TaxProf Blog

Paul L. Caron
Dean





Tuesday, September 27, 2016

The IRS Scandal, Day 1237

Politifact

Politifact, John Fleming Attacks IRS in Inaccurate Radio Ad:

In a recent radio campaign ad, Louisiana senate candidate John Fleming claimed that the head of the Internal Revenue Service ordered 24,000 emails erased before Congress could see them.

"The head of the IRS ordered 24,000 emails erased before Congress could review them, making sure the American people will never know the real truth," Fleming’s ad says. "The officials in charge follow the same dishonest playbook they’ve used for every scandal from Fast and Furious to Hillary’s emails."

Fleming is running for senator of Louisiana against six Republican candidates, including David Duke, as well as three Democrats and one unaffiliated candidate.

Fleming — who currently represents Louisiana in the House — is calling for the impeachment of IRS commissioner John Koskinen.

So far, Democrats are largely against the impeachment, and Republicans are divided on it, citing due process concerns. A vote on the matter was expected on Sept. 15, 2016, but it was delayed.

Since destruction of documents is a serious charge, we wondered if it was true that the head of the IRS "ordered 24,000 emails erased before Congress could review them." Independent reports suggest that’s not the case. ...

Emails were erased, and up to 24,000 are likely unrecoverable. However, there’s zero evidence that the head of the IRS ordered them destroyed. Multiple independent investigations confirmed that the erasure was accidental and not intended to obstruct information from Congress. Fleming’s ad says the opposite.

We rate this claim False.

https://taxprof.typepad.com/taxprof_blog/2016/09/the-irs-scandal-day-1237.html

IRS News, IRS Scandal, Tax | Permalink

Comments

No answer, Pubs? Can't say I'm surprised there, "all relevant facts" really isn't your strong suit.

Sigh, from what I understand TIGTA has a criminal investigatory capacity, but it only goes so far:

https://www.oig.doc.gov/pages/faqs-about-oig-investigations.aspx

"The results of OIG investigations may be used for administrative action by the Department and its bureaus, as well as for criminal and civil action by the U.S. Department of Justice (DOJ)."

Nobody should be surprises that the DOJ under this Administration has not conducted any major prosecution of wrongdoing in any Executive Branch department. Not in the IRS for this pattern of behavior, the VA for altering waiting lists and falsifying patient data. The former Attorney General himself made false statements to Congress on more than one occasion, and there were no consequences at all beyond a contempt citation.

When the only department with prosecutorial powers at the federal level does not use said powers to hold federal bureaucrats accountable for wrongdoing, is it any surprise when guys like Koskinen conduct themselves with impunity and disdain for the public?

Posted by: MM | Oct 5, 2016 8:30:32 PM

Pubs,

Look, when you're not leaving terse, off-topic comments around here, you're cherry-picking facts to make your sophomoric arguments, which is fine. Left-of-center lawyers do that better than most.

But I draw the line at cherry-picking which question you choose to answer. So I'm waiting, and unlike last time when you flatly refused (or couldn't) cite any statutes to back up your argument, I'm not letting this one go until I get 3 straight answers from the resident self-proclaimed legal expert.

Posted by: MM | Oct 3, 2016 7:40:17 PM

Mr. sigh: TIGTA has three basic functions: 1) audit; 2) investigations; and 3) inspections and evaluations. The investigative function is carried out by sworn, armed special agents, classified as Criminal Investigator (Special Agent), series 1811. This is the standard federal job classification for criminal investigators, including FBI S/As (and most people who have worked with FBI and IRS S/As will tell the latter are better and smarter). TIGTA S/As are trained at Glynco, GA, the same place the IRS trains its criminal investigators. TIGTA is unquestionably a criminal investigative agency.

Posted by: Publius Novus | Oct 3, 2016 6:49:02 AM

"We would all presume guilt and laugh off the excuses."

Not a perfect analogy, but a good one. In fact, Senators on Capitol Hill and industry critics have already presumed that Wells Fargo CEO John Stumpf is 100% guilty and should resign or be removed by the Board.

The irony seems to be lost on these same politicians, mostly lawyers by the way, that when a federal government agency perpetrates a pattern of discriminatory behavior like the IRS, never in a million years will anybody at the top ever be held accountable, especially under this administration. The President only sees fit to fire whistleblowers.

An adage for the ages: Those who make the rules are the best equipped to break the rules...

Posted by: MM | Oct 2, 2016 6:36:02 PM

One thing that IRS defenders have to come to grips with is that TIGTA (as with all IG’s) is essentially an AUDIT agency NOT a criminal investigative one. They examine facts and policies but, to put it bluntly, they don’t do motive. They are never going to build circumstantial evidence in order to determine motivation. Unless someone confesses or they find a written order that blatantly spells everything out – they are going to report that they found no evidence of the motivation. So, it’s not really all that meaningful.

The facts in the case, however, show that the IRS executives have lied repeatedly to downplay the severity of the scandal and to avoid turning over documents. They tried to blame low level employees in Cincinnati first and then went through a raft to other excuses (overwork, confusion…etc.) that were proved wrong by TIGTA’s finding that the responsibility for the TP cases ended up at determination’s HQ and the Chief Counsel’s office quite early in the scandal (i.e., not people who would be confused).

The IRS has also changed their story numerous times about the emails and backup tapes. First, they would provide everything, then oops Lerner’s HD has crashed, then there are no backups, then it would take years to provide the emails. When the backups were destroyed (whether intentionally or not) a key question overlooked is why were they still there? Remember TIGTA found that NO ONE had even inquired about them until they did. If the primary HD’s were destroyed – and the IRS wanted to comply - why hadn’t anyone in the IRS gone and got the backups long before March 2014?

You also have to remember that this isn’t just congressional republicans crying over spilt milk. In a related case, a federal judge had to threaten to haul Koskinen into court and charge him with contempt if the IRS didn’t start responding with his court’s orders regarding the production of documents.

So you have a series of lies and a series of suspicious accidents (to say the least). If the IRS were a private entity there is no doubt they would be facing prosecution because no rational person would believe all of the fortuitous accidents given the pattern of deceit.

If two years from now we find out that the backup tapes of the Wells Fargo email system (covering the period in time of the illegal behavior) were accidentally destroyed by 2 low level people we would not be having this discussion. We would all presume guilt and laugh off the excuses.

Posted by: sigh | Oct 2, 2016 3:38:39 PM

Publius,

Regarding the claim that the preservation instructions were misunderstood, here's the 2013 email directive from IRS Chief Technology Officer Terence Milholland, verbatim:

https://congress.gov/congressional-report/114th-congress/house-report/635/1

"Given the current environment and ongoing investigations, do not destroy/wipe-reuse any of the existing backup tapes for email, or archiving of other information from IRS personal computers. Further, do not reuse or refresh or wipe information from any personal computer that is being reclaimed/returned/refreshed/updated from any employee or contractor of the IRS. Finally, effective immediately, the email retention policy for backups is to be indefinite rather than 6 months."

The involved employees said that they *believed* the directive only applied to hard drives. Well, I *believe* even grade schoolchildren would've understood those instructions, which brings into question the competence and/or honesty of these IRS employees. Good grief, the backup tapes are the first thing Milholland mentions in his directive! But TIGTA's 2015 report takes their ridiculous excuses at face value. In reading the report, TIGTA states there was no obvious evidence of intentional wrongdoing, and of course there was no attempt to investigate further by anyone. However, there is no categorical determination that this was done unintentionally.

Regarding Paul Wester's opinion on IRS recordkeeping compliance, unqualified in the report by the way, he's just plain wrong as I read the law, for whatever reason. The IRS was required to report Lerner's crashed hard drive "promptly", which would've or should've instigated a search for the backup tapes. IRS officials evidently never did any of this. Here's the relevant portion of the Federal Records Act:

https://www.law.cornell.edu/cfr/text/36/1230.14

§ 1230.14 The agency must report promptly any unlawful or accidental removal, defacing, alteration, or destruction of records in the custody of that agency to the National Archives and Records Administration. The report must include:

(1) A complete description of the records with volume and dates if known;
(2) The office maintaining the records;
(3) A statement of the exact circumstances surrounding the removal, defacing, alteration, or destruction of records;
(4) A statement of the safeguards established to prevent further loss of documentation; and
(5) When appropriate, details of the actions taken to salvage, retrieve, or reconstruct the records.

But it's not my opinion that matters. Mr. Wester's boss, David Ferriero, the Archivist of the United States and head of NARA, came to a completely different conclusion the year before, in Congressional testimony where ironically Wester was also present and didn't disagree or object:

http://docs.house.gov/meetings/GO/GO00/20140624/102423/HHRG-113-GO00-Transcript-20140624.pdf

TIM WALBERG (R, Michigan): Mr. Ferriero, just to review a bit, in your testimony you state that when agencies become aware of unauthorized destruction of Federal records, that they're required to report the incidents to the Archives. At any time in 2011, through last Monday, did the IRS report any loss of records related to Lois Lerner?
DAVID FERRIERO: No.
MR. WALBERG: Is it fair to say that the IRS broke the Federal Records Act?
MR. FERRIERO: They're required - any agency is required to notify us when they realize they have a problem that could be destruction or disposal - unauthorized disposal.
MR. WALBERG: But they didn't do that.
MR. FERRIERO: That’s right.
MR. WALBERG: Did they break the law?
MR. FERRIERO: I'm not a lawyer.
MR. WALBERG: But you administer the Federal Records Act.
MR. FERRIERO: I do.
MR. WALBERG: If they didn't follow it, can we safely assume they broke the law?
MR. FERRIERO: They did not follow the law.

Now then, since you're the self-proclaimed expert on all things legal around here, I'll make this simple. For the benefit of us uneducated blokes, please answer in a straightforward manner these 3 simple questions:

1) Given Mr. Ferriero's testimony as head of the National Archives, how did IRS officials comply with the Federal Records Act in this case, specifically the handling of Lerner's crashed hard drive?

2) Did you understand Mr. Milholland's email directive to involved IRS employees, yes or no?

3) Given the extreme incompetence or willful ignorance shown by IRS employees who erased the backup tapes, what are the legal or disciplinary consequences for violating the email directive and destroying information that was subpoenaed by Congress?

Thanks!

Posted by: MM | Oct 2, 2016 11:14:33 AM

Mr. wodun: How do I know “Koskinen did not order the erasure of emails?” Try to follow along. “The investigation revealed that the backup tapes were destroyed as a result of IRS management failing to ensure that a May 22, 2013, e-mail directive from the IRS Chief Technology Officer (CTO) concerning the preservation of electronic e-mail media was fully understood and followed by all of the IRS employees responsible for handling and disposing of e-mail backup media. . . . [T]he midnight shift employees at Martinsburg degaussed (magnetically erased) the backup tapes because their interpretation of the CTO’s May 22, 2013, e-mail directive was that it was meant to preserve hard drives only. This misinterpretation resulted in the continued destruction of tape media until June 2014, when management realized the misinterpretation and put a halt to the destruction of all of the tape media. . . . [T]he backup tapes containing LERNER’s e-mails were destroyed because the IRS employees who shipped the bckup tapes and server hard drives did not understand their resonsibility to comply with the CTO’s May 22, 2013 e-mail directive tp preserve electronic backup media and the Martinsburg employees who destroyed the backup tapes on March 4, 2014, misinterpreted the directive.” Report of Investigation, Exempt Organizations Data Loss, pp. 3-4, Case No. 54-1406-008-I. Koskinen became the commissioner on December 23, 2013, at a time when the server in question had already been destroyed (April 2012) and the CTO’s litigation hold had already been issued (May 2013). Bottom line: the destruction of the tapes was the result of low-level workers’ failure to understand the litigation hold, not the result of your imaginary order by Koskinen to erase the emails. That’s how I know. Now show me yours.

Mr. M&Ms: You asked for my source for my statement that "Conversely, the workers who destroyed the disks stated that they did not know of the litigation hold." See the above quotations. As for your repeated allegations that the Martinsburg workers violated the Federal Records Act, I have previously addressed that. And here’s what the National Archives’ Paul Wester, Chief Records Officer had to say: “[T]he IRS did nothing wrong as far as safeguarding records.” ROI, p. 21. Now show me yours.

Posted by: Publius Novus | Sep 30, 2016 7:52:50 AM

Oh, and Pubs, thank you very much. Your response validated my point, that you believe the public has as little right to know as possible regarding the details of government malfeasance.

Of course, when the IRS has violated the privacy rights of citizens... (crickets chirp)... not an objection was raised...

Posted by: MM | Sep 29, 2016 1:10:36 PM

"How do you know the employees who destroyed the disks were not disciplined?"

This from the guy who has stated on numerous occasions (paraphrased) if there's no direct evidence something happened (re: government malfeasance), then it didn't happen, and anyone who thinks something did happen is a conspiracy theorist.

Ironic, but I'll follow Publius' precedent, except for the ad hominem. I see no evidence that anyone at the IRS has been disciplined, so I conclude no one has been.

Given the general pattern of behavior in the federal government, for instance DOJ spying on reporters, VA officials altering waiting lists, and of course State Dept. officials under Clinton not being disciplined for violating their own damn policies, not to mention the law, I think it's a safe conclusion. But at least I have an open mind about such things...

Posted by: MM | Sep 29, 2016 1:06:53 PM

Mr. MM: How do you know the employees who destroyed the disks were not disciplined? Such information would not be public (5 U.S.C. § 552a(b)). Nor has it been revealed if the “guilty parties,” as you put it, were employees or contractors. If the latter, the IRS would not be able to discipline, only terminate the contract.

Posted by: Publius Novus | Sep 29, 2016 8:28:59 AM

sigh,

I don't think we'll ever find clear evidence of lying, bureaucratic lawyers are too smart to leave anything incriminating like that behind. For a much more serious example, see Clinton and her staff's conduct in intentionally mishandling classified information and then playing completely dumb on the issue when talking to the FBI.

But what can be observed is the IRS's long pattern of behavior that officials have passed of as accidental or coincidental, but when taken together, make a very compelling circumstantial case of wrongdoing. Behavior such as, but not limited to, false and misleading statements before Congress and to the public, destruction of subpoenaed documents after they were subpoenaed, violations of the Federal Records Act and U,S, Civil and Criminal statutes regarding the handling of confidential taxpayer information, and arguably violations of private citizens' 1st, 5th, and 14th amendment rights. This was the net effect, whether pre-planned or not, and guys like Publius have consistently argued, not very persuasively by the way, that A) the public has no right to know about the details of this wrongdoing, and B) that nobody at the IRS should be disciplined or fired.

If a private insurance firm had the same pattern of behavior, the Dept. of Justice's Civil Rights Division would've aleady shut the whole place down and run the responsible individuals through the wringer, from the boss on down...

Posted by: MM | Sep 29, 2016 7:49:42 AM

Two points. One, I agree with MM that there is currently no evidence that Koskinen “ordered” the destruction. Two, while it might matter for this guy’s add, it really doesn’t matter in the big scheme of things. Contra PN, an ethical prosecutor can and would charge such a case based on the totality of the evidence combined with motive.

Let’s review, the IRS made a series of lies trying to cover for the targeting (just line employees in Cincinnati, they were confused, overworked, etc.) – showing they knew it was wrong and providing motive for the destruction of documents. The IRS then made a series of lies about the existence of the documents (there are no backups, OK there are backups but it will take years to provide…). Then the backups get destroyed because no one tells the employees to preserve them. Heck, according to TIGTA no one even asked them about the backups in the first place until TIGTA showed up.

When a subpoena is issued - those it is issued to (i.e. Koskinen) have a legal responsibility to see that it is carried out. Issuing a litigation hold letter but doing nothing to see that it gets to the right place and that it is carried out does not provide immunity.

I’ll go back to what I’ve said in previous posts. If this had been a private entity (Enron for example) and it behaved as the IRS has, the DOJ would undoubtedly be pressing charges for obstruction of justice.

Posted by: sigh | Sep 29, 2016 4:23:10 AM

Pubs,

"Conversely, the workers who destroyed the disks stated that they did not know of the litigation hold."

Source, please?

The guilty parties are then claiming ignorance regarding the IRS Chief Technology Officer's email directive of May 22, 2013. Which would beg the question, why haven't they been disciplined for violating the directive, not to mention the Federal Records Act?

Posted by: MM | Sep 28, 2016 10:31:11 PM

Criminal Law 101 Mr. wodun. Let’s deconstruct this a little bit. Criminal liability usually requires two elements: actus reas and mens rea, both of which must be found beyond a reasonable doubt. Let’s try the first one, i.e., the necessary criminal act. "The events happened." It is undisputed that the disks were destroyed. It is undisputed that the Chief Counsel put a litigation hold on the disks. There is no known evidence that Koskinen ordered the destruction of the disks. Conversely, the workers who destroyed the disks stated that they did not know of the litigation hold. The foregoing does not constitute the factual elements of a crime; such a case would not even get to a jury. Second, the guilty mind, i.e., “The events were willful.” Koskinen testified under oath that he did not order the destruction of the disks and that at the time he made the relevant testimony to congress, he was unaware that they had been destroyed. No jury could find the necessary willfulness on the foregoing evidence. No competent and otherwise ethical prosecutor would charge such a case.

Posted by: Publius Novus | Sep 28, 2016 3:38:38 PM

The deliberate destruction of evidence typically allows a judge or jury to infer the worst possible explanation for why and how that evidence was destroyed. So while there may be no direct evidence Koskinen ordered the destruction, it's certainly reasonable to presume that he did, and that he was very successful at hiding his tracks.

Posted by: ruralcounsel | Sep 28, 2016 4:48:07 AM

Koskinen did not order the erasure of emails.

How do you know Publius?

What we know is that the IRS was ordered to preserve those emails and use due diligence in searching for them. They didn't and Koskinen perjured himself over it.

Lying and destruction of evidence don't just happen. Its not an oopsie. It was deliberate.

So put up your proof that Koskinen didn't order these actions.

The events happened. The events were willful. The IRS and Koskinen have motive. All of the elements needed to convict a person, or agency, are present.

Posted by: wodun | Sep 28, 2016 12:43:57 AM

Mr. Fleming is wrong in the sense that Koskinen never ordered the destruction of emails. But as the Depty IG Mr. Camus testified, it was an "unbelievable set of circumstances."

- The Oversight Committee interviewed IT employees at the agency, where it found that IRS officials ignored recommendations to have hard drive (which crashed in 2011) sent to outside experts for processing.
- Experts who spoke with Congressional investigators said the data likely could have been recovered if Lerner's hard drive was merely scratched. Instead, IRS employees destroyed the hard drive.
- Koskinen did not inform Congress about the hard drive crash until June 2014 despite knowing since February 2014, as testimony from an IRS official showed.
- Koskinen said he didn't know before April 2014 and waited to tell Congress until he was sure the emails could not be recovered from backup tapes.
- IRS employees erased the backup tapes subsequent to the Chief Technology Officer's email directive (on May 22, 2013). TIGTA found that the "involved employees did not know about, comprehend or follow" this directive.

They apparently also didn't read the news, otherwise they'd have been aware of the Congressional subpoena, as well. Just a gut instinct. but I doubt government employees under investigation for malfeasance go out of their way to preserve subpoenaed documents.

But Mr. Camus was right, it is unbelievable. I see nothing that exonerates anybody at the IRS of incompetence worthy of termination at best, and intentional wrongdoing and obstruction of justice at worst.

Posted by: MM | Sep 27, 2016 1:56:16 PM

Koskinen did not order the erasure of emails. That is the diputed fact, and it is uncontroverted. BTW, the 18.5 minute gap on Nixon's tapes were admittedly erased by Rosemary Woods. Accidentally.

Posted by: Publius Novus | Sep 27, 2016 1:56:10 PM

Nixon was a Republican, so the comparison is irrelevant.

Posted by: Mike Petrik | Sep 27, 2016 12:55:32 PM

Nixon was a Republican. The "dog erased my tapes/email" rule therefore did not apply to him.

Posted by: Timothy Kelly | Sep 27, 2016 12:03:00 PM

So, accidental erase of government records is a get-out-of-jail-free card now? If only Nixon had known that.

Posted by: ThomasA | Sep 27, 2016 9:26:57 AM

If by "false" they mean at least partly true, and possibly entirely true, then yes, it is false.

Posted by: tim maguire | Sep 27, 2016 9:09:43 AM

Politifact is stupid propaganda and lies. I'm going to start my own fact-checking website, start out correctly telling truth from lies, and then just ideologically call everything (actually everyone more than everything) I disagree with lies.

Posted by: Anon | Sep 27, 2016 8:01:01 AM