TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Friday, July 17, 2015

The IRS Scandal, Day 799

IRS Logo 2Library of Law & Liberty:  Impeachment of the IRS Commissioner, by Mike Rappaport (San Diego):

I have long believed that the House Republicans should be using their impeachment power against the IRS.  I thought that they should have seriously considered impeaching Lois Lerner (although I suppose there is question whether she was a constitutional officer).  I certainly believe that they should consider whether to impeach IRS Commissioner John Koskinen and other relevant IRS officials.  (Note: the House impeaches or accuses; the Senate tries the official and can convict with a two thirds majority.)

It is true that an impeachment of the IRS Commissioner will not directly affect the President or the White House.  But it is important to use the tools that the Congress has to police wrongdoing and impeachment is one of them. ...

Once it becomes clear that officials may be impeached, their will be greater reluctance on the part of officials to engage in wrongdoing.  Moreover, the impeachment may reveal information about wrongdoing by the White House. ...

It is true that while the House can impeach an official with a majority vote, a conviction and removal from office requires a two thirds vote of the Senate.  Thus, depending on the evidence against the official and the degree of politics at work in the Senate, it is possible that an official who should be removed would not be convicted in the Senate.  But that is not a serious problem in my view.

Washington Free Beacon, Rep. Jim Jordan: ‘Definitely’ Looking at Possibility of Impeaching IRS Commissioner:

Rep. Jim Jordan (R., Ohio) said that the House Oversight and Government Reform Committee is “definitely” looking at the possibility of impeaching IRS Commissioner John Koskinen in an interview with the Washington Free Beacon on Thursday.

“We are definitely looking at that,” Jordan said. “Definitely looking at that. I’ll say this, Mr. Koskinen has on more than one occasion come in front of the committee and conveyed information to the committee that later turned out not to be accurate.” ...

Jordan said that impeachment is a possibility for the IRS commissioner.

“When you have an individual who’s head of an agency with this kind of power the Internal Revenue Service has, who has stated things under oath that turned out later to be false, that’s a problem,” he said. “Couple that with the false information that was sent out to a lot of Obamacare enrollees that impacted their tax liability that was just false, and some of the data breaches that have taken place there too—so the main focus is, of course, the targeting scandal and his answers to questions in front of the committee under oath that I’ve said later turned out to be untrue.”

“But there’s also these other things, so that’s something that the committee is looking at but there’s a certain amount of homework you’ve got to do before you start down that path,” he said. “So we’re looking at it.” ...

Jordan also expressed skepticism about the Justice Department’s handling of the IRS controversy.

“Everyone knows the fix is in at the Justice Department,” said Jordan. “The FBI announced a year and a half ago, according to the Wall Street Journal, that no one was going to be prosecuted. The President made his famous statement on Super Bowl Sunday a year and a half ago that there’s no corruption, not even a smidgen, and the lead attorney on the case is Barbara Bosserman who’s a maxed-out contributor to the President’s campaign.”

“So everyone knows the fix is in, and what really tells you that the fix is in with the Justice Department investigation is Lois Lerner was willing to sit down with Justice Department attorneys, Ms. Bosserman and her team, and answer their questions but she’s not willing to answer members of Congress’ questions,” said Jordan.

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July 17, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Thursday, July 16, 2015

The IRS Scandal, Day 798

IRS Logo 2Washington Examiner, With New Documents, Stench of IRS Scandal Reaches Into its Third Year:

In 2013, Lois Lerner, former head of the IRS non-profit section, pleaded the Fifth Amendment before the House Oversight Committee. She had been called to testify about her division's unjustifiable harassment of conservative applicants for nonprofit status.

Just over a year later, it was reported that a number of Lerner's work emails had gone missing due to a supposed problem with her hard drive. Then last month, the Treasury inspector general for tax administration testified that IRS employees — despite being under explicit orders not to destroy records — had "magnetically erased" as many as 24,000 of Lerner's missing emails from hundreds of data tapes where they were being stored.

Whether the emails' disappearance was innocent or not, the public is only now beginning to get more information about just what it concealed, thanks to an ongoing Freedom of Information Act lawsuit against the IRS by the conservative watchdog group Judicial Watch. Documents unearthed this week show that in Fall 2010, Lerner was working to get the Justice Department to prosecute nonprofits that engaged in political activity. This despite the fact that 501(c)4 groups, which cannot take tax-deductible donations, are permitted to engage in some political advocacy by law and by Civil Rights-era court precedents. ...

The original IRS scandal hinted at an intensive but narrow effort within one division to punish or at least make life difficult for the Obama administration's political opponents — the sort of thing that could perhaps be chalked up to a few bad actors. But the new documents suggest there were at least attempts to bring other agencies in on the wrongdoing. ...

This scandal continues to stink at least as badly as it did when IRS targeting of conservative non-profits was first acknowledged. This isn't a partisan political issue — unfair tax enforcement is unfair to everyone, and anyone can become a victim. Moreover, federal tax privacy laws exist because tax information is so sensitive and susceptible to abuse by politicians and ideologically interested parties.

Congress is right not to let go of this bureaucratic malfeasance, and to continue investigating what could prove to be a with a broader scope than anyone anticipated.

Daily Caller, Bozell On IRS Scandal: ‘A Tyrannical Administration Using Stalinist Tactics Against Its Political Opponents’:

The president of the Media Research Center, Brent Bozell, came out swinging Thursday in response to the revelations — uncovered by the watchdog Judicial Watch — that Lois Lerner, other officials from the IRS, the Department of Justice, and the FBI met in 2010 to discuss criminally prosecuting non-profit organizations targeted for illegal political activities.

Bozell was incensed that few media outlets bothered to cover the news. “The networks’ refusal to cover these devastating revelations borders on being complicit in a cover-up of criminal misconduct by a tyrannical administration using Stalinist tactics against its political opponents,” the conservative figure declared in a statement.

In Bozell’s opinion, the meeting revealed “criminal coordination between the IRS, FBI and the Department of Justice in an effort to politically persecute innocent, law-abiding Americans and independent organizations.”

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July 16, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Wednesday, July 15, 2015

The IRS Scandal, Day 797

IRS Logo 2The Hill, Senate Panel's IRS Report Due in Weeks:

The Senate Finance Committee plans to release its report on the IRS’s improper scrutiny of conservative groups before lawmakers leave Washington for the August recess, a panel spokesman said Tuesday. 

The committee’s IRS investigation has lasted for more than two years, ever since former agency official Lois Lerner apologized in May 2013 for the IRS’s treatment of groups seeking tax-exempt status.

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July 15, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, July 14, 2015

The IRS Scandal, Day 796

IRS Logo 2Fox News, IRS Ignores Deadline to Hand Over Lerner Emails:

The Internal Revenue Service is ignoring a court-imposed deadline to turn over newly found Lois Lerner email documents essential to investigations of the IRS tax-exempt scandal.

U.S. District Court Judge Emmet Sullivan last week ordered the agency to turn over 1,800 new emails from Lerner, who ran the tax exempt unit which decided which organizations could receive tax exempt status. The government watchdog group Judicial Watch has sought the emails in a Freedom of Information Act (FOIA) request. Monday, a spokesperson told  FOXBusiness.com that the group would not oppose the IRS producing something this Wednesday and every 2 weeks thereafter, assuming the Court agrees. At the time of publication there was no word from the IRS on this development or an amended order from the court. 

Judicial Watch President Tom Fitton said his organization has agreed to receive the information this week, but as of today no information has been received. Lerner is at the center of a scandal in which conservative groups, especially those that identified themselves as Tea Party groups, were denied tax exempt status.

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

Monday, July 13, 2015

The IRS Scandal, Day 795

IRS Logo 2Tribune-Review, Another IRS 'Oops': Hardly Credible:

It was “an unbelievable set of circumstances” that led to the erasure of backup tapes of Lois G. Lerner's emails after a congressional subpoena sought these records in an investigation of the tax agency's targeting of tea party and conservative groups. Or so says the IRS' deputy inspector general.

In literature and in cinema, this would be referred to as suspension of disbelief. For the Obama administration in its dealings with Congress, it's business as usual.

As the script goes, Ms. Lerner formerly led the IRS agency accused in the targeting scandal. Once an investigation commenced, the IRS informed Congress that, by golly, her computer had suffered a debilitating hard drive crash and that her emails were lost.

Backup computer tapes of the sought emails later turned up. But — oops! — about 24,000 emails might have been permanently lost to erasure, The Washington Times reports. Of the 1,000 recovered emails that the IRS didn't turn over to Congress, none pertain to the targeting, according to the IG. Imagine that.

Why, nobody “did anything intentionally to hinder our investigation,” said Democrat Rep. Elijah E. Cummings.

A crashed hard drive. Now erased backup tapes. It is not unreasonable to suspect the destruction of evidence amid a succession of excuses during a two-year investigation. Congress must redouble its efforts to get to the bottom of this.

Newsmax, Judicial Watch's Fitton: More Lois Lerner Emails on the Way:

The IRS is dragging its feet on the court-ordered release of newly-discovered emails to and from Lois Lerner, the ex-agency official who allegedly targeted tea party groups seeking tax-exempt status, Tom Fitton, president of the government watchdog Judicial Watch, tells Newsmax TV.

"The government found 1,400-plus new Lois Lerner emails. Remember those emails that were deleted and weren't recoverable on backup tapes? Well, they weren't deleted, they were recoverable and they were on backup tapes," Fitton said Friday on "The Steve Malzberg Show." ...

Fitton said other Lerner emails that have been released thus far are "astonishing." "They provide an exhaustive account of a meeting that Lois Lerner and other IRS folks had with the Department of Justice.... It wasn't just the IRS stalling tea party applications, it was the Justice Department and the FBI talking about prosecuting these very groups," he said.

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July 13, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Sunday, July 12, 2015

The IRS Scandal, Day 794

IRS Logo 2Nonprofit Quarterly, IRS Lois Lerner Emails Impossible to Find or Save:

Yesterday, NPQ published a newswire based on an editorial that speculated that it would be difficult to address the dark money issues in 501(c)(4) nonprofits this election season because of the targeting scandal of the IRS. This, of course, is not helped by the fact that the inquiry drags on and on.

Last week’s Treasury Inspector General’s update to the House Oversight and Government Reform Committee on Lois Lerner’s missing emails was unsatisfying to all parties. Early estimates of tens of thousands of possible emails being found that relate to the IRS scandal were subsequently reduced to 6,000 and ultimately to about 1,000. Meanwhile, the TIGTA’s office reported that as many as 24,000 emails may be permanently lost.

The IRS had promised for more than a year to respond fully to a subpoena and produce all Lerner emails. After a long delay, the IRS ultimately reported the emails to have been lost due to computer hardware failures. However, the TIGTA’s office later found more than 700 backup tapes (not produced by the IRS in response to the subpoena) that may have included the Lerner emails under subpoena. Almost all of the tapes had been erased and the data unrecoverable.

The investigators’ interviews with IRS personnel discovered no willful intent to destroy evidence. The tapes were handled in accordance with IRS policy and procedures for the handling of confidential material, and the personnel involved in the destruction claimed no knowledge of the subpoenas and the potential relevance of the materials destroyed.

Democrats on the committee continue to point out that there is no evidence of political bias as a motivation for the IRS’s targeting and that there is no demonstrated link to the White House. They cite the more than 160,000 labor hours and $20 million spent by the IRS to comply with investigators’ demands as a distraction from customer service and other IRS priorities. Democrats and the Treasury investigators both complained about leaks from committee Republicans citing the early numbers of possible emails. Republicans continue to be enraged about the slow IRS response and apparent unwillingness to take the investigations seriously, despite credible evidence of IRS malfeasance that, by definition, targeted “Tea Party” and other conservative-sounding organizations in the wake of the Citizens United Supreme Court ruling in early 2010.

At the very least, the IRS’s procedures for responding to subpoenas for electronic evidence have been demonstrated to be seriously deficient. In addition, the IRS’s destruction of electronic records may violate the Federal Records Act, which mandates the archiving of all government communications under the ultimate supervision of the Archivist of the United States.

The IRS’s targeting of conservative-sounding tax-exempt organizations, first reported publicly in May 2013, prompted several simultaneous and ongoing investigations that have awaited production of subpoenaed emails to and from Lerner. Lerner was the Director of the Exempt Organizations (EO) Unit of the IRS from 2006 until being placed on unpaid administrative and ultimately retiring from the IRS in 2013. Lerner is believed to have been a key figure in the IRS scandal, based on the TIGTA’s May 2013 initial audit report and upon evidence subsequently produced.

To add more unfortunate fodder for the conspiracy theorists, there is now a link between the IRS scandal and the Congressional investigation surrounding the attack on the US Consulate in Benghazi, Libya, in 2012. Catherine Duval, the IRS attorney responsible for supervising the production of the Lerner emails, has been transferred to the State Department, where she now oversees the production of former Secretary of State Hillary Clinton’s emails to the House committee investigating Benghazi.

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July 12, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Saturday, July 11, 2015

The IRS Scandal, Day 793

IRS Logo 2Town Hall, I Know What Lois Lerner Did Last Summer:

I know her secret, I know she’s scared, and I know what she did last summer.

If you need something lighthearted to pick yourself up and get back into work after a long holiday weekend, I’ll give you a column that would more humorous if it weren’t so close to the truth. It’s the story about what Lois Lerner and her new bestie, Hillary Clinton, did last summer.

The 4th of July reminded me of the 1997 horror-thriller, “I Know What You Did Last Summer,” where a girl gets attacked on the 4th of July. Which then reminded me of the chilling probability that I may know what girls gone wild like former IRS Director of Exempt Organizations Lois Lerner did last summer. ...

Well, after two summers of chilling at the beach, on May 31 of 2015, the U.S. Attorney’s Office announced that Lois Lerner would not be charged with contempt or face charges. Lois could keep the $129,000 in bonuses that she received while presiding over contended favoritism at the IRS and retire will full pension. ...

Lois Lerner’s case isn’t closed. Late last month the chief government watchdog for the IRS revealed at a Congressional testimony that Lerner’s hard drive containing emails dated between 2010 and 2012 appear to have been destroyed by “an impact of some sort.” Translation: Lois might pack a hammer in her beach bag. ...

Treasury Inspector General for Tax Administration J. Russell George further testified that 422 backup tapes containing up to 24,000 emails sent to and from Lois Lerner had been destroyed by IRS employees. George qualified his revelation by saying that he did not smell foul play in this destruction of evidence. Which makes you question the strength of George’s watchdog sniffer. But, I digress. ...

[A] few days before the 4th of July holiday, we learned that the same woman charged with managing Congress’ investigation into Lerner’s emails has also been charged with overseeing Clinton’s email scandal: an attorney named Catherine Duval.

Perfect.

“If you're going to bury the truth, make sure it stays buried,” was a movie tagline for I Know What You Did Last Summer.

Depending on how well Lois and Hillary buried the truth contained in the thousands of emails that they do not seem eager for you or me to see may determine how many more summers they spend sunbathing—or doing community service. Either way, we know what Lois Lerner did last summer.

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July 11, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Friday, July 10, 2015

The IRS Scandal, Day 792

IRS Logo 2Wall Street Journal editorial, Wisconsin’s Friend at the IRS: Emails Show a Common Cause in Restricting Political Speech:

Wisconsin’s campaign to investigate conservative tax-exempt groups has always seemed like an echo of the IRS’s scrutiny of conservative groups applying for tax-exempt status. It turns out that may be more than a coincidence.

Former IRS tax-exempt director Lois Lerner ran the agency’s policy on conservative groups. Kevin Kennedy runs the Wisconsin Government Accountability Board (GAB) that helped prosecutors with their secret John Doe investigation of conservative groups after the 2011 and 2012 recall elections of Governor Scott Walker and state senators.

Emails we’ve seen show that between 2011 and 2013 the two were in contact on multiple occasions, sharing articles on topics including greater donor disclosure and Wisconsin’s recall elections. The emails indicate the two were also personal friends who met for dinner and kept in professional touch. “Are you available for the 25th?” Ms. Lerner wrote in January 2012. “If so, perhaps we could work two nights in a row.”

This timing is significant because those were the years when the IRS increased its harassment of conservative groups and Wisconsin prosecutors gathered information that would lead to the John Doe probe that officially opened in September 2012. ...

These interconnections matter because they reveal that the use of tax and campaign laws to limit political speech was part of a larger and systematic Democratic campaign. Speaking at the University of Wisconsin in 2010, President Obama sent his own political message to investigators.

“Thanks to a recent Supreme Court decision, [Republicans] are being helped along this year, as I said, by special interest groups that are allowed to spend unlimited amounts of money on attack ads. They don’t even have to disclose who’s behind the ads,” he said. “You’ve all seen the ads. Every one of these groups is run by Republican operatives. Every single one of them—even though they’re posing as nonprofit groups with names like Americans for Prosperity, or the Committee for Truth in Politics.”

Conservative nonprofits like the Wisconsin Club for Growth and Wisconsin Manufacturers and Commerce were later subpoenaed and bound by secrecy orders as their fundraising all but ceased. Liberals worked together to turn the IRS and the GAB into partisan political weapons.

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

Thursday, July 9, 2015

The IRS Scandal, Day 791

IRS Logo 2New York Post editorial, The IRS Scandal Just Got Even Worse:

So the Obama IRS wasn’t just persecuting right-leaning nonprofits — it was out to prosecute them, too. And with the help of the Obama Department of Justice and FBI.

Via Freedom of Information Act lawsuits, the watchdog group Judicial Watch just got evidence of the plot. A “DOJ Recap” on an Oct. 8, 2010 meeting tells how officials from the three agencies discussed “several possible theories to bring criminal charges under FEC law” against groups “posing” as tax-exempt nonprofits.

As part of the project, the IRS handed the FBI 21 computer disks with 1.23 million pages of confidential IRS returns from 113,000 nonprofit 501(c)(4) groups — nearly every 501(c)(4). This, though federal law generally bans the IRS from sharing such data.

The evidence shows “that the Obama IRS scandal is also an Obama DOJ and FBI scandal,” noted Judicial Watch President Tom Fitton. “The FBI and Justice Department worked with Lois Lerner and the IRS to concoct some reason to put President Obama’s opponents in jail before his re-election. And this abuse resulted in the FBI’s illegally obtaining confidential taxpayer information.”

The IRS scandal surfaced years ago — and for all the administration talk of a full investigation, this huge news is only surfacing now, and only thanks to Judicial Watch.

The news of FBI and Justice involvement in the IRS scandal makes the need for some special prosecutor to probe this mess even more obvious.

After all, as Judicial Watch’s Fitton asks: “How can the Justice Department and the FBI investigate the very scandal in which they are implicated?”

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July 9, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Wednesday, July 8, 2015

The IRS Scandal, Day 790

IRS Logo 2Judicial Watch Press Release, New Documents Reveal DOJ, IRS, and FBI Plan to Seek Criminal Charges of Obama Opponents:

Judicial Watch today released new Department of Justice (DOJ) and Internal Revenue Service (IRS) documents that include an official “DOJ Recap” report detailing an October 2010 meeting between Lois Lerner, DOJ officials and the FBI to plan for the possible criminal prosecution of targeted nonprofit organizations for alleged illegal political activity.

The newly obtained records also reveal that the Obama DOJ wanted IRS employees who were going to testify to Congress to turn over documents to the DOJ before giving them to Congress. Records also detail how the Obama IRS gave the FBI 21 computer disks, containing 1.25 million pages of confidential IRS returns from 113,000 nonprofit social 501(c)(4) welfare groups  – or nearly every 501(c)(4) in the United States – as part of its prosecution effort. According to a letter from then-House Oversight Committee Chairman Darrell Issa (R-CA) to IRS Commissioner John Koskinen, “This revelation likely means that the IRS – including possibly Lois Lerner – violated federal tax law by transmitting this information to the Justice Department.”

The documents were produced subsequent to court orders in two Judicial Watch Freedom of Information Act (FOIA) lawsuits: Judicial Watch v. Internal Revenue Service (No. 1:14-cv-1956) and Judicial Watch v. Department of Justice (No. 1:14-cv-1239).

The new IRS documents include a October 11, 2010 “DOJ Recap” memo sent by IRS Exempt Organizations Tax Law Specialist Siri Buller to Lerner and other top IRS officials explaining an October 8 meeting with representatives from the Department of Justice Criminal Division’s Public Integrity Section and “one representative from the FBI” to discuss the possible criminal prosecution of nonprofit organizations for alleged political activity. ...

“These new documents show that the Obama IRS scandal is also an Obama DOJ and FBI scandal,” said Judicial Watch President Tom Fitton. “The FBI and Justice Department worked with Lois Lerner and the IRS to concoct some reason to put President Obama’s opponents in jail before his reelection. And this abuse resulted in the FBI’s illegally obtaining confidential taxpayer information. How can the Justice Department and FBI investigate the very scandal in which they are implicated?”

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July 8, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Tuesday, July 7, 2015

The IRS Scandal, Day 789

IRS Logo 2New York Times, I.R.S. Expected to Stand Aside as Nonprofits Increase Role in 2016 Race:

As presidential candidates find new ways to exploit secret donations from tax-exempt groups, hobbled regulators at the Internal Revenue Service appear certain to delay trying to curb widespread abuses at nonprofits until after the 2016 election.

In a shift from past elections, at least eight Republican presidential candidates, including leading contenders like Jeb Bush and Senator Marco Rubio of Florida, have aligned with nonprofit groups set up to raise hundreds of millions of dollars. Hillary Rodham Clinton’s supporters are considering a similar tactic.

Some of these so-called social welfare nonprofit groups are already planning political initiatives, including a $1 million advertising campaign about Iran by a tax-exempt group supporting Mr. Rubio.

The groups are able to carry out many of the same political activities as candidates and their affiliated “super PACs” but do not have to disclose where they get their money, allowing total anonymity for donors.

While the nonprofit groups are supposed to limit their political activity, the I.R.S. appears powerless to stop the onslaught of money coursing through them.

The tax agency remains deeply wounded by the scandal that began two years ago over its scrutiny of nonprofits tied to the Tea Party and other political causes, both conservative and liberal.

“It’s anything goes for the next couple of years,” said Paul Streckfus, a former nonprofit specialist at the I.R.S. who now edits a newsletter on tax-exempt groups. “The whole system has really collapsed.”

Under an exemption established more than a century ago, the nonprofit groups — known as 501(c)(4) organizations for the section of the tax code that created them — are supposed to be devoted to “social welfare,” with an aim “to further the common good and general welfare of the people of the community.” But there is disagreement over just how much politicking the nonprofits can do.

I.R.S. officials concede that the rules are vague and difficult to enforce. Audits for excessive campaign work are extremely rare, even for groups spending huge chunks of their budgets to support candidates. Complaints about abuses can languish for years, records show.

The Treasury Department recently squashed speculation that new rules would soon be put into effect to limit the political activity of nonprofits. The I.R.S. commissioner, John Koskinen, drew criticism this year when he said nonprofits could spend up to 49 percent of their money on political activities. Watchdog groups have said Congress meant for those groups to work “exclusively” on social welfare and not politics.

The I.R.S. put out its first proposal for regulating nonprofits’ political work in 2013, just as the controversy was building over the targeting of Tea Party groups. Both liberals and conservatives attacked the move as chilling political speech, and the agency shelved the proposed rules.

“Because of the way the I.R.S. has been attacked, they’ve become extremely hesitant to act,” said Miriam Galston, a campaign finance specialist at George Washington University who believes tougher restrictions are needed.

Bloomberg View:  Why Nonprofits Get Away With Campaigning, by Noah Feldman (Harvard):

Nonprofit groups are supposed to exist to promote the public welfare, not to run political campaigns. IRS rules say that tax-exempt 501(c)(4) organizations, which are allowed to campaign consistent with their welfare-promoting missions, can’t have politicking as their primary activity. But because those rules aren’t being enforced, presidential campaigns now feature such nonprofits.

Why is this happening? And what -- if anything -- can be done to stop it?

The source of the problem isn’t IRS laziness. It’s a deeper difficulty in defining the interaction between money and free speech in the logic of the First Amendment, one that’s gotten much worse in the era of Citizens United and the U.S. Supreme Court’s gradual subversion of campaign-finance laws. The solution, if there is one, is going to have to come from the courts.

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July 7, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Monday, July 6, 2015

The IRS Scandal, Day 788

TIGTATreasury Inspector General for Tax Administration Report of Investigation, Exempt Organization Data Loss and Potential Obstruction of Justice:

The investigation determined that there were six possible sources to examine in order to potentially recover the missing e-mails. These sources were LERNER's crashed hard drive, the backup or disaster recovery tapes, a decommissioned Microsoft (MS) Exchange 2003 e-mail server, the backup tapes for the decommissioned e-mail server, LERNER's BlackBerry, and loaner laptop computers that may have been assigned to her while her laptop was being repaired. An examination of four of these sources, the backup or disaster recovery tapes, the decommissioned Exchange 2003 e-mail server, LERNER's BlackBerry, and the loaner laptops produced e-mail that the IRS had not previously produced to Congress, DOJ or TIGTA. The investigation also determined that once it was discovered that there was a gap in the IRS' production of LERNER's e-mail, the IRS did not fully identify as a source or perform recovery attempts for e-mail on the following electronic media, all of which the IRS had in their possession: backup or disaster recovery tapes, the decommissioned Exchange 2003 e-mail server, the backup tapes for the decommissioned e-mail server or the loaner laptop computers.  ...

The investigation also revealed that on or about March 4, 2014, one month after the IRS realized it was missing some of LERNER's e-mails, IRS employees in the IRS Enterprise Computing Center in Martinsburg, West Virginia (Martinsburg), magnetically erased 422 backup tapes that are believed to have contained LERNER's e-mails that were responsive to Congressional demands and subpoenas. However, the investigation did not uncover evidence that the IRS and its employees purposely erased the tapes in order to conceal responsive e-mails from the Congress, the DOJ and TIGTA. 

The investigation revealed that the backup tapes were destroyed as a result of IRS management failing to ensure that a May 22, 2013, e-mail directive from the IRS Chief Technology Officer (CTO) concerning the preservation of electronic e-mail media was fully understood and followed by all of the IRS employees responsible for handling and disposing of e-mail bStephen MANNING, former IRS Deputy Chief Information Officer, Strategy and Modernization.ackup media.  ...

When interviewed, [Terence MILHOLLAND, IRS Chief Technology Office] was asked if he knew that e-mail backup tapes from a decommissioned e-mail server had been degaussed in March 2014, MILHOLLAND stated that he was not aware of this, and he advised that he was "blown away" at the revelation. He further stated that IRS IT senior management was ultimately responsible. MILHOLLAND also stated that his May 2013 e-mail directive would have applied to preserving the NCFB backup tapes and that the organization that sent them to be destroyed would also be responsible for their destruction.

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July 6, 2015 in Congressional News, Gov't Reports, IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Sunday, July 5, 2015

The IRS Scandal, Day 787

Saturday, July 4, 2015

The IRS Scandal, Day 786

IRS Logo 2Wall Street Journal, Lois Lerner for President:

[G]et a load of this report from CNSNews.com:

Catherine Duval, the attorney in charge of the Internal Revenue Service’s email production to Congress, has changed jobs: She now manages the State Department’s email production to Congress, Rep. Trey Gowdy (R-S.C.) told a hearing of the House Oversight and Government Reform Committee on Thursday, June 25.

Meanwhile, members of the Oversight Committee last week accused the IRS of destroying some of Lois Lerner’s emails despite a subpoena and an order to preserve them.

“There was a preservation order in place, there’s a subpoena in place, they’ve never complied with it; we’ve had testimony from the IRS commissioner that we would get all this only to find out they’ve been degaussing these tapes and they destroyed evidence,” said Rep. Jason Chaffetz (R-Utah) at the June 25 hearing.

Which gives us an idea: Why doesn’t Lois Lerner jump into the race for the Democratic presidential nomination? At least she believes in something.

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July 4, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Friday, July 3, 2015

The IRS Scandal, Day 785

IRS Logo 2Politico, Double Trouble? IRS Lawyer Now Heads Clinton Email Production:

A year ago, Catherine Duval was embroiled in the scandal over former IRS official Lois Lerner’s lost emails.

Now the top government attorney is heading up another document project in the cross hairs of Congress: the State Department’s release of Hillary Clinton’s emails and Libya documents to the House Select Committee on Benghazi.

And Republican GOP investigators are raising red flags, accusing her and the State Department of stonewalling Congress by narrowly interpreting document requests and failing to disclose important information.

“The person in charge of document production at two different places on two different scandals has not been completely straightforward with us,” said Rep. Jim Jordan (R-Ohio), a top IRS and Benghazi investigator, in an interview. “She was at the IRS when there was a preservation order and subpoena — and documents were destroyed. She is now at the State Department, where we were supposed to get [certain] information, and we know that some of the emails were not given.”

Duval, a former attorney for the powerhouse Washington law firm Williams & Connolly who left the IRS and joined the State Department last August, declined to comment for this story. But she told House Oversight investigators last year that she didn’t know such backup tapes of the lost Lerner emails — recently found destroyed — even existed. And while she was leading the document production effort, she also gave a preservation order to all employees. ...But now, with an IRS watchdog announcing last Thursday that tax agency employees under Duval’s watch had erased more than 400 backup tapes central to Congress’ IRS probe of the tea party targeting, Republicans are even more suspicious.

“Who is Kate Duval — because I think I’ve heard that name before,” Gowdy asked during last week’s IRS hearing on the news. “I know where she is now: She’s at the Department of State in charge of their email productions. Wow.” ...

Benghazi panel Democrats say the IRS problems were out of Duval’s control, noting that the Oversight Committee turned up nothing when it questioned her last year about her role. And they add that Duval was the one who raised the alarm about Lerner’s missing emails in the first place.

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July 3, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Thursday, July 2, 2015

The IRS Scandal, Day 784

IRS Logo 2World, Investigators Find Proof IRS Destroyed Evidence in Targeting Scandal:

Two Treasury Department inspectors general revealed last week someone erased computer evidence during the investigation into the IRS targeting scandal—months after the agency was ordered to preserve the documents.

Timothy Camus and J. Russell George made the disclosure during a Thursday hearing of the House Oversight and Government Reform Committee. They said 422 backup tapes were destroyed and about 24,000 emails were lost in March 2014, the same month IRS Commissioner John Koskinen told Congress the agency was fully complying with the investigation.

The controversy revolves around Lois Lerner, former head of the IRS tax-exempt division, who acknowledged in 2013 her department improperly singled out conservative groups for extra scrutiny. Investigators discovered her computer crashed in 2011, and government IT specialists were unable to detect why. Camus and George said Lerner borrowed multiple computers on loan and deleted thousands of emails. ...

Despite a subpoena order to provide documents, IRS employees working night shifts demagnetized the contents of Lerner’s’ computers, according to the inspectors general. They said Koskinen failed to inform the employees about the May 2013 subpoena order to preserve the documents.

Rep. Jody Hice, R-Ga., suggested Koskinen committed a crime by lying to Congress about the availability of the emails. He said Americans are “sick and tired of being snookered” by the government.

“I urge you to hold these people accountable,” said Rep. Jason Chaffetz, R-Utah, chairman of the committee. He and other Republicans called the ongoing IRS scandal worse than Watergate.

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

Wednesday, July 1, 2015

The IRS Scandal, Day 783

Tuesday, June 30, 2015

The IRS Scandal, Day 782

IRS Logo 2Forbes:  IRS Won't Release Lois Lerner Emails -- Because They Might Be Duplicates, by Robert W. Wood:

Eureka! The IRS says it may have found 6,400 more emails from Lois Lerner. What do they say? Who are they targeting? We don’t know, as the IRS says it won’t release them. The reason?

This is a good one. Not only the IRS, but the Obama Justice Department is weighing in on this. We need to be sure we have not already released these emails, they say. After all, they might be duplicates. We don’t even want members of Congress to see these until we can determine if we already provided them. ...

Of course, the IRS said in 2014 (a little late?) that Ms. Lerner’s computer crashed in 2011. Oops, no one’s fault that we lost a few years’ worth of emails. We kept being reminded how hard the IRS looked and how terribly expensive it was that the IRS had to do this. But the inspector general found about 35,000 emails from recycled back-up tapes.

It then turned out that the key IRS IT people weren’t even asked to look at back up tapes. Isn’t this a little insulting? The IRS’s admission that it couldn’t find Lerner’s emails reinvigorated congressional investigations into the IRS. Of course, the IRS sort of apologized in May 2013 for singling out Tea Party groups seeking tax-exempt status. But the seeming cover-up doesn’t exactly seem sorry.

One email from former IRS firebrand Lois Lerner is particularly revealing. Sure, she said she did nothing wrong, she was the victim, and she still took the Fifth. But in February 2012, she wanted to “put together some training points to help them [IRS staffers] understand the potential pitfalls” of revealing too much information to Congress. This is the IRS version of don’t tell. You might have assumed that retired but officially silent Lois Lerner–who ran a key IRS division–might face charges.

Congress found her in contempt after she professed her innocence, and thereafter took the Fifth. Much later, she broke her silence to Politico, saying she did nothing wrong, claiming that she was the victim. The U.S. Attorney’s Office was supposedly considering prosecution, but now it announced she is off the hook and will not be charged with contempt. So said a seven-page letter the U.S. Attorney–on his last day in office–sent to Speaker John A. Boehner with the news and its rationale.

Wouldn’t some answers be nice? There is arguably no part of the government more important than our tax system. Our country cannot exist without it. Our tax code and how we administer it could be improved. Yet it is still a system with integrity, one that is administered mostly on the honor system. IRS employees deserve better than the black eye they are getting over this mess. American taxpayers deserve better too.

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June 30, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Monday, June 29, 2015

The IRS Scandal, Day 781

IRS Logo 2New York Observer, Judge Sullivan Demands Answers from the IRS by Month’s End; It’s Past Time for Orange to be the New Black for Lois Lerner, by Sidney Powell:

Just a day after our most recent article about our “Shameless IRS” and its continued stonewalling, federal Judge Emmet G. Sullivan has demanded that the IRS answer his questions and respond to Judicial Watch in a report that the IRS must file by June 29th. In its “supplemental report,” the IRS must disclose “any new information regarding: (1) [The Treasury Inspector General for Tax Administration] TIGTA’s recovery of emails from the backup tapes; (2) TIGTA’s production of emails to the IRS; (3) the IRS’s review of emails and production to the plaintiff; and (4) the status of the TIGTA investigation. This report shall be filed by no later than June 29, 2015.”

As we previously reported, Judge Sullivan is the federal judge who appointed a special prosecutor to investigate the Department of Justice and its “Public Integrity Section” prosecutors upon their corrupted prosecution of former United States Senator Ted Stevens. Now Judge Sullivan is presiding over the Freedom of Information Act Suit brought by Judicial Watch to recover, among other things, the “missing” emails of Lois Lerner and her comrades in their efforts to harass and discriminate against conservative groups seeking tax exempt status.

All thinking Americans are fed up with the arrogance. Entitlement and disdain for the law demonstrated repeatedly by the IRS officials, especially Commissioner Koskinen, who is now proved by his own Inspector General to have lied to Congress when he claimed the IRS had made every effort to find the missing emails and backup tapes. ...

Judge Sullivan has also set a hearing for July 1 at 1:30 in his courtroom. If the IRS has not sufficiently answered his questions in writing, there’s no doubt they will be called upon to do so in person. This hearing may be worthy of concession sales. It’s past time for “orange to be the new black” for some people in the IRS.

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

Sunday, June 28, 2015

The IRS Scandal, Day 780

IRS Logo 2Forbes:  Joan Farr Claims IRS Denial Of Exempt Status Is Example Of Persecution Of Christians, by Peter J. Reilly:

Joan Farr tells me that the IRS denial of exempt status to the Association For Honest Attorneys is another instance of an organization being persecuted because it is Christian and conservative.  I contacted Ms. Farr, because I was pretty sure that PLR 201524206, a revocation of exempt status, was referring to A.H.A.!. (On the A.H.A.! website she is listed as Joan Heffington, which is the name she used while running for Governor of Kansas in the 2010 Republican primary.  In her 2014 run for the Senate as an independent she went by Joan Farr. Ms. Farr is a widow and Farr was her maiden name which she has readopted.) Ms. Farr confirmed that A.H.A.! was the organization in the ruling. ...

Ms. Farr indicates the “facts” in the ruling are inaccurate.  Here is the IRS version. The agent determined that some of the services that AHA provided for compensation were not related to its exempt purpose and should have been taxed as UBTI.

The agent found many transactions for personal expenses and at least one instance of an expenditure related to the campaign for governor.

During the review of the bank statements, the agent found a check written to “cash”. The memo section the check reflected “cash for campaign“. The agent asked to provide the exempt purpose of this payment. said this check was for repayment of the loan.

So you have UBTI, inurement and political activity.  Other than that Mrs. Lincoln how did you enjoy the play?

Ms. Farr had loaned the organization a lot of money, so any expenditures not related to the exempt purpose were actually loan repayments.  This ended up leading to an attempt to reconstruct the loan balance, which took a lot of effort on Ms. Farr’s part, but ended up not satisfying the IRS.

Ms. Farr indicated that AHA had never grossed more than $25,000 meaning it never had to file a complete Form 990.  Based on the drama about the loan balance, it was clear that nobody was maintaining a general ledger.  Revenue agents are trained as accountants and it makes accountants happy when they have a general ledger with everything classified.  I also have to say that having an entity pay back your loan by paying your bills for you is a very bad idea.  If there had been a general ledger with those items charged to the officer loan accountant that would have been better, but much better would be the two step process of a loan repayment via a check to Ms. Farr and her paying the bills out of her personal account.

I can’t rule out that the selection of her organization for audit had something sinister behind it, but having spoken to her a bit, I could understand how she might exhaust the patience of a revenue agent.  Inserting an accountant between her and the IRS might have saved the day.  On the other hand you have to wonder why this organization would be a priority with the IRS.

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June 28, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Saturday, June 27, 2015

The IRS Scandal, Day 779

IRS Logo 2The Weekly Standard, Republicans Consider Impeaching IRS Chief:

Republican Jim Jordan went on Fox News this morning to discuss the fact that Republicans in the House of Representatives are considering impeaching the head of the IRS, John Koskinen.

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June 27, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Friday, June 26, 2015

The IRS Scandal, Day 778

IRS Logo 2Wall Street Journal, Former IRS Official’s Email Lost When Backup Tapes Routinely Erased:

Thousands of missing emails from former Internal Revenue Service official Lois Lerner, a central focus of lawmakers’ probes into the alleged targeting of tea-party groups starting in early 2010, were lost when backup digital tapes were erased last year, the agency’s inspector general has found in an investigation.

The emails were first lost when Ms. Lerner—then the head of the tax-exempt division of the IRS—suffered a hard-drive crash in mid-2011.

Investigators had hoped to find the missing emails in backup tapes.

Now it turns out that 422 backup tapes from the crucial period were routinely erased by IRS workers. The tapes were destroyed in March 2014, according to the Treasury inspector general for the IRS, J. Russell George. That is long after lawmakers started trying to obtain all of Ms. Lerner’s emails, and long after the IRS issued instructions for employees to cease routine destruction of documents that might relate to the probes.

The finding means that much of the mystery surrounding alleged IRS targeting of tea party groups likely will continue. It could also raise difficult new questions for IRS managers, including Commissioner John Koskinen.

“There was a [document] preservation order in place” that the IRS “never complied with,” said Rep. Jason Chaffetz (R., Utah), the chairman of the House Oversight and Government Reform Committee, at a hearing on Thursday morning. “They destroyed evidence. That’s what they did.”

The tapes could contain as many as 24,000 additional emails, Mr. George said in

Mr. George’s probe also showed that the IRS didn't search for several potential sources of emails, including the backup tapes, after the hard-drive crash became known. Even some Democrats said they were troubled.

“I’m concerned too as to why things were not looked into,” said Rep. Elijah Cummings (D., Md.), the top Democrat on the panel. “That really does concern me.”

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

Thursday, June 25, 2015

The IRS Scandal, Day 777

IRS Logo 2Minneapolis Star-Tribune, Investigator: IRS Erased Computer Backups After Officials Realized Tea Party Emails Were Lost:

IRS employees erased computer backup tapes a month after officials discovered that thousands of emails related to the tax agency's tea party scandal had been lost, according to government investigators.

The investigators, however, concluded that employees erased the tapes by mistake, not as part of an attempt to destroy evidence.

As many as 24,000 emails were lost because 422 backup tapes were erased, according to J. Russell George, the Treasury inspector general for tax administration. George says those tapes "most likely" contained emails to and from former IRS official Lois Lerner, who has emerged as a central figure in congressional investigations.

The revelation is likely to fuel conspiracy theories among conservatives who say the IRS has obstructed investigations into the scandal.

George is scheduled to testify before the House Oversight Committee Thursday morning about his investigation into the emails. The Associated Press obtained a copy of his prepared testimony.

TIGTAThe House Committee on Oversight and Government Reform holds a hearing today on Missing IRS Emails: An Update From the Inspector General:

PURPOSE:

  • To focus on the Treasury Inspector General for Tax Administration’s (TIGTA) findings with respect to Lois Lerner’s recovered e-mails and to examine the Internal Revenue Service’s (IRS) response to the congressional investigations on the targeting program. 

BACKGROUND:

  • From February 2010 to May 2012, the IRS subjected conservative applicants for tax-exempt status to systematic scrutiny and delays. On May 10, 2013, Lois Lerner, former Director of IRS Exempt Organizations, publicly acknowledged the targeting and apologized.
  • The Committee requested documents and communications from the IRS to assist in its investigation of the targeting program. The IRS did not cooperate voluntarily and two subpoenas were eventually issued—one to Treasury Secretary Jacob Lew on August 2, 2013, and the second to then-new IRS Commissioner John Koskinen on February 14, 2014. At a hearing on March 26, 2014, Koskinen testified that all Lerner’s e-mails would be provided to the Committee.
  • Less than three months later, on June 13, 2014, the IRS informed Congress that it had lost or destroyed almost two years’ worth of e-mails to and from Lerner. On November 21, 2014, TIGTA notified congressional investigators that it located approximately 30,000 of Lerner’s “missing” e-mails. Recently, TIGTA informed the Committee it had recovered as many as 80,000 of Lerner’s e-mails, including duplicates, which were found among hundreds of “disaster recovery tapes” that were used to back up the IRS e-mail system.

WITNESSES AND TESTIMONIES

  • Russell George (Inspector General,  Treasury Inspector General for Tax Administration)
  • Tim Camus (Deputy Inspector General for Investigations,  Treasury Inspector General for Tax Administration)

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June 25, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Wednesday, June 24, 2015

The IRS Scandal, Day 776

IRS Logo 2New York Observer:  A Shameless IRS Is STILL Withholding Lois Lerner Emails, by Sidney Powell:

In the continuing saga of the IRS, the Department of Justice, and their efforts to hide evidence and obstruct justice to protect Lois Lerner and the administration’s targeting of its political opposition, the IRS now claims that thousands of emails found on backup tapes Commissioner Koskinen told Congress did not exist are not IRS records, the IRS has no control over them, and they can’t produce them. In fact, the IRS won’t even say whether it has the thousands of additional “lost” emails. And down the rabbit hole we head—where “up means down” and “stop means go.”

Knowledge of Ms. Lerner’s abuse of power within the IRS to target conservative groups for harassment and denials of tax-exempt status surfaced more than two years ago, along with apparent links to the White House. Congress has been investigating, but the IRS has repeatedly lied and stonewalled. The Treasury Inspector General issued a report, acknowledging the abuse and improprieties and is now in the midst of a criminal investigation. The Department of Justice has done nothing.

In one of its more stunning developments, IRS asserted that Lois Lerner’s computer had crashed, preventing any ability to recover her emails. Even more shocking, soon the claimed crashed expanded to everyone in the IRS who was involved with Lerner—more than 20 computers. Of course, we all knew that there are backups and copies on servers, Blackberry, and other devices.

Nonetheless, Commissioner Koskinen told Congress that the IRS did not have backup tapes of Lois Lerner’s emails. He claimed the IRS had worked hard to try to find them, but they had been destroyed.

Watchdog non-profit Judicial Watch filed a Freedom of Information Act lawsuit that landed in the court of federal judge Emmett G. Sullivan. ... [T]he Treasury Inspector General for Tax Administration (TIGTA) belied Mr. Koskinen’s claims within a day—finding the first 744 “non-existent” backup tapes containing thousands of emails exactly where they should have been. Upon further review, the Inspector General identified a missing document, which quickly led to an additional 424 tapes of backup emails—all from the IT department of the IRS in West Virginia. Mr. Koskinen had not even asked them about the tapes.

The Department of Justice did nothing. Many people have been prosecuted, convicted and imprisoned for far less in the way of perjury. ...

Now, according to the most recent filing by Judicial Watch, the IRS asserts that the emails are not records of the IRS. Being a Texan, I’m not 100 percent sure how to pronounce it, but “chutzpah” is the only word to describe this latest assertion. To borrow from Lewis Carroll, “Imagination is the only weapon in the war against reality.”

The IRS and its Department of Justice lawyers must be imagining that these emails were not repeatedly sought by Congress and Judicial Watch while in the possession of the IRS. The IRS must be imagining that its own commissioner never lied to Congress, the court and the public about their existence and purported efforts to find them. And it must be imagining that each of its seven filings in Judge Sullivan’s court did not fail to reveal the existence of the backup tapes. It must be imagining that Judge Sullivan won’t remember the lengths to which he and the magistrate went to try to find the emails and any backups. And it is imagining that it can continue stalling and lying indefinitely, while no one in the government is held accountable for far more serious legal infractions than those for which ordinary citizens have been imprisoned.

It took Judge Sullivan only two days to grant Judicial Watch’s request to require IRS to disclose whether all emails the inspector general found have been turned over to the IRS, where it stands in the review process, and how many of the 1,268 tapes have been processed for recovery or when that process will be complete.

Stunningly, in its response the IRS again said nothing. It simply punted to the Inspector General. It claims that because of that investigation, it cannot disclose more Lois Lerner or other emails. It just stalls. ...

If the IRS won’t provide information, set and meet a deadline, perhaps Judge Sullivan will turn to the Inspector General to answer his questions. If neither does, Judge Sullivan still has the option of naming a special prosecutor.

President Obama was right when he said there isn’t “a smidgeon of corruption in the IRS.” Rather, it is rife with it. Someone needs to end the madness, and teach the IRS that stop means stop.

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June 24, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Tuesday, June 23, 2015

The IRS Scandal, Day 775

IRS Logo 2Wall Street Journal editorial, The IRS Loses Again: Z Street May Soon Get to See Why the Agency Sat on its Application:

The story of IRS targeting of conservative groups that disagreed with Obama Administration policy isn’t over. On Friday the IRS lost another big battle, as the D.C. Circuit Court of Appeals ruled that a viewpoint discrimination lawsuit against the agency can proceed. Next stop, discovery.

The lawsuit began when the Pennsylvania-based pro-Israel group Z Street applied for tax-exempt status in 2009. When Z Street called to inquire about its application, it says an IRS agent said the agency had a policy that required Israel-related applications to get extra scrutiny in a special unit in Washington. Z Street sued in federal court but the IRS claimed the Anti-Injunction Act prevents suits meant to evade the collection of taxes and because the IRS was protected by the doctrine of sovereign immunity. The IRS lost in district court but appealed. ...

We already know from the IRS’s Be On the Lookout lists that the agency was flagging groups having to do with “occupied territory advocacy.” Soon we may see what else no good the agency was up to.

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

Monday, June 22, 2015

The IRS Scandal, Day 774: The D.C. Circuit Continues To Chip Away At The Anti-Injunction Act

Hickman 2014 2TaxProf Blog op-ed:  Z Street v. Koskinen: The D.C. Circuit Continues To Chip Away At The Anti-Injunction Act, by Kristin E. Hickman (Minnesota):

In Z Street v Koskinen, the D.C. Circuit considered the justiciability of a claim raised by Z Street, a nonprofit organization, that the IRS delayed considering Z Street’s application for tax exempt status under IRC § 501(c)(3) based solely upon the fact that Z Street’s activities contradicted government policy vis a vis Israel, and that the IRS thus violated Z Street’s First Amendment rights. IRC § 7428 allows an organization to seek declaratory judgment if the IRS fails to act upon its exemption application within 270 days. Z Street brought its challenge 32 days short of that date, prompting the IRS to claim that the Anti-Injunction Act, § 7421 precluded Z Street’s suit until the 270-day period for relief under IRC § 7428 had elapsed. 

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June 22, 2015 in IRS News, IRS Scandal, New Cases, Tax | Permalink | Comments (0)

Sunday, June 21, 2015

The IRS Scandal, Day 773

IRS Logo 2Fox, The IRS Mystery Man Calling the Shots:

When it comes to the targeting of conservative groups by the Internal Revenue Service, the media has focused its attention on Lois Lerner, who oversaw the tax agency’s Exempt Organizations Unit. But they may want to pay more attention to William Wilkins, the IRS chief counsel, whose office, according to sources, had unprecedented involvement in applications for tax exempt status and the special scrutiny of conservative applications.

Wilkins is one of just two of the tax agency’s roughly 90,000 employees who was appointed by the White House, according to reports.  He came to the IRS in 2009 from Wilmer Cutler Pickering Hale and Dorr LLP, where he had worked as a lobbyist since 1988. At WilmerHale, as the firm is now called, he was part of the tax practice group and as part of his responsibilities he advised nonprofit organizations on tax compliance. Prior to that, Wilkins served as staff counsel to the Democratic side of the Senate Finance Committee from 1981 to 1988.

Tom Fitton, president of Judicial Watch, who is suing the IRS to force the issuance of emails related to the tax exempt scandal, is highly critical of Wilkins. He says, “The counsel’s office was up to its neck in tea party targeting. I don’t understand why he is still there.” Wilkins also led the defense team of former Obama pastor Jeremiah Wright and Trinity United Church of Christ in 2008, when it faced an IRS probe regarding its tax exempt status.

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June 21, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Saturday, June 20, 2015

The IRS Scandal, Day 772: D.C. Circuit Refuses To Dismiss Z Street's Claim That The IRS Delayed Tax-Exempt Status Due To Its Pro-Israel Views

SmithTaxProf Blog op-ed: D.C. Circuit Opinion in Z Street v. Koskinen Denies Application of Anti-Injunction Act in Suit over Delay in Processing Application for Tax Exemption, by Patrick J. Smith (Ivins, Phillips & Barker, Washington, D.C.):

On Friday, June 19, 2015, the D.C. Circuit issued its opinion in Z Street v Koskinen.  In this suit, an organization that had filed an application for tax-exempt status with the IRS brought suit against the IRS in U.S. district court alleging that the IRS was delaying processing of the application because the organization’s activities related to Israel and because, according to the organization’s allegations, the IRS has an “Israel Special Policy” requiring delayed processing for such organizations if their views on Israel do not coincide with the policies of the Obama Administration.  The government filed a motion to dismiss, relying primarily on the argument that the suit was barred by the Anti-Injunction Act.  Based on the procedural posture, the district court assumed the truth of the organization’s allegations, and denied the motion, holding that the suit was not about assessment or collection of taxes but rather about allegations of unconstitutional discrimination in the processing of the application for tax-exempt status.

The oral argument in the case took place on May 4 of this year, and during this oral argument the panel of three D.C. Circuit judges was clearly extremely hostile to the position taken by the IRS and the Justice Department on behalf of the IRS.  A significant part of the questioning by the judges related to the Supreme Court’s recent decision in Direct Marketing Association v. Brohl, 135 S. Ct. 1124 (2015).  The judges on the panel suggested in their questions to the attorney representing the IRS that the Direct Marketing decision would strongly support the conclusion that the Anti-Injunction Act should not apply under the circumstances of this case. 

As I discussed in a recent Tax Notes article, Challenges to Tax Regulations: the APA and the Anti-Injunction Act, while the Direct Marketing decision related to the Tax Injunction Act, which imposes limitations on the types of suits relating to state taxes that may be heard in federal district court, while the Anti-Injunction Act imposes limitations on the types of suits relating to federal taxes that may be brought in federal district court, nevertheless, because of the strong similarities between these two provisions, and because the Supreme Court in Direct Marketing relied on these parallels to read the words “assessment,” “collection,” and “levy” in the Tax Injunction Act in a narrow, technical way, based on the meaning these words have in the Internal Revenue Code, the narrow reading the Court gave the Tax Injunction Act in Direct Marketing would suggest that the Anti-Injunction Act should be given a similarly narrow reading, contrary to the broad reading given to the Anti-Injunction Act in the 1974 Supreme Court decision Bob Jones University v. Simon, 416 U.S. 725 (1974).

However, while the opinion issued by the D.C. Circuit in Z Street affirmed the district court and held that the Anti-Injunction Act did not apply to bar the suit, nevertheless, the tone of the opinion was much milder than might have been expected based on the tone of the oral argument.  In addition, while the opinion noted that the court’s conclusion “finds support in” the Direct Marketing decision, it was not on this basis that the court decided the Anti-Injunction Act did not apply.  Instead, the court relied on the Supreme Court’s 1984 decision in South Carolina v. Regan, 465 U.S. 367 (1984), which held that the Anti-Injunction Act does not apply to bar a suit in cases where the party bringing the suit has no alternative way of bringing its challenge to IRS action in court.  The court held this principle applied in this case because the alternative remedies suggested by the government, a tax refund suit, or a challenge in Tax Court under section 7428 for a determination relating to qualification for tax-exempt status, would not give the organization a way to make its challenge to the delay in processing its application on allegedly unconstitutional grounds.

Thus, while the outcome in the case is welcome, this decision is somewhat disappointing in that it leaves for another day a determination of the effect of the Direct Marketing decision on the scope of the Anti-Injunction Act and the Bob Jones decision.  The court notes that while the D.C. Circuit’s earlier en banc decision in Cohen v. United States, 650 F.3d 717 (D.C. Cir. 2011) (en banc), rejected the IRS position that because of the Anti-Injunction Act, the only way to litigate tax issues is through the types of tax litigation specifically authorized in the Internal Revenue Code, such as tax refund suits and Tax Court deficiency actions, nevertheless, the Cohen decision, which preceded the Direct Marketing decision by several years, also noted that the Anti-Injunction Act means that a suit’s “implications” for assessment and collection must be considered. 

Another currently pending D.C. Circuit case, Florida Bankers Association v. Treasury, No. 14-5036 (D.C. Cir.), is likely to address more directly the issue of what Direct Marketing means for the Anti-Injunction Act.  I discussed the Anti-Injunction Act issue in this case in my recent Tax Notes article, and I discussed the merits issue in the case in two earlier Tax Notes articles.  Although the briefing and the oral argument in this case preceded the issuance of the Direct Marketing decision, nevertheless, the plaintiffs filed a submission with the D.C. Circuit after the Direct Marketing decision notifying the court of the relevance of this case.  This case involves a challenge to the validity of IRS regulations requiring banks to file information returns with the IRS reporting interest earned by non-resident aliens on accounts at the reporting banks.  In addition to arguments on the merits, the government argues the suit is barred by the Anti-Injunction Act.  The district court held the Anti-Injunction Act did not apply, both because the case involves information reporting regarding income that would not in any event be subject to U.S. tax and because the penalty that would be imposed on the banks for failing to comply with the reporting requirements was not sufficient to implicate the Anti-Injunction Act because none of the banks had violated this requirement and none had indicated an intention to do so.

During the D.C. Circuit oral argument, one of the judges on the panel, Judge Brett Kavanaugh, who wrote the opinion in Loving v IRS, 742 F.3d 1013 (D.C. Cir. 2014), holding invalid the IRS regulations imposing restrictions on tax return preparers, was particularly interested in the Anti-Injunction Act issue.  The fact that there has been a somewhat long delay since the oral argument without the opinion in this case being issued (over four months, compared to six weeks between oral argument and opinion in Z Street), suggests that the opinion when it comes out should illuminate the D.C. Circuit’s view on the significance of the Direct Marketing decision for the Anti-Injunction Act.  There is no overlap in the panels between Z Street and Florida Bankers.

Prior TaxProf Blog coverage:  

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June 20, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Friday, June 19, 2015

The IRS Scandal, Day 771

IRS Logo 2Investor's Business Daily, IRS' Latest Email Excuse Draws It Closer To Rogue Agency Status:

Lawlessness:  On Day 768 of the IRS scandal targeting political dissidents, the tax agency said it has more emails to release. Only it can't release them until September because it must ensure there are no duplicates. Baloney.

Missing yet another court-ordered deadline on June 12, the Internal Revenue Service has failed to release 6,400 new emails found on the hard drive of Lois Lerner, former tax exempt organization chief, pertaining to the agency's admitted targeting of administration critics. ...

Now, instead of that dog-ate-my-homework claim, the excuse is that the IRS only wants to make sure there are no duplicates in the bunch, a peculiar fastidiousness given how the agency has stopped answering most taxpayer phone calls .

Let's cut to the chase here: The IRS is obstructing justice because it doesn't want the truth to come out . The agency has been caught red-handed targeting opponents of the Obama administration, including the tea party, pro-Israel groups and conservative news media.

It purposely delayed issuances of tax-exempt status to nonprofit groups and held investigations entirely outside its own mandate.

What the IRS is hiding is bound to be the work of malicious political operatives cloaking themselves as impartial civil servants, plotting among themselves against their political enemies through email.

The stiff-arms given by the IRS at every juncture — from Lerner's invoking her Fifth Amendment right against self-incrimination at a House hearing to this latest claim about preventing duplicates — is consistent with that scenario.

As a result, the IRS is moving closer and closer to rogue status — an agency so contemptuous of the law and confident of its impunity that it's becoming a law unto itself.

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June 19, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Thursday, June 18, 2015

The IRS Scandal, Day 770

Wednesday, June 17, 2015

The IRS Scandal, Day 769

IRS Logo 2Judicial Watch Press Release, IRS Finds New Lois Lerner Emails:

Judicial Watch President Tom Fitton made the following statement in response to the IRS’ court filing Friday about 6,400 newly discovered emails from Lois Lerner’s account:

Late Friday afternoon, the Obama IRS finally complied with Judge Emmet Sullivan’s June 4 order requiring the IRS to provide answers by June 12 on the status of the Lois Lerner emails the IRS had previously declared lost. Judicial Watch raised questions about the IRS’ handling of the missing emails issue in a court filing on June 2, 2015, demanding answers about Lois Lerner’s emails, which had been recovered from backup tapes.

Our review of the seven-page filing shows that the IRS remains intent on stonewalling Judicial Watch and Judge Sullivan. Indeed, contrary to false representations to the court and Congress that the emails were lost and unrecoverable, the IRS finally admits that it has as many as 6,400 new Lois Lerner emails but won’t promise to turn them over to Judicial Watch. Even though the Treasury Inspector General for Tax Administration already identified and removed emails that are duplicates, the IRS is in ‘the process of conducting further manual deduplication of the 6,400’ emails, rather than reviewing them in response to Judicial Watch’s Freedom of Information Act requests that are more than two years old now. Our legal team will continue pursuing all necessary and available legal options to hold the IRS accountable for its flagrant abuse of power.

Plaintiff's Response to Defendant's June 12, 2015 Response (No. 1:13-cv-1559-EGS, June 12, 2015):

1.  Defendant Internal Revenue Service (“IRS”) does not refute in its seven-page Response that the Treasure Inspector General for Tax Administration (“TIGTA”) was able to locate the Lois Lerner backup tapes within one day of its investigation or that the IRS never requested the backup tapes from its technicians before declaring that the emails were lost forever.

2.  IRS has still not disclosed whether TIGTA has produced to the IRS all emails it forensically recovered and when the IRS expects to produce them to Plaintiff in response to the FOIA requests submitted more than two years ago.

3.  Rather, it affirmed that the “Service is in the process of conducting further manual duplication of the 6,400 forensically-recovered emails to supplement the automated duplication conducted by TIGTA.” This is after TIGTA had already identified and removed emails that are duplicates of the recovered emails or those which the IRS had already produced to Congressional Committees. According to its Response, the IRS does not intend to begin producing any of the 6,400 emails until after it has completed its review and production of the Lerner emails that were not forensically recovered. ...

4.  The IRS has a statutory duty to search for and produce documents responsive to Plaintiff’s FOIA requests in the shortest amount of time. 5 U.S.C. § 552(a)(6)(A); Order, Jason Leopold v. U.S. Department of State, Case No. 15-0123-RC (D.D.C. May 27, 2015) (DKT No. 17) (ordering the State Department to start producing Hillary Clinton’s emails every thirty days, rather than waiting to produce them at one time in January 2016).

5.  Plaintiff’s counsel is not concerned about receiving duplicate emails in this case. Lois Lerner’s emails are at the heart of Plaintiff’s FOIA requests. Plaintiff has waited more than two years to receive them and the IRS should start producing them now.

6.  Also, the IRS’s uncited statement that it is premature for TIGTA to publically disclose the status of its investigation in greater detail is directly contradictory to Congressman Chaffetz’s statement on June 12, 2015 that TIGTA is preparing to release the conclusion of its investigation about the Lois Lerner’s emails in the next several days. The fact that TIGTA’s conclusion of its investigation is expected in the next few days indicates (1) that the investigation is complete and (2) the report is basically in final form.

7.   Judicial Watch respectfully requests that the Court order the IRS to start producing any non-exempt, responsive emails contained within the 6,400 emails immediately and disclose whether they are all or a subset of the recovered emails from the 1,268 backup tapes.

8.  Further, Judicial Watch respectfully requests that the Court order the IRS to file monthly status reports about its progress of the production of non-exempt, responsive emails that were placed in the Congressional database two years ago, the 6,400 recovered emails and any additional emails that may be recovered by TIGTA from the 1,268 backup tapes.

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June 17, 2015 in IRS News, IRS Scandal | Permalink | Comments (1)

Tuesday, June 16, 2015

The IRS Scandal, Day 768

IRS Logo 2Daily Caller, IRS Finds 6,400 New Lois Lerner Emails…Gives DUMBEST EXCUSE YET For Not Releasing Them:

The Internal Revenue Service found 6,400 more Lois Lerner emails — but they’re not handing them over in court.

The IRS’ latest excuses are nothing short of infuriating.

Department of Justice lawyers Geoffrey J. Klimas and Stephanie Sasarak, acting as counsel for the IRS, submitted a U.S. District Court filing June 12 in the case Judicial Watch v. Internal Revenue Service. The court filing, provided to The Daily Caller, claims the IRS received new Lerner emails from the Treasury Department’s inspector general (TIGTA) but can’t fork over the emails to Judicial Watch, a nonprofit group suing to get the emails. Why? Because the IRS is busy making sure that none of the emails are duplicates  – you know, so as not to waste anyone’s time.

However, the inspector general already made sure that none of the emails were duplicates, so the IRS’ latest excuse falls flat.

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June 16, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (8)

Monday, June 15, 2015

The IRS Scandal, Day 767

IRS Logo 2OpenSecrets.org, Rove’s ‘New’ Group Isn’t New, and That Could Be the Point:

Karl Rove and his colleagues at the dark money behemoth Crossroads GPS have a “new” 501(c)(4), and according to reports, they’re going to use it in much the same way they have used GPS itself — as a conduit for anonymous, political money in the 2016 elections.

But the group, One Nation, isn’t “new,” and that’s probably the point.

Virginia state incorporation records show that the operatives who run Crossroads simply took over an existing 501(c)(4), and they likely did so because the group had the one thing that has been elusive to Crossroads since its founding in 2010: An approved application for tax exemption from the IRS.

Grasping that fact is central to understanding why Crossroads would need to form a new 501(c)(4) to do what it — the largest of all politically active nonprofits — has done for nearly five years. Obtaining the more durable shield of IRS recognition likely has as much to do with this move by Crossroads as its reported aim of keeping the Crossroads brand relevant in a crowded field of GOP groups trying to influence the 2016 elections.

Over the last two weeks, media outlets have talked up One Nation as the “new nonprofit group” that will be spending millions on television and radio ads aimed at softening up voters in three states where Senate Republicans are vulnerable. This “new” group will work in tandem with a super PAC called Senate Leadership Fund to help the GOP hold its majority in the Senate. Essentially, Crossroads is taking a page out the playbook developed by Harry Reid and the Democratic operatives behind liberal dark money group Patriot Majority USA and its sister super PAC Senate Majority PAC.

But One Nation is as “new” as a 2010 Camry with $2 million in the trunk, a fresh coat of paint and a different driver behind the wheel. That’s because One Nation was, until recently, Alliance for America’s Future, a five-year-old 501(c)(4) social welfare organization formed by the GOP consultants that made up the “BK” in BKM Strategies — Barry Bennett and Kara Ahern, respectively. Mary Cheney was the “M” in the firm, and the Alliance for America’s Future had other ties to the Cheney network. But the group hasn’t made independent expenditures since the 2010 cycle, when it spent more than $700,000; it also spent heavily that cycle for ads promoting Nevada GOP gubernatorial candidate Brian Sandoval.

While Crossroads GPS has been waiting for the IRS to approve its application for exempt status since Miley Cyrus was Hannah Montana, Alliance for America’s Future — which is represented by the same law firm and applied for an exemption the same month as GPS — was given the IRS seal of approval within weeks, in July 2010. Now, by taking the reins at Alliance for America’s Future, the folks at Crossroads are at the controls of a group that comes pre-packaged with an IRS exemption. And there’s already a link between the organizations: Crossroads helped fund the Republican Governors Public Policy Committee in 2010, a year when the governors’ group provided more than half the money spent by the Alliance for America’s Future — which Nevada courts found out when they forced AAF to disclose three years later.

Marcus Owens, a nonprofit tax lawyer at Loeb & Loeb and former head of the IRS Tax Exempt Division, agrees that the exemption could play a role in the decision by Crossroads operatives to take over the Alliance — particularly given the level of uncertainty that surrounds the Crossroads application for exemption.

“Having an already exempt fallback organization makes sense as a way to continue activities,” Owens said.

Lloyd Hitoshi Mayer, professor of nonprofit tax law at Notre Dame, calls the move “a well-known strategy in such situations,” going back at least to the Christian Coalition’s decision in 1999 to shift its operations to its Texas chapter, which already had exempt status, and rename it the Christian Coalition of America.

With One Nation under its wing, Crossroads GPS could engage in a similar shift. If it is denied status by the IRS — or if it decides to withdraw its application altogether — its operations can move seamlessly under the umbrella of another 501(c)(4) that already has the IRS’s seal of approval and whose legal gymnastics are already choreographed by the same law firm.

Owens and Mayer stressed that such a move doesn’t mean that the Crossroads operatives are free to engage in politics when they’re at the helm of One Nation; it just shifts oversight to the much less watchful eye of the agency’s auditors. “Such a shift doesn’t escape the possibility of IRS scrutiny,” Owens told OpenSecrets Blog, “but it moves the matter from the application context to the audit context, where the IRS capabilities are spread much more thinly.”

Thin indeed: a 2014 report by the Center for Public Integrity cited statistics showing that the IRS only audited 7 out of every 1,000 yearly returns in 2013. Compare that to the application process, which requires each 501(c) application to be approved or denied by an actual person, and it becomes clear why circumventing that process is such a boon to the operatives who run Crossroads.

The icing on the cake is that this move gives Crossroads a way to slide out from under its languishing application without being forced to pay the corporate income taxes it would have to pay if it received a denial from the IRS — a liability that already got smaller when the statute of limitations on its earliest activities ran out in April. Crossroads could withdraw its application and terminate, potentially without the repercussions of negative determination by the IRS.

This wouldn’t be a risk-free strategy on Crossroad’s part. As Owens points out, this kind of move from an active organization “has historically been an audit trigger.” Mayer says that “in theory the IRS could retroactively attempt to force the organization into 527 status for earlier years and require disclosure of contributors to the organization during those years,” but he doesn’t know of an instance where that has happened.

But while such a scenario poses uncertain risks for Crossroads GPS, those risks are not transferred to One Nation, because it is a separate organization, not technically affiliated with Crossroads.

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June 15, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Sunday, June 14, 2015

The IRS Scandal, Day 766

IRS Logo 2IRS, Response to Notice (No. 1:13-cv-1559-EGS, June 12, 2015):

In accordance with the Court's June 4, 2015, Order, the Internal Revenue Service ("Service") responds to Judicial Watch, Inc.'s Notice dated June 2, 2015:

15. On April 23, 2015, TIGTA provided approximately 6,400 forensically-recovered emails to the Service. 1 Certain of the emails forensically recovered by TIGTA were not readable, or not entirely readable, as initially provided to the Service. TIGTA subsequently provided some of these documents to the Service in readable form on May 8 and June 1, 2015. To date, TIGTA has not provided any other recovered emails to the Service.

16. Prior to providing the Service with the approximately 6,400 forensically-recovered emails, TIGTA identified and removed emails which appear to be duplicates of those which the Service has already produced to the Congressional Committees or were duplicates of other recovered emails. Such emails are also duplicates of those the Service has already retrieved in connection with responding to the FOIA requests at issue in this case. The Service is in the process of conducting further manual deduplication of the 6,400 forensically-recovered emails to supplement the automated deduplication conducted by TIGTA. TIGTA also is further reviewing the 6,400 emails to verify that they were not already produced to the Congressional Committees by the Service.

17. The Service expects to begin processing and reviewing the recovered emails immediately following its review and production of Lerner communications which were not forensically recovered. At this time, the Service is unable to estimate when it will finish processing and reviewing the forensically-recovered emails. 

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June 14, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Saturday, June 13, 2015

The IRS Scandal, Day 765

IRS Logo 2Judicial Watch Press Release, JW Beats IRS in Court (June 12, 2015):

Calling all conservative activists, citizens and groups who were silenced and harassed by the Obama Internal Revenue Service in the run-up to the 2012 elections and beyond — you should know that we have moved a few steps closer to holding the Obama administration accountable for its criminal misuse of the federal tax-collecting agency.

We are pleased to announce that Judge Emmet Sullivan of the U.S. District Court for the District of Columbia granted a Judicial Watch request to issue an order requiring the IRS to provide answers by June 12, 2015, on the status of the Lois Lerner emails the IRS had previously declared lost. Judicial Watch raised questions about the IRS’ handling of the missing emails issue in a June 2 court filing, demanding answers about Lois Lerner’s emails, which had been recovered from backup tapes. Judge Sullivan issued the court order on June 4, 2015. ...

The IRS response is due today. Typically, the Obama administration waits until late in the day, especially on Fridays, to release material that makes it look bad. I’ll report back to you next week on the IRS filing. In the meantime, you may want to ask your congressmen and senators why, for the most part, they sit on their hands on the Obama IRS abuses and cover-up while Judicial Watch does all the hard work.

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June 13, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Friday, June 12, 2015

The IRS Scandal, Day 764

IRS Logo 2World, New Details Emerge in IRS Targeting Scandal:

It’s been a little more than two years since a Treasury Department Inspector General report found the Internal Revenue Service used “inappropriate criteria” to target conservative nonprofit groups for extra scrutiny.

“It’s inexcusable, and Americans are right to be angry about it, and I’m angry about it,” said President Barack Obama in a statement issued May 15, 2013, the day after the report. “I’ll do everything in my power to make sure that nothing like this ever happens again.”

The investigation into what happened and who is responsible has unfolded slowly, but lost amid ISIS, presidential campaigns, and international crises, congressional probes continue to uncover new information. This week, during a House Oversight and Government Reform Committee hearing, Republican lawmakers honed in on an IRS official’s disclosure that the agency established a “special project team” to handle all information requests related to the targeting issue.  

Republicans were instantly suspicious because the arrangement apparently involved the IRS chief counsel and acting commissioner—the only two political appointees at the agency. Mary Howard, IRS director of privacy, governmental liaison, and disclosure, said the team included hundreds of attorneys assigned to gather information for both congressional and public inquiries. ...

Rep. Jim Jordan, R-Ohio, who has taken a lead on investigating the targeting, said it could be just as Howard said, but “obviously I’m suspicious based on the track record. “ ...  Jordan said Howard’s testimony raised many new questions the committee decided to formally ask the IRS in a letter sent today.  ...

The two-year-old controversy involves conservative groups who were singled out for extra scrutiny when they applied for 501(c)4 nonprofit status. The Government Accountability Office is currently studying whether the IRS also singled out existing conservative nonprofit groups through the auditing process. Jordan said lawmakers anticipate a report in the near future.

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June 12, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Thursday, June 11, 2015

The IRS Scandal, Day 763

IRS Logo 2Wall Street Journal editorial, Return of the Speech Police:

You won’t read much about it in the Beltway press corps, but a behind-the-scenes effort is under way to lobby the Federal Election Commission and Justice Department to stifle free political speech the way the Internal Revenue Service did in 2012. Don’t be surprised if the subpoenas hit Republican candidates at crucial political moments. ...

Criticism of the FEC is part of the left’s strategy to turn the commission into its agent to intimidate conservative groups and limit their political speech. The letter writing campaigns use the same accusations about “dark money” that the groups used to lobby the IRS in the 2012 election cycle.

In September 2011, Democracy 21 and the Campaign Legal Center wrote to then IRS Commissioner Douglas Shulman and Exempt Organizations Director Lois Lerner requesting an IRS probe into whether “certain organizations are ineligible for tax exempt status under section 501(c)(4).” Around the same time, the IRS created its process that targeted conservative groups. The same outfits are back at it, filling the FEC’s docket with complaints that target Republicans or GOP-leaning organizations 75% or more of the time.

If these liberal outfits don’t like Super PACs, they should look in the mirror. Super PACs are the inevitable reaction to campaign-finance limits on candidates. Instead of unleashing another round of political targeting, this time corrupting the Justice Department, true liberals should deregulate politics.

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June 11, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Wednesday, June 10, 2015

The IRS Scandal, Day 762

IRS Logo 2USA Today op-ed:  The IRS Can Still Silence Political Dissent, by Allison R. Hayward:

Two years ago, Lois Lerner of the IRS revealed that it unfairly targeted and delayed Tea Party applications for tax exemption. While the IRS has apologized and promised reform, the agency has not fixed the vague rules that allowed this scandal to happen. As we enter the 2016 election cycle, political activists remain in danger of selective IRS audits, penalties and approvals.

As troubling as this is, we have seen this before. The tax regulation of non-profit advocacy groups has not had a happy history. One pattern repeats: Congress passes a tax law, often to score short-term political points. The IRS then interprets the law aggressively, often against groups with controversial views. Federal courts may soften that blow case by case. Eventually, Congress passes another law and this cycle starts again. ...

We need to learn several lessons from this history. First, the IRS, while effective at collecting taxes, is a poor agency to task with regulating advocacy organizations, especially those, such as the advocacy groups covered under 501(c)(4), that cannot offer donors a tax deduction. At most, only trivial amounts of revenue are at stake from the activity. Whether a certain message, or viewpoint, or advertisement, or tone is proper should not be a concern of the revenuer.

Second, Congress must resist the temptation to even political scores through tax legislation. Not only is it poor governance, it rarely works.

Finally, the courts should remain vigilant in protecting groups from IRS overreach and congressional mischief. Courts should feel free to identify and excise laws, even tax laws, that abridge political freedom.

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

Tuesday, June 9, 2015

The IRS Scandal, Day 761

IRS Logo 2Judicial Watch Press Release, Federal Court Issues Ruling Compelling IRS to Provide Answers on Lerner IRS Emails:

Judicial Watch announced that Judge Emmet Sullivan of the U.S. District Court for the District of Columbia granted a Judicial Watch request to issue an order requiring the IRS to provide answers by June 12, 2015, on the status of the Lois Lerner emails the IRS had previously declared lost.  Judicial Watch raised questions about the IRS’ handling of the missing emails issue in a court filing on June 2, 2015, demanding answers about Lois Lerner’s emails, which had been recovered from backup tapes.  Judge Sullivan issued the court order on June 4, 2015.

Judicial Watch has argued that the IRS misled the court and Judicial Watch by withholding the truth about the existence and content of the backup tapes.  In response to Judicial Watch’s litigation and pressure from Congress, some of Lerner’s emails had been recovered by the Treasury Inspector General for Tax Administration (TIGTA) despite testimony from the IRS Commissioner and representations to Judge Sullivan that Lerner’s emails had been irretrievably lost and destroyed. ...

“The Obama IRS obstructed and lied to a federal judge and Judicial Watch in an effort to hide the truth about Lois Lerner’s emails,” said Judicial Watch President Tom Fitton. “The IRS, including its top political appointees IRS Commissioner John Koskinen and General Counsel William J. Wilkins, has much to answer for over its contempt of court and of Congress.  And the Department of Justice officials enabling this cover-up in court need to be held accountable, as well.  The IRS is out of control and Judicial Watch is happy that Judge Sullivan has taken this key step to remind the agency that it is accountable to the rule of law and the American people.”

 

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June 9, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Monday, June 8, 2015

The IRS Scandal, Day 760

IRS Logo 2Forbes, IRS' Lois Lerner Got Pension, $129K Bonus, New Call For Criminal Charges, by Robert W. Wood:

 Many Republicans are still upset that Lois Lerner of the IRS got a pass from the Obama Justice Department. As the IRS scandal hit day 750, 24 Republicans sent a letter to Attorney General Loretta Lynch, who recently replaced Eric Holder as the nation’s top law enforcement officer. It seems unlikely that the new AG will upset the apple cart. Still, the 24 House members want the new AG to criminally prosecute Lois Lerner, the IRS official at the center–if not the top–if the agency’s targeting scandal. ...

Ms. Lerner will probably not face any further action. Yet while she presided over alleged discrimination against conservative nonprofits, Ms. Lois Lerner received $129,000 in bonuses. Some people have asked but for what.

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June 8, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Sunday, June 7, 2015

The IRS Scandal, Day 759

IRS Logo 2Fox News op-ed:  More IRS Outrage: Agency Used 'Hundreds of Lawyers' to Hide Information from Congress, by Jay Sekulow:

It’s been a very bad week for the Internal Revenue Service (IRS) – which translates into a very bad week for the American people. ...

Now, we learn that as Congress began its investigation into the unlawful scheme targeting conservative and Tea Party groups the IRS used “hundreds of attorneys” to hide critical information from Congress.

According to new bombshell testimony, the IRS set up a previously unknown “special project team” comprised of “hundreds of attorneys,” including the IRS Chief Counsel (one of only two politically appointed positions at the IRS).

The “special project” this team was given?  Concealing information from Congress.

The IRS’s director of privacy, governmental liaison, and disclosure division, Mary Howard, testified that soon after the IRS targeting scandal was revealed, the IRS “amassed hundreds of attorneys to go through the documents [requested by Congress] and redact them.” She told Congress that once the “special project team” was created and operational, she never saw requests for information.

Her testimony is clear: As soon as the IRS targeting scandal broke, the IRS set up a special team of hundreds of attorneys, including President Obama’s political head of the Chief Counsel’s office, to keep requests for publicly available information away from the person who would normally review those documents and turn them over to Congress and the public.  That “special” team then overly redacted, delayed, and determined which documents it wanted Congress to see.

After setting up a special “group” to target and delay applications by Tea Party groups for tax-exempt status, the IRS set up a new “special project team” to delay and redact information from Congress about that targeting.  Talk about a cover-up.

When asked about these revelations and the ongoing investigation by Congress into the IRS and former top IRS official Lois Lerner’s involvement, Howard testified, “I think that Lois Lerner was the tip of the iceberg.”

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

Saturday, June 6, 2015

The IRS Scandal, Day 758

IRS Logo 2Wall Street Journal:  The Clinton ‘Charity’ Begins at Home, by Kimberley A. Strassel:

The scandal of the century at the IRS was that agency’s secret targeting of conservative nonprofits. Perhaps a close second is the scandal of what the IRS hasn’t been investigating: the Clinton Foundation.

The media’s focus is on Hillary Clinton’s time as secretary of state, and whether she took official actions to benefit her family’s global charity. But the mistake is starting from the premise that the Clinton Foundation is a “charity.” What’s clear by now is that this family enterprise was set up as a global shakedown operation, designed to finance and nurture the Clintons’ continued political ambitions. It’s a Hillary super PAC that throws in the occasional good deed.

That much is made obvious by looking at the foundation’s employment rolls. Most charities are staffed by folks who have spent a lifetime in nonprofits, writing grants or doing overseas field work. The Clinton Foundation is staffed by political operatives. It has been basically a parking lot for Clinton campaign workers—a comfy place to draw a big check as they geared up for Hillary’s presidential run. ...

This is typically Clinton, which means it is typically on the edge of legal. The foundation operates as a nonprofit, raising hundreds of millions as a “charity.” We know from foundation tax filings that it spends an extraordinary portion of its funds on travel and staff. How many donors are unaware that their money is going to keep Clinton friends in full employment? How many are aware and give precisely for that reason—to help elect a new president, one who will gratefully remember their help?

Lucky for the Clintons, nobody looks. As a charity (and unlike a super PAC), the foundation is subject to almost no oversight. The IRS in the past has stripped charities of their tax-exempt status when they are shown to be operating for a purpose other than benevolence. The agency has shown no real interest in the Clinton Foundation. Go figure.

Clinton allies are insisting to all who listen that the foundation exists to do good. It does. It exists to do very good things for Hillary and Bill and all their longtime allies. And in that, it has succeeded beautifully.

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

Friday, June 5, 2015

The IRS Scandal, Day 757

IRS Logo 2Washington Examiner, IRS Sends Congress Unsigned Form Letter to Brush Off Demands for Clinton Foundation Investigation:

The IRS responded to a Republican request for an investigation into the Clinton Foundation's tax-exempt status with a one-page form letter that starts with "Dear Sir or Madam."

In May, more than 50 House Republicans asked the IRS to review the Clinton Foundation's tax-exempt status, after it became clear that the foundation had failed to report millions of dollars in grants from foreign governments.

That letter, led by Rep. Marsha Blackburn of Tennessee, said a review was "appropriate" given that this money was accepted and not reported while Hillary Clinton was serving as secretary of state.

In response, the IRS sent Blackburn a form letter, which Blackburn received late Wednesday. The letter thanked her for submitting the request, and said the IRS has an "ongoing examination program" to ensure tax-exempt groups comply with tax law.

"The information you submitted will be considered in this program," it said. The letter was from Margaret Von Lienen, director of exempt organizations examinations, but she didn't sign it.

Blackburn said the perfunctory response is far below the level of customer service members of Congress should be getting.

"The IRS response is not acceptable and lacking in the requisite tact that should accompany a congressional inquiry," she said. "It is unbelievably disrespectful that Margaret Von Lienen couldn't even take the few extra seconds needed to sign the letter."

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

Thursday, June 4, 2015

The IRS Scandal, Day 756

IRS Logo 2Washington Times, IRS Official: ‘Lois Lerner Was the Tip of the Iceberg’:

The IRS’s director of privacy, governmental liaison and disclosure division testified Wednesday that the tax agency set up a special team with hundreds of lawyers to handle the probe into whether Tea Party groups were targeted, but repeatedly said she had no idea how it operated.

Mary Howard, who also works as the head Freedom of Information Act officer in the IRS, told the House Committee on Oversight and Government Reform that once the “special project team” was created and operational, she never saw requests for information. ...

Republican Committee Chairman Jason Chaffetz also asked about the information requests after news broke that the IRS was targeting conservative groups, holding up their requests for tax-exempt status. Those requests “went to the commissioner, and it went to the general counsel,” he said. “There’s only two political appointees in all of the IRS, the commissioner and the general counsel. Those are the only two out of 90,000.”…

“I think that Lois Lerner was the tip of the iceberg,” Howard said.

“Really?” Chaffetz said. “So do we.”

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

Wednesday, June 3, 2015

The IRS Scandal, Day 755

IRS Logo 2The Hill, Watchdog: Lerner Report by End of Month:

A federal watchdog investigating the missing Lois Lerner emails said Tuesday he expects to give lawmakers a final report by the end of the month. 

J. Russell George, the Treasury inspector general for tax administration, said at a Senate Finance hearing that his office conducted almost 150 interviews as it sought to track down the former IRS official's emails. ...

Senate Finance Chairman Orrin Hatch (R-Utah) told George that he hoped to have the inspector general’s report by the middle of this month.

George, while insisting his office would do his best, also stressed that he needed to be extra careful with an investigation this sensitive. He said the office still had to interview some people important to the case.

“As you can imagine, with each interview, that leads to more information that needs to be tracked down,” George told Hatch. “Given the nature of this matter, we need to be as thorough as possible, and we’re endeavoring to do just that.” ...

GOP lawmakers have said little so far about what was in those emails, though one Republican aide has said there appeared to be little new in the documents.

Hatch told reporters Tuesday that he believed the Finance Committee would be able to quickly wrap up its own bipartisan investigation into the IRS once it got the inspector general’s report.

“The entire delay has been we kept getting more and more emails, after they said that was it,” said Hatch, who had previously stated that he wanted to get his committee’s report out this month. “We’ve had to go through them all.”

Hatch and committee aides had previously said that the Finance report was all but done when the panel found out last year that the IRS couldn’t recover some of Lerner’s emails.

But Finance aides have declined to put out a timeline for when their report could be released, noting that committee investigators will have to square what the inspector general uncovered with their own findings.

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June 3, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, June 2, 2015

The IRS Scandal, Day 754

IRS Logo 2Newmax, GOP Calls on AG to Prosecute Lois Lerner in IRS Scandal:

Republican lawmakers are petitioning the new attorney general, Loretta Lynch, to criminally prosecute former IRS official Lois Lerner over the agency's targeting scandal, having failed to convince her predecessor to do so.

According to The Hill, 24 Republicans on the House Ways and Means Committee sent a letter to Lynch asking for her to take up the panel's 2014 request to charge Lerner for possible crimes.

The allegations include using her position at the agency to pursue heightened scrutiny of conservative groups; obstructing investigations by giving misleading information; and disclosing confidential taxpayer information, The Hill said.

Before former Attorney General Eric Holder stepped down from his post, House Speaker John Boehner was informed by the department that Lerner would not be prosecuted for refusing to testify at a congressional hearing.

The letter, which was circulated by the committee's chairman, Paul Ryan, also prompted statements of support from Boehner and House Majority Leader Kevin McCarthy.

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

Monday, June 1, 2015

The IRS Scandal, Day 753

IRS Logo 2U.S. News & World Report, House Committee Chairman Subpoenas IRS Official to Hearing on Freedom of Information Act:

The chairman of the House Oversight Committee issued a subpoena Friday for an IRS official to testify at a hearing on the Freedom of Information Act.

Rep. Jason Chaffetz, R-Utah, said he issued the subpoena after the IRS declined to provide the official who oversees information requests. Instead, the IRS offered to have IRS Commissioner John Koskinen testify.

In a letter to Koskinen, Chaffetz said he wanted to hear from the agency's expert on responding to information requests. Chaffetz issued the subpoena for Mary Howard, the IRS director of privacy, governmental liaison and disclosure. She reports to a deputy commissioner.

The IRS said Friday it will send Howard to the hearing, which is scheduled for Wednesday. Officials from several government agencies are scheduled to testify.

"In order to conduct effective oversight we must hear from the individuals with the greatest insight into the issues we are exploring," Chaffetz said in a statement. "When an agency attempts to undermine the role of Congress by refusing to allow a witness to testify, issuing a subpoena is not only necessary but appropriate."

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

Sunday, May 31, 2015

The IRS Scandal, Day 752

IRS Logo 2Wall Street Journal op-ed:  Get the IRS Out of the Speech-Police Business, by Scott Blackburn (Center for Competitive Politics): 

In May 2013, an inspector general’s report detailed the politically motivated targeting of nonprofit groups by the IRS for harassment. Two years later, despite continuing Republican outrage and Democratic complaints about Republican anger, the agency continues to stick its nose where it does not belong.

Some agency defenders have claimed that nothing was amiss in the IRS harassing hundreds of conservative and tea party groups. Since the agency also went after a few liberal groups, what’s the problem? The problem is that Americans deserve better than equal harassment under the law.

The job of the IRS should be to collect taxes, fairly and efficiently. Since the income tax was enacted in 1913, however, the IRS has appropriated to itself—sometimes on its own, sometimes with congressional blessing—the right to make political judgments about groups of citizens. That is the central failure revealed by this scandal.

The solution is to get the agency out of the business of policing political speech. ...

The IRS ... should not decide whether an organization is a political committee or a social-welfare group. As National Taxpayer Advocate Nina Olson advised Congress in 2013, that decision should be made by the FEC. This agency is set up to assure that neither major political party can use the determination of the organization’s status as a weapon against political opponents.

It is a bad idea to have a tax-collection agency monitoring the political activities of tax-exempt groups. Worse still that it would do so without any expertise. And silly when the job is already done by another agency.

The treatment of tea party groups is not the first time that the IRS has been used as a political cudgel to beat some organizations into silent submission. But this has been one of the most systematic efforts to do so. If we want to ensure that such abuse does not happen again, we must, and rather easily can, take the agency out of the speech-police business.

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May 31, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Saturday, May 30, 2015

The IRS Scandal, Day 751

IRS Logo 2Wall Street Journal:  One More Chance for Justice at the IRS, by Kimberley A. Strassel:

Paul Ryan on Thursday sent his first official letter to Loretta Lynch, the new U.S. attorney general. With luck, Ms. Lynch will take a few moments out of her international soccer crackdown to give it a glance.

Signed by every Republican member of the House Ways and Means Committee, which Mr. Ryan heads, the letter is a forceful request that Ms. Lynch channel just a smidgen of her famed prosecutorial skill into the largest abuse of government power in decades: the IRS targeting scandal. It’s now been two full years since a little-known IRS bureaucrat named Lois Lerner admitted that her agency systematically collected the names of conservative groups, harassed them, and denied their right to participate in elections. It’s been two full years since the Justice Department opened an investigation. And it’s been two full years of crickets.

While Ms. Lynch was this week orchestrating a dramatic dawn raid and the arrest of seven international soccer officials, the IRS’s offices continued to operate as if nothing ever happened. Two years ago, in the days following the targeting revelations, the administration sacked Acting IRS Commissioner Steven Miller only because it had to. Ms. Lerner, who had led the exempt organizations division, was allowed to retire with full pension benefits. Holly Paz, her effective deputy, was put on administrative leave. Everyone else is still at their desks. Not a single official—there or gone—has faced prosecution.

The Ryan letter asks Ms. Lynch to finally answer his committee’s 2014 referral of Ms. Lerner to the Justice Department for criminal prosecution. That referral has been largely lost to time and other headlines. Most of the focus last year was on the House’s decision to issue a contempt citation against Ms. Lerner, for improperly asserting her Fifth Amendment rights and refusing to answer its questions about her time at the IRS. In March of this year, U.S. Attorney for the District of Columbia Ronald Machen, who has since resigned, informed Speaker John Boehner that he was refusing to bring that contempt citation before a grand jury.

That’s a pity. Note, though, that the citation dealt only with Ms. Lerner’s after-the-fact behavior in front of Congress. Investigators have also compiled compelling evidence that she may have broken the law while overseeing the targeting of conservative groups. Nearly a month before Mr. Boehner sent out the citation, the Ways and Means Committee (then under Rep. Dave Camp) sent a letter to Justice making the case that Ms. Lerner should be criminally prosecuted for her time at the IRS. The Justice Department has never responded to that letter. ...

Ms. Lynch’s response will be enormously telling about her view of her job. Well before the IRS scandal broke, former Attorney General Eric Holder had already built a reputation as one of the most partisan and political holders of the office in history. It was never really a surprise that Justice assigned the IRS probe to a staff attorney who was a Obama donor, or that the FBI early on leaked that it didn’t intend any prosecutions, or that Mr. Holder ignored calls for a special prosecutor. The likelihood that he’d act dropped further as evidence came out that his own Justice attorneys were implicated in Ms. Lerner’s targeting.

Meanwhile, today’s IRS commissioner, John Koskinen, has been unable to acknowledge that someone at his agency might have engaged in intentional wrongdoing. This attitude, combined with Justice’s inaction, creates the scary potential of an IRS targeting repeat. When nobody in a position of authority or with police power is willing to even question whether some in the IRS might be bad actors, there is no guard whatsoever against a Lerner 2.0.

One of Ms. Lynch’s specialties in her previous post as U.S. attorney for the eastern district of New York was political corruption. She knows that government officials can and do break the law. If she ignores or skirts the Ryan letter, the country will see that it has another Obama partisan sitting in the attorney general seat. If she acts, she might instead restore some public faith in two of the nation’s least respected institutions: the Justice Department and the IRS. It doesn’t seem such a hard choice.

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

Friday, May 29, 2015

The IRS Scandal, Day 750

IRS Logo 2Letter From All 24 Republican Members of the House Ways & Means Committee to Loretta Lynch (Attorney General of the United States) (May 28, 2015):

As Members of the House Ways and Means Committee we are writing to inquire about the status of the Committee's April 9, 2014 referral of Lois Lerner to the Department of Justice for criminal prosecution as supplemented July 30, 2014. See attachments.

On March 31, 2015, the U.S. Attorney for the District of Columbia, Ronald Machen, wrote U.S. House Speaker John Boehner stating that the U.S. Attorney's office would not prosecute Lois Lerner for contempt of Congress based on her refusal to testify before the House Committee on Oversight and Government Reform, despite offering a brief opening statement before asserting her Fifth Amendment right to remain silent. Mr. Machen's letter responded to Speaker Boehner's referral of Ms. Lerner of May 7, 2014.

Mr. Machen's letter did not address the April 9, 2014, criminal referral of Ms. Lerner issued by the House Ways and Means Committee under my predecessor, Chairman David Camp. In that referral, the Committee identified three specific acts undertaken by Ms. Lerner that may have violated one or more criminal statutes, including that:

  • Ms. Lerner used her position to improperly influence agency action against only conservative organizations, denying these groups due process and equal protection rights under the law.
  • Ms. Lerner impeded official investigations by providing misleading statements in response to questions from the Treasury Inspector General for Tax Ad ministration (TIGTA).
  • Ms. Lerner risked exposing, and may actually have disclosed, confidential taxpayer information, in apparent violation of Internal Revenue Code section 6103 by using her personal email to conduct official business.

The Committee continues to believe that these serious charges should be pursed by the Department of Justice. We would appreciate receiving an update on the status of the referral as soon as possible. Thank you for your  assistance in this matter.

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