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Paul L. Caron
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Sunday, December 28, 2014

The IRS Scandal, Day 598

IRS Logo 2Forbes:  Exactly What Kind Of A Criminal Might Lois Lerner Be?, by Peter J. Reilly:

If Lois Lerner is a criminal, exactly what kind of criminal is she? If you spend much time reading IRS scandal or, as I like to call it, Teapartygate material, you will often encounter some form of the question that Joe Otto asks in his post titled Why Isn’t Lois Lerner In Prison Yet? , since as he notes “ Lois Lerner’s decision to weaponize the IRS against Tea Party groups is absolutely criminal!”

OK. Well, I’m a little bit of a geek and I’m fairly certain that there is not a section in the United States Code titled – Weaponizing IRS against Tea Party groups -, at least not yet. Give them time. There will probably be a constitutional amendment to say that the Eighth Amendment does not apply in cases of IRS Weaponizing, so that the punishment can be really unusual. Anyway we’re not there yet, so I’ve been trying to figure out what the specific crimes are that Lois Lerner can be charged with. ...

One of the scenarios that fits a lot of the facts that have come out so far is that Lois Lerner was frustrated that people inside the IRS were not serious enough about dark money 501(c)(4) groups being in violation of the law. ... A prosecutor would have to prove that Lois Lerner knew she had a legal duty not to disclose the information to the FBI and chose to violate that duty knowing that the violation was criminal – not that she should have known, rather that she did know.

https://taxprof.typepad.com/taxprof_blog/2014/12/the--2.html

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Comments

Jack, I cannot find fault with your cogent analysis. The point I was trying to make was that there are situations where LLerner's discussions and disclosures to DOJ Crim are not illegal. Perhaps I should have ended my comment with "LLerner's disclosures to DOJ Criminal Division did not NECESSARILY violate the anti-disclosure provisions of the IRC."

Posted by: Publius Novus | Dec 30, 2014 9:54:26 AM

I know that DOJ claims, at least sometimes claims, the authority to investigate tax crimes. I have never been able to understand the basis for the claim. I think DOJ attorneys just assert the claim and hope that no one will investigate the claim. I have addressed this issue in a blog on my Federal Tax Crimes Blog, here:
http://federaltaxcrimes.blogspot.com/2009/06/doj-tax-division-criminal-tax.html

Now, as to the authority of DOJ to access tax return information, as you note, there is a limited exception in Section 6103(h)(2)(A) but that only allows access to return information for a proceeding. I am not sure that the type of preliminary inquiry by the DOJ attorney to Ms. Lerner would meet the proceeding requirement. It certainly cannot be the case that, simply because a fishing expedition into IRS files and taxpayer return information might turn up something that is prosecutable, that alone is justification for the authority in Section 6103(h)(2)(A). I think some specific proceeding needs to be in place or contemplated. I don't think that was the case with the meeting, but I don't have the details to know one way or the other.

Moreover, Section 6103(h)(3) requires a specific procedural predicate for the authority granted in Section 6103(h)(2) -- a referral of the case by the IRS to DOJ or a request from a high ranking DOJ official specifically naming the taxpayer and the need for the disclosure. My understanding was that neither of these procedural predicates were met -- at least not on the basis of the public information I have seen. One or both may have been met, but I certainly don't know that.

That is not to say that Ms. Lerner even disclosed any taxpayer return information in the meeting. I can imagine that there could be general discussion of the problems with exempt organizations generally and 501(c)(4)s specifically without dealing with return information of a specific taxpayer. But, at least in my judgment, the meeting was ripe for potential disclosure and was therefore unwise. Unwise is not the same as illegal. That has yet to be established.

And, I will say finally, that, in my judgment, Issa and his committee minions have now -- at great expense to the country and to a fine agency -- have stated their best case. I don't think any prosecutor would even take that case to a grand jury much even hint to a grand jury that it should indict. The standard for federal prosecutors is not whether the prosecutor can get a grand jury to indict but whether the prosecutor can prove the charge(s) beyond a reasonable doubt. Issa's best case assertions do not even come close to that standard. It is just a partisan screed bending the evidence to a partisan stance.

Posted by: Jack Townsend | Dec 29, 2014 3:24:02 PM

Mr. Reilly, your premise--that only the IRS' Criminal Investigation Division can investigate tax crimes--is flawed. The DOJ is authorized to investigate tax crimes and not infrequently does so. Moreover, the disclosure of returns and return information to DOJ is authorized by 26 U.S.C. 6103(h)(2)(A). As a result, LLerner's disclosures to DOJ Criminal Division did not violate the anti-disclosure provisions of the IRC.

Posted by: Publius Novus | Dec 28, 2014 2:54:05 PM