Paul L. Caron

Sunday, May 29, 2016

The IRS Scandal, Day 1116

IRS Logo 2Bloomberg BNA, Conservative Group's IRS Targeting Claim Can Move Forward:

A conservative organization arguing the IRS targeted its application for tax-exempt status based on its political views demonstrated that its claim of unconstitutional targeting has merit, and can continue in federal district court.

The U.S. District Court for the Northern District of Texas on May 25 rejected the government's motion to dismiss Freedom Path Inc.'s First Amendment claim that the Internal Revenue Service subjected the group's applications for tax-exempt status to higher scrutiny, flagging groups that had “conservative sounding names.”

Freedom Path v. Lois Lerner, No. 3:14-CV-1537-D (N.D. TX May 25, 2016):

Freedom Path alleges that the federal defendants have denied its rights guaranteed by the First Amendment by targeting its application for tax-exemption and subjecting it to heightened scrutiny because of Freedom Path’s conservative viewpoint. Freedom Path points to the federal defendants’ “policy and practice of submitting [to Freedom Path] the unconstitutionally and overly intrusive requests for information” that caused an unreasonable delay in the determination of Freedom Path’s tax-exempt status.

The federal defendants contend that the conduct complained of in count IV has been remedied, and that Freedom Path’s claims are therefore moot. According to the federal defendants, the IRS no longer engages in heightened scrutiny nor issues improper requests for information. ...

Freedom Path complains that its application for tax-exemption has been unconstitutionally targeted and subjected to heightened scrutiny. Freedom Path also alleges that the IRS sent it inappropriate and unconstitutional requests for information.

Although the federal defendants have adduced some evidence that the IRS no longer uses BOLO lists and that the IRS has made efforts to train its employees on how to issue proper information requests, Freedom Path has demonstrated that its general complaints of unconstitutional targeting, heightened scrutiny, and improper requests for information still present a live controversy.

The cases on which the federal defendants rely—True the Vote and Linchpins of Liberty—were decided under distinguishable facts. In True the Vote the court held that the plaintiff’s allegations of unconstitutional targeting and heightened scrutiny were moot because the IRS had granted the plaintiff tax-exempt status.  Accordingly, the plaintiff’s injury claim was moot. ... In Linchpins of Liberty the plaintiff specifically complained of the use of BOLO lists, but it also alleged that the IRS was no longer using the lists. The termination of the complained-of conduct (the use of BOLO lists) therefore rendered the claim moot. In contrast, Freedom Path’s allegations in count IV are not limited to the use of BOLO lists, it has not pleaded that the BOLO lists are no longer in use, and its application for tax-exempt status has not been granted. The allegations of count IV are not moot. ...

The federal defendants contend that Freedom Path lacks constitutional standing, which requires that a litigant establish three elements: (1) an injury-in-fact that is concrete and actual or imminent, not hypothetical; (2) a fairly traceable causal link between the injury and the defendants’ actions; and (3) that the injury will likely be redressed by a favorable decision. ... The federal defendants maintain that Freedom Path lacks standing to bring the claims asserted in counts IV, VI, VII, and VIII because it has not alleged impending, future injury that is real and immediate rather than conjectural or hypothetical. ...

Freedom Path responds that it primarily complains of injury from the “multi-pronged offensive” and “larger pattern” of viewpoint discrimination in the application of Revenue Ruling 2004-6. It cites Z Street, Inc. v. Koskinen, 44 F.Supp.3d 48 (D.D.C. 2014), aff’d, 791 F.3d 24 (D.C. Cir. June 19, 2015), to demonstrate that it has no other recourse against defendants for their illegal scheme. ... Freedom Path alleges that while it awaits the determination of its tax-exempt status, it must “continue curtailing similar speech [to the Leader advertisement] in the future.” ...

Freedom Path has sufficiently pleaded future harm to establish injury in fact. ... It alleges that it will curtail its publication of advertisements similar to the Leader advertisement and that it has ceased raising funds and undertaking advocacy work because of uncertainty about how the IRS will apply Revenue Ruling 2004-6. The court denies the federal defendants’ motion to dismiss counts IV, VI, VII, and VIII based on alleged lack of standing.

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Rendering these cases moot is like saying a person who tried but failed to kill another human being can go free because the victim ended up living.

Posted by: wodun | May 30, 2016 11:21:29 AM