Paul L. Caron

Wednesday, May 13, 2015

The IRS Scandal, Day 734

IRS Logo 2Forbes, IRS Not Grossly Negligent In Disclosure Of Exempt Application, by Peter J. Reilly:

The order from the United States District Court of Colorado in the ongoing lawsuit Citizens Awareness Project Inc versus Internal Revenue Service is giving me flashbacks.  The case relates to one of the aspects of the perennial, interminable IRS scandal, on Day 732 by TaxProf count as I write this. The lawsuit is in reaction to the improper release of tax-exempt applications to ProPublica.  That story showed up on Day 5 (May 14, 2013) as ProPublica joined in piling on the IRS with a story titled IRS Office That Targeted Tea Party Also Disclosed Confidential Docs From Conservative Groups.  The story actually went back to December 2012. ...

As I looked into the background a bit, it struck me that Citizens Awareness Project could well be a great example of what was upsetting Lois Lerner so much – i.e. dark money using 501(c)(4) to game campaign financing disclosure.

The IRS is not contesting that it screwed up when it released a copy of CAP’s Form 1024.  ProPublica had requested the applications of 67 organizations.  They were organizations that had reported substantial expenditures to the FEC.  On October 16, 2012 CAP reported paying Stephen Clouse & Associates  $993,916.79 for printing, production and postage in opposition to Barrack Obama. The expenditure caught a little coverage with this piece titled Mystery group spends $1 million opposing Obama. ...

The IRS admitted that it was wrong to have released CAP’s 1024 that was still in process, so presumably, it would have cut the organization a check for a grand without a lawsuit.  If the actual damages don’t break $1,000, then presumably CAP does not get to recover the costs of the action, which I suspect are a bit more than the potential claim for actual damages of $4,819.78 that the Court still sees as being in play. ...

Sophia Brown was the IRS employee charged with responding to ProPublica’s request.  Apparently she failed to check whether CAP’s Form 1024 had been ruled on yet.  Since it had not been ruled on, it should not have been released. The Court did not see any gross negligence here.

IRS News, IRS Scandal, Tax | Permalink


Lost in the smoke and heat (but no light) of the “IRS scandal” is the fact that Citizens Awareness Project baldly admitted in its application that it spent $993,916 on partisan politicking. Yes, the IRS negligently disclosed CAP’s application–among the other 62 that were properly disclosed. In a disclosure operation the size of the IRS’ there will be, unfortunately, a few such negligent disclosures every year. But should CAP, which is unquestionably a political advocacy organization, be a non-profit under 26 U.S.C. § 501(c)(4)? It certainly isn’t a “social welfare” organization, and it was certainly Congress’ intent that such orgs be classified under § 527. I’ve begun to suspect that LLerner actually was an agent provocateur for the right wing. She succeeded spectacularly it getting our eyes off the ball. (That's a joke, Mr. Wodun.)

Posted by: Publius Novus | May 13, 2015 7:35:32 AM