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Tuesday, July 28, 2015

The IRS Scandal, Day 810

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

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

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

Internal Revenue Service Commissioner John Koskinen needs to go.

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

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

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

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

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

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

Monday, July 27, 2015

The IRS Scandal, Day 809

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

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

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

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

Sunday, July 26, 2015

The IRS Scandal, Day 808

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

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

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

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

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

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

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

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

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

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

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

Saturday, July 25, 2015

The IRS Scandal, Day 807

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

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

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

Friday, July 24, 2015

IRS Directors Of Professional Responsibility And Whistleblower Offices Swap Jobs

Job SwapLee D. Martin, Deputy Director of the IRS Office of Professional Responsibility, has been named Director of the IRS Whistleblower Office.  Stephen A. Whitlock, Director of the IRS Whistleblower Office, has been named Director of the IRS Office of Professional Responsibility. Both appointments are effective August 3, 2015.

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July 24, 2015 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 806

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

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

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

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

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

Subcommittee Chairman Peter Roskam, Opening Statement:

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

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

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

GAO released that report today. It says:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The GAO report’s supporting findings include:

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

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

Panel #1:

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

Panel #2:

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

Press and blogosphere coverage:

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

Thursday, July 23, 2015

NY Times: IRS Shuts Down Private Equity Management Fee Waiver Tax Game

New York Times:  I.R.S. Targets Tax Dodge by Private Equity Firms, by Gretchen Morgenson:

The Internal Revenue Service on Wednesday proposed a rule aimed at ending a common and lucrative practice among private equity firms that allows them to artificially lower their partners’ personal income tax bills.

The practice targeted by the I.R.S. allows private equity firms to convert management fees they receive from their investors, which would normally be taxed as ordinary income, into capital contributions invested in their funds. Profits generated on such contributions are treated as capital gains or dividend income and subject to a sharply lower tax rate.

Converting a management fee to a capital contribution may be a “disguised payment for services,” the I.R.S. said in its proposed rule making, which it said was intended to provide guidance to partnerships and their overseers that such arrangements will be disallowed if they were done in such a way that no entrepreneurial risk was involved. ...

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

The IRS Scandal, Day 805

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

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

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

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

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

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

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

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

Wednesday, July 22, 2015

Rental Car Companies Cannot Deduct Collision Damages To Its Vehicles As § 165 Casualty Losses

Rental CarChief Counsel Memorandum 2015-29-008 (July 17, 2015):

[T]he Taxpayer operates E. The amount of the overall repair costs for damaged vehicles is large. The Taxpayer did not suffer unusual casualty or an abnormal loss because it is normal and expected that its vehicles will be damaged when it rents such vehicles to numerous customers to be operated over public highways.

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

Who’s Right on Marijuana? Justice Or The IRS?

Vapor RoomFollowing up on my previous post, 9th Circuit: Marijuana Dispensaries Cannot Deduct Business Expenses, Must Pay Taxes On 100% Of Their Gross Income:  Newsweek, Who’s Right on Marijuana? Justice Or the IRS?:

In downtown Washington, D.C., the Department of Justice asserts that marijuana enterprises are free to exist, while immediately across 10th Street, the IRS tells those businesses they are illegal drug-trafficking operations ineligible for the benefits other corporate entities enjoy.

Which is it? Right now, it is both. This dual status presents commercial challenges for marijuana businesses, carrying serious consequences for individuals, patients, investors, law enforcement, courts, accountants and others.

Last week, one challenge—the issue of tax deductions for marijuana enterprises—had its day in court. In Olive v. Commissioner of Internal Revenue [CIR], the U.S. Court of Appeals for the Ninth Circuit reviewed whether a medical marijuana enterprise in California—Vapor Room Herbal Center in San Francisco—could deduct business expenses under U.S. tax law (the Internal Revenue Code).

The case made its way to the Ninth Circuit on appeal from a decision from the United States Tax Court. The Tax Court previously ruled in favor of the commissioner of the IRS because Vapor Room Herbal Center was a business that “consist[ed] of trafficking in controlled substances” (26 U.S.C. § 280E). Section 280E of the tax code limits businesses from deducting business expenses under such circumstances.

The Ninth Circuit upheld the Tax Court decision. The appeals court outlined two clear reasons (among others) why Vapor Room Herbal Center could not deduct business expenses.

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July 22, 2015 in IRS News, New Cases, Tax | Permalink | Comments (1)

The IRS Scandal, Day 804

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

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

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

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

BACKGROUND

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

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

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

The Hill, Senate Finance to Discuss IRS in Secret:

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

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

Fox News, Senate Finance Working to Release IRS Targeting Report

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

Tuesday, July 21, 2015

Microsoft, IRS Square Off In Court Today: 'The IRS Claims It Has No Money To Answer Its Phones, Yet Can Pay Millions To Hire Private Lawyers'

MicrosoftSeattle Times, Microsoft, IRS Going to Court Over Longtime Tax Scrutiny:

Microsoft and the federal government have squared off in court over the years, and this week another high-stakes match is in the offing, this time involving the Internal Revenue Service.

The case is part of the IRS’ campaign to ensure that U.S. companies, particularly those in the tech sector, follow the law when they make moves involving overseas subsidiaries that have tax consequences. Such practices have been the subject of congressional hearings and are a hotly debated political topic.

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

The IRS Scandal, Day 803

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

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

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

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

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

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

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

Monday, July 20, 2015

The IRS Scandal, Day 802

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

Has Senator Ted Cruz lost his bark?

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

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

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

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

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

Sunday, July 19, 2015

The IRS Scandal, Day 801

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

Imagine having a vision for your country.

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

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

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

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

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

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

Welcome to the very real tyranny of modern America.

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

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

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

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

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

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

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

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

Saturday, July 18, 2015

The IRS Scandal, Days 701-800

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

The IRS Scandal, Day 800

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

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

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

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

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

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

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

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

Report: IRS Hung Up On 8.8 Million Taxpayers This Year (Up From 544k Last Year); ‘Courtesy Disconnects’ Increased 1,500 Percent

TAS 2National Taxpayer Advocate Nina Olson today released (IR-2015-97) her semi-annual report to Congress, FY 2016 Objectives Report to Congress:

“With funding down about 17 percent on an inflation-adjusted basis since FY 2010, and with the IRS having had to implement large portions of the [ACA] and the Foreign Account Tax Compliance Act (FATCA) this year without any supplemental funding, sharp declines in taxpayer service were inevitable,” Olson wrote. Likening the 2015 filing season to “A Tale of Two Cities,” however, the report says: “For the majority of taxpayers who filed their returns and did not require IRS assistance, the filing season was generally successful. For the segment of taxpayers who required help from the IRS, the filing season was by far the worst in memory.”

  • The IRS answered only 37 percent of taxpayer calls routed to customer service representatives overall, and the hold time for taxpayers who got through averaged 23 minutes. This level of service represents a sharp drop-off from the 2014 filing season, when the IRS answered 71 percent of its calls and hold times averaged about 14 minutes.
  • The IRS answered only 39 percent of calls from taxpayers seeking assistance from TAS on the National Taxpayer Advocate (NTA) Toll-Free hotline, and hold times averaged 19 minutes. TAS serves as the IRS’s “safety net” for taxpayers who are experiencing a financial or systemic hardship as a result of IRS action or inaction.
  • The IRS answered only 17 percent of calls from taxpayers who called after being notified that their tax returns had been blocked by the Taxpayer Protection Program (TPP) on suspicion of identity theft, and the hold times averaged about 28 minutes. In three consecutive weeks during the filing season, the IRS answered fewer than 10 percent of these calls.
  • The IRS answered only 45 percent of calls from practitioners who called the IRS on the Practitioner Priority Service line, and hold times averaged 45 minutes.
  • The number of “courtesy disconnects” received by taxpayers calling the IRS skyrocketed from about 544,000 in 2014 to about 8.8 million this filing season, an increase of more than 1,500 percent. The term “courtesy disconnect” is used when the IRS essentially hangs up on a taxpayer because its switchboard is overloaded and cannot handle additional calls.

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

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

Save The Date: Inaugural International Conference On Taxpayer Rights — The Bedrock Of Tax Administration

NTA

Save the Date:  Inaugural International Conference on Taxpayer Rights: The Bedrock of Tax Administration in Washington, D.C. on November 18-19, 2015:

The National Taxpayer Advocate of the U.S. Internal Revenue Service is convening the Inaugural International Conference on Taxpayer Rights in Washington, D.C. This ground breaking conference will explore how taxpayer rights globally serve as the foundation for effective tax administration.

Government officials, scholars, and practitioners from many countries will discuss issues such as:

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July 10, 2015 in Conferences, IRS News, Tax | Permalink | Comments (0)

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

IRS Whistleblower Office Issues Annual Report To Congress: Claims Up 37%, Awards Paid Down 17%

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

IRS Employees Can Use 'Password' As A Password? No Wonder We Get Hacked

IRS Logo 2The Guardian, IRS Employees Can Use 'Password' as a Password? No Wonder We Get Hacked:

The public is finally starting to learn what security experts have been warning for years: the US government has no idea what it’s doing when it comes to cybersecurity. Worse, the government’s main “solutions” may leave all our data even more vulnerable to privacy violations and security catastrophes. ...

The New York Times reported this weekend that the IRS’s systems still allow users to set their passwords to “password,” along with other hilariously terrible mistakes.

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

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

Rand Paul To Challenge The Constitutionality Of FATCA

FATCABloomberg, Rand Paul Said to Take on the IRS, Again:

Last week, Rand Paul said he wanted to blow up the tax code. Next week, he could be suing the tax man.

The Kentucky senator is expected to be one of the plaintiffs in a lawsuit against the Internal Revenue Service and the Treasury Department, challenging the government's rules on how Americans abroad are taxed and what foreign banks have to disclose about U.S. citizens who are their customers. Being on the wrong side of the IRS is, of course, a great place for a Republican presidential contender to be.

The focus of the lawsuit is the 2010 Foreign Account Tax Compliance Act—FATCA to the initiated—which has made it much harder for Americans to have foreign bank accounts hidden from the IRS. It's also been a logistical nightmare for the millions of Americans who live outside the country and are still required to file U.S. taxes. The law has also prompted some foreign banks to refuse U.S. customers rather than deal with the hassles.

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

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

Tax Analysts Sues IRS For Refusing To Release Information On Bonuses Paid To Top Employees

FOIATax Analysts Sues IRS Over Executive Bonus Awards Records:

Tax Analysts filed suit against the IRS on June 23, asking the U.S. District Court for the District of Columbia to compel the agency to release records of bonus awards it paid to high-level executives since 2010.

Tax Analysts originally requested the bonus awards records in early February through a Freedom of Information Act filing, but the IRS has not said when or whether it would comply with the request.

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June 25, 2015 in IRS News, Tax | Permalink | Comments (8)

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

TIGTA: IRS Violated Federal Law By Awarding Millions In Contracts To Businesses With Unpaid Federal Taxes

TIGTAThe Treasury Inspector General for Tax Administration today released Existing Procurement Practices Allowed Corporations With Federal Tax Debt to Obtain Contract Awards (2015-10-011):

Beginning with Fiscal Year (FY) 2012, Federal law has prohibited the IRS from using appropriated funds to enter into a contract with a corporation that has certain Federal tax debt and/or felony convictions.  ...

The IRS did not have effective controls in place to prevent the award of contracts to corporations with certain Federal tax debt and/or felony convictions.  TIGTA identified 17 corporations that were awarded a total of 57 contracts valued at about $18.8 million (including nearly $18 million for contract modifications)during FYs 2012 and 2013, while they had Federal tax debt.  The IRS has not established a definition of Federal tax debt for this purpose and does not perform proactive tax checks to comply with this Federal law.

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June 24, 2015 in Gov't Reports, IRS News, Tax | Permalink | Comments (1)

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)