed that it had destroyed backup tapes containing thousands of Lois Lerner’s records.  Furthermore, the IRS did not inform Congress of the destruction for several months.  In the Microsoft case, the IRS discovered the loss of records in December 2015, but did not disclose the loss until January 19, 2016.

“In order for taxpayers to trust the IRS, they need to know that the IRS is dealing with them fairly and playing by the rules.  The IRS, however, has demonstrated now at least twice that it is either unwilling or unable to obey basic rules of discovery before federal courts and before Congress.”

Click here to view the letter.

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January 25, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Sunday, January 24, 2016

The IRS Scandal, Day 990

IRS Logo 2Power Line, Federal Bureaucracies: Incompetent, Corrupt, Or Both?:

The saga of Barack Obama’s Internal Revenue Service is almost unbelievable. After “joking” years ago that he would audit his enemies, it turned out that Obama’s minions were in fact delaying or blocking routine applications for 501(c) status by conservative organizations, in order to help the Democratic Party. When Congress tried to investigate, the Obama administration stonewalled at every turn. Evidence mysteriously disappeared and the key player in the scheme, Lois Lerner, pled the Fifth rather than answer Congress’s questions.

Obama’s stonewall strategy has generally worked well. Scandals fade from the front pages when there are no new developments, and if information finally emerges, Democratic Party reporters treat it as old news. So the IRS scandal has pretty much disappeared from public awareness. Nevertheless, via InstaPundit, we learn that yet another IRS computer hard drive has been destroyed. How many is that now? I’ve lost track. ...

Most people probably don’t realize how astonishing this is. I practiced law for 41 years before retiring at the end of last year, all of it doing litigation. Preserving evidence is a routine obligation in lawsuits; it doesn’t depend on a court order. But if a federal judge has ordered a party to preserve a hard drive, as happened here, you can be assured that the hard drive will be protected like the crown jewels. Every company in America understands this: if a court has ordered you to preserve evidence, you guard it with your lawyers’ lives.

And yet, time after time, the IRS has either inadvertently or intentionally destroyed hard drives that courts have ordered them to preserve. In the private sector, this is unthinkable. Private companies obey court orders. They know that if they don’t, millions of dollars in sanctions are likely to result, and executives will lose their jobs. Only in government agencies do we see this kind of irresponsible scofflaw behavior. This is because most bureaucrats have a deep loyalty to the left-wing cause, and there is no accountability. ...

Is this because federal agencies are corrupt, or because they are unusually inept? The familiar adage is that one should never presume malice when incompetence is a sufficient explanation. But here, I think we are going beyond ineptitude. Are federal agencies the only employers who can’t hire people who know how to follow court orders? No. Incompetence may play a part, but it is hard to avoid the conclusion that federal agencies led by left-wing bureaucrats, including but not limited to the IRS, view themselves as above the law and protected by the scofflaw Obama administration, and therefore entitled to thumb their noses at the federal courts.

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January 24, 2016 in IRS News, IRS Scandal | Permalink | Comments (3)

Saturday, January 23, 2016

The IRS Scandal, Day 989

IRS Logo 2Washington Examiner editorial, The Dog Keeps Eating IRS Hard Drives:

In Oscar Wilde's comedy, "The Importance of Being Earnest," Lady Bracknell is indignant to hear that Jack Worthing is an orphan. "To lose one parent, Mr. Worthing, may be regarded as a misfortune; to lose both looks like carelessness."

If only one could enjoy a similar belly laugh over President Obama's IRS repeatedly losing hard drives loaded with data related to scandals at the agency. To lose one might be regarded as suspicious happenstance; to lose two looks like conspiracy.

The most famous case is that of Lois Lerner, whose division became notorious for targeting conservative groups applying for nonprofit status. Her computer hard drive malfunctioned before that scandal broke, around the same time Congress was looking for information on a separate IRS targeting scheme aimed at conservative donors.

One of Lerner's emails to colleagues, which was finally retrieved from data tapes after roughly two years of congressional demands, stated, "No one will ever believe that both your hard drive and mine crashed within a week of each other."

The newest case of IRS hard drive trouble happened last April, but came to light only this month. Law 360, a subscription-based trade publication, reported this week that the IRS has notified the Justice Department that it erased a hard drive after being ordered not to do so by a federal judge.

In this case, the missing communications are those of a former IRS official named Samuel Maruca in the Large Business and International division. He is believed to have been among the senior IRS employees who made the unusual and possibly illegal decision in May 2014 to hire the outside law firm Quinn Emanuel to help conduct an audit of Microsoft Corporation. ...

Another reason Congress is upset about this law firm's $2.2 million contract is that it came at the expense of IRS customer service. Ever since the Lerner scandal, IRS leadership has moaned incessantly about cuts to their budget. In an effort to gain public sympathy, they made a big deal of the fact that the cuts would diminish the agency's capacity to provide taxpayer assistance during spring 2015.

But at the same time, the IRS was using funds to pay executive bonuses and to hire this outside law firm, even though the agency has many qualified tax attorneys and auditors on staff capable of investigating Microsoft

House Oversight & Government Reform Committee Press Release, Chaffetz, Jordan Letter to IRS Commissioner Regarding Destroyed Documents:

Today, House Oversight and Government Reform Committee Chairman Jason Chaffetz (R-UT) and Health Care, Benefits, and Administrative Rules Subcommittee Chairman Jim Jordan (R-OH) sent a letter to Internal Revenue Service (IRS) Commissioner John Koskinen after learning the IRS destroyed documents covered by a federal district court’s preservation order. The preservation order was issued in response to a Freedom of Information Act lawsuit filed by Microsoft relating to the potentially wasteful hiring of an outside law firm by the IRS to assist in auditing Microsoft.

Key excerpts from the letter:

“The destruction of evidence subject to preservation orders and subpoenas has been an ongoing problem under your leadership at the IRS. …

“It is stunning to see that the IRS still does not take reasonable care to preserve documents that it is legally required to protect. …

 “It is now apparent that the IRS has not solved the management problems that have led once again to the destruction of documents in contravention of its legal obligations.”

The letter requests documents from the IRS so that the Committee can better understand the IRS’s policies.

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January 23, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Friday, January 22, 2016

The IRS Scandal, Day 988

IRS Logo 2Senate Finance Committee Press Release, Hatch, Wyden Press IRS on Record Keeping Practices; Tax Agency Erased Hard Drive Despite Litigation Hold:

Senate Finance Committee Chairman Orrin Hatch (R-Utah) and Ranking Member Ron Wyden (R-Ore.) today sent a letter to Internal Revenue Commissioner (IRS) John Koskinen asking for answers regarding the agency’s recordkeeping practices after it was revealed the agency erased a former employee’s hard drive and destroyed electronic records subject to a litigation hold and potentially responsive to a  Freedom of Information Act (FOIA) request.  The documents related to the agency’s use of outside law firms to conduct examinations of taxpayers.   
 
“This disclosure comes months after the IRS deleted electronic evidence related to a Finance Committee investigation,” Hatch and Wyden wrote. “During the Committee’s bipartisan investigation into the treatment of tax-exempt organizations, the IRS accidentally destroyed 422 back-up tapes and up to 24,000 emails subject to our document requests. The IRS’s missteps in preserving documents – whether they be the subject of a congressional investigation, court order, or FOIA request – are concerning, and necessitate further oversight into the agency’s document preservation practices."

The text of the letter is below. 

Robert W. Wood (Forbes), IRS Wipes Another Hard Drive Defying Court Order...But You Must Keep Tax Records:

Talk about Déjà vu. Despite a court order to preserve documents, the IRS wiped the hard drive of an important IRS official, Mr. Samuel Maruca. Controversially, Mr. Maruca helped the IRS hire Quinn Emanuel, an outside law firm tasked with pursuing Microsoft. Hiring outsiders at over $1,000 an hour (!) angered Senate Finance Committee Chairman Orrin Hatch, who wrote a letter to the IRS complaining about strange deal and the $2.2 million fee.

Sen. Hatch pointed out that this was work the IRS and Justice Department should do. A federal judge was also troubled. And when the questions were too probing, oops, the hard drive was wiped. Sound familiar? Meanwhile, of course, you have to keep all your receipts and tax records! Imagine if the IRS found out that you deleted emails or destroyed records? The fact that the IRS–accidentally–wiped Mr. Maruca’s hard drive reminds everyone of Lois Lerner, the key IRS official who refused to testify about targeting conservatives. ...

It was no surprise that the Justice Department wrote a letter to members of Congress announcing that Lois Lerner will face no criminal charges. What about emails sent from Ms. Lerner’s dog’s email account? The dog is safe too. The DOJ said there was no evidence that any IRS official acted based on political, discriminatory, corrupt, or other inappropriate motives.

Let’s see, is the IRS likely to accept similar taxpayer arguments? 

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January 22, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Thursday, January 21, 2016

The IRS Scandal, Day 987

IRS Logo 2Americans for Tax Reform, IRS Erases Hard Drive Despite Court Order:

The IRS erased a hard drive belonging to a former top employee involved in the agency’s controversial, taxpayer-funded hiring of elite trial law firm Quinn Emanuel.

Although there was a court preservation order on all documents related to the IRS hiring of the outside firm, the hard drive was erased anyway. The order was borne of a Freedom of Information Act (FOIA) request submitted by Microsoft.

Even though the white shoe law firm has zero experience handling sensitive tax data, taxpayers have been footing bills of over $1,000 per hour for its services.

The deleted hard drive belonged to the agency’s former director of transfer pricing operations at the IRS Large Business and International Division, likely a key employee involved in the controversy. It is not known if there is any way to recover documents belonging to the employee. ...

This is not the first time the agency has failed to preserve key information. The IRS also “accidentally” destroyed the hard drive belonging to Lois Lerner during investigations into the targeting of conservative groups. As many as 24,000 emails were lost forever when 422 backup tapes were wiped clean despite an agency-wide preservation order and congressional subpoena.

In the Lerner case, the IRS failed to take simple steps to ensure compliance with the order, according to a report by the House Oversight Committee.

Now, it appears that important information has once again disappeared because of IRS corruption, incompetence, or both.

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January 21, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Wednesday, January 20, 2016

The IRS Scandal, Day 986

IRS Logo 2Legal Insurrection, Tea Party Class Action Against IRS Abuse May Proceed:

Tea Party groups won a major victory last week, when Judge Susan J. Dlott of the United States District Court for the Southern District of Ohio certified a class of Tea Party organizations that allege the IRS intentionally delayed their applications for preferential tax treatment based on their political viewpoints. ...

Having survived the hazardous class certification step, the Plaintiffs will now get substantive discovery from the IRS and from third parties. ...

Ms. Lerner’s deposition, assuming Plaintiffs are able to take it, will be a blockbuster.  Ms. Lerner, of course, was the senior-most identified IRS official with knowledge and apparent participation in slow-rolling IRS applications.  She would be entitled to assert her 5th Amendment right against self-incrimination, but only for questions that could lead to criminal penalties against her.

A subpoena to appear for deposition can also include a request for documents.  This is called a subpoena duces tecum.  In a very limited set of circumstances, production of documents can raise Fifth Amendment issues, but it is rare and not obviously applicable here.  This means that any email correspondence to or from Ms. Lerner regarding Tea Party groups should be discoverable.

In addition, a jury is entitled to make a negative inference against a party asserting his or her Fifth Amendment rights in a civil suit.  That is, Ms. Lerner or anyone else appearing on behalf of the IRS could assert his or her Fifth Amendment rights, but the jury would be entitled to assume he or she is doing so because the answer would be incriminating.  If the IRS refused to answer the question “did you delay Tea Party applications?” the jury would be entitled to infer that the deponent or witness is refusing to answer the question because the IRS did in fact delay Tea Party applications.

In a criminal case, the jury is forbidden from drawing any negative inference from a witness’s assertion of his or her Fifth Amendment rights.

In short, Ms. Lerner can repeat her despicable performance before Congress, and continue to stonewall the search for what exactly happened at the IRS, why, and on who’s orders, but she may well suffer personal repercussions now that she was able to evade in Congress’s hearings (with the assistance of a complacent and complicit Department of Justice).

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January 20, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Tuesday, January 19, 2016

The IRS Scandal, Day 985

IRS Logo 2Investor's Business Daily editorial, IRS Scandal: It's The Tax Collector's Turn To Be A Defendant:

Justice:  It's not often that the victims of IRS abuse find satisfaction, but the Tea Party groups mistreated by the tax collector will get a shot. Maybe next will be an audit of the IRS — which apparently hasn't changed its ways.

On Tuesday, Day 978 of the unresolved IRS scandal, a federal judge granted class-action status to as many as 300 conservative groups that have been affected by the agency's practice of unduly scrutinizing small-government organizations that sought tax-exempt status but which the IRS saw as dangerous dissidents.

U.S. District Court Judge Susan Dlott's ruling also opens the door for other groups who believe they have been harmed by the IRS to join the suit. We hope the piling on is heavy.

Maybe legal trouble from the suit will teach the IRS, because it sure seems it hasn't learned so far. Americans for Tax Reform, citing Government Accountability Office reports, suggested Wednesday that the "IRS may still be targeting conservative groups."

Seems the culture that allowed the IRS to target right-of-center groups for political reasons — effectively rendering them inoperative — has never been fixed, despite promises from the president himself.

"The control deficiencies increase the risk of selecting organizations for audit in an unfair manner — for example, based on an organization's religious, educational, political or other views," says the GAO.

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January 19, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Monday, January 18, 2016

The IRS Scandal, Day 984

IRS Logo 2From reader Henry Schaffer:

I was going to suggest capping it at 1,000 days.

Until I read Day 983.

Regardless of how the suit turns out, covering it, and similar ones, provides relevant material I'm unlikely to get from other sources. Since legal procedures advance slowly — it certainly will be well over 1,000 days till there is nothing more to report. 10,000 days?

For more on my continuation of coverage of the IRS Scandal, see here, here, here, and here.

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January 18, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Sunday, January 17, 2016

The IRS Scandal, Day 983

IRS Logo 2Press Release, U.S. District Court Certifies Class Action Against the IRS by Tea Party Groups:

Graves Garrett LLC is pleased to announce that the U.S. District Court for the Southern District of Ohio has certified the class action brought by their clients against the Internal Revenue Service. The plaintiff Tea Party groups sued the IRS for violating their First Amendment rights by discriminating and retaliating against them during the tax-exempt application process. The groups also seek damages against the IRS for violating a taxpayer privacy statute. With certification of the class, the representative groups now assert claims on behalf of at least 200 other groups that the IRS targeted.

“This decision represents a significant step forward for obtaining relief for Tea Party groups that were identified, segregated, and harassed by the IRS solely because of their viewpoints,” said Edward Greim, who with Todd Graves and Dane Martin served as counsel. “It is also the culmination of nearly two years of class discovery into the scope and harm of the IRS’s conduct, including ten sworn depositions of the IRS and its agents in Washington, D.C. and Cincinnati, Ohio, and the IRS’s production of thousands of pages of documents.” In briefs, the Tea Party groups cited to evidence showing that the IRS’s conduct was not benign, but instead an orchestrated effort designed to hinder the effectiveness of Tea Party groups, prevent their access to the courts, and forcefully disclose their private donor information.

The lawsuit, NorCal Tea Party Patriots v. Internal Revenue Service, was the first lawsuit filed against the IRS relating to its handling of applications for tax-exemption by Tea Party groups. The case will now proceed to merits discovery and trial concerning liability and damages.

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January 17, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Saturday, January 16, 2016

The IRS Scandal, Day 982

IRS Logo 2IRS Statement:

The IRS stresses that audits of tax returns are based on the information contained on the taxpayer’s return and the underlying tax law – nothing else. Politics play no factor in audit selection. There is nothing in the GAO reports that contradict that statement. GAO did not identify any instances where the selection of a case was considered inappropriate or unfair. The audit process is handled by career, non-partisan civil servants, and we have processes in place to safeguard the exam process.

We generally agree with the recommendations in the GAO report and will take a number of steps to further improve our processes. The IRS has procedures in place that adhere to internal control standards, which help ensure fairness and integrity in the return selection process. No individual can control which tax returns are selected for audit. As required by law, we have a number of safeguards in place to restrict access to our systems to only authorized users. We emphasize the importance of fairness and integrity to fulfilling our responsibilities as the nation’s revenue agency.

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January 16, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Friday, January 15, 2016

The IRS Scandal, Day 981

IRS Logo 2House Ways & Means Committee press release, Ways and Means Chairmen Call On IRS to Quickly Implement GAO Recommendations to Protect Taxpayers:

Today, the Government Accountability Office (GAO) released two new reports regarding serious flaws in the Internal Revenue Service’s (IRS) audit selection processes. GAO confirmed that these flaws mean the IRS could continue to unfairly target American taxpayers based on their political beliefs and other First Amendment protected views.

House Ways and Means Chairman Kevin Brady (R-TX) and Subcommittee on Oversight Chairman Peter Roskam (R-IL) expressed concerns about GAO’s findings and called on the IRS to immediately take action.

“In December, Congress passed into law regulations to ensure that the IRS can no longer target American taxpayers for their political beliefs,” said Chairman Brady. “GAO has now exposed serious weaknesses in the IRS’s auditing process and confirmed that Americans remain at risk of political targeting.  Ways and Means members will hold the IRS accountable for quickly implementing GAO’s recommendations and finally treating all American taxpayers fairly.”

“We already knew the IRS was targeting political opponents of the Administration when vetting groups applying for tax-exempt status. Now we have reports from GAO raising concerns about the audit selection process throughout IRS operations. The American people deserve better. We must do more to ensure the IRS treats all Americans fairly, holds employees responsible for these abuses accountable, and implements procedures to prevent this abuse from ever happening again,” said Subcommittee Chairman Roskam

BACKGROUND ON THE REPORTS

After Committee members learned that the IRS had targeted conservative groups applying for tax-exempt status, they were concerned that this could be happening in other divisions within the agency, particularly audit selection.

As a result, the Committee asked the GAO to review each business unit within the IRS to determine whether there were protections in place to ensure that audits are selected fairly and without bias.

On July 23, 2015, GAO released its first report on the Tax Exempt/Government Entities division and the Oversight Subcommittee held a hearing on this report.

Today’s GAO reports confirm serious problems at the Small Business/Self Employed unit and the Wage & Investment unit.

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January 15, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Thursday, January 14, 2016

The IRS Scandal, Day 980

IRS Logo 2Washington Free Beacon, Report: IRS May Still Be Targeting Conservative Organizations for Audit:

The Internal Revenue Service may still be unfairly targeting conservative organizations for audit due to flaws within their interior controls, Americans for Tax Reform reported Wednesday.

A Government Accountability Office audit found that because of control deficiencies within the IRS system, there is higher risk for the government agency to select organizations based on political and religious beliefs for audit:

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January 14, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Wednesday, January 13, 2016

The IRS Scandal, Day 979

IRS Logo 2Wall Street Journal editorial, An IRS Class Action: A Judge Certifies That a Suit For Some 200 Groups Can Proceed:

The case against the IRS for targeting conservatives isn’t over after all. On Tuesday a federal judge in Ohio certified a class-action lawsuit against the IRS by conservative groups whose applications for tax-exempt status were slow-rolled between 2010 and 2013.

The lawsuit by the  NorCal Tea Party Patriots was filed in May 2013, shortly after the targeting came to light. It will represent more than 200 groups. In July 2014 Judge Susan Dlott dismissed parts of the lawsuit but allowed key portions to go forward. Those include claims that the IRS engaged in retaliation and viewpoint discrimination in violation of the First Amendment, and that the tax agency violated Section 6103 of the U.S. Code, which protects confidential taxpayer return information.

A class action isn’t our favorite legal method, but it fits this case because it appears the IRS targeted groups based on common criteria and treated them similarly—putting them through unprecedented scrutiny and delay. Judge Dlott, a Bill Clinton appointee, has become frustrated by IRS and Justice Department stonewalling. ...

The law firm representing the tax-exempt groups, Kansas City-based Graves Garrett, will now move on to discovery on the merits, with the ability to ask IRS officials what they did and why. The Obama Administration can appeal the class certification and no doubt it will try. But there’s still plenty of time to find out what Justice and the IRS are so committed to hide.

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January 13, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, January 12, 2016

The IRS Scandal, Day 978

IRS Logo 2Rep. Jim Jordan Press Release, Jordan Questions Justice Department Assistant Attorney General About IRS Scandal:

Congressman Jim Jordan (R-Ohio) questioned Assistant Attorney General Peter Kadzik from the U.S. Department of Justice during a hearing today before the House Committee on Oversight and Government Reform about the rate and quality of document production by federal agencies, and about the IRS targeting scandal.

Rep. Jordan questioned Kadzik about Justice Department delays in delivering requested documents to the Oversight committee, and also about the Justice Department’s investigation of the IRS and its decision to not prosecute anyone for its targeting of conservative organizations.

During his questioning, Rep. Jordan expressed frustration over the Justice Department’s failure to provide documents to the Oversight committee, even though the department’s investigation of the IRS has concluded. The Justice Department refused to provide case files related to its investigation, instead pointing to a congressional briefing on the subject planned for next week.

Rep. Jordan: “We … sent you a letter on December 1, the Chairman and I, and we requested in that letter all documents that pertain to the [IRS] investigation and we have yet to receive a single document. Why is that?” 

Kadzik: “We also received your letter yesterday requesting the file.” 

Jordan: “That’s a follow-up letter. We sent the first letter over a month ago.”

Kadzik: I understand, but producing an entire investigation or prosecution file presents particular issues with respect to our law enforcement sensitivities and prosecutorial responsibilities.”

Jordan: “We’ve heard that for three-and-a-half years. I’ve had two different FBI directors, I’ve had Mr. Holder, assistant Attorney General Mr. Cole, give me that exact same answer for three-and-a-half years. And their answer added one other word: ‘ongoing’ investigation. And now the investigation is over. And it’s been over at least since October 23 according to what you just testified and according to the eight-page letter you sent us on October 23. And now you’re telling us you can’t give us any documents and you’re just giving us the same answer?”

Federal News Radio, Oversight Committee Critical of Agencies’ Effort to Fill Document Requests:

How many people with visas have overstayed their time in the United States? What information was included in more than 10,000 files related to the Office of Personnel Management data breach? Is there a paper trail leading to the decision not to pursue criminal charges against IRS officials for targeting conservative groups?

Those are questions members of the House Committee on Oversight and Government Reform have been asking — in some cases — for more than a year, but a lack of documentation from federal agencies have prevented complete answers from being given.

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January 12, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Monday, January 11, 2016

The IRS Scandal, Day 977

IRS Logo 2Government Executive, Lawmaker: Every Agency Could Easily Find at Least 5% of Fat to Trim:

The top oversight role for Congress in relation to federal agencies is rooting out the people doing dumb things, a House Republican said on Thursday.

Rep. Jason Chaffetz, R-Utah, chairman of the House Oversight and Government Reform Committee, said at an event hosted by the Brookings Institution the government tries to do too many things while rewarding its employees with too many bonuses. ...

He noted that several agency leaders have testified to his committee that they are struggling to fire their worst employees and would like more power to do so.

For one federal official, Chaffetz is attempting to take the firing into his own hands. The watchdog leader introduced articles of impeachment against Internal Revenue Service Commissioner John Koskinen in October, and has been working “behind the scenes” to move that process forward.

“Mr. Koskinen better lawyer up,” Chaffetz said. “It’s about to get ugly.”

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January 11, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Sunday, January 10, 2016

The IRS Scandal, Day 976

IRS Logo 2Boston Herald: Citizens Are No Longer Equal Under Obama, by Adriana Cohen:

Disgraced former IRS chief Lois Lerner is enjoying her “Get Out of Jail Free” card care of the Obama administration.

Who’s surprised she won’t face charges given the fact that most Americans believe the White House was in on allegations the IRS targeted Tea Party and conservative groups 
applying for nonprofit status?

It gets worse. During the “investigation,” IRS head John Koskinen stonewalled big time, refusing to provide Congress with information including Lerner’s “missing” emails. Sound 
familiar?

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January 10, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Saturday, January 9, 2016

The IRS Scandal, Day 975

IRS Logo 2Joe Kristan (Tax Update Blog), Taxpayer Advocate: Koskinen Demoralizes IRS, IRS Breaks Law. Koskinen Replies: Give Me More Money!:

It’s getting bad when the IRS won’t even talk to its own Taxpayer Advocate. Nina Olson, the head of the IRS Taxpayer Advocate office, ripped the state of the IRS and Commissioner Koskinen’s management in a speech to the AICPA annual tax conference yesterday, Tax Analysts reports  (my emphasis, $link):

Olson said that IRS Commissioner John Koskinen’s oft-repeated mantra — that instead of doing more with less in budget-constrained times, the agency was going to do less with less — was demoralizing the IRS workforce and further eroding customer service.

“What my local taxpayer advocates are telling me is that they have never seen so much resistance to their own work” from the IRS, Olson said. She recounted the story of a local TAS employee who asked the IRS in October to release a taxpayer’s refund that had been held up since February. “The response that [TAS] got back was . . . ‘We have thousands of these cases; get in line,’” Olson said, adding that it was the first time she’d heard such a response from the IRS in her 15 years at the TAS.

The feeling at the IRS that there are some jobs it won’t do because Congress didn’t provide funding, Olson said, “works its way down to the employees, so that they feel like, ‘Well, I’m going to do just this, and I’ve got so much work that I’m only going to be able to get this done.'” ...

Ms. Olson says the IRS mistreatment of the TAS office has risen to the level of lawbreaking:

Olson also protested that the IRS is refusing to grant her and her staff access to taxpayers’ administrative files unless they sign agreements barring them from sharing any of the files’ information, even with the taxpayer. Olson noted that she is bound by the same privacy laws as other IRS employees and said she is entitled to access under section 6103.

“My position is that the IRS in those instances has violated the law,” Olson said. “And I do not say that lightly.”

You have problems with the IRS breaking the law? Well, to coin a phrase, get in line.

Commissioner Koskinen responded later in a speech to the same group, in which he did what he always does: ask for more money. “Most of Koskinen’s prepared remarks at the conference were a repeat of his concerns about the IRS’s deteriorating budget position.”

But this Commissioner will never get a budget increase out of this Congress. His glib, arrogant and obstructionist response to the Tea Party scandal, full of denials of the existence of information that subsequently surfaced, has destroyed his credibility. There’s no hope that the IRS will get improved funding as long as he is around to spend it.

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January 9, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Friday, January 8, 2016

The IRS Scandal, Day 974

IRS Logo 2Wall Street Journal editorial, An IRS Retreat on Charity: The Agency Pulls its Proposal to Sweep Up Small-Donor Records:

It’s not every day we can celebrate a less intrusive Internal Revenue Service. But charities and the people who support them will be happy to learn that the IRS has withdrawn its proposal to collect more donor information, including Social Security numbers.

In September the IRS and Treasury Department proposed to give charities the “option” of filing detailed reports on everyone who contributes more than $250 to a charity. The IRS was calling it “voluntary,” which in government means the agency hasn’t gotten around to requiring it yet. We reported on the legitimate fear that new reporting would be required of every nonprofit—including the conservative organizations that the IRS helped muzzle in the 2012 presidential election. [More here, here, here, and here.]

Amazingly enough, in this case the IRS appears to have listened to concerns from the taxpayers who pay their salaries. On Thursday the IRS said it is withdrawing its proposal after receiving “a substantial number of public comments.” Many of the comments “questioned the need for donee reporting, and many comments expressed significant concerns about donee organizations collecting and maintaining taxpayer identification numbers for purposes of the specific-use information return,” said the IRS. The legitimate anger of average citizens was amplified by stalwart IRS watchdogs like Rep. Jim Jordan (R., Ohio) on Capitol Hill.

One year after Republicans took control of the Congress, and one year before President Obama leaves the White House, the pendulum is beginning to swing against IRS abuse of taxpayers. Coming on the heels of other reforms in the year-end tax and spending bills—including a ban on new IRS rules limiting political activity—Thursday’s news is reason to cheer.

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January 8, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Thursday, January 7, 2016

The IRS Scandal, Day 973

IRS Logo 2Philip T. Hackney (LSU), Should the IRS Never 'Target' Taxpayers? An Examination of the IRS Tea Party Affair, 49 Val. U. L. Rev. 453 (2015):

In 2013, the Treasury Inspector General for Tax Administration faulted the Internal Revenue Service for the appearance of impartiality because it used names and policy positions such as “Tea Party” and conservative ideology to pick applications for tax-exempt status for greater scrutiny. The Inspector General's review came after members of Congress accused the Service of "targeting" conservative organizations. This Article finds the Inspector General's claim lacks a firm foundation. The use of names to select organizations for closer review fits well within the discretionary space that both Congress and courts provide to the Service to collect revenue. However, a narrower legal and ethical claim is supportable: where an enforcement choice impinges on a fundamental constitutional right the Service should exercise a higher degree of care to ensure that its screening choices do not appear biased in an unconstitutional manner. Thus, this review finds the Inspector General's primary claim regarding it being inappropriate to use names to screen applications to be incorrect. However, it finds that the Service violated an ethical norm because it failed to bring a high level of care to a matter that at least impinged on a fundamental Constitutional right. The Article recommends that the Service continue using names to screen applications for tax-exempt status. However, the Article suggests the Service implement procedures to document an unbiased process when evaluating applications that raise questions of a fundamental Constitutional nature.

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January 7, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Wednesday, January 6, 2016

The IRS Scandal, Day 972

IRS Logo 2Russ Fox (Taxable Talk), 2015 Tax Offender of the Year:

Once more it’s time to award that prestigious award, the 2015 Tax Offender of the Year. The winner of this award must do more than just cheat on his or her taxes. It has to be special; it really needs to be a Bozo-like action or actions. Unfortunately, there were plenty of nominations. ...

Our final runner up was IRS Commissioner John Koskinen. While I applaud the lead he appears to now be taking on identity theft, Commissioner Koskinen’s reaction to the IRS scandal has been ridiculous. I agree with Joe Kristan’s comment earlier this year:

His glib, arrogant and obstructionist response to the Tea Party scandal, full of denials of the existence of information that subsequently surfaced, has destroyed his credibility. There’s no hope that the IRS will get improved funding as long as he is around to spend it.

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January 6, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Tuesday, January 5, 2016

The IRS Scandal, Day 971

IRS Logo 2Washington Post:  Goodbye to 2015, a Year of Absurdity and Overreach, by George F. Will:

E.B. White reportedly said “the most beautiful sound in America” is “the tinkle of ice at twilight.” In 2015’s twilight, you had to fortify yourself with something 90 proof as you remember that year in which: ...

The Internal Revenue Service persecutes conservative advocacy groups but does not prosecute IRS employees who are tax cheats: An audit revealed that over the past decade, the IRS fired only 400 of the 1,580 employees who deliberately violated tax laws, rather than the 100 percent required by law. ...

This list of 2015 ludicrousness could be lengthened indefinitely, but enough already. The common thread is the collapse of judgment in, and the infantilization of society by, government.

Happier New Year.

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January 5, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Monday, January 4, 2016

The IRS Scandal, Day 970

IRS Logo 2American Center for Law and Justice, ACLJ Forces IRS to Comply with the Law in Major Federal Lawsuit:

The ACLJ has secured an important victory in our Freedom of Information Act (FOIA) case against the IRS on behalf of Citizens for a Strong New Hampshire. After a year of litigation, which followed over four months of waiting for the IRS to respond to its FOIA request, we finally succeeded in compelling the IRS to comply with its obligations under federal law.

As we have previously written, Citizens for a Strong New Hampshire issued a FOIA request to the IRS in June 2014 seeking communications between two New Hampshire legislators and certain IRS officials, including Lois Lerner, the IRS’s Exempt Organizations Director who was at the center of the IRS Tea Party targeting scandal. Rather than search for and provide responsive documents within the statutory time period, the IRS sat on the request for months as the November 2014 elections approached. This delay blatantly flouted the very purpose of the Freedom of Information Act, as it prevented Citizens for a Strong New Hampshire from knowing whether these legislators had engaged in any communications with the IRS in which the New Hampshire public might be interested—and, if so, disseminating that information to voters prior to the November elections.

In order to get a response from the IRS, we filed a federal lawsuit on behalf of Citizens for a Strong New Hampshire. While the IRS did perform a search and provide some responsive documents shortly thereafter, it was not at all clear that the agency had searched all sources reasonably likely to contain responsive records or that the records it refused to produce were properly withheld. After raising these issues with the court, we succeeded in forcing the IRS to provide the withheld documents to the court—essentially a means of providing the necessary assurances that the IRS had not withheld documents to which the organizations enjoyed a right of access. We also obtained an order from the court explaining that the IRS had failed to demonstrate the reasonableness (i.e., thoroughness) of its search for documents.

The upshot of the court’s order was that we would be heading to trial—a highly unusual occurrence in FOIA cases. On its own initiative, however, obviously realizing that its prior search was deficient, the IRS undertook two additional searches and provided the necessary information to Citizens for a Strong New Hampshire (and the court) to demonstrate the appropriateness of these new searches.

In short, the IRS finally decided to fully comply with its legal obligations under FOIA, providing Citizens for a Strong New Hampshire with the relief it had been seeking for nearly a year and a half.

We are pleased to have obtained this positive outcome for Citizens for a Strong New Hampshire and will continue to pursue litigation in federal appeals court on behalf of the numerous nonprofit organizations that are still seeking relief from the IRS’s unlawful targeting of conservative groups.

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January 4, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Sunday, January 3, 2016

The IRS Scandal, Day 969

IRS Logo 2Washington Examiner op-ed:  Congress Moves to Protect Free Speech From Bureaucratic Assault, by Luke Wachob (Center for Competitive Politics):

Tucked away in the 2,000 page omnibus tax and spending deal to fund the government is an early Christmas gift to proponents of free speech.

Seven provisions of the deal will help encourage more speech or put a halt to various efforts to increase regulation of political speech via the executive branch. After years of losing at the Supreme Court, in Congress and at the Federal Election Commission, those who wish to limit speech under the guise of campaign finance "reform" have increasingly focused their efforts on pressuring administrative agencies to achieve through regulation what could not be won via legislation. Through these seven provisions, Congress put a stop to much of this nonsense.

The riders may seem relatively unassuming, but they are in fact a major victory. Threats to speech increasingly originate from the executive branch, most prominently during the IRS targeting scandal. Years of urging from "reform" groups and thin-skinned politicians duped the IRS into playing the role of speech police, with predictably disastrous results. The agency discriminated against conservative groups applying for tax-exempt status on the basis of their names and political beliefs, with no regard for the First Amendment.

Congress sought to prevent such abuse in the future; the omnibus prohibits the agency from working on new speech regulations over the coming year.

The IRS was not alone, however, in being pushed outside its duties to regulate speech. ...

[The omnibus provisions] further prohibit the president from issuing an executive order requiring companies to report their federal election campaign donations, which are already publicly disclosed, as part of the process for bidding on government contracts; clarify that the IRS may not attempt to stifle speech by collecting the Gift Tax on donations to organizations advocating for social change; forbid IRS employees from conducting government business on personal email addresses; and require that employees be fired if they discriminate against groups or individuals on the basis of political belief.

Several of these provisions — most pointedly the requirement that government business be conducted over government email — are clearly a response to the actions of Lois Lerner, the IRS official at the center of the scandal whose use of a personal email address resulted in missing emails that frustrated investigators. But the IRS's hostility towards free speech did not end with Lerner's resignation. Instead, it sought to make restrictive speech rules official IRS policy, proposing harsh new rules that would have silenced many nonprofit advocacy groups during election years.

Those rules were withdrawn in the face of overwhelming, bipartisan opposition, but the IRS promised to try again and potentially apply the new rules to an even broader swath of groups. By denying funding for the development of new rules, Congress ensures that if new rules are written, it will be by the next president.

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January 3, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Saturday, January 2, 2016

The IRS Scandal, Day 968

IRS Logo 2Phil Kerpen (President, American Commitment), The Free Speech Silver Lining in the Budget Cloud:

The massive omnibus package of tax and spending changes recently passed by Congress was mostly a defeat for free-market economics. ... But the deal is actually a triumph in the single most important policy area: the First Amendment. ...

In 2012, Democrats won a national election by turning the IRS into a political intimidation agency, systematically destroying the vitality of the tea party movement that delivered a conservative wave in 2010. Given the level of scrutiny the agency is now under as a consequence, you might think there was no way they could use the same playbook to tilt the playing field for 2016. But the IRS was actually poised to propose official rules that would have been facially neutral but would have had the effect of silencing precisely the same groups that were sidelined by targeting in 2012.

This deal takes that risk off the table by expressly prohibiting such rules.

The deal also includes a comprehensive package of IRS reforms authored by Rep. Peter Roskam of Illinois that enjoy broad support but that until now had failed many attempts to be attached to a legislative vehicle that would be signed by the president.

That package includes a prohibition on IRS employees using private email address, as we know Lois Lerner and her coconspirators often did when orchestrating targeting, a mechanism for nonprofit groups to challenge IRS determinations in court so that they cannot be held indefinitely in limbo, and a provision requiring any IRS employee engaged in political targeting to be fired. (In the recent scandal nobody was: Even Lois Lerner was allowed to retire with her full pension.)

Most significantly, Roskam's reform package bans the IRS from trying to assess gift tax on contributions to nonprofit organizations, which they infamously attempted against conservative donors.

In 2011, donors to conservative groups were told that despite decades of clear legal understanding and practice, they could be found liable for gift tax on their contributions. While the IRS never did impose such a tax, the threatening letters they sent likely had a chilling effect on contributions to conservative groups, which was the point.

Taxing contributions to nonprofits would do nothing to advance the intended purpose of the gift tax — enforcing compliance with the federal estate tax — and would serve to dramatically diminish the ability of nonprofit groups to educate and mobilize citizens in the public policy process. Yet some liberal advocates continued to praise these abusive letters and even call for more of them to be issued.

Now donors have an ironclad legal guarantee that their contributions to nonprofit groups will not be subject to threatening IRS audit letters and arbitrary taxation.

The bottom line is that on a wide range of issues the omnibus deal is deeply disappointing, but the First Amendment provisions are an enormous silver lining because they mean activists will not be IRSed in 2016 the way they were in 2012. And that assures conservatives an honest opportunity to effectively engage the political process and come back to win on all the other issues.

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January 2, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Friday, January 1, 2016

The IRS Scandal, Day 967

IRS Logo 2The Blaze op-ed:  Despite New Limits, The IRS is Not Yet Under Control, by Andrew F. Quinlan (President, Center for Freedom and Prosperity):

The massive omnibus spending package passed by Congress included new limits on the IRS, in particular on the agency’s ability to harass political non-profits. Congress is not done, however, as an ongoing dispute between the tax collection agency and Microsoft demonstrates that the IRS continues to operate outside the bounds of the law.

The IRS is in the midst of an almost nine-year audit of Microsoft. That’s unusual given the three-year statutory limit for audits. Sometimes they can be extended when necessary, but the IRS has asked and been granted permission by Microsoft to do so eight times already. Most notable, however, is the fact that Microsoft just wants to pay its bill and move on, but the IRS has refused to submit one. That might be due to the fact that the never-ending audit is proving quite profitable for a powerful, politically-connected law firm.

Again acting outside normal procedure, the IRS brought in lawyers from Quinn Emanuel Urquhart & Sullivan, a major contributor to Barack Obama and the Democrat Party. This despite the fact that the IRS already employs a veritable army of lawyers and accountants with more relevant expertise.

The use of outside lawyers raises serious concerns regarding taxpayer privacy and potential conflicts of interest. Namely, that a $1,000-per-hour firm is going to be less motivated to resolve a case quickly and efficiently than the taxpayers footing their bill.

The $2.2 million contract for Quinn Emanuel also comes at a time when the IRS is claiming poverty and a lack of sufficient funds for assisting taxpayers.

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January 1, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Thursday, December 31, 2015

The IRS Scandal, Day 966

IRS Logo 2Following up on my previous coverage (here, here, and here):  Breitbart, Koch Brothers May Have to Disclose Donor List to California:

The San Francisco Ninth Circuit Court of Appeals overruled a U.S. District Court judge to give authority to California Attorney General Kamala Harris to obtain the donor list from the Koch Brothers-backed Americans for Prosperity Foundation.  [Americans for Prosperity v. Harris, No.  15-55446 (9th Cir. Dec. 29, 2015)].

The Americans for Prosperity Foundation was founded by Charles and David Koch as a national foundation in 2004 and registered in all states, including California, as a nonprofit organization promoting limited government and free markets by educating individuals around the country about practical ways to improve their circumstances. It became one of the most influential American conservative political advocacy organizations after the 2009 inauguration of President Barack Obama. ...

But AFP became the number one target of elected Democrat officials and their constituencies for the role the organization played in breaking Democrat majority control of the House of Representatives in 2010 and the U.S. Senate in 2014.

AFP has complied with the filing requirements with the Internal Revenue Service each year for over a decade and disclosed its nationwide list of major donors’ names and addresses on tax form “Schedule B” for a nonprofit charity. Federal criminal statutes protect the constitutional right to privacy by forbidding the IRS to make any unauthorized disclosure of charity donors to a 501(c)4 non-profit.

For a decade, California accepted AFP’s charitable registrations and renewals without need for filing Schedule Bs. But in 20014, California Attorney General and candidate for U.S. Senate Kamala Harris suddenly began demanding Schedule Bs under threat of draconian sanctions, such as personal fines against a charity’s officers. ...

AFP in February was granted a preliminary injunction protecting against disclosure of the Foundation’s Schedule B by the district court after considering evidence of threats, violence, and harassment directed at the Foundation, as attested to in sworn affidavits and confirmed by accompanying documentation.

The court stated:“Public disclosure of [the Foundation’s] Schedule B, and thus the names and addresses of its donors, would open those persons up to harassment, retaliation, and chilling of free speech.” It added: “These negative consequences would objectively work to chill protected First Amendment speech.”

But a three-judge Ninth Circuit Court of Appeals panel overturned the lower court judge, allowing California Attorney General Kamala Harris access to information from the Americans for Prosperity Foundation while the group’s lawsuit is being decided. The appeals panel’s unanimous decision said that AFP failed to show reason to fear disclosure. ...

Derek Shaffer, Americans for Prosperity, said AFP will immediately appeal the ruling to the U.S. Supreme Court.

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December 31, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Wednesday, December 30, 2015

The IRS Scandal, Day 965

IRS Logo 2Following up on my previous posts, The Problem Is Not Just IRS Lawyers; The Problem Is All Federal Government Lawyers and A Cincinnati IRS Lawyer Speaks: We Are Democrats, But Nonpartisan Democrats:  The Daily Caller News Foundation, IRS Employees Fuel Democratic Candidates, Causes:

A Daily Caller News Foundation analysis of OpenSecrets.org data found Internal Revenue Service (IRS) employees have backed Democrats over Republicans by 2-1 in their political donations over the last 25 years.

Donors listing the IRS as their employer have donated roughly $453,800 to Democratic candidates and causes and $221,400 to Republican candidates and causes since 1990. About one in four of the dollars for Democrats, or roughly $117,500, went to President Barack Obama.

But IRS employees since 1990 have also donated $203,000 to the National Treasury Employees Union, which in turn has given about 95 percent of its $6 million in political contributions to Democrats over the last 25 years, OpenSecrets.org data shows.

Disclosure of the huge bias among IRS employees for Democrats won’t help an agency under fire for years for illegally targeting conservative groups applying for tax-exempt status. Federal tax officials illegally tried to silence hundreds of conservative and tea party non-profit applicants during the 2010 and 2012 election campaigns.

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December 30, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Tuesday, December 29, 2015

The IRS Scandal, Day 964

IRS Logo 2Robert W. Wood (Forbes), More Calls To Impeach IRS Chief Over Targeting, Bonuses, Obstruction:

Congress has kept the IRS in business with recent funding, including slight budget increases included in the Consolidated Appropriations Act. The IRS even got some specific mandates for fraud prevention and taxpayer service, two areas where Republicans claim work is needed. Yet the alleged use of the IRS as a political weapon, and the role its Chief John Koskinen had in that long running scandal, continues to grate on some Republicans.

On Christmas eve, Sen. Pat Roberts (R-KS) wrote in the Wall Street Journal that it’s time to hold the IRS accountable for unfairness, including new IRS moves to targets political donors. Recent appropriations of money for the IRS comes with conditions, such as prohibiting the IRS from issuing new rules on the political activities of Section 501(c)(4) organizations. There are even attempts to stop the White House from ordering the IRS to review tax exempt groups. But are these and other band aids on the IRS enough?

Not for Oversight Committee Chair Jason Chaffetz, R-Utah. He wants to continue pressure on IRS Commissioner John Koskinen, including impeachment. The resolution to impeach Commissioner Koskinen was introduced by Chairman Chaffetz (R-Utah) and 18 others. Months before, he and his colleagues wrote to President Obama requesting Koskinen’s removal. The resolution claims that the IRS chief violated the public trust. ...

As Sen. Pat Roberts (R-Kan.) put it, the Obama administration used the IRS as a political tool to actively work against conservative groups. Roberts claims that the IRS suppressed electoral activities of groups that did not agree with the Obama administration’s views. But now, any impeachment efforts against Koskinen are in the hands of the House Judiciary Committee, under the helm of Rep. Bob Goodlatte, R-Va.

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December 29, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Monday, December 28, 2015

The IRS Scandal, Day 963

IRS Logo 2Your News Now, Sen. Portman's Bill Would Give Americans More Power When Dealing With IRS:

Ohio Senator Rob Portman has introduced legislation that would give Americans more power when dealing with the Internal Revenue Service.

Senator Portman says the IRS scandal that unfolded following the 2012 election, caused him to consider the proposal.  Several conservative  groups alleged the IRS used its powers against them, making it difficult to organize and achieve tax exempt status.

IRS officials then claimed to have lost e-mails and other documentation in a subsequent investigation. Portman says the "Taxpayer Bill of Rights" would help address IRS abuse and ensure that federal employees at the IRS can be punished if found to have misused their power.

Portman's bill would allow for termination of any IRS employee caught injecting politics into IRS decisions. One IRS official, Lois Lerner, resigned from the IRS following the e-mail scandal.

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December 28, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Sunday, December 27, 2015

The IRS Scandal, Day 962

IRS Logo 2New York Times editorial, Political Dark Money Just Got Darker:

As untold millions of dollars pour into the shadowy campaign troughs of the presidential candidates, voters need to be reminded of the rosy assumptions of the Supreme Court’s Citizens United decision that legitimized the new spending frenzy. ...

The court majority in the 5-to-4 decision should have been watching this month when the Republican-controlled Congress, which has firmly bottled up all campaign disclosure legislation, voted to further cripple disclosure at two of its most vital points.

In the new budget bill, Republicans inserted a provision blocking the Internal Revenue Service from creating rules to curb the growing abuse of the tax law by thinly veiled political machines posing as “social welfare” organizations. These groups are financed by rich special-interest donors who do not have to reveal their identities under the tax law. So much for effective disclosure at the I.R.S.

In another move to keep the public blindfolded about who is writing big corporate checks for federal candidates, the Republicans barred the Securities and Exchange Commission from finalizing rules requiring corporations to disclose their campaign spending to investors. ...

In acting to seal that pocket and hobble the I.R.S., congressional Republicans are advancing what has become the dark age of plutocratic money in campaign spending. At every turn, they are veiling the truth about the special-interest ties they have with rich donors shopping for favors. Since the Citizens United decision in January 2010, politicians have collected more than $500 million in dark money from phantom donors, according to the Center for Responsive Politics, with hundreds of millions more expected in the current campaign.

The move against the S.E.C. blocked it from “finalizing” a corporate disclosure rule, leaving proponents hopeful that it could be studied for some future enactment. This is not likely with a Republican Congress, which has made the I.R.S. even more of a target. Conservative lawmakers contend that tax investigators have been biased against right-wing political groups operating as “social welfare” organizations. And Congress has cut the tax agency budget by 18 percent since 2010, reducing its work force and weakening tax law enforcement.

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December 27, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (7)

Saturday, December 26, 2015

The IRS Scandal, Day 961

IRS Logo 2Investor's Business Daily, After Tearing Up First Amendment, IRS Can Tear Up Passports:

Abuse Of Power: Some thought the IRS would be punished after interfering in a presidential election by harassing conservative organizations. Instead, the tax man gets the new power of revoking your passport.

The massive transportation bill that a Republican Congress passed this month gives the Internal Revenue Service new powers to authorize the State Department to revoke U.S. passports.

It's hard not to draw a connection between this and Americans living abroad who are renouncing their precious U.S. citizenship in record numbers in recent years for one reason: to prevent the IRS from shaking them down.

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December 26, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Friday, December 25, 2015

The IRS Scandal, Day 960

IRS Logo 2American Center for Law and Justice, 2015 Victories: Holding the IRS Accountable:

In the aftershock of the IRS scandal targeting Tea Party and other conservative organizations applying for tax-exempt status, one conservative group submitted a Freedom of Information Act (FOIA) request to the IRS seeking certain correspondence involving high-ranking IRS officials and left leaning politicians. The time-sensitive FOIA request was submitted right before the November 2014 congressional elections.

Delaying and balking at every attempt to make it hand over documents exposing its conduct, the IRS simply refused to play by the rules. It failed to respond within the time required.  Stall tactics.  Citizens for a Strong New Hampshire contacted the ACLJ, and we filed a federal lawsuit demanding accountability.  The IRS finally provided some documents, but it was clear others were missing.  More stall tactics. 

We insisted the IRS answer for its behavior in court. First, the court was not persuaded by the IRS’s attempts to dodge accountability to the people and determined that this case must go to trial. As less than 1% of these types of cases actually go to trial, this was a victory in steps. Now, facing our litigation, the IRS has finally decided to perform the requisite search for responsive documents - required by law. This is a major victory.  In the end, we forced the IRS to turn over documents it had refused to turn over to the public.  The IRS's stall tactics failed.  Only through litigation are we able to force the IRS to follow the law and be held accountable to the American people.

This is why we continue pressing forward with major legal efforts against the IRS. Our major case on behalf of dozens of conservative groups from across America demanding justice continues on appeal.  Each victory along the way brings us one step closer to the truth and one step closer to justice for those illegally targeted for their beliefs by the IRS.

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

Thursday, December 24, 2015

The IRS Scandal, Day 959

IRS Logo 2Wall Street Journal:  It’s Time to Hold the IRS Accountable for Unfairness, by Sen. Pat Roberts (R-KS):

Your editorial The IRS Targets Political Donors (Dec. 16) hits the nail on the head about the IRS’s new proposed regulation that targets nonprofit organizations. When I heard about the IRS’s latest assault, I introduced legislation to block this “voluntary” rule. It would have a chilling effect on charitable giving and add a costly burden to charitable organizations. The IRS has already threatened donors in groups that it doesn’t like and proved that it cannot safeguard personal and private information from being hacked. Why should we trust them with a new source of data on donors? The proposal is bad for donors, it’s bad for nonprofits and it’s bad for the communities that are served by charitable donations. The IRS’s assault on the charitable sector must stop. My bill will do that.

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December 24, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Wednesday, December 23, 2015

The IRS Scandal, Day 958

IRS Logo 2Politico, White House Surrenders on 'Dark Money' Regulation:

The Obama administration has thrown in the towel on cracking down on hundreds of millions of dollars in “dark money” — funds given to advocacy groups that claim to be social welfare organizations rather than political committees.

Closing the so-called social-welfare loophole — which exempts the groups from federal tax and disclosure requirements — was one of the most urgent priorities of campaign-finance reformers in the wake of the Supreme Court's decision in the Citizens United case. But then the IRS came under fire for holding up conservative groups applying for the social-welfare tax exemption, and many Republicans cried foul.

By giving in to a GOP provision in the omnibus spending bill, the administration has effectively given up on limiting the political influence of nonprofit groups with unknown funders. ...

Some suspect that the Obama administration was wary of litigating the issue in the midst of the 2016 campaign. Even though Koskinen had assured lawmakers the rules would not take effect before the election, tea party groups and others on the right would almost certainly have pounced on any proposal released before then as an effort to muzzle free speech.

“From the Obama administration’s point of view, nothing was going to happen this election cycle … it was going to happen after he was done anyway,” said David Keating, president of the Center for Competitive Politics, which supports the rider. “And going into an election year the last thing they needed to do probably was raise the whole topic of the IRS scandal again.”

Congress didn’t stop there.

Keating pointed to a handful of other riders and tax provisions in the year-end tax-and-spending deal — including a provision barring the Securities and Exchange Commission from requiring corporations to disclose campaign spending to shareholders, and a ban on applying the gift tax to nonprofit donors. ...

The issue stems as much from the 2013 IRS scandal as it does from Citizens United. Republicans were infuriated when the IRS inspector general disclosed the agency had stalled the applications of tea party-affiliated organizations after Citizens United.

The report triggered the biggest scandal in recent IRS history: Several officials, including Exempt Organizations Director Lois Lerner, were pushed out, and the agency is still under investigation on the Hill. The inspector general called for clearer guidelines for delineating social welfare groups and political organizations. In response, the IRS floated guidance in November 2013 to police the political activity of social welfare groups.

But the proposal — released just over six months after the targeting scandal came to light — caused such an uproar that agency officials said they would start over from square one.

Technically, the congressional regulation ban lasts only through September 2016, but the timetable for finalizing regulations means the effort will have to be left to the next administration. A Republican president presumably would bury the rules, and a Republican Congress could continue to block them under a Democratic administration.

“If they were going to finalize this before the [Obama] administration leaves office they’d have to release the proposal by around Jan. 20 … so the delay until the end of the fiscal year effectively kills the regulation,” Georgetown law professor Brian Galle said.

“To be honest I expected them to issue it on Christmas Eve,” Galle said. He added: “What surprises me is the administration didn’t stand up a little more firmly on this provision …They didn’t even, as far as I know, make any effort to bluff that they were going to [veto it].”

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December 23, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Tuesday, December 22, 2015

The IRS Scandal, Day 957

IRS Logo 2Washington Post, Republicans ‘Rein in’ the IRS in New Budget After Years of Grievances:

There is no love lost between Republicans in Congress and the Internal Revenue Service, whether it’s their dislike for the tax code, the current tax commissioner or their fury at the agency’s treatment a few years ago of conservative groups.

With many lawmakers still smarting over that controversy, the GOP used the budget deal reached by House and Senate negotiators this week to tighten the reins on the IRS with a series of little-noticed Mother-May-I provisions.

They’re largely symbolic. But they speak loudly. ...

Its employees must not use personal email accounts for work communications, a practice that got both Hillary Clinton and Lois Lerner, the former IRS official at the center of the scandal over tax-exempt groups in trouble. ...

And it cannot target groups for scrutiny based on their ideological beliefs, new language repeated in three separate provisions of the bill. ...

Republicans investigated the IRS for more than two years after agents were discovered to have subjected conservative groups applying for tax-exempt status to additional scrutiny. In October, they moved to impeach Commissioner John Koskinen, days after the Justice Department formally closed its investigation of the scandal without filing criminal charges. They accused him of erasing back-up tapes containing thousands of emails written by Lerner.

After the budget deal was announced this week, House Majority Leader Kevin McCarthy (R-Calif.) crowed in a press release, “The House is Reining in the IRS.” “House Republicans have worked since the IRS scandal to rein in this unaccountable agency and make sure no American citizen has their fundamental rights infringed upon,” McCarthy wrote. “In the upcoming spending bill, we put severe constraints on the IRS to stop the abuse.” ...

Democrats did not rush to condemn the new budget provisions. John Lewis (D-Ga.), the top Democrat on the oversight panel of the House Ways and Means Committee, said he generally agreed with them.

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December 22, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Monday, December 21, 2015

The IRS Scandal, Day 956

IRS Logo 2Washington Post, Republicans ‘Rein in’ the IRS in New Budget After Years of Grievances:

There is no love lost between Republicans in Congress and the Internal Revenue Service, whether it’s their dislike for the tax code, the current tax commissioner or their fury at the agency’s treatment a few years ago of conservative groups.

With many lawmakers still smarting over that controversy, the GOP used the budget deal reached by House and Senate negotiators this week to tighten the reins on the IRS with a series of little-noticed Mother-May-I provisions.

They’re largely symbolic. But they speak loudly. ...

Its employees must not use personal email accounts for work communications, a practice that got both Hillary Clinton and Lois Lerner, the former IRS official at the center of the scandal over tax-exempt groups in trouble. ...

And it cannot target groups for scrutiny based on their ideological beliefs, new language repeated in three separate provisions of the bill. ...

Republicans investigated the IRS for more than two years after agents were discovered to have subjected conservative groups applying for tax-exempt status to additional scrutiny. In October, they moved to impeach Commissioner John Koskinen, days after the Justice Department formally closed its investigation of the scandal without filing criminal charges. They accused him of erasing back-up tapes containing thousands of emails written by Lerner.

After the budget deal was announced this week, House Majority Leader Kevin McCarthy (R-Calif.) crowed in a press release, “The House is Reining in the IRS.” “House Republicans have worked since the IRS scandal to rein in this unaccountable agency and make sure no American citizen has their fundamental rights infringed upon,” McCarthy wrote. “In the upcoming spending bill, we put severe constraints on the IRS to stop the abuse.” ...

Democrats did not rush to condemn the new budget provisions. John Lewis (D-Ga.), the top Democrat on the oversight panel of the House Ways and Means Committee, said he generally agreed with them.

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December 21, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Sunday, December 20, 2015

The IRS Scandal, Day 955

IRS Logo 2Wall Street Journal editorial, Free Speech and the Freedom Caucus: Congress Blocks IRS Political Meddling, but the Right Blows a Chance to Do More:

Republican disunity has limited Congress’s power of the purse, but the GOP majority has marked up a few victories. The budget and tax bills moving this week usefully block the IRS and other agencies from restricting political speech.

In 2014 opposition from the left and right forced the IRS to back down on its rule limiting political activities by tax-exempt 501(c)(4) groups. But director John Koskinen, the most tone-deaf man in Washington, says he wants to try again, and the spending bill includes a provision that shuts that down.

The tax bill also blocks the practice of IRS employees using personal email for official business. The use of personal email by Lois Lerner, then head of the tax-exempt division, became a stumbling block for investigators trying to discover what happened. A provision in the tax bill also bans the IRS from imposing the gift tax on donations to 501(c) groups, an idea the agency considered in 2011 when it audited several conservative donors.

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December 20, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)