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Wednesday, August 6, 2014

The IRS Scandal, Day 454

IRS Logo 2National Review:  The IRS's God Complex:

Is the Internal Revenue Service a threat to religious liberty?

As the IRS continues to come under well-aimed fire for harassing conservative groups, on Friday it secured a final court order formalizing what amounts to a secret agreement to monitor the pulpits of ill-favored churches. The serious danger, as former Justice Department attorney J. Christian Adams told Fox News, is that the IRS will start treating “theology as politics,” and regulate it accordingly.

Lovers of liberty should be very concerned.

According to a June 27 IRS letter to the Justice Department, 99 churches merit “high priority examination” for allegedly illegal electioneering activities. The letter was sent in reference to a now-dismissed lawsuit filed by the atheist group known as the Freedom from Religion Foundation (FFRF). The suit originally was a rather broad one, demanding not only that the IRS enforce prohibitions against churches’ endorsing candidates specifically, but also that churches should be “required to file” what it described as “detailed annual information” that would force them (if they are like other nonprofits) to “expend substantial time and resources.”

With the end of the suit, those filings presumably will not be required (though a second suit, on just that subject, remains open). But IRS’s monitoring of alleged electioneering activities could still be quite onerous.

Traditionally, churches have been free to do just about anything short of outright candidate endorsements. Conservatives have suggested that not even that prohibition is enforced against traditionally liberal churches in black communities and that FFRF isn’t much concerned with such groups. But at least for conservative-leaning churches, FFRF has a much more restrictive agenda in mind. ...

FFRF has been crowing loudly about its “victory.” It asked for its suit to be dismissed “without prejudice” because the IRS was able to assure FFRF, in private discussions, that the agency would indeed take an active role in monitoring churches. That’s what the IRS’s June 27 letter to the DOJ, which specified that 99 churches warrant “high priority examination,” explained.

In fact, the IRS on July 22 filed a motion with the court specifically to deny the request of another church, which had become a party to the suit, for documents pertaining to the “agreement” between IRS and FFRF. In other words, shockingly, the IRS was now taking the side of the atheist group that had nominally sued it. One week later, FFRF filed a motion making clear, as its co-president Annie Laurie Gaylor put it, that the dismissal of its suit applies only if “our agreement has teeth.”

So even though the IRS will now put “teeth” into its monitoring of churches, the general public will not be allowed to find out exactly what those teeth can bite into (according to the IRS’s July 22 motion against release of documents, which the judge granted August 1).

Considering the IRS’s well-publicized penchant for burying or erasing evidence (even from Congress) of its bias against conservative political groups, this secrecy about enforcement teeth in the church-electioneering case should raise concerns from every traditionalist church and faith group.

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August 6, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Tuesday, August 5, 2014

Reynolds: Public Servants Acting as Public Masters

USA Today op-ed:  Public Servants Acting as Public Masters, by Glenn Reynolds (Tennessee):

"Nothing could be further from the truth. I mean, we wouldn't do that." That was CIA Director John Brennan's answer in March when Sen. Dianne Feinstein, D-Calif., charged the CIA with breaking into computers used by Senate investigators looking into CIA misconduct.

It turns out that the CIA would do that — and, in fact, had done so. Brennan's reassurances were false, and CIA spooks had been hacking into the committee investigators' computers looking for documents they thought the investigators shouldn't have, violating a promise not to. So, first Brennan broke a promise. Then, he either lied, or showed that he doesn't control his own agency, which in many ways would be worse.

Brennan has apologized, but his apology won't be the end of things. We're already seeing bipartisan calls for his removal, from Sens. Mark Udall, D-Colo., Martin Heinrich, D-N.M., and Sen. Rand Paul, R-Ky. The White House is hanging tough so far, but we're now hearing comparisons made to the speed with which Brennan's predecessor, Gen. David Petraeus, was cut loose over an extramarital affair. Does this mean that the White House views spying on, and lying to, members of Congress as less serious than an affair?

The answer to that, alas, is probably "yes." Contempt for Congress, and for separation of powers and historical understandings about the roles of the executive and legislative branches, has been a hallmark of the Obama administration. It's not surprising that in such an atmosphere, CIA operatives would feel comfortable snooping on the Senate, and that a CIA director would feel confident issuing blanket denials when questioned. ...

Alas, as with the IRS' stonewalling of investigations into its targeting of Obama's political opponents, consequences for offenders seem hard to come by in the face of an administration that has no shame. Probably the best that Congress can do is to punish the entire CIA by using its budgetary power to make employees' lives worse: Cutting back on bonuses, raises, conferences, and other perks. Where the IRS is involved, there's some talk of abolishing most of it in favor of a national sales tax that would require much less bureaucracy and provide fewer opportunities for abuse, but that's unlikely to go anywhere anytime soon.

The sad truth is that when you elect irresponsible people into positions of power, you get irresponsible government. President Obama oozes contempt for Congress, and for longstanding unwritten political accommodations among the branches, at every opportunity. It's unsurprising that his underlings feel — and act — consistently with that view.

If the American electorate votes more responsibly next time, things will get better. Until then, alas, elections have consequences, and this is one of them.

August 5, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

The IRS Scandal, Day 453

IRS Logo 2Washington Post:  Lois Lerner’s Conservative Bashing: Smoking Gun or Just Cause for Investigation?:

The Federal Eye received lots of feedback in recent days about an article analyzing the e-mails in which former Internal Revenue Service official Lois Lerner described conservative talk-show hosts as “__holes.”

In that piece, we noted that career federal employees are allowed to have political views, as long as those views don’t influence their work or affect elections. We also noted that Lerner’s comments represent only circumstantial evidence rather than rock-solid proof that she used her authority to silence conservatives.

Some readers objected to our rationale. ...

To be clear, the point of last week’s article was not to suggest that authorities shouldn’t investigate Lerner for potential wrongdoing. It was to say that Republicans haven’t proven definitively whether the former IRS official used her position to slow down the proliferation of conservative advocacy groups. ...

Did Lerner’s unit use inappropriate techniques to scrutinize such groups? The answer is yes, according to the agency’s inspector general, who said in a report last year that the IRS selected groups for review based on their names and policy positions.

The next question, then, is whether those actions were part of an effort to target conservative groups while going easy on left-leaning organizations. In other words, did Lerner’s political views — such as those expressed in her e-mails — cause her to become less than impartial in her work? ...

[M]any of the facts in this case look bad for Lerner. Her IRS division used inappropriate screening techniques that largely affected conservatives. She was a registered Democrat who used offensive terms to describe firebrand right-wingers. She expressed a desire to work for an advocacy group founded by President Obama’s allies. And she invoked her Fifth Amendment rights instead of testifying before Congress about her involvement in the targeting behavior.

Regardless, that’s all circumstantial evidence. It makes Lerner a prime candidate for investigation, and it’s great campaign fodder for the midterm elections, but it does not prove that she violated the rules of professionalism by trying to hinder conservative groups. Republicans need direct evidence to confirm that theory, which is part of the reason they want an independent prosecutor to look into the case. It’s also why they are so frustrated with Lerner’s missing e-mails.

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August 5, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Monday, August 4, 2014

The IRS Scandal, Day 452

Sunday, August 3, 2014

The IRS Scandal, Day 451

Saturday, August 2, 2014

The IRS Scandal, Day 450

IRS Logo 2Fox News:  Lois Lerner Ripping ‘Crazies’ on Right: Why Some Media Folks Don’t Care, by Howard Kurtz:

The new batch of Lois Lerner emails may or may not be a smoking gun. But they’re something of a Rorschach test for the media.

For the former IRS official to be branding conservative commentators as “crazies” and “a--holes” is a telling moment in this scandal—but some in the media could care less.

To be sure, this investigation has dragged on a long time without proving a link between the White House and the Cincinnati office’s targeting of advocacy groups, especially on the right, for special scrutiny of their tax-exempt status. Critics say that conservative outlets such as Fox have tried to keep the story alive.

But the administration has done a decent job of bringing the story back to the headlines. The IRS acknowledged that it could not find two years’ worth of lost emails written or received by Lerner, who pleaded the Fifth when summoned by Congress. And the commissioner, William Koskinen, sounded downright arrogant when he showed up on the Hill.

Now the Republicans have found three emails in which Lerner disparaged conservatives.

What did the New York Times give the story? One measly paragraph, written by the AP, in a roundup column.

How much airtime did the story get that night on ABC’s “World News”? None.

The messages don’t prove that Lerner deliberately targeted Tea Party groups for special scrutiny, or that higher-ups knew about it. But they reveal a whole heckuva lot about her state of mind.

To give it short shrift suggests a certain eye-rolling attitude toward the IRS story, or perhaps a tacit view that some conservatives are kinda nuts.

Imagine a swirling controversy about a Bush administration official who was alleged to be out to get liberal groups. Emails surface in which the person rips, say, pundits on MSNBC or other liberal activists. Wouldn’t the press go crazy that such a biased individual was in charge of investigations? Wouldn’t there be analyses and op-ed columns and followup stories?

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August 2, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Friday, August 1, 2014

The IRS Scandal, Day 449

IRS Logo 2New York Observer:  Did The White House Know About the IRS Emails? The IRS, the President, and his No. 1 Muse: Kathryn Ruemmler, by Sidney Powell:

The president’s longest serving White House counsel, Kathryn Ruemmler, was, until her sudden departure for Latham & Watkins, “a regular presence in the Situation Room and the Oval Office, making legal judgments and helping coach other senior officials on how to discuss them publicly,” according to the Washington Post. Our first article, “All The President’s Muses,” described Ms. Reummler’s outsized role in the aftermath of the Benghazi tragedy. It’s undisputed she starred in the president’s expansive use of executive powers, increased secrecy and recent Supreme Court reversals.

With the near daily revelations from the IRS, the question becomes, what exactly might Ms. Ruemmler know?

The Inspector General of the Treasury confirmed that the IRS targeted the president’s political opposition with audits, harassment and denials of tax-exempt status. Patrick Howley reported from congressional hearings that even more IRS computers surrounding Lois Lerner and the White House had crashed. Now the IRS is claiming that the number is greater than seven (the prior count) but fewer than 20. There may be emails on back-up devices, but the IRS still claims it isn’t sure.

The burning question is: have they looked in the White House? ...

Ms. Ruemmler’s recent midnight departure from the White House left her actions largely unscrutinized. Yet, she was squarely in the middle of the IRS controversy from the very beginning. As she told the Wall Street Journal, “The White House really sees everything, and you touch everything.” ...

As White House counsel, Ms. Ruemmler led the president in all federal appointments. Her fingerprints are all over the president’s attempt to appoint Mary Smith, a colleague from Ms. Ruemmler’s days in President Clinton’s Counsel’s office, to head the powerful Tax Division of the Department of Justice. Senator Grassley blocked that confirmation, leaving the White House “very upset.” In response, Lois Lerner suggested auditing Senator Grassley.

Not long ago, the president said he knew nothing about the IRS target-hunting. Roger Aronoff reported that both the White House Chief of Staff and White House Counsel Ms. Ruemmler knew about the targeting of conservative groups at least a month before (the now infamous) Ms. Lerner “planted a question” regarding the IRS’ abusive actions. “President Obama later claimed on national television that in terms of the IRS scandal, there wasn’t a ‘smidgeon of corruption’ in his administration, and blamed the whole episode on ‘bone-headed decisions’ of bureaucrats.”

Ms. Ruemmler claimed she did not tell the president—prompting even some Democrats, including Lanny Davis, a prominent Democratic crisis manager, to call for her resignation more than a year ago. Yet, she remained safely in place.

“Either Ruemmler was incredibly incompetent or the White House is lying about when Obama knew of the scandal,” writes Ed Morrissey at Hot Air. “We got a big hint . . . when Obama changed the context of a question about his awareness of the scandal to his awareness of the IG report, which is pointedly not the same thing.” ...

In an incredible stroke of luck, the emails on multiple computers that might reveal IRS agents’ communications with the White House were precisely the ones that mysteriously disappeared.

That lucky streak continued when by mere happenstance Ms. Ruemmler left the White House shortly before IRS Commissioner Koskinen was forced to admit that thousands of emails between Ms. Lerner, the White House and others were “missing.” ...

These IRS emails are today’s White House Watergate tapes. Who and how many people in the White House were recipients or senders? Surely, their computers haven’t crashed, too. How could 155 visits by a key IRS agent be missed by White House Counsel—the president’s fiercest protector?

So what did Ms. Ruemmler know and when did she know it?

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August 1, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Thursday, July 31, 2014

The IRS Scandal, Day 448

IRS Logo 2House Ways & Means Committee Press Release, Camp Sends More Evidence of Criminal Wrongdoing to DOJ (July 30, 2014):

Today, Ways and Means Committee Chairman Dave Camp (R-MI) sent additional evidence to the Department of Justice (DOJ) regarding the April 9, 2014 criminal referral letter which laid out evidence of possible criminal wrongdoing by former IRS employee Lois Lerner uncovered through the Committee’s investigation.

In releasing the letter, Camp stated, “Despite the serious investigation and evidence this Committee has undertaken into the IRS’s targeting of individuals for their beliefs, there is no indication that DOJ is taking this matter seriously.  In light of this new information, I hope DOJ will aggressively pursue this case and finally appoint a special counsel, so the full truth can be revealed and justice is served.”

In the letter to DOJ, Chairman Camp revealed:

Lerner had a bias against conservatives:

A newly discovered email exchange from Ms. Lerner’s official IRS email account, dated November 9, 2012, directly demonstrates Ms. Lerner’s deep animus towards conservatives, which she refers to as “---holes.”   Lerner further illustrates her disgust with conservatives, even suggesting they will ruin the country.  In her email, Lerner states: “So we don't need to worry about alien teRrorists. (sic) It's our own crazies that will take us down.”  This email shows that Ms. Lerner’s mistreatment of conservative groups was driven by her personal hostility toward conservatives.

Lerner used her personal email for official business, including taxpayer information:

The Committee also found that Lerner used her personal email for official business, including confidential return information.  The Committee believed that further investigation, using resources available to the Department of Justice, could reveal whether there was unauthorized disclosure of taxpayer information in violation of the law.  A newly discovered email from February 22, 2012 shows an exchange between Ms. Lerner and an IRS IT professional regarding a “Virus on Home PC.”  In the exchange, Ms. Lerner indicates that she kept work information on her home computer, some of which may have been lost.  She further states that her computer may have been “simply hacked because my password was too simple.”  This exchange further raises concerns that taxpayer information may have been leaked.  

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July 31, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, July 30, 2014

3' 10" Former IRS Agent Turned Clinical Sexologist for Little People of America

The Atlantic, The Challenges of Having Sex as a Little Person:

Dr. Marylou Naccarato was an agent for the Internal Revenue Service for decades before she became a clinical sexologist. “As a former IRS agent of 23 years,” she quips, “people ask, ‘How did you shift from working in the tax field to sexology?’ I always reply, ‘Well if you think about it, I haven’t really changed professions. It’s all about whether or not you’re gonna get screwed.’”

Standing at 3’10” with a rare type of dwarfism called Kniest, Naccarato has become something of a pioneer in the Little People of America community. She was a speaker at their conference earlier this month in San Diego where she broke through conservative boundaries to talk the ins and outs of sex, intimacy, and lovemaking with the various limitations that may come with life as a person of short stature.

Born and raised in Los Angeles to a Sicilian Catholic father and a Moroccan Jewish mother, Naccarato found herself in the sex counseling and education field by accident. Although she was working for the IRS, she had always wanted to be a social worker, until one night when she watched a program on sexual health on a cable network. “They were talking about the Kama Sutra," she recalls. "The narrator was explaining that in this particular male-female intercourse position, if the man was standing and the woman was on her back on the edge of the bed, it would be less pressure on his lower back." ...

She quit her job at the IRS and has since become something of a sex education mogul. She is a board certified clinical sexologist, has a doctorate from the Institute for Advanced Study of Human Sexuality, and certification as a sexuality educator from the American Association of Sexuality Educators, Counselors, & Therapists, where she was a speaker last month. She also serves on the board of the American College of Sexologists, was recently featured on Playboy Radio, and is a sex and disability blogger for sex-positive pioneer Betty Dodson’s website.

July 30, 2014 in IRS News | Permalink | Comments (0)

The IRS Scandal, Day 447

IRS Logo 2The House Oversight & Government Reform Committee holds a hearing today on IRS Abuses: Ensuring that Targeting Never Happens Again:

  • David Keating (Center for Competitive Politics)
  • Cleta Mitchell (Foley & Lardner)
  • James Sherk (Heritage Foundation)
  • Hans A. von Spakovsky (Heritage Foundation) 

Wall Street Journal:  GOP Report Floats IRS Changes on Tax-Exempt Group Oversight:

As the IRS probe grinds on, congressional Republicans are floating ideas to ensure IRS targeting of conservative groups doesn’t happen again. While they don’t call for ripping up the floorboards at the agency’s Washington headquarters, they come pretty close, according to a new report reviewed by the Wall Street Journal.

The House Oversight and Government Reform Committee report, prepared in advance of a hearing scheduled for Wednesday, recommends getting the IRS out of the business of regulating political activities by tax-exempt groups in order to ensure its continued objectivity.

“Congress must disentangle politics from the IRS,” the report said. “To regain the trust of American taxpayers, the IRS must return to its traditional role as a dispassionate administrator of the federal tax code.” ...

Perhaps the most eye-catching of the ideas in the report: eliminating the IRS commissioner job. Republicans say the commissioner structure has provided insufficient oversight of the agency at a time when its workload has been expanding rapidly.

Instead, lawmakers said, Congress should turn the IRS over to a bipartisan commission, like the ones that runs some regulatory agencies.

Wall Street Journal editorial:  The IRS's Foreign Policy:

The IRS has stuck by its story that tax-exempt applications by conservatives got slow-rolled because of bureaucratic bungling not because the groups opposed President Obama's policies. Now the slow drip of email evidence to congressional investigators is casting further doubt on that tale.

In 2009 the Pennsylvania group Z Street applied for tax-exempt status for its mission of educating people about Israel-related issues. In 2010 an IRS agent told Z Street that its application was delayed because the tax agency's Washington, D.C. office was giving special scrutiny to groups whose missions might conflict with Administration policies. The IRS's "Be On the Lookout" list that November also included red flags for groups referring to "disputed territories."

Z Street sued in August 2010 for viewpoint discrimination and its case is headed for discovery in federal court. Now emails uncovered by the House Ways and Means Committee show that the IRS and State Department were conferring in 2009 about pro-Israel groups like Z Street and considering arguments to deny their tax-exempt applications. ...

On Monday the IRS filed an appeal of the judge's decision denying its motion to dismiss Z Street's case. The government says the action stops all discovery while the appeal is pending, a process that could take months or even years. By filing the appeal on the last possible day, the Justice Department is running out the clock on discovery during the remainder of the Administration.

This is a whole lot of effort to prevent discovery in a case that is not even seeking damages. Ways and Means uncovered the email exchange between State and the IRS only after Treasury was forced to turn over documents it had previously withheld. What else did it lose in the ether?

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July 30, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, July 29, 2014

Jost: IRS Releases Premium Tax Credit Rules and Draft Forms

Timothy Jost (Washington & Lee), Implementing Health Reform: IRS Releases Premium Tax Credit Rules and Draft Forms:

Although the focus of activity the week of July 21 was in the courts, the agencies were not totally silent. On July 24, 2014 the Internal Revenue Service released final and temporary  and proposed regulations addressing issues that are presented by the premium tax credit program. The IRS also released drafts of the forms that individuals, insurers, and employers will use for reporting information to the IRS necessary for reconciliation of premium tax credits and for the enforcement of the individual and employer mandate programs. Finally, the IRS set the maximum individual mandate penalty for individuals whose income is high enough that they pay the penalty as a percentage of income rather than a flat dollar amount. This amount is established by the statute as the average cost of a bronze level plan for the applicable family size for 2014 and was set by the IRS at $2,448 per individual annually, up to $12,240 for families of five or more.

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July 29, 2014 in IRS News, Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 446

Monday, July 28, 2014

The IRS Scandal, Day 445

IRS Logo 2Wall Street Journal:  The ObamaCare-IRS Nexus, by Kimberley A. Strassel:

The IRS (famed for nitpicking and prosecuting the tax law), chose to authorize hundreds of billions of illegal subsidies without having performed a smidgen of legal due diligence, and did so at the direction of political taskmasters. The agency's actions provided aid and comfort to elected Democrats, even as it disenfranchised millions of Americans who voted in their states to reject state-run exchanges. And Treasury knows how ugly this looks, which is why it initially stonewalled Congress in its investigation—at first refusing to give documents to investigators, and redacting large portions of the information.

Administration officials will continue to use the IRS to try to improve its political fortunes. The subsidy shenanigans are merely one example. Add Democrats' hijacking of the agency to target and silence political opponents. What you begin to see are the makings of a Washington agency—a body with the power to harass, to collect, to fine, to imprison—working on behalf of one political party. Richard Nixon, eat your heart out.

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July 28, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Sunday, July 27, 2014

The IRS Scandal, Day 444

Saturday, July 26, 2014

The IRS Scandal, Day 443

Friday, July 25, 2014

The IRS Scandal, Day 442

Thursday, July 24, 2014

The IRS Scandal, Day 441

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July 24, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, July 23, 2014

The IRS Scandal, Day 440

IRS Logo 2House Ways & Means Committee Press Release, Lerner Hard Drive Was "Scratched"; IRS Ignored Advice to Use Outside Experts to Recover Data:

Despite early refusals to make available IT professionals who worked on Lois Lerner’s computer, Ways and Means Committee investigators have now learned from interviews that the hard drive of former IRS Exempt Organizations Director Lois Lerner was “scratched,” but data was recoverable.   In fact, in-house professionals at the IRS recommended the Agency seek outside assistance in recovering the data.  That information conflicts with a July 18, 2014 court filing by the Agency, which stated the data on the hard drive was unrecoverable – including multiple years’ worth of missing emails.

“It is unbelievable that we cannot get a simple, straight answer from the IRS about this hard drive,” said Ways and Means Committee Chairman Dave Camp (R-MI).  “The Committee was told no data was recoverable and the physical drive was recycled and potentially shredded.  To now learn that the hard drive was only scratched, yet the IRS refused to utilize outside experts to recover the data, raises more questions about potential criminal wrong doing at the IRS.”

It is also unknown whether the scratch was accidental or deliberate, but former federal law enforcement and Department of Defense forensic experts consulted by the Committee say that most of the data on a scratched drive, such as Lerner’s, should have been recoverable.  However, in a declaration filed last Friday by the IRS, the agency said it tried but failed to recover the data, but is not sure what happened to the hard drive afterwards other than saying they believe it was recycled, which, according to the court filing means “shredded.”

Further complicating the situation, the Committee’s investigation has revealed evidence that this declaration may not be accurate.  A review of internal IRS IT tracking system documents revealed that Lerner’s computer was actually once described as “recovered.”  In a transcribed interview on July 18, IRS IT employees were unable to confirm the accuracy of the documents or the meaning of the entry “recovered.”

“It is these constant delays and late revelations that have forced this investigation to go on so long,” Camp added.  “If the IRS would just come clean and tell Congress and the American people what really happened, we could put an end to this.  Our investigators will not stop until we find the full truth.”

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July 23, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Tuesday, July 22, 2014

The IRS Scandal, Day 439

What Are The Chances? (An IRS Love Song):

(Hat Tip: Glenn Reynolds.)

Wall Street Journal, New Information Deepens the Mystery of the Missing IRS Emails:

The mystery of the missing IRS emails has deepened.

An IRS official told congressional investigators in an interview last week that — despite what agency leaders thought previously — some of the missing IRS emails might still exist on backup tapes.

Those tapes were thought to have been recycled several years ago, destroying the data.

Washington Post:  6 Questions About the IRS’s Missing Emails, From IT Experts:

Did the IRS intentionally lose e-mails to cover up potentially incriminating communications relating to the agency’s targeting controversy, or did the records go missing because of bad technology management?

As for the latter question, few organizations are in a better position to make an assessment of the situation than the International Association of Information Technology Asset Managers, which deals with these types of issues on a regular basis.

The group, which runs the only worldwide certification program for IT asset managers, released six questions on Monday that it thinks lawmakers and federal investigators should ask about the missing e-mails of former IRS official Lois Lerner, a central figure in the targeting affair.

  1. What happened to the IRS’s IT asset managers who appear to have disappeared at a key juncture?
  2. Where is the documentation to prove that the IRS wiped or destroyed Lois Lerner’s hard drive?
  3. Were the drives destroyed by an outside vendor or firm? If so, by who, and can they verify the destruction?
  4. What are the IRS’s specific policies and procedures on document retention when hard drives are damaged or destroyed?
  5. What is the IRS’s disaster-recovery policy?
  6. Where are Lois Lerner’s Blackberry e-mails?

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July 22, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Monday, July 21, 2014

The IRS Scandal, Day 438

Sunday, July 20, 2014

The IRS Scandal, Day 437

Saturday, July 19, 2014

The IRS Scandal, Day 436

Friday, July 18, 2014

The IRS Scandal, Day 435

IRS Logo 2Forbes:  Despite Yearlong Investigation Of IRS, DOJ Just Learned Of Lost Emails From News Media, by Robert W. Wood:

For over a year now, the DOJ and FBI have been investigating the IRS targeting scandal. Yet a DOJ lawyer testified before a Congressional committee that even a year into its investigation, DOJ had no advance notice of the 2 years’ worth of emails the IRS says went missing years ago. ...

[T]his is astonishing. On June 13, 2014, the IRS admitted that it lost Lois Lerner’s emails from January 2009 through April 2011. DOJ says it learned of the missing emails after June 13, 2014 from the media! Oh, those two-years’ worth of emails to and from the key IRS figure who refused to testify to Congress about her job as a top IRS official? They covered the precise period of time when the alleged IRS targeting of Tea Party groups took place.

Republican Rep. Ron DeSantis asked Deputy Attorney General James Cole, “So you actually read about it in the press and nobody in the IRS ever went to the Justice Department to give you a heads-up, knowing you were conducting the investigation that some evidence may have been destroyed?”

“Not before the 13th of June,” Cole replied. “I think we learned about it after that, from press accounts,” Mr. Cole told House Oversight and Government Reform subcommittee chairman Rep. Jim Jordan. Rep. Jordan pressed Mr. Cole, “Is it a big deal to you Mr. Cole, a big deal to the Justice Department that the head of the Internal Revenue Service waited two months to tell the United States Congress, two months to tell the American people, and, most importantly, two months to tell the FBI and the Justice Department that they had lost Lois Lerner’s emails?”

Mr. Cole’s response seemed practically Presidential, “It depends on what the circumstances were behind,” Cole responded. The whole story may eventually come out, but the investigation has taken on a decidedly pale complection. Now there’s a new DOJ investigation underway into the IRS missing emails. One might wonder if it will ever turn up even a smidgen of corruption.

Meanwhile, a federal court may prove to be tougher. In a suit against the IRS brought by Judicial Watch, U.S. District Judge Emmet G. Sullivan ordered the IRS to explain what happened to Lois Lerner’s emails. The DOJ has done its best to avoid having to explain much of anything to anyone.

It is another seedy chapter that casts further doubt on the tax system. In 2013, the IRS targeting scandal was already brewing, and Ms. Lerner asked an IT specialist at the IRS if the IRS saved texts? They are not saved automatically, came the response, but since saving them was possible, be careful. “Perfect,” Ms. Lerner answered.

So the switch to texts was an even better way to adopt the IRS version of Moscow Rules. Even President Obama’s new IRS Commissioner Koskinen testified that he was completely unaware of the instant-messaging system. Still, he told a House committee he didn’t think Ms. Lerner’s response about the texts meant she was happy that IRS instant messages weren’t saved. ‘Perfect’ must mean different things to different people.

Forbes

Wall Street Journal:  Justice Department Learned of Lost IRS Emails From Press, Official Says:

Justice Department officials didn't learn until June that the Internal Revenue Service had lost two years' worth of emails that could shed light on the agency's treatment of conservative groups, a top Justice official said.

Deputy Attorney General James Cole told a congressional panel Thursday that the agency learned from press accounts in June that the IRS had lost the emails. The Justice Department announced more than a year earlier, in May 2013, that it was investigating the alleged IRS targeting of conservative groups, after an inspector general found tea-party groups faced unusual scrutiny and lengthy delays as they sought tax-exempt status.

Republicans said the disclosure supports their claim that the Justice Department hasn't been aggressive in pursuing its investigation of the matter.

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July 18, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Thursday, July 17, 2014

District Court Joins Loving, Holds IRS Lacks Statutory Authority to Regulate Tax Return Preparers

RTRPThe U.S. District Court for the District of Columbia yesterday followed Loving v IRS, 742 F.3d 1014 (D.C. Cir. 2014), and held that the IRS lacks statutory authority to regulate tax return perparers.  Ridgely v. Lew, 1:12-cv-00565 (D.D.C. July 16, 2014).

Prior TaxProf Blog coverage:

July 17, 2014 in IRS News, Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 434

IRS Logo 2Wall Street Journal:  Justice Dept. to Investigate Lost IRS Emails:

The Justice Department is conducting a criminal investigation into the loss of Internal Revenue Service emails that could shed light on the agency's treatment of conservative groups.

As part of its criminal probe into the IRS's treatment of politically active conservative groups, the Justice Department is "investigating the circumstances of the lost emails from [former IRS official Lois Lerner's] computer," according to prepared testimony by James Cole, the deputy attorney general. Mr. Cole is set to appear at a hearing scheduled for Thursday before a panel of the House Oversight and Government Reform Committee. The Wall Street Journal reviewed his prepared testimony on Wednesday. ...

Mr. Cole's comments underscore the potential seriousness of the email loss, which has roiled congressional probes of the matter and angered some top GOP lawmakers. The IRS has blamed the loss on a crash of Ms. Lerner's hard drive—a common occurrence at the agency, officials say. They add a backup tape also was routinely recycled after six months.

Some Republicans regard the timing of the email loss in 2011 as suspicious, however, noting that it came just days after Republicans began questioning the agency's treatment of politically active conservative donors and groups.

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July 17, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, July 16, 2014

National Taxpayer Advocate Releases Mid-Year Report to Congress

TASNational Taxpayer Advocate Nina Olson today released (IR-2014-78) her semi-annual report to Congress, FY 2015 Objectives Report to Congress:

[The report] identifies key issues, goals and activities TAS will focus on during the upcoming fiscal year. These include the implementation of the Taxpayer Bill of Rights, resolving refund delays for victims of return preparer fraud, and the need for minimum standards for tax return preparers. This year's report also includes a Volume II that outlines formal IRS responses to the 25 most serious taxpayer problems identified by the NTA in her 2013 Annual Report to Congress, as well as the NTA’s comments on those responses.

July 16, 2014 in IRS News, Tax | Permalink | Comments (1)

CPAs Sue IRS, Say its 'Voluntary' Regulation of Tax Preparers Lacks Authorization From Congress

RTRPFollowing up on my prior post, CPAs: IRS's 'Voluntary' Regulation of Tax Preparers Lacks Statutory Authorization From Congress, Contravenes D.C. Circuit Decision, and Violates Administrative Procedure Act:  the American Institute of CPAs yesterday sued the IRS in the U.S. District Court for the District of Columbia over its new "Voluntary" Tax Return Preparer Program:

July 16, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

The IRS Scandal, Day 433

IRS Logo 2Forbes:  Is the IRS Scandal Microsoft's Fault?, by Gene Marks:

Hmm….maybe Microsoft is to blame for this whole IRS-email thing.

Just last week, “…a second federal judge has now ordered the IRS to explain under oath how the agency lost emails from former division director Lois Lerner, the woman at the heart of the Tea Party targeting scandal. U.S. District Court Judge Reggie Walton told Obama administration lawyers on Friday he wants to see an affidavit explaining what happened with Lerner’s hard drive. The IRS claims her computer suffered a crash in 2011 that wiped her email records at the time clean.”

Ah-hah! It’s a brilliant ploy. Can’t provide emails requested by the courts? Then just blame the computer guys! The computers crashed. It was a blue screen of death. You know what’s it like with Windows, right? We’ve all had this happen to us before. Who hasn’t had their computer crash? Curse you, Microsoft! This must be your fault! You’ve foiled us again!

I don’t know if the IRS did anything wrong – that’s for the courts to decide. But I do know a little something about information technology. And this is an IT issue. Judges. Lawyers. IRS people. Congressmen. The Media. Everyone’s trying to get to the bottom of the lost emails. But there’s one group of people missing from the conversation: the tech people. I don’t mean the ones who work for the IRS. They’re scrambling, I’m sure. The ones who should be subpoenaed are the ones who work at IT firms, like mine, across the country. They will tell a different story. When we hear that emails were just “lost,” especially in 2011, we scratch our heads in amazement. Ask any IT firm, the clients they serve, or the IT people that work in corporate America: e-mails don’t get “lost.” And frankly, computers don’t really crash very often. That was a great excuse in…oh…1995. But not anymore.

In other words: you can’t blame Microsoft. Nice try. ...

[D]id Ms. Lerner’s computer really crash, wiping out all her data, including emails? That story’s really hard to believe for anyone with an IT background. It’s easy to blame Microsoft for our problems. That used to be a great excuse. But that excuse is getting harder and harder for anyone, even the IRS, to make.

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July 16, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, July 15, 2014

House Votes to Cut IRS Budget 13% (21% Below Obama's Request)

IRS Logo 2Bloomberg:  IRS Budget Sliced 13% as U.S. House Constrains Tax Agency:

The House of Representatives voted to cut the IRS’s budget by $1.14 billion in another blow to the tax agency.  ... The changes would leave the IRS with a budget of $9.8 billion for the fiscal year that starts Oct. 1, 13 percent below this year’s funding level and 21 percent below the administration’s request.

July 15, 2014 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 432

IRS Logo 2The Weekly Standard:  More Than a Smidgen, by Stephen F. Hayes:

The facts are simple. The IRS systematically targeted conservative and Tea Party groups after their activism proved decisive in the 2010 midterm elections—Obama’s famous “shellacking.” The effects of this targeting were widespread. Some Tea Party groups were neutered in the months before the 2012 presidential election.

Few of the explanations or justifications of this targeting provided by IRS leaders and Obama administration officials have held up. IRS officials at first denied that any targeting had taken place. That was false. They later claimed that the targeting had involved only low-level employees in the Cincinnati office. That was false. They argued that conservative groups weren’t singled out, that progressive groups were subject to the same level of scrutiny. That was false. They argued that the IRS has complied with all requests for information from Congress. That was false.

Three years ago, on June 3, 2011, Representative Dave Camp, chairman of the House Ways and Means Committee, wrote to the IRS requesting all information—including emails and other communication—related to the alleged targeting of conservative groups. Ten days later, Lois Lerner, the woman at the center of the targeting, reported to the IT team at the IRSthat her hard drive had crashed. IRS leaders, questioned repeatedly about Lerner’s emails in subsequent congressional hearings, made no mention of the hard drive crash. Earlier this summer, IRS director John Koskinen disclosed that thousands of Lerner emails—including many of those sent to executive branch agencies—were missing because of the alleged computer problems. From her first appearance before a congressional committee, back in May 2013,Lerner has exercised her right against self-incrimination and refused to testify.

Last week brought a significant new revelation: an email in which Lerner seeks advice about keeping information from Congress. ... She knew that the IRS scandal was about to explode.

At the time Lerner sent the email, IRS officials had recently learned that the Treasury inspector general would be issuing a report the following month criticizing the agency for its targeting of conservative groups. And Lerner’s email came just before she planted a question in the audience at an American Bar Association conference on May 10 in an effort to get out in front of the controversy.

These facts lead to one conclusion: Lois Lerner and other top IRS officials were desperate to keep information on the targeting of conservative groups from Congress. 

It’s crucial to understand why. And that will require a special prosecutor.

Town Hall:  Reality of the IRS Scandal, by Bruce Bialosky (Founder, Republican Jewish Coalition):

People who are not distraught about Lois Lerner and the IRS must have never actually dealt with the organization. As someone who has for 36 years, it is clear that at best we are dealing with fabrications and at worst outright lies and criminal actions. The fact that any American --let alone the national press, Congressional Democrats, and the White House – might not be agitated is dangerous for our society.

First, let us be clear: despite billions of dollars of taxpayer money being spent on improving their computer system, it is still rank. Second, the Internal Revenue has gradually over my career asserted more and more control at higher levels leaving agents and revenue officers less flexibility. That means there is less opportunity for an agent in the field to make their own decisions about any matter.

If you ever sat in an IRS office or waited endlessly on the telephone, you would know that this entire scenario of lost emails is not remotely plausible.

Las Vegas Review-Journal editorial:  Lerner Must Testify Without Immunity in IRS Scandal:

Last week, an Arizona Republic editorial stated that the only way to move this investigation forward is to get Ms. Lerner to talk — via immunity from prosecution. Ms. Lerner needs to talk, all right, but in light of the past week’s news, she cannot possibly be given immunity. The IRS regularly operates with absolute ruthlessness and no mercy in its dealings with the public, and in this case, we’ve seen nothing but complete contempt from the highest-ranking agency officials, all as the administration looks the other way and President Barack Obama himself says there’s “not even a smidgen of corruption” within the IRS.

Remember, this isn’t about partisan sniping. This is about an executive branch agency working to influence the outcome of the 2012 election in favor of the party — and the president — in power.

It’s one thing to offer reduced sentences or penalties for cooperating, but full immunity must be off the table. Ms. Lerner and the IRS are long overdue for a heavy dose of karma.

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July 15, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (8)

Monday, July 14, 2014

The IRS Scandal, Day 431

IRS Logo 2National Review:  The ‘Independent’ Counsel Mirage: Don’t Hand the IRS Investigation Over to a Special Prosecutor, by Andrew C. McCarthy:

I confess to being amazed that President Obama and his trusty attorney general, Eric Holder, have not mollified their detractors by appointing an “independent counsel” to investigate the IRS scandal.

“Why,” you ask, “would Obama sic a prosecutor with independence from Holder’s Justice Department on a component of the Obama administration?” The real question is: Why hasn’t he?

The disconnect here lies in the public’s perception — and, perhaps, the perception of some congressional Republicans who ought to know better — of what an “independent counsel” really is. Independence is a mirage: Obama’s critics crave an evenhanded investigation of executive lawlessness and, in the Washington fashion, they have convinced themselves that wishing can make it so. As it actually exists, however, an “independent counsel” would be tailor-made for letting the administration and the IRS dodge accountability. ...

You can have political accountability for abuses of power or you can have an “independent” counsel and “the process.” Political accountability is driven by congressional investigations and court cases brought by citizens whose rights have been trampled. It is messy, combative, and political, but the malfeasance it uncovers can result in the removal of corrupt officials from power.

By contrast, “the process,” under the steady hand of “independent” counsels, is neat, silent, and somnolent. In fact, once it starts, that may be the last you hear about it until President Obama pardons everyone on his way out the door.

Time:  After “Tea Party” Scandal, IRS to Rubber Stamp Tax-Exempt Status for Most Charities:

Amid ongoing controversy over its scrutiny of non-profits, the Internal Revenue Service has decided it will no longer screen approximately 80% of the organizations seeking tax-exempt charitable status each year, a change that will ease the creation of small charities while doing away with a review intended to counter fraud and prevent political and other non-charitable groups from misusing the tax code.

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July 14, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Sunday, July 13, 2014

The IRS Scandal, Day 430

IRS Logo 2Washington Post:  More IRS Smidgens Show Up. ‘Perfect.’, by Ed Rogers:

Anyone paying attention to the Internal Revenue Service scandal has been waiting for the next smidgen to drop. Well, two more hit pretty hard this week. At the president’s next encounter with the media, I will scream collusion if no one asks him for his exact definition of a “smidgen,” and if he thinks he has seen a smidgen of corruption yet. At this point, only the most gullible or culpable can continue to claim there is no compelling evidence in this case. Given the delays, lies and stonewalling, there is no viable argument against a special prosecutor.

In a stunning revelation this week, it was disclosed that former IRS official Lois Lerner told colleagues, “we need to be cautious about what we say in emails” and then proceeded to ask the IRS IT department, in an e-mail, “if [instant messaging] conversations were also searchable.”  When she was told they were not, she e-mailed back, “Perfect.” This is a smoking gun e-mail in that it makes plain she had a cover-up in mind. There is no other plausible explanation. ...

[A]s long as Lerner stays cool and the Obama Department of Justice has her back, the administration obviously thinks it can run out the clock on this scandal. But these revelations are definitely meaningful smidgens. At what point does a flock of smidgens become irrefutable evidence that deserves an independent examination?

Judicial Watch press release:

Judicial Watch announced today that on June 17, 2014, it filed a Freedom of Information Act (FOIA) lawsuit against the Department of Justice (DOJ) seeking the number of hours DOJ Attorney Barbara Bosserman expended in the investigation of the IRS targeting of conservative organizations seeking tax exempt status during the 2010 and 2012 elections cycles (Judicial Watch v. U.S. Department of Justice (No. 1:14-cv-01024)).

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July 13, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Saturday, July 12, 2014

The IRS Scandal, Day 429

IRS Logo 2Wall Street Journal editorial:  Judging the IRS: A Pair of Court Orders Seek Answers About the Vanishing Emails:

Congress has been working for more than a year to get to the bottom of the IRS political targeting scandal, and the Obama Administration has resisted across the board. So hurrah to the judicial branch, which this week stepped into the fray with orders that could force the IRS to start coughing up some answers.

U.S. District Judge Emmet G. Sullivan on Thursday ordered the IRS to provide for him, within a month, a sworn declaration explaining how the agency came to lose two years' worth of email belonging to former Director of Exempt Organizations Lois Lerner. Judge Sullivan also assigned a federal magistrate, John Facciola, to conduct his own query into whether Ms. Lerner's emails might be obtained by other means. The order suggested that Judge Sullivan was far from satisfied with the IRS's cursory explanations of crashed hard drives and irretrievable information.

On Friday a second federal judge, Reggie B. Walton, issued another order, demanding the IRS provide under oath an affidavit outlining what happened to Ms. Lerner's hard drive, the qualifications of anybody who attempted to retrieve her lost email, and the status of the IRS Inspector General's investigation into these issues. Judge Walton gave the IRS one week to respond.

Now we're getting somewhere. The IRS has slow-rolled document production for Congress and then it waited two months to tell its legislative overseers that Ms. Lerner's emails had vanished. The Justice Department and FBI, meanwhile, have leaked to the press that their probes have found nothing wrong.

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July 12, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Friday, July 11, 2014

The IRS Scandal, Day 428

IRS Logo 2Wall Street Journal:  U.S. Judge Orders IRS to Explain How it Lost Lerner’s Emails:

A federal judge on Thursday ordered the Internal Revenue Service to explain how it lost two years’ worth of a former official’s emails, and tapped a magistrate judge to find out whether the documents can be obtained from other sources.

At a hearing in a conservative group’s lawsuit, U.S. District Judge Emmet Sullivan gave the IRS until Aug. 10 to provide a sworn declaration explaining how the email loss occurred. The IRS previously has said that the emails were lost because the top agency official’s computer crashed in 2011, and backup tapes were routinely reused after six months.

Wall Street Journal:  Lerner's 'Perfect' Plan for IRS Emails: The Tax Official Warned Colleagues About Creating Electronic Records:

Less than two weeks after the IRS inspector general had circulated a draft report on the agency's unlawful targeting of conservative groups, Ms. Lerner reached out to IT specialist Maria Hooke to inquire about IRS record-keeping of internal communications. Ms. Lerner wrote:

"I had a question today about OCS [Microsoft Office Communications Server]. I was cautioning folks about email and how we have several occasions where Congress has asked for emails and there has been an electronic search for responsive emails – so we need to be cautious about what we say in emails. Someone asked if OCS conversations were also searchable – I don't know, but told them I would get back to them. Do you know?"

Ms. Hooke responded that individual employees could choose to save their communications, but that the software was not set to automatically save any messages.

Ms. Lerner's response: "Perfect."

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July 11, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Thursday, July 10, 2014

TIGTA: IRS's 17% Error Rate in Processing Amended Tax Returns Caused $2.1 Billion of Erroneous Tax Refunds

TIGTA The Treasury Inspector General for Tax Administration yesterday released Amended Tax Return Filing and Processing Needs to Be Modernized to Reduce Erroneous Refunds, Processing Costs, and Taxpayer Burden (2014-40-028):

The IRS received more than 4 million amended tax returns in Fiscal Year 2012. This audit was initiated because previous TIGTA audits have identified problems with IRS processes for verifying claims on amended tax returns. The objective of this review was to determine whether the IRS has controls in place to ensure that claims for refunds on amended tax returns are appropriate. ...

TIGTA’s review of a statistical sample of 259 amended tax returns claiming tax refunds of $500 or more in Fiscal Year 2012 identified 44 (17 percent) tax returns for which the IRS issued potentially erroneous tax refunds totaling $103,270. Based on the sample results, TIGTA estimates the IRS may have issued more than $439 million in potentially erroneous tax refunds claimed on 187,421 amended returns in Fiscal Year 2012. As such, the IRS could issue more than $2.1 billion in potentially erroneous tax refunds claimed on amended tax returns over the next five years.

To reduce erroneous refunds, processing costs, and taxpayer burden, the IRS could revise Form 1040, U.S. Individual Income Tax Return, to allow for corrections to original tax return filings and expand e-filing to include amended tax returns. TIGTA estimates that the IRS could have potentially saved more than $17 million in processing costs during Fiscal Year 2012 if it had allowed taxpayers to e-file their amended tax return.

July 10, 2014 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 427

IRS Logo 2New York Times, Republicans Say Ex-I.R.S. Official May Have Circumvented Email:

Lois Lerner, the former Internal Revenue Service official at the center of an investigation into the agency’s treatment of conservative political groups, may have used an internal instant-messaging system instead of email so that her communications could not be retrieved by investigators, Republican lawmakers said Wednesday.

The accusation against Ms. Lerner, the former head of the agency’s division on tax exemption, came nearly a week after the I.R.S. gave investigators thousands of her emails, including some that were destroyed when her hard drive crashed in 2011 but were recovered from the accounts of people with whom she had corresponded.

The Republican lawmakers said that in one of those email exchanges — which took place in the spring of 2013, just days after the Treasury Department’s inspector general concluded in a report that agency officials had treated conservative groups improperly — Ms. Lerner asked another official whether messages sent over the instant-messaging system were recorded. When she was told that they were not, she responded, “Perfect.”

Republican lawmakers interpreted that response as an expression of relief.

“Ms. Lerner says, ‘Wow, I know I’ve gotten rid of the emails when the computer crashed two years earlier, but I’d better double check on this intraoffice instant-messaging capability we have at the Internal Revenue Service,’ and she says ‘perfect’ when she learns that it’s not traceable, not trackable, not stored,” Representative Jim Jordan of Ohio said during a hearing of a House oversight subcommittee.

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July 10, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Wednesday, July 9, 2014

The IRS Scandal, Day 426

Tuesday, July 8, 2014

The IRS Scandal, Day 425

IRS Logo 2New York Post editorial:  Audit the IRS!:

True the Vote has an idea that is the fantasy of every taxpayer who’s ever found himself sitting opposite an imperious tax collector: Audit the IRS.

On Thursday, the IRS will have to persuade federal Judge Reggie Walton why this shouldn’t happen.

True the Vote calls itself “the nation’s largest nonpartisan, voters’ rights and election integrity organization.” It is one of the conservative outfits whose application for nonprofit status was targeted by IRS authorities. And in its motion asking for an outside specialist in data recovery to be permitted to conduct a forensic audit into the lost Lois Lerner e-mails, True the Vote makes an eminently reasonable case:

“Even if the ill-timed hard drive ‘crash’ was truly an accident, and even if the IRS genuinely believes that the e-mails are ‘unrecoverable,’ the circumstances of the spoliation at issue cry out for a second opinion,” reads the motion.

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July 8, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Monday, July 7, 2014

IRS Spending: Administration v. Refundable Credits

Following up on last Monday's post, Spending by the IRS, 1970-2014:  Joe Kristan links to this additional chart from the Cato Institute, which divides IRS spending into administration and refundable credits:

IRS Budget 2

July 7, 2014 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 424

IRS Logo 2New York Times editorial: The Real Internal Revenue Scandal:

There is a scandal going on at the Internal Revenue Service, but it has nothing to do with Lois Lerner or her missing emails. House Republicans have not given up on their noisy crusade to tie Ms. Lerner to what they imagine to be widespread political corruption within the Obama administration, but all they have proved is that the I.R.S. is no better at backing up its computer files than most other government agencies.

No, the real scandal is what Republicans did to cripple the agency when virtually no one was looking. Since the broad Tea Party-driven spending cuts of 2010, the agency’s budget has been cut by 14 percent after inflation is considered, leading to sharply reduced staff, less enforcement of the tax laws and poor taxpayer service.

As the economist Jared Bernstein noted recently in The Washington Post, a weakened I.R.S. enforcement staff will be unable to make a dent in the $385 billion annual gap between what taxpayers owe and what they pay — an unintended tax cut, mostly for the rich, that represents 11 percent of this year’s spending.

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July 7, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Sunday, July 6, 2014

The IRS Scandal, Day 423

IRS Logo 2Arizona Republic editorial:  Grant Lois Lerner Immunity in IRS Case:

Congress is facing a fork in the road in the Internal Revenue Service's tea party-harassment scandal.

It may have to take both. 

But, first, Republicans in the House must come to terms with a decision they really — really — do not wish to make.

They will have to offer immunity from prosecution to Lois Lerner, the IRS retiree who has refused to testify and whose emails so amazingly disappeared when her computer hard drive crashed.

And if they fail to get to the bottom of the IRS shenanigans through Lerner? Well, there is a Plan B. They can appoint a special prosecutor — and accept all the expense and power-wielding baggage that comes with such an appointment.

Following the contempt-dripping theatrics of IRS Commissioner John Koskinen, the GOP lawmakers have no choice but to take one or both of those dramatic steps. ... Lerner, of course, has been no more willing to get to the bottom of events than Koskinen. Or, for that matter, the Justice Department, whose own half-hearted investigation is languishing ... somewhere. Or, for that matter, the White House, which simply could order agencies that may have communicated with Lerner, et al, to cooperate.

Their determined resistance is beginning to tell its own suspicious story. If Lerner dodges Congress again, despite immunity, there is always the special prosecutor route. It may be the only way to make sure this episode is never repeated, by administrations of either party.

Above the Law, Some Thoughts About the IRS Scandal and Spoilation of Evidence:

On Tuesday, U.S. District Judge Reggie Walton issued an order to hear oral arguments from lawyers representing the Internal Revenue Service and the conservative nonprofit True the Vote. True the Vote is one of the conservative groups claiming IRS improperly targeted its application for nonprofit status based on the group’s political and philosophical affiliation. True the Vote filed a motion for a preliminary injunction and expedited discovery on Monday, calling for an independent forensics examination of any IRS hard drives, servers, or other computer hardware involved in the government agency’s possible targeting of conservative nonprofits’ applications for tax-exempt status. It wants an outside computer expert to try to ascertain how and when any electronic evidence, such as former IRS Commissioner Lois Lerner’s emails, may have been lost. Also, it would be great if the government didn’t spoliate — I mean “recycle” — any more evidence….

In its motion, True the Vote argues that the law obligated the IRS to preserve potentially relevant evidence, including electronically stored information. The IRS knew that the hard drives and emails of Lerner and other officials were of significant legal interest. By the time the agency supposedly began disposing of Lois Lerner’s computer hardware, Congress was publicly investigating the IRS scandal. Pro-Israel group Z Street, Inc. filed suit in August 2010, alleging similar improper targeting as True the Vote claims. In September 2013, True the Vote itself sent a litigation hold letter to counsel for the IRS officials, including Lerner, who the group believed were involved in IRS wrongdoing. The government clearly had notice that the computer equipment and information should be preserved as potential evidence.

If the account alleged in True the Vote’s motion is accurate, opposing counsel was none too cooperative. Despite earlier attempts to confer with IRS counsel, attorneys for True the Vote did not learn of the missing emails of Lois Lerner and other IRS officials until Friday, June 13, 2014, when news reports publicized the loss. On that day, IRS finally informed Congressional investigators that the agency could not recover two years’ worth of Lerner’s emails. Apparently, Lerner’s hard drive crashed in 2011, its data was unrecoverable, and the government had no available back-ups.

Talk about bad luck — finding out on Friday the 13th that two years’ worth of emails spanning the time period when you believe the federal government committed illegal acts have been “lost.”

Of course, it is hard to believe in bad luck when federal-government malfeasance is involved. Did IRS officials violate True the Vote’s constitutional rights by improperly singling out their application for tax-exempt status as the conservative group claims? Was this politically motivated targeting the result of overzealous lower-level employees? Did members of the Obama administration orchestrate this campaign to punish the administration’s political enemies? We don’t know. That’s the kicker about the spoliation of evidence.

IRS explanations of how Lerner’s emails during the crucial time period were lost have not inspired much confidence, under the circumstances. Perhaps the only reason to believe that the IRS and Obama administration are telling the truth about the lost evidence and the IRS scandal is that their explanations look so extraordinarily — almost laughably — suspicious that someone would have to have “courage” the size of the U.S. Treasury to claim such things with a straight face.

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July 6, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Saturday, July 5, 2014

High-Level Departures Roil IRS's International Division

IRS Logo 2At a time of unprecedented attempts to thwart tax avoidance with FATCA and BEPS, and controversy swirling over the rush of U.S. corporations to use inversions to reduce their U.S. tax exposure, the IRS's Large Business & International Division has been stung by the sudden departures of several key people:

  • Michael Danilack (Deputy Commissioner (International)), resigned effective July 2
  • Laura Prendergast (Deputy Commissioner (Domestic)), resigned effective July 3
  • Samuel Maruca (Director, Transfer Pricing Operations), resigned effective August 1
  • Diana Wollman (Director, International Strategy), resigned July 1
  • Richard McAlonan (Director, Advance Pricing and Mutual Agreement), resigned effective June 27

Tax Analysts:  Major Shake-Up at LB&I?,  by Jaime Arora, Amy S. Elliott, & Andrew Velarde:

One practitioner told Tax Analysts that a coming reorganization may have spurred the departures. ... A former IRS official, now in private practice, said that Danilack agreed to lead the IRS's international unit on the condition that the Service would realign its Large and Midsize Business Division (LMSB) in a way that would separate international tax administration from domestic tax administration. The 2010 LMSB/LB&I realignment meant that agents working on international issues would ultimately report to Danilack, giving him greater management authority.

Under the realigned structure, the domestic and international deputy commissioners had equal authority to resolve issues. The former official said that under the LMSB structure, international issues were ultimately resolved by the domestic territory managers, directors of field operations, and industry directors. Since the realignment, "there's not been anyone with a 51 percent vote to resolve issues for a particular taxpayer" aside from going to LB&I Commissioner Heather Maloy for a tiebreaker vote, and "that's not good management," the former official said.

With industry directors and Danilack's team having similar levels of authority under the realigned LB&I, neither could overrule the other, the former official said. "No one was in charge," he said. "It was the Achilles' heel of the organization."

The former official added that Danilack's departure indicates that he probably argued for getting tiebreaker authority, making the case that the larger assessments are often those stemming from international issues, and lost. "I knew he was frustrated," the former official said. Danilack declined to comment for this article.

Tax Analysts Blog:  What’s Behind the Brain Drain at the IRS?, by Christopher Bergin:

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July 5, 2014 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 422

IRS Logo 2Fort Wayne Telegram:  Federal Government Email From the Inside, by Richard Greene:

Since senior federal official Lois Lerner and I served together in the Bush Administration, surely she must have received the same sort of regular briefings about using the government’s email system as I did. ...

I was told that anything I did with my computer or Blackberry device would result in a permanent record being created. Only classified communications would be encrypted, and all the rest would be discoverable in any legal proceedings. That record would be available to virtually anyone but especially useful to Congress or the Justice Department in the event of their need to examine electronic communications dealing with public affairs.

Any notion that I could just erase something after it had been sent was conclusively dashed when the hard drive inside my desktop computer in my office crashed. The tech guy came in, quickly removed the drive and told me he would try to fix it. I explained to him that my concern was that all my data, including email that I often searched through, was on that drive and could be lost.

His reply was to assure me that every stroke of my keyboard had been backed up multiple times in the local office and off site as well, and nothing would be lost. If he couldn’t fix the drive he had removed, he would simply set up a new one and transfer everything that was there from the moment it failed and it would be completely restored.

Maybe my experience is why the latest polls are finding about 75 percent of the American people believe Congress should keep investigating what happened to Lerner’s emails.

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July 5, 2014 in IRS News, IRS Scandal | Permalink | Comments (0)

Friday, July 4, 2014

The IRS Scandal, Day 421

IRS Logo 2Wall Street Journal: House Lawmakers Press on IRS Probe:

House lawmakers are planning to step up pressure on the Justice Department to act on a contempt-of-Congress citation against former Internal Revenue Service official Lois Lerner.

Legislators view the citation—passed by the House in May—as a potential pressure point in their broader efforts to force action by the Justice Department in the controversy concerning IRS treatment of conservative tax-exempt organizations, committee aides said. ...

Federal law says the local U.S. attorney has the "duty" to present the contempt citation to a grand jury. Contempt of Congress is a misdemeanor punishable by a fine of up to $100,000 and a year in prison, under an 1850s statute. Republicans on the committee note the statute in demanding that prosecutors pursue the case.

But "it remains unclear whether the 'duty' of the U.S. Attorney…is mandatory or discretionary," a Congressional Research Service report says. Courts generally grant prosecutors wide discretion in deciding which matters to pursue.

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July 4, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Thursday, July 3, 2014

The IRS Scandal, Day 420

IRS Logo 2Forbes:  The Time Has Come: Defund The IRS, by Steve Forbes:

The current IRS scandals are now bigger than those of Watergate in the 1970s and Teapot Dome in the 1920s. The most powerful and feared government agency was turned loose on groups of citizens who the White House and congressional Democrats felt threatened their power. President Franklin Roosevelt used the IRS against opponents, as did Presidents John Kennedy, Lyndon Johnson and Richard Nixon. Conservative think tanks were rightfully suspicious they were being singled out for tax audits during the Clinton Administration. But none of those abuses was of the sweeping nature of the ones that began in 2010 and have taken place against ordinary citizens who have spontaneously come together in countless organizations to fight the current regime’s egregious policies and threats to liberty.

[Defenders of liberty, especially Republicans, should seek to defund] almost all of the IRS after the midterm elections, which the Democrats will lose badly. There can be no more continuing resolutions that allow the tax-collection agency to operate business as usual, even though Congress hasn’t passed an appropriations bill. If a continuing resolution is necessary to avoid a government shutdown, then by all means pass one–but specifically do a near-zeroing-out of the IRS (the only exception would be a handful of clerks to process refunds) until these scandals are fully and credibly investigated. If the President vetoes such a budget resolution, the onus is on him, not Congress.

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July 3, 2014 in IRS News, IRS Scandal | Permalink | Comments (1)

Wednesday, July 2, 2014

The IRS Scandal, Day 419

IRS Logo 2Wall Street Journal:  Judge Sets Hearing on Group's Push to Investigate Lost IRS Emails:

A federal judge scheduled a hearing for next week on a grass-roots conservative group's request to investigate missing emails at the Internal Revenue Service, as part of the group's lawsuit against the agency.

U.S. District Judge Reggie Walton ordered the hearing on Tuesday, after conservative group True the Vote filed a motion seeking to speed up discovery and "preserve and prevent further destruction" of documents and electronic data. Among other things, the group wants a forensic expert to figure out how the emails were lost and examine whether any of the missing data can be recovered.

The hearing is set for July 11 in U.S. District Court in Washington, D.C.

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July 2, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Tuesday, July 1, 2014

Bernstein: Why the GOP Really Wants to Defund IRS

Washington Post op-ed:  Why the GOP Really Wants to Defund IRS, by Jared Bernstein:

In one of the great D.C. key-dangles (“look over here, not over there!”), congressional conservatives have everyone looking the other way while they try to defund the Internal Revenue Service. No question, recent IRS screw-ups are feeding right into their opponents’ plans. But let’s not lose sight of what’s really going on here: This is just a different way to try to shrink government, accommodate tax evasion and even undermine the implementation of health reform. ...

To collect taxes, we need an amply funded IRS, and therein lies the real scandal. The details are in this new Center on Budget and Policy Priorities paper by Chuck Marr and Joel Friedman, who document “…significant cuts that have occurred in IRS funding, which remains well below its 2010 level…. The cuts have led the IRS to reduce its workforce, severely scale back employee training, and delay much-needed upgrades to information technology systems. These steps, in turn, have weakened the IRS’s ability to enforce the nation’s tax laws and serve taxpayers efficiently.” ...

Marr and Friedman identify these additional facts of the real case:

  • The figures below show a 14 percent fall in the agency’s inflation-adjusted budget (figure 1) along with an 11 percent decline in its staffing levels (figure 2), 2010-2014. IRS staff assigned specifically to enforcement is down 15 percent.

Bernstein_IRS_combo

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July 1, 2014 in IRS News, Tax, Think Tank Reports | Permalink | Comments (7)

Yin: The Most Critical Issue Facing Tax Administration Today -- And What to Do About It

George K. Yin (Virginia), The Most Critical Issue Facing Tax Administration Today -- And What to Do About It:

This very brief paper contains the text of the keynote address delivered on June 19, 2014 to a research conference in Washington, DC on Advancing Tax Administration, co-sponsored by the IRS and the Tax Policy Center.

July 1, 2014 in IRS News, Scholarship, Tax | Permalink | Comments (1)

The IRS Scandal, Day 418

Monday, June 30, 2014

Spending by the IRS, 1970-2014

Outlays

Data here. (Hat Tip: Len Burman.)

June 30, 2014 in IRS News, Tax | Permalink | Comments (5)