Paul L. Caron
Dean


Sunday, October 23, 2016

The IRS Scandal, Day 1263: The Denial Of Probe Into IRS Disclosure Of Taxpayer Information Is ‘Alarming’

IRS Logo 2Bloomberg BNA, Denial of Probe Into IRS Disclosure ‘Alarming,’ Group Says:

The dismissal of an investigation into the IRS’s disclosure of protected taxpayer information by a government watchdog is “alarming,” a conservative group said.

The Cause of Action Institute in June asked the Department of Justice Inspector General and the Treasury Inspector General for Tax Administration to “examine potential legal violations arising from the October 2010 disclosure of more than one million pages of tax returns and return information to the FBI and DOJ Public Integrity Section by” the Internal Revenue Service and former agency official Lois Lerner, the group said in an Oct. 20 news release.

As part of the request, the institute asked that the DOJ watchdog examine whether the Federal Bureau of Investigation and DOJ employees violated taxpayer confidentiality laws by inspecting the disclosed data.

The DOJ Inspector General responded in an Oct. 12 letter signed by Daniel C. Beckhard, assistant inspector general for the Oversight and Review Division. It appeared that some protected taxpayer information was included on compact discs that the IRS provided to the department, the inspector general said, but when the department learned of that disclosure, it returned the CDs to the IRS and informed Congress.

“Given the absence of available information suggesting that Department employees over whom our Office has jurisdiction might have engaged in conduct that violates laws, regulations, or policy, we have determined that this matter does not warrant further investigation,” Beckhard said in the letter, which was attached to the CoA Institute’s news release.

The CoA Institute said it has filed a Freedom of Information Act request with the DOJ watchdog to “determine the exact nature of its notification to Congress.” ...

“The DOJ IG’s response is concerning,” said John J. Vecchione, vice president at the CoA Institute. “While admitting that the IRS did, in fact, disclose confidential taxpayer information, the IG failed to address the absence of any proper requests for disclosure from the DOJ,” he said. “Even more alarming, the IG refused to conduct an investigation into legal violations because of the ‘absence of available information,’ ” Vecchione said.

https://taxprof.typepad.com/taxprof_blog/2016/10/the-irs-scandal-day-1263-denial-of-probe-into-irs-disclosure-of-taxpayer-information-alarming.html

IRS News, IRS Scandal, Tax | Permalink

Comments

Some questions come to mind that at this point only a FOIA lawsuit can answer:

- Does "some protected taypayer information" refer to the *millions* of pages of tax returns on nearly every tax-exempt organization in the country that Lerner sent to the DOJ without a referal or request?
- Did the DOJ inform the Joint Committee on Taxation of this disclosure as required by law? And given that taxpayer information was provided without a referal or request from the IRS to the DOJ, how is this not a violation of the law?
- Since the DOJ IG has declined to investigate further due to insufficient evidence, could he please provide to the public the evidence he does cite in his letter, namely the chain of events and who handled the confidential taxpayer information between the IRS and DOJ?

I'm not going to jump the gun and accuse anybody of lying, but this particular aspect of the IRS scandal stinks from beginning to end.

Apparently, it's just a coincidence given the circumstantial evidence of wrongdoing, that nobody in this administration ever gets investigated thoroughly...

Posted by: MM | Oct 23, 2016 10:00:42 AM

Tiresome, tiresome. Mr. MM, these questions have been answered for you at least twice. Here we go with the third time.
1. Under 26 U.S.C. § 6103(h)(2)(A), IRS is authorized to disclose tax returns and return information to DOJ for the purpose of the DOJ conducting tax proceedings. No DOJ request is necessary under subsec. (h)(2)(A)
2. No report to the joint committee is required under subsec . (h)(2)(A). As I previously explained, the vast majority of IRS-to-DOJ disclosures are made under this provision. Nearly every tax case referred from IRS to DOJ is referred pursuant to this provision; thousands of disclosures are made each year.
3. The real question here is whether Lerner was authorized, by internal IRS procedures, to make the disclosures. Although some types of IRS officers are authorized to make the disclosures directly to DOJ, most disclosures go through Chief Counsel . Did Lerner have Chief Counsel authorization to make the disclosures, or was she authorized to make disclosures on her own say so? These are the questions you should be asking.

Posted by: Publius Novus | Oct 23, 2016 6:57:05 PM

Lerner made the disclosures as part of an illegal campaign to persecute dissidents and the DOJ went along with it. Lerner and the DOJ were going to arrest and imprison people for not being Democrats. This was straight up fascism brought to you by the Obama administration.

Posted by: wodun | Oct 23, 2016 8:51:38 PM

Pubs,

I honestly have no interest in your perspective on these matters anymore. You've been asked to quote the relevant statutes more than once, and have failed to do so. I've read the statutes and quoted them at length, and I'm satisfied that the law requires a referral from the IRS or request from the DOJ for any legal disclosures of confidential tax information, and also requires a Grand Jury proceeding. Also, the Joint Committee on Taxation must be notified of any such disclosures by the following calendar year-end, and there is no exemption for DOJ investigations spelled out in the law, period. Again, you've been asked to quote such exemptions, and you've failed to do so.

You've also made false and misleading statements on these matters, which I won't bother to quote. Any you've avoided answering direct questions regarding the public record on these matters. Anybody who's followed your pattern of commentary over the past 3 years can easily recognize a sophomoric litany of excuses masquerading as legal expertise.. Your credibility on these matters is gone in my book, for all of these reasons.

Posted by: MM | Oct 23, 2016 9:59:29 PM

The law:
https://www.law.cornell.edu/uscode/text/26/6103

***
26 U.S. Code § 6103 - Confidentiality and disclosure of returns and return information
(p) Procedure and recordkeeping

(1) Manner, time, and place of inspections
Requests for the inspection or disclosure of a return or return information and such inspection or disclosure shall be made in such manner and at such time and place as shall be prescribed by the Secretary.

(2) Procedure
(A) Reproduction of returns
A reproduction or certified reproduction of a return shall, upon written request, be furnished to any person to whom disclosure or inspection of such return is authorized under this section. A reasonable fee may be prescribed for furnishing such reproduction or certified reproduction.

(B) Disclosure of return information
Return information disclosed to any person under the provisions of this title may be provided in the form of written documents, reproductions of such documents, films or photoimpressions, or electronically produced tapes, disks, or records, or by any other mode or means which the Secretary determines necessary or appropriate. A reasonable fee may be prescribed for furnishing such return information.

(C) Use of reproductions
Any reproduction of any return, document, or other matter made in accordance with this paragraph shall have the same legal status as the original, and any such reproduction shall, if properly authenticated, be admissible in evidence in any judicial or administrative proceeding as if it were the original, whether or not the original is in existence.

(3) Records of inspection and disclosure
(A) System of recordkeeping
Except as otherwise provided by this paragraph, the Secretary shall maintain a permanent system of standardized records or accountings of all requests for inspection or disclosure of returns and return information (including the reasons for and dates of such requests) and of returns and return information inspected or disclosed under this section and section 6104(c). Notwithstanding the provisions of section 552a(c) of title 5, United States Code, the Secretary shall not be required to maintain a record or accounting of requests for inspection or disclosure of returns and return information, or of returns and return information inspected or disclosed, under the authority of subsections (c), (e), (f)(5), (h)(1), (3)(A), or (4), (i)(4), or (8)(A)(ii), (k)(1), (2), (6), (8), or (9), (l)(1), (4)(B), (5), (7), (8), (9), (10), (11), (12), (13), (14), (15), (16), (17), or (18), (m), or (n). The records or accountings required to be maintained under this paragraph shall be available for examination by the Joint Committee on Taxation or the Chief of Staff of such joint committee. Such record or accounting shall also be available for examination by such person or persons as may be, but only to the extent, authorized to make such examination under section 552a(c)(3) of title 5, United States Code.

(B) Report by the Secretary
The Secretary shall, within 90 days after the close of each calendar year, furnish to the Joint Committee on Taxation a report with respect to, or summary of, the records or accountings described in subparagraph (A) in such form and containing such information as such joint committee or the Chief of Staff of such joint committee may designate. Such report or summary shall not, however, include a record or accounting of any request by the President under subsection (g) for, or the disclosure in response to such request of, any return or return information with respect to any individual who, at the time of such request, was an officer or employee of the executive branch of the Federal Government. Such report or summary, or any part thereof, may be disclosed by such joint committee to such persons and for such purposes as the joint committee may, by record vote of a majority of the members of the joint committee, determine.

(C) Public report on disclosures
The Secretary shall, within 90 days after the close of each calendar year, furnish to the Joint Committee on Taxation for disclosure to the public a report with respect to the records or accountings described in subparagraph (A) which—

(i) provides with respect to each Federal agency, each agency, body, or commission described in subsection (d), (i)(3)(B)(i) or (7)(A)(ii), or (l)(6), and the Government Accountability Office the number of—

(I) requests for disclosure of returns and return information,
(II) instances in which returns and return information were disclosed pursuant to such requests or otherwise,
(III) taxpayers whose returns, or return information with respect to whom, were disclosed pursuant to such requests, and

(ii) describes the general purposes for which such requests were made.
***

I see the how law spells out exactly how requests must be made from outside agencies. I also see no exemptions or exceptions for the DOJ from having their requests reported by the Secretary of the Treasury to the Joint Committee on Taxation.

Now, I'm sure a clever legal weasel can claim the law says the exact opposite, but I've never put much stock in such arguments...

Posted by: MM | Oct 23, 2016 10:40:42 PM

Publius,
I’ve read that section and I just don’t know. Either there is a lot of additional case law that modifies 26 U.S.C. § 6103(h)(2)(A) or you seem to be interpreting it a lot broader than I am. As I read it, under that subsection, disclosure is only authorized to the DOJ if the DOJ is conducting a grand jury investigation (or an investigation that might lead to a grand jury) and the taxpayers are a party to that investigation.

What we currently know about the Lerner to DOJ disclosure was that it was more of a fishing expedition than an existing DOJ investigation of the impacted taxpayers. That is, there was no existing DOJ investigation into the affected taxpayers at the time. It was more of a “let’s look at all these returns and see if we can come up with anything.” I don’t read the code as authorizing that sort of disclosure.

Posted by: sigh | Oct 24, 2016 4:10:51 AM

“[You’re]satisfied that the law requires a referral from the IRS or request from the DOJ for any legal disclosures of confidential tax information, and also requires a Grand Jury proceeding?” Well, I guess that settles it. I’ll have to give up.
What part of the parenthetical in subsec. 6103(h)(2)(A) (“(or investigation which may result in such a proceeding)”) isn’t getting through? Do you think grand jury proceedings spring full-bodied from the earth? They are always preceded by an investigation. The investigation requires the disclosure to and inspection of tax returns and return information by DOJ. Subsec. (h)(3)(A) permits the IRS to make the disclosures without a request by DOJ. Subsec. (p)(3)(A) excepts the (h)(3)(A) disclosures from the recordkeeping requirements.

Posted by: Publius Novus | Oct 24, 2016 2:00:59 PM

Now you know why I choose the pseudonym “sigh.” This can get quite exasperating. Yes, a grand jury proceeding is preceded by an investigation but you didn’t really address the second part of my point – that there WAS NO investigation at the time. They were on a fishing expedition. Neither the IRS not the DOJ were working on an actual case of specific taxpayers.

If you interpret 6103(h)(2)(A) to authorize (data mining / fishing expedition) type disclosures then there is no point to that part of the statute. Nothing would be unauthorized except maybe special cases involving covered relationships/conflict of interest (i.e. someone asking about his ex-wife’s return). If that was the intent then it would be written that way. Clearly the statute limits disclosures unless there is an existing case against specific taxpayers.

As far as (h)(3)(A), it only authorizes the Secretary to disclose return information if he is referring a case to the DOJ. As far as we know the Secretary was never involved and, again, the IRS was not referring a specific case – they were sending a boatload of returns for a data mining / fishing expedition.

Posted by: sigh | Oct 24, 2016 6:20:50 PM

Excuse me, Pubs, but 26 U.S. Code § 6103 (h)(2), the section governing disclosures to the DOJ for the purposes of tax investigations, is not referenced under 26 U.S. Code § 6103 (p)(3)(A) as being exempt from required reporting to the Joint Committee on Taxation. Subsection (h)(3)(a) does not supersede Subsection (h)(2).

According to the IRS, there are 11,860 501(c)(4) organizations in existence, and the standard 990 tax form is 12 pages in length. Assuming Lerner grabbed all 501(c)(4) tax returns, that only accounts for around 140,000 pages. She disclosed 1.25 million pages of information on 501(c)(4) organizations, including confidential information, in violation of the statute in question and the IRS's own policies regarding such disclosures.

There is no evidence this disclosure was part of any federal investigation into a particular tax-exempt organization's activities. The information sent to the DOJ constituted an entire database containing enough pages to cover every 501(c)(4) organization in the country 9 times over. Federal investigations involve specific targets, and no Grand Jury would be convened without a defendant subject to indictment:

https://www.law.cornell.edu/rules/frcrmp/rule_6

Why do you continue to make erroneous excuses on behalf of the IRS?

Why do you continue to make false and misleading statements with respect to federal law?

I'll answer my own questions, because you definitely won't: Those are your primary motivations for commenting. In my considered legal opinion, I wouldn't take your word on a local jaywalking ordinance with the amount of twisting I've observed, for years now...

Posted by: MM | Oct 24, 2016 9:45:47 PM

Sigh,

You're correct, there is no evidence of any DOJ investigation into specific groups for specific crimes. There is evidence, though, that the DOJ contacred Lerner in early Oct. 2010 and made this *request* for confidential taxpayer information. Lerner even asked the FBI what their format preference was for the massive data dump they apparently requested:

https://oversight.house.gov/release/irss-lois-lerner-database-tax-exempt-organizations-sent-fbi-weeks-2010-midterm-elections/

In an e-mail dated October 5, 2010, former IRS Director of Exempt Organizations Lois Lerner asked Richard Pilger, an official with the Justice Department’s Election Crimes Branch, about his formatting preference for “the disks we spoke about.” Pilger forwarded Lerner’s e-mail to an FBI agent, writing, "This is incoming data re 501c4 issues. Does FBI have a format preference?" He then responded to Lerner, "Thanks Lois – FBI says Raw format is best because they can put it into their systems like excel."

And then, later in Oct. 2010, there was an in-person meeting with the FBI:

https://oversight.house.gov/release/testimony-2010-justice-department-sought-lois-lerners-help-prosecute-tax-exempt-groups-engaging-politics/

"According to Mr. Pilger," the letter continues, "the Justice Department convened a meeting with former IRS official Lois Lerner in October 2010 to discuss how the IRS could assist in the criminal enforcement of campaign-finance laws against politically active nonprofits. This meeting was arranged at the direction of Public Integrity Section Chief Jack Smith."

This disclosure of confidential taxpayer information circumvented the channels of reporting which I quoted above in the statute. And it's a bridge too far to expect the DOJ under this administration to seriously investigate the IRS and itself for collusion in violating the statute, which there's no evidence they followed.

But don't expect Publius to care about any of these facts, or government transparency, or viewpoint discrimination. He's been complaining for over 3 years about a "witchhunt" because he doesn't like Congressional oversight when there's a Democratic administration in power. The irony here, which the facts strongly suggest, is that the IRS and DOJ together engaged in their own witchhunt for supposed crimes committed by non-profit organizations. And to facilitate this witchhunt, they shared confidential taxpayer information, in violattion of the law, and targeted these groups based on their names and political positions, per TIGTA's 2013 report.

And Publius calls that a conspiracy theory. I guess throwing out all the evidence you don't like is one way to avoid cognitive dissonance...

Posted by: MM | Oct 25, 2016 7:39:45 AM

Tangentially related: I'm surprised that no IRS employee has leaked Trump's tax returns to the media. I thought that was a sure bet to occur by mid-October. I figured that at least one extreme partisan would believe it worth breaking the law and losing his job and freedom a la Snowden.

Posted by: AMTbuff | Oct 25, 2016 10:38:31 AM

AMT,

I imagine future President Clinton would give such an employee a pardon and Presidential Medal of Freedom to boot. It's a little ironic that she's benefited enormously from others breaking state laws regarding tax return confidentiality, while at the same time committing a couple of federal felonies on her own, lying about them to the public at least 2 dozen times, playing dumb in her FBI interview, and then avoiding prosecution by the DOJ merely on the basis of "discretion".

Whoever said civic pride is dead was predicting the 2016 election!

Posted by: MM | Oct 25, 2016 1:48:56 PM

Messrs. MM & sign: I'll bet the4 DOJ lawyers representing the IRS/U.S. in the various "IRS scandal" cases wish you were representing the taxpayers. It would be like shooting fish in a barrel.

Posted by: Publius Novus | Oct 27, 2016 7:43:55 AM

Pubs,

Given how the DOJ lawyers have basically been getting clobbered by their opponents (and sometimes excoriated by the Judges) I would probably agree with you. However, nothing in your non-response response really addressed why you would think 6103(h)(2)(A) would authorize data mining / fishing expedition type disclosures.

The code as written seems pretty clear that there needs to be an existing investigation or proceeding that relates to specific taxpayers before the information can be sent to the DOJ. So, I’ll ask again, do you know of any case law that expands 6103(h)(2)(A) to include data mining / fishing expedition type disclosures?

Posted by: sigh | Oct 27, 2016 2:03:35 PM

Pubs,

That's the best you've got, a lazy ad hominem? No answers to questions put to you, nor any logical arguments left, huh? I guess that's too much to expect from an old hack.

Honestly, the quality of your argumentation has dropped precipitously since commentators have started calling out your sophomoric crap...

Posted by: MM | Oct 27, 2016 7:38:06 PM

Sigh,

Don't expect a thoughtful response from old Pubs. In previous discussions on IRS malfeasance, he's fallen back on the classic Clintonian defense (paraphrased): "Since there is no direct evidence of criminal wrongdoing, then no laws were broken and no crimes were committed." I'm sure a great many metropolitan police officers would get a kick out of that canard.

Of course what he never mentions, in addition to the fact that cases are made all the time based on circumstantial evidence, is that the DOJ is the only "policeman" in D.C. that has the authority sinvestigate and prosecute IRS officials. But as the public record clearly shows, the DOJ would have to investigate itself as well, since it colluded with the IRS in the targeting scheme 6 years ago.

The pattern of behavior, and inaction by law enforcement, clearly require a special prosecutor to investigate, if accountability means anything anymore. Not that guys like Pubs give a rip about justice for conservatives...

Posted by: MM | Oct 27, 2016 7:57:57 PM