Paul L. Caron

Sunday, December 7, 2014

The IRS Scandal, Day 577

IRS Logo 2Town Hall:  IRS Scandals Update:, by Daniel J. Mitchell (Cato Institute):

I generally don’t feel a special degree of animosity for the internal revenue service. After all, it’s the politicians who have created the 74,000-plus page monstrosity of a tax code. Blaming the IRS for enforcing that system is like blaming the police for the drug war.

This isn’t to say the IRS is blameless. Just as cops sometimes take misguided laws and enforce them is bad ways, the IRS periodically will go beyond its legal mandate because of an enforcement-über-alles mentality.

But what gets me most upset is when the IRS allows itself – either with glee or reluctance – to become politicized. ...

For instance, the Washington Times reveals that the IRS may have violated taxpayer privacy by giving confidential taxpayer data to the political operatives in the White House. ...

One possible example deals with the Obama Administration’s attack on the Koch brothers. As the Washington Examiner reported, Obama’s top economist at the time was the subject of an investigation. ...

It’s worth noting, by the way, that this isn’t the first White House to get in trouble for using the IRS as a political weapon.

Section 6103 of the Internal Revenue Commission’s criminal code, which Congress enacted following revelations of President Nixon’s abuse of private tax information during the Watergate scandal. The second article of impeachment against Nixon in the House Judiciary Committee was based on those abuses.

So the ghost of Richard Nixon may approve of Obama, as suggested by this cartoon.

But this isn’t the only IRS scandal we need to monitor. Remember Lois Lerner, who became infamous for targeting the President’s opponents and then apparently losing her emails? Well, we have an update. The Wall Street Journal opines on the latest development in the IRS targeting scandal. ... One can’t help but wonder whether the delay in finding the emails and now the delay in turning them over to investigators is simply to allow time for smoking guns to be hidden. ...

Let’s close with a good cartoon about the IRS. By the way, if you enjoy anti-IRS cartoons, click here, here, and here for more examples. ...

P.P.S. I don’t want to end on a sour note, so here’s more examples of IRS humor from my archives, including a new Obama 1040 form, a death tax cartoon, a list of tax day tips from David Letterman, a cartoon of how GPS would work if operated by the IRS, an IRS-designed pencil sharpener, two Obamacare/IRS cartoons (here and here), a sale on 1040-form toilet paper (a real product), a song about the tax agency, the IRS’s version of the quadratic formula, and (my favorite) a joke about a Rabbi and an IRS agent.

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Mr. Mitchell, “what gets me most upset is when” newspapers like the Washington Times speculate that “the IRS may have violated taxpayer privacy by giving confidential taxpayer data to the political operatives in the White House,” when neither the Times nor the person they are quoting knows if taxpayer data was “shared,” what taxpayer data was shared with the WH, whether it was shared with “political operatives,” and whether the sharing was or was not authorized by one of the longest and most complex provisions contained in the Internal Revenue Code (§ 6103). It may prove out that: 1) no confidential data was shared; 2) confidential data was shared, but not with “political operatives”; or 3) confidential data was shared, but the sharing was entirely proper under 26 U.S.C. § 6103(g). Speculation like that quoted from the Times article, and repeated over and over again as truth, does not assist in the public discourse and tends to undercut taxpayer confidence. There are many reasons for taxpayer confidence to have been undercut recently, but this is not one, at least not yet.

On the other hand, there are some nuggets of truth to some of the allegations made in connection with the IRS’ use of BOLO lists to screen exempt orgs following the SCOTUS’ Citizens United decision. There may or may not be some truth to the “new” allegations that tax returns were disclosed to the WH. But so far, the great majority of allegations have been overblown and exaggerated to the point that the real issues are going to be missed in the final analysis. We all know the story of the boy who called “wolf.”

For myself, I find it distressing that in 1959, the IRS took it upon itself–in an administrative action non-compliant with the APA–to “liberalize” 26 U.S.C. § 501(c)(4). This 55-year-old error is the root of the tax exempt BOLO problem. In my view, the IRS has no more authority to liberalize the tax code than it does to make it more onerous. The IRS’ job is to enforce the Code as written by Congress–however badly or unwisely it may have been written. And I would think that most “strict constructionists” would feel the same way. As for transfers of tax data to the WH, they are absolutely necessary in order to do background checks on potential employees and appointees. If there is a belief that § 6103(g) is overly broad in the discretion it accords the president, then it should be modified. But so far, there is no evidence–as opposed to unsupported speculation–that the WH and the IRS did not comply with § 6103(g).

Posted by: Publius Novus | Dec 8, 2014 7:56:10 AM