Paul L. Caron

Tuesday, March 15, 2016

The IRS Scandal, Day 1041

IRS Logo 2Capital Research Center, The IRS Attacks the Tea Party:

The great Daniel Webster famously remarked that the power to tax is the power to destroy. Webster’s words are as true today as they were 200 years ago. But the Obama administration, an endless source of innovation in political corruption, found a way to wield as a weapon against its political enemies the power to grant tax-exempt status. ...

In 2013 the American public learned that President Obama used the Internal Revenue Service to vex and harass his political opposition. That Obama’s IRS singled out conservative groups for special scrutiny ought to “send a chill” up Americans’ spines, then-House Intelligence Committee chairman Mike Rogers (R-Mich.) told Fox News. The tax-collection agency’s strong-arming of political organizations “is as dangerous a problem the government can have.”

“This is something that we cannot let stand. It needs to have a full investigation.” ...

Left-wing Democrat Lois G. Lerner, then the director of the Exempt Organizations Division at the IRS, did the Obama administration’s bidding, harassing conservative groups and funders. Lerner testified before Congress, and after protesting her innocence she suddenly invoked the Fifth Amendment and refused to continue testifying.

But earlier Lerner had confirmed the IRS abuses. IRS employees in the agency’s Cincinnati office targeted conservative 501(c)(4) groups, she said. Section 501(c)(4) of the Internal Revenue Code exempts nonprofit organizations “operated exclusively for the promotion of social welfare” from having to pay federal income tax. The IRS allows 501(c)(4) groups to engage in lobbying and political campaign activities if those activities are not the organization’s primary activity. Two of the most high-profile 501(c)(4) groups are the left-leaning Organizing for Action (which is simply a continuation of the Obama presidential campaign) and the right-leaning Crossroads GPS (which was founded by GOP political consultants, including Karl Rove).

Such 501(c)(4) groups are allowed to be more overtly political in their activities than the most common form of nonprofit, the 501(c)(3), which includes public charities like the Salvation Army and private foundations like Ford and Rockefeller. Consequently, donors to 501(c)(4) organizations are not allowed to deduct their donations from their income taxes, whereas donors to 501(c)(3) groups are allowed to make such adjustments.

Lerner admitted that groups that included the words “tea party” or “patriot” in their documents were singled out for heightened scrutiny. Yet she denied that orders to make conservative activists’ lives difficult had come from on high in Washington.

Nobody buys that line, especially given President Obama’s frequent promises to dole out punishment to his opponents. The very fact that Lois Lerner isn’t in prison right now is proof of political interference at the highest levels. Lerner lied to Congress, committed contempt, and engaged in obstruction of justice on a massive scale. Yet nothing happened to her.

At the same time, left-wing nonprofit groups went all-out to protect the Obama administration. Propaganda outlets Media Matters for America and ThinkProgress dutifully attacked those who demanded the truth be told, while investigative outfits like ProPublica worked hand-in-hand with the IRS in the effort to hurt conservative activist groups.

Before examining the role that those left-wing nonprofits played in the saga, some background is necessary. In the lead-up to the 2012 election, many conservative organizations and Tea Party groups that had sought tax-exempt status from the IRS were frozen in limbo, unable to participate fully during election season because they were wasting away on an IRS list specifically created to stymie right-leaning groups hostile to President Obama’s radical left-wing agenda.

In spring 2013, the IRS admitted to using keywords to target conservative organizations seeking tax exemption. The agency said it used the keywords as a way to quickly flag applications for closer scrutiny because, after the First Amendment-affirming Citizens United ruling in 2010, the IRS was overloaded with applications.

Some of the keywords used to target conservative groups included “Tea Party” and “patriots,” as well as the word “Israel.” Other key phrases and concepts used by the IRS to apply a heightened level of scrutiny included questioning government spending, government debt, government capability, or criticizing how the country was being run, advocating for education about the Constitution or the Bill of Rights, and any challenges to the Affordable Care Act (a.k.a. Obamacare).

There is no comprehensive list of the groups targeted because the IRS destroyed storage media containing information relevant to the scandal. But an NPR report summarizing findings by the House Ways and Means Committee eloquent testifies to the abuse conservative groups suffered. (See table 1, “IRS Targeting of Files Produced by IRS Through July 29, 2013.”)


The IRS claims in its defense that lower-level employees at its Cincinnati office took it upon themselves to use these keywords and key phrases to flag applications and that no upper management, such as Lerner, had instructed them to subject conservative groups to enhanced scrutiny.

But Lois Lerner’s unprecedented stonewalling of congressional committees underlined her guilt. It didn’t help her case that the IRS was unable to turn over most of her emails requested during the investigation, because the emails had been mysteriously destroyed. However, some of the few emails recovered and made public showed Lerner condemning and lambasting conservatives. She called the Tea Party “very dangerous” and used obscenities when referring to politically conservative radio hosts.

Even more suspiciously, Lerner’s hard drive had supposedly crashed and therefore could not be used in the investigation. Over 400 electronic backup tapes had also been destroyed and could not be used either.

On Oct. 23, 2015, the nearly two-and-a-half year investigation into the scandal by the U.S. Department of Justice found that Lerner and the IRS were not guilty and that no criminal charges would be filed. Justice’s official statement added the proviso that even though Lerner and the IRS undeniably botched the process, they committed no crimes.

“Our investigation uncovered substantial evidence of mismanagement, poor judgment and institutional inertia, leading to the belief by many tax-exempt applicants that the IRS targeted them based on their political viewpoints,” Assistant Attorney General Peter Kadzik said. “But poor management is not a crime.”

Kadzik said DoJ could not prove that IRS officials had “intentionally discriminated against an applicant based upon viewpoint” but instead came to the conclusion that low-level employees’ “ignorance” and “negligence” were the reason for the backlog of hundreds of conservative organizations’ applications for 501(c)(3) and 501(c)(4) status. However, emails made public between IRS officials seem to show that the employees were following instructions from Washington to continue to put on hold the conservative applications that had been flagged.

Former Justice Department staff attorney J. Christian Adams said Lerner was never in legal jeopardy with Obama in the White House. “She’s part of the elite, insider, left-wing, five-bedroom-house-in-Bethesda crowd,” he said of Lerner and the fancy Maryland suburb of Washington in which she lives. “And so nothing was going to happen to her because she goes to the right cocktail parties.” The decision not to proceed against Lerner shows that being prosecuted for crimes “is for little people.”
Robert Knight of the American Civil Rights Union said Lerner’s misdeeds helped President Obama secure a second term because Tea Party groups weren’t able to get organized while their tax-exempt status hung in limbo.

“What Lois Lerner did moves us that much closer to being an authoritarian third world-type country, where might makes right,” Knight said. “It’s un-American. She should have been indicted. It’s a disgrace.”

Not long after the DoJ ended the investigation, 19 members of the House Oversight and Government Reform Committee called for the impeachment of IRS Commissioner John Koskinen, a longtime Democrat apparatchik appointed by Obama in 2013. The lawmakers claimed that Koskinen lied under oath to Congress and that he allowed the destruction of evidence when thousands of Lerner’s e-mails were mysteriously erased, thus hindering the investigation.

The committee claimed that Koskinen “failed to comply with a congressionally issued subpoena, documents were destroyed on his watch, and the public was consistently misled. Impeachment is the appropriate tool to restore public confidence in the IRS and to protect the institutional interests of Congress.”

Meanwhile, President Obama said in a Super Bowl weekend interview that not even “a smidgen of corruption” existed or would be found during the investigation into IRS the scandal.

Lerner refused to resign after lawmakers repeatedly demanded she do so after the scandal first came to light. She instead was placed on administrative leave until Sept. 23, 2013 when she officially retired from her position as head of the IRS’s tax-exempt division. She received her full pension and benefits upon retiring.

The Speaker of the House of Representatives, Paul Ryan (R-Wis.), said that while the Department of Justice’s decision is “predictable coming from this administration,” it is still “deeply disappointing.”

“Serious and unprecedented actions taken by the most senior IRS official in charge of the non-profit unit, Lois Lerner, deprived conservative organizations of their constitutional rights,” Ryan said. “The American people deserve better than this.” ...

Republicans were not the only ones disappointed by the DoJ’s decision; some liberals were upset as well. For example, MSNBC talking head Rachel Maddow agreed that the targeting of conservative groups was “not fair,” and she added, “There is a reasonable fear by all of us, by any of us, that the kind of power the IRS has could be misused.”

Also from MSNBC, Joe Scarborough called the IRS scandal an example of “tyranny,” saying the IRS abuses were “real” and “unspeakable.”

Chuck Todd, a White House correspondent for NBC, observed that “It didn’t seem like [the White House] had a sense of urgency about it, a real sense of outrage.” Todd said the scandal was “outrageous no matter what political party you are.”

Terry Moran from ABC News called the scandal “A truly Nixonian abuse of power by the Obama administration.”

And the most liberal of them all, Comedy Central’s Jon Stewart, said the scandal creates doubt about President Obama’s “managerial competence” and takes away “the last arrow in your pro-governance quiver.”

Lori Lowenthal Marcus, president of Z Street, one of the conservative groups targeted by the IRS, believes that “The Obama administration is trying to punish any group with a different view point from theirs.”

Z Street, a pro-Israel group, is now suing the IRS for unconstitutional discrimination. Marcus believes that the IRS “gave differential treatment to tax exemption applications from organizations holding views about Israel inconsistent with those espoused by the Obama administration.”

Z Street filed its suit in fall 2010 after it learned of the discriminatory IRS “Israel Special Policy.” In Z Street v. Koskinen, Z Street claims that this “special policy” constitutes viewpoint discrimination and therefore violates the group’s First Amendment rights.

“The IRS didn’t come up with this idea on their own,” Marcus believes. “The Obama administration has particular views on Israel that Z Street does not share.” She adds that “Groups like Z Street believe that Jews are allowed to live in disputed territories [the West Bank] and Israel. The Obama administration does not agree.”

Marcus argues that her “constitutional rights were violated. The IRS has violated the constitution. The IRS is blocking Americans from being able to exercise their constitutional rights, they have blocked us from being able to educate about Israel.” ...

The Lois Lerner affair prompted some commentators to draw parallels with President Richard Nixon, noting he came dangerously close to impeachment for unleashing the IRS on his enemies. ...

The Obama administration continues to plot against conservative groups.

President Obama’s IRS is still holding nonprofit applications from conservative and Tea Party groups hostage even now, years after the IRS targeting scandal first made headlines. The IRS remains a powerful instrument of political repression in the hands of Obama. Always on the hunt for new ways to disadvantage his political adversaries, Obama is also now moving forward with a fresh campaign of political intimidation against nonprofit groups that strikes at the heart of the American democratic process.

Ominously, IRS boss John Koskinen has vowed “to have new rules to limit political activities of nonprofit organizations in place before the 2016 election, raising the specter of another major fight over the tax agency and political targeting,” the Washington Times paraphrased Koskinen saying. The IRS already tried to impose a rule preventing nonprofits from running voter registration drives (which is currently legal if done on a “nonpartisan” basis), but backed down in the face of a public backlash.

J. Christian Adams warns that the Obama administration is inventing new ways to stick it to nonprofit groups, forcing those organizations to reveal their donors, even though that is not required by federal law or IRS regulations. Coerced disclosure “has no purpose other than to try to open up the donors of such organizations to harassment and intimidation for their political and social beliefs in associating with particular membership organizations,” according to Adams. The Federal Election Commission “has no statutory authority to mandate such disclosure of organizations that are not political committees.” And the leading Supreme Court case on the issue, NAACP v. Alabama (1958), forbade such disclosures, which were then being sought from civil rights groups that were suffering harassment from state and local governments run by Democrats. (For more on current left-wing efforts to harass donors through “disclosure,” see Organization Trends, September 2015.)

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Such claptrap. “In 2013 the American public learned that President Obama used the Internal Revenue Service to vex and harass his political opposition.” Wow. There is no evidence–zero, none–that President Obama was in any way involved in the IRS “scandal.” Nevertheless, as often (though inaccurately) attributed to Joseph Goebbels, “If you repeat a lie often enough, it becomes the truth.” The conservative meme about the IRS scandal is well on its way to becoming “truth.” As we all well know, Washington chopped down a cherry tree and threw a silver dollar across the Potomac.

And BTW, the “power to tax is the power to destroy” line is complete nonsense in the usage of this editorial. In its original context, both Webster and Chief Justice Marshall used the language to deny the states the power to tax instrumentalities of the federal government. In other words, their concern was that the states would destroy the central government by taxing it. Today’s “conservatives” have turned the meaning of the phrase completely on its head, suggesting that the power of the federal government to levy taxes implies the possibility of destroying the people. That, of course, fits the conservative narrative about how the Constitution was intended to limit the federal government’s taxing powers–a narrative 180 degrees from the actual purpose of the Constitution, which was to overcome the supreme weakness of the Articles of Confederation, i.e., the lack of the central government’s authority to levy taxes. Hence, the nearly unlimited power of the congress to “lay and collect” taxes in Art. I, § 8.

Posted by: Publius Novus | Mar 15, 2016 9:13:01 AM

The IRS targeted groups that publicly, and consistently, voiced their displeasure with paying taxes and their opinion that they shouldn't be taxed. Wow, how shocking that the IRS then targeted them! Crazy! I can't imagine why!

Posted by: Raekwon the Chef | Mar 15, 2016 8:15:55 AM