Paul L. Caron
Dean


Tuesday, October 7, 2014

The IRS Scandal, Day 516

IRS Logo 2Power Line:  Is Another Obama Administration Scandal About to Explode:

While strong cases can be made for both Benghazi and Fast and Furious, most voters consider Barack Obama’s misuse of the IRS to be his administration’s worst scandal so far. But, as we wrote last year, targeting of conservative non-profits for harassment is not the only dimension of the IRS scandal. In addition, there is strong reason to believe that one or more White House political appointees have illegally accessed private taxpayer information and used it for political gain. 

Austan Goolsbee directed Obama’s Economic Recovery Advisory Board and later chaired his Council of Economic Advisers. In August 2010, Goolsbee conducted a telephone press briefing in which, according to the Washington Post, he purported to reveal confidential taxpayer information:

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

There are three possibilities here: either Goolsbee just made up the claim that Koch Industries doesn’t pay corporate income taxes; or he learned Koch’s tax status from some proper, legal source; or else he illegally accessed Koch’s tax returns and used the information he learned for political purposes in a call with reporters. ...

The wheels of justice, as they say, grind slowly. As with other Obama administration scandals, Barack’s effort is to run out the clock. It may be that by the time we learn the full extent of the Obama administration’s lawlessness, the administration will be over. But the remaining options are not good: either Austan Goolsbee, a senior adviser to Obama, made up a smear of Koch Industries out of whole cloth, or else Obama’s IRS allowed the White House illegal access to confidential taxpayer data for political purposes. That’s a crime for which at least two people should go to jail.

[I]t is likely that members of the Obama administration committed federal crimes by illegally sharing confidential taxpayer information with the White House for political purposes. With luck, we will find out for sure before our next president is inaugurated. The alternative is that a high-ranking White House official fabricated a baseless smear against the administration’s political opponents and passed it on to reporters to further the administration’s political agenda. Any way you look at it, this is a shameful episode in the already bleak history of the Obama administration.

Forbes, TIGTA Must Disclose More About Investigation Of Possible IRS Release Of Koch Industries Return Information, by Peter J. Reilly:

TIGTA has publicly acknowledged that it investigated whether Mr. Goosbee’s statement was based on improper disclosure by the IRS. There seems to be a good chance that it was a pretty easy investigation seeing as how it is extremely likely that Goosbee was flat out wrong in his speculation that KI was an S corporation. Taking that as the scenario, how can TIGTA then explain the results of the investigation without disclosing the very thing that was not supposed to be disclosed? Koch Industries’s status as either a C or an S Corporation.

Cause of Action still argued that TIGTA needed to be more forthcoming not only about its investigation of the Goosbee matter but also whether any of its other investigations of improper disclosure involve the White House. Mr. Epstein indicated that you might be able to connect the dots to the Tea Party scandal, if you could find out whether TIGTA is investigating breaches of taxpayer confidentiality involving the White House and applications for not for profit status. Using the very statute that is meant to protect taxpayers against breaches of confidentiality to protect the breachers does appeal to my inner villain as a masterful stroke, so I think Cause of Action has a point.

More important than my opinion is that of Judge Amy Berman Jackson, who was nominated by President Obama to serve on United States District Court for the District of Columbia, shortly before Mr. Goosbee’s unfortunate remark. Judge Jackson ruled that TIGTA should disclose more:

The Court finds that the fact of the existence of any records within the category of records that plaintiff seeks is not confidential “return information” under section 6103 of the Internal Revenue Code, and so defendant’s Glomar response is not supported by FOIA Exemption 3. Furthermore, although the existence of some records might be a fact protected by FOIA Exemption 7(C), the Court finds that defendant has waived reliance on both Exemption 7(C) and Exemption 6 by officially acknowledging its investigation into questions raised by the public statements of a particular administration official, and by failing to offer any other basis that would support a Glomar response on those grounds. Therefore, defendant’s motion for summary judgment will be denied, and plaintiff’s cross-motion for summary judgment will be granted. The Court will remand the case to the agency for further action consistent with this opinion. A separate order will issue.

https://taxprof.typepad.com/taxprof_blog/2014/10/the-irs-scandal-4.html

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