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IRS Policy That Allowed Targeting Is Still in Effect, Watchdog Finds

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An obscure bureaucratic policy that allowed IRS officials to target conservative and tea party tax-exemption applicants during the 2010 and 2012 election campaigns is still in place, meaning the same abuses may be continuing, according to a nonprofit government watchdog.

The federal tax agency’s policy requires IRS officials to stop processing tax-exempt applications that are “likely to attract media or congressional attention,” the Cause of Action Institute said in a report made public Wednesday.

The policy also directs IRS officials to prepare “sensitive case reports” for their supervisors and to ignore “the merits of the application” if it involves a newsworthy topic.

“Targeting was—and is—IRS policy, not a violation of it,” the report said, noting that the policy is still in place. “As a result, American taxpayers are at risk for similar treatment in the future.”

“In halting the applications, preparing such reports and referring the matter to supervisors, including political appointees, IRS employees behaved exactly as agency rules dictated,” the report continued. (Read more from “IRS Policy That Allowed Targeting Is Still in Effect, Watchdog Finds” HERE)

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How President Trump Could Make the IRS Great Again

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The president, Congress, and the American taxpayer are none of them fans of the Internal Revenue Service. Voters were justifiably angered by well-publicized mismanagement in recent years on the part of high-ranking IRS executives, many of whom are gone but are probably collecting sizeable government pensions. These missteps included:

Lois Lerner’s stone walling of Tea Party groups;

IRS employees subsequently pleading the 5th before Congress;

an extravagant Disneyland training conference;

a multi-million-dollar technology contract awarded to a military school drop out with a fictitious injury who is now doing hard time for killing his wife;

and IRS executives goofing off during the workday to practice line dancing (at least it wasn’t disco dancing) and making skits parodying Star Trek and Gilligan’s Island.

Despite all this, the IRS is not an agency out of control. The IRS answers to an alphabet soup of other government agencies which monitor its operations, such as the Government Accountability Office, the Treasury Inspector General for Tax Administration, and the IRS Oversight Board. The current IRS commissioner has clamped down on abuses and in many ways the pendulum has swung the other way. Now rank and file employees (the people who didn’t create the problems but have to clean up the mess) must complete a form and get high level approval to attend a free training conference across the street from their offices. Bathroom passes are probably next.

The bad news is that the IRS is now being starved of resources which it needs to keep the government running — the government which you the voters just elected and inaugurated. On Monday, President Trump signed an Executive Order freezing all federal hiring not directly related to the military, public safety, and public health. President Trump should have also exempted the IRS. Here’s why:

Why IRS Needs Funds Restored

The Federal Government’s fiscal condition is dire. The national debt hovers around $20 trillion ($20,000,000,000,000), with almost $9 trillion added during the Obama Administration. In 2016, the federal government ran about $1 trillion in the red. The voluntary compliance rate hovers only around 81%, and the Gross Tax Gap, the estimated amount of taxes that should be collected before enforcement efforts but is not, stands at $468 billion. This figure does not include the unpaid taxes from illegal activities such as pimping and drug dealing.

Despite the ballooning national debt and massive annual budget deficits, Congress has slashed the IRS budget 19% in constant dollars since 2010. This has resulted in the IRS hemorrhaging employees, from 95,000 in 2010 to 80,000 in 2015. This decline in personnel has resulted in fewer auditors, investigators, tax collectors, and people answering the phone. There are fewer people working at the IRS now than when Ronald Reagan took office.

In 1998, the IRS had about 3,300 highly trained special agents combating tax fraud, money laundering, and related financial crimes (I was one of them). Today there are fewer than 2,300. The same trend exists for revenue agents (the people who conduct field audits) and revenue officers (they do the actual collections). At this rate, getting caught cheating on your taxes is going to be about as likely as Publishers Clearing House knocking on your door.

The money invested in the IRS produces astronomical returns. The IRS uses the $5 billion Congress gives it for enforcement and reduces the Gross Tax Gap by $62 billion, resulting in an estimated annual Net Tax Gap of $406 billion. In other words, for every dollar you give the IRS for enforcement it returns $12 to the Treasury. MIT-trained economist Dr. Jeff Dubin wrote in a 2007 article that a $353 million additional investment would result in $16.8 billion, between in additional dollars collected and greater voluntary compliance. No business owner would forgo the opportunity to earn that kind of return on investment.

To tackle America’s fiscal nightmare, President Trump should exempt the IRS from the hiring freeze and press Congress to appropriate the funds necessary to close the Tax Gap. Start with an extra $2 billion. That would bring the IRS budget back to 2010 budget levels. Then hold the IRS accountable for every dime. Tell it to start with cracking down on the pimps and the dope dealers who never did an honest day’s work (I have a few names they can start with). Then go after the fraudulent tax preparers who add fake dependents and abuse the ITIN system to bilk the Treasury out of tens of billions of dollars in bogus refunds. Stop chasing the little guy, like my friend who is a semi-retired septuagenarian who filed his corporate return late (he was in the hospital) and is fighting a $1,700 fine.

President Trump has big plans to Make American Great Again. To do that, he needs to make the IRS Great Again. To my friends at the IRS I say this: Sharpen your pencils and double knot your wingtips. It’s time to get to work! (For more from the author of “How President Trump Could Make the IRS Great Again” please click HERE)

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Retired IRS Special Agent: Here’s How to Get Mexico to Pay for the Wall

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The Washington Post published an article Friday reporting that American taxpayers will have to pay for the promised wall between Mexico and the southern U.S. border, despite President-elect Donald Trump’s earlier claims that Mexico would be forced to fund the project.

There is still a way that Mexico could pay for the wall, however.

How Illegal Immigrants Receive Hefty Tax Returns

Congress, through the Internal Revenue Code (IRC), allows illegal immigrants working in the United States to claim their relatives living in Mexico and Canada, or illegally in the Unitesd States, as dependents on their tax return, thus reducing their tax liability. Amending the IRC to allow only U.S. Citizens (USC’s) or legal residents to be claimed as dependents would likely generate billions of dollars in additional tax revenue which could then be earmarked for a border fence between Mexico and the United States.

Here’s how the system current works. An illegal immigrant living in the United States can file a Form W-7 through an “Accepting Agent” (usually a return preparer) with the IRS to get an Individual Tax Identification Number (ITIN). He then can get ITIN’s for his relatives living in Mexico or illegally in the United States.

When he files his Form 1040, he slaps his ITIN on the front of the return and attaches his Form W-2 showing his wages. The Form W-2 usually shows the social security number that he has purchased, stolen, or borrowed because he was ineligible to work in the Unites States. He then loads up his return with the ITIN’s of his dependents either living illegally in the United States or residing in Mexico. These dependents don’t have to be the taxpayer’s children. They can be his parents, uncles, and distant relatives such as nieces and nephews. The taxpayer’s 2016 taxable income is reduced by $4,050 for each dependent.

Crazy True Story

Here’s a true example. IRS special agents raided a one-person tax preparation business in a small Wisconsin town in 2014. Over the course of seven years, the owner filed 10,437 applications for ITIN’s on behalf of her clients. From the 2011 through 2014 filing season, her clients racked up over $34 million in refunds from the 9,489 returns she filed with the IRS. Her clients received an average refund of $3,509 even though 69 percent of the listed an ITIN holder as the primary taxpayer and about 75 percent of the claimed dependents had ITIN’s.

Translated into English, this means that 69 percent of her taxpayers were illegal immigrants working in the United States who got an annual check for about $3,600 from Uncle Sam after claiming other illegals (or relatives in either Mexico or Canada) as dependents. During an undercover operation, this return preparer counseled her client (the conversation was conducted in Spanish) to find children in Mexico to claim so he could get a tax refund instead of owing money to the IRS.

IRS Mismanagement

Now, matters are getting worse. Illegal immigrants who want to claim bogus dependents operate on the honor system because Congress decimated the IRS’s enforcement budget. This move was made in response, I believe, to former IRS director Lois Lerner’s pleading of the 5th, lost IRS emails, crashed IRS hard drives, a few million dollars spent on a Disney Land boondoggle for IRS management, and videos showing high ranking IRS executives practicing a line dance or parodying a Star Trek episode. (Note that they mix the bridge of the original Star Trek with the Next Generation uniforms. Atrocious.)

The IRS does not publish statistics on the tax revenue lost by allowing illegal immigrants to claim other illegal immigrants, or people residing in Mexico, as dependents. However, the example provided above shows that just one return preparer can cost the Treasury $34 million in a few short years. What we do know is that the IRS estimates that the Tax Gap (the amount of tax revenue that should be collected but isn’t) stands at $468 billion per year.

If President-Elect Trump wants Mexico to pay for the wall, I suggest he sign a revision of the Tax Code which eliminates the dependency exemption for persons residing in Mexico and illegal immigrants from Mexico residing in the Unites States. Doing so would both fulfill a campaign promise and reduce the Tax Gap.

By the way, the return preparer in my example was never indicted, though hope springs eternal. (For more from the author of “Retired IRS Special Agent: Here’s How to Get Mexico to Pay for the Wall” please click HERE)

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Obama’s IRS Commissioner Escapes Impeachment Vote in Congress

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The GOP-led House voted Tuesday against impeaching IRS Commissioner John Koskinen, delaying indefinitely the conservative effort to hold President Barack Obama’s top taxman accountable for the targeting of tea party groups.

Koskinen “would have been the first appointed executive-branch official to meet that fate in 140 years.,” had the resolution succeeded, according to Politico.

Conservative lawmakers on Capitol Hill, however, had been pushing for Koskinen’s impeachment.

“We think Mr. Koskinen has to go,” Rep. Jim Jordan, R-Ohio, told The Daily Signal.

Jordan, who has repeatedly called for Koskinen’s impeachment, said the targeting of conservative groups by the IRS is unacceptable. He said Koskinen’s role in the scandal warrants impeachment proceedings.

“Koskinen [was] brought in to clean up the mess, and he has done, in my judgement, just the opposite,” said Jordan, who previously led the House Freedom Caucus.

In the interview, Jordan outlined the corruption he said has occurred on Koskinen’s watch, including “allowing backup tapes to be destroyed that were under subpoena to be given to Congress, not telling [Congress] about Lois Lerner’s missing emails, making statements to Congress that turn out later to be not true.”

Jordan also highlighted a story from a tea party organization in Albuquerque, New Mexico, which has been waiting seven years for the IRS to approve its tax-exempt status.

All of this activity, according to Jordan, is sufficient grounds for Congress to impeach Koskinen.

“When all that happens, and you’re the head of this agency, we think you’ve got to go. So we plan to make a motion [Tuesday] afternoon on the House floor that says that we should bring up impeachment proceedings and an impeachment vote against Mr. Koskinen,” Jordan said.

By filing a motion Tuesday, the conservative lawmakers attempted to force the House to vote before Congress adjourns for the year.

Rep. Mark Meadows, R-N.C., agrees, saying that if that resolution passed, the next Congress would “take it up and judge it on the merits of the argument.”

Meadows, who recently became chairman of the conservative House Freedom Caucus, said this call for impeachment is all about holding government officials accountable for their actions.

President Barack Obama has described efforts to impeach Koskinen “crazy” and Koskinen believes that allegations calling for his impeachment “lack merit.” (For more from the author of “Obama’s IRS Commissioner Escapes Impeachment Vote in Congress” please click HERE)

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What Skittles, the IRS Commissioner, and This Congressman Have in Common

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In an otherwise repetitive three-and-a-half hours, there were several weird moments during the House Judiciary Committee hearing with IRS Commissioner John Koskinen on Wednesday. The hearing was supposed to be about impeachment articles brought against Koskinen, but Democrats on the committee used the time to attack Donald Trump instead.

Congressman Luis Gutierrez, D-Ill. (F, 24%) opened his five-minute questioning slot by chewing on a Skittle, declaring:

“I really love Skittles because, as you see, they come orange, yellow, red, and purple — all the different colors. And they come all together in a bag — together, right? All different colors, kind of like a rainbow. A lot of people on this side of the aisle … we like that,” Gutierrez opined in a none-too-subtle swipe at conservatives.

Other Democrats used their time to ask Koskinen questions about Republican presidential nominee Donald Trump’s tax returns, charitable donations, and how the heavily scrutinized relationship with Russian President Vladimir Putin might influence a Trump presidency. On all this, Koskinen demurred, nor did the Democrats acknowledge or question how the many foreign interests tied to the Clinton Foundation might affect a Hillary Clinton presidency.

Meanwhile, Republicans spent their time grilling Commissioner Koskinen on how 422 backup records with Lois Lerner’s emails on them got destroyed under his watch.

Koskinen’s account of events strains credulity: During a midnight shift in an IRS center in Martinsburg, W.V., two employees destroyed 422 backup data of Lerner’s emails after they “identified them as junk,” according to Koskinen.

This was after a standing order had been put in place by Koskinen to collect records with her emails. And, according to Koskinen, similar orders had been put in place six months before he began working for the IRS in December 2013.

The Republicans on the Judiciary Committee have serious questions about why John Koskinen — who was supposed to clean up the Lois Lerner/targeting mess at the IRS — doesn’t know more about how effective his efforts were in 2014 and ‘15. He had been on the job well over a year when the inspector general discovered that two IRS employees (one of whom still works at the IRS, Koskinen admitted Wednesday) had destroyed 422 backup records of Lerner’s emails during graveyard hours.

As someone watching the hearing, I began to wonder two hours in why House Republicans haven’t already issued a subpoena for Koskinen’s emails to see what he was saying about the Lerner emails, and what he might have known about the backup records. Doing so would have enabled Republicans to ask more detailed questions and possibly shed light on whether Koskinen’s excuses are really just that — excuses for incompetency, or even flat-out lies.

Three hours after the hearing started, Rep. Jason Chaffetz, R-Utah (C, 78%) and Chairman Bob Goodlatte R-Va. (D, 66%) finally asked Koskinen for “any written communication” regarding the standing order he put in place asking IRS employees to retrieve information on the Lerner emails.

Still, they could have made their ask broader so as to include the written communications of senior-level IRS employees — especially ones that work directly under Koskinen. One of the persistent complaints from Republicans against Commissioner Koskinen during this hearing was that he’s the head of the IRS … but seems to have no control over very destructive practices of his staff.

Republicans on the Judiciary Committee have five legislative days to submit written inquiries to Koskinen, and it would behoove them to demand written communications from any IRS employee who might have known or covered up the destruction of evidence before Congress breaks for a long October recess. Some members of the Freedom Caucus may attempt to force a vote on Koskinen’s impeachment after the November elections, after they tried but failed to do so last week.

As Rep. Trent Franks, R-Ariz. (A, 90%) pointed out during Wednesday’s hearing, Koskinen “would never let an American taxpayer treat an IRS audit” like he has treated the House’s inquiries into the IRS scandal and his incompetent clean-up job. Regardless, Koskinen declared that he’s “proud” of his “overall record at the IRS.”

Whether John Koskinen is a liar, negligent, or just incompetent, he needs to go. (For more from the author of “What Skittles, the IRS Commissioner, and This Congressman Have in Common” please click HERE)

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Ahead of Vote on Impeachment of IRS Commissioner, Freedom Caucus Pushes Republicans

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Conservatives who belong to the House Freedom Caucus are trying to corner any Republicans thinking twice about impeaching the head of the Internal Revenue Service. They’ve framed the debate as a strict binary, telling fellow members of the GOP that they either can be with conservatives or with the IRS.

Skipping the regular committee process, the Freedom Caucus took their case directly to the House floor.

Reps. John Fleming, R-La., and Tim Huelskamp, R-Kan., introduced a “privileged resolution” Tuesday to impeach IRS Commissioner John Koskinen.

The House has scheduled a roll call vote Thursday. It’s the closest conservatives have come in their effort to remove the top taxman, who they accuse of obstructing a congressional investigation into IRS targeting of conservative groups.

And conservatives interpret any parliamentary tactic to delay a vote as part of a strategy to scuttle impeachment.

“Any motion to table or refer to a committee is meant to kill the impeachment,” Fleming wrote in a statement, “and should be viewed as a vote against impeachment by that member.”

That notice is born from a well-founded fear.

House Democrats already warn that they will vote in unison in support of Koskinen and against impeachment. Minority Whip Steny Hoyer, D-Md., told reporters Tuesday that “every Democrat is going to vote against this.”

And if liberals poach enough conservatives, they could spoil the effort. Lawmakers wouldn’t need to vote against impeachment Thursday: They either could vote to table the resolution or refer it to committee.

Centrist Republicans—among them Tuesday Group Chairman Charlie Dent, R-Pa.—are pushing for the second option.

“There has got to be some level of due process afforded here,” Dent told The Daily Signal on Tuesday. “If there’s going to be an impeachment vote, it should go through a regular order process and you shouldn’t try to sneak something this important through.”

Conservatives balk at that characterization. They argue that ongoing reluctance to impeach from House Speaker Paul Ryan, R-Wis., and Judiciary Chairman Bob Goodlatte, R-Va., has soured the process.

Rep. Mick Mulvaney, R-S.C., described the Freedom Caucus strategy as an emergency valve.

“This privileged resolution is regular order,” Mulvaney, a founder of the Freedom Caucus, told The Daily Signal. “It’s regular order when the other parts of the process break down.”

The conservative push to impeach is nothing new. They’ve been calling for the IRS commissioner’s retirement since October, arguing that he obstructed the congressional investigation into the agency’s treatment of conservative groups seeking tax-exempt status.

The White House has decried that targeting but remained unwavering in its defense of Koskinen, who was brought in to reform the agency.

Koskinen, who has hired a personal defense lawyer, has described allegations of wrongdoing as “unwarranted” and the articles of impeachment lodged against him as “without merit.”

To the chagrin of conservatives, the tax chief met with lawmakers on Capitol Hill last Wednesday to make his case for why he should keep his job.

Republicans will huddle in a closed-door conference meeting Thursday morning to discuss their party’s official position.

Though there hasn’t been an official GOP vote count, the Freedom Caucus backs the privileged resolution to impeach, as do Republican Study Committee Chairman Bill Flores, R-Texas, and Oversight Chairman Jason Chaffetz, R-Utah.

The Freedom Caucus received a boost from conservative columnist George Will over the weekend. Will lent their cause intellectual firepower, writing that “Congress should fulfill its constitutional duty to police executive branch lawlessness.”

“What we have in the houses of Congress are agents of our own obsolescence,” Rep. Raul Labrador, R-Idaho, said Tuesday, referring to Will’s article. “And it’s because of the leadership of the Republican Party.” (For more from the author of “Ahead of Vote on Impeachment of IRS Commissioner, Freedom Caucus Pushes Republicans” please click HERE)

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IRS Redefines ‘Husband’ and ‘Wife’ to Eliminate Sex

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In a far-reaching response to the U.S. Supreme Court striking down natural marriage laws last summer in Obergefell v. Hodges, the IRS and Department of the Treasury have changed the meanings of the words “spouse,” “marriage,” “husband” and “wife.” This change was also a response to the Court’s 2013 decision in United States v. Windsor, which ruled that the words “spouse” and “marriage” could not be limited to heterosexual marriages.

“Husband” and “wife” now refers to “two individuals lawfully married to each other,” regardless of sex. The new definitions will give same-sex marriage couples job-protected leave to take care of their spouse’s family members under the Family and Medical Leave Act, and applies to the marital status of taxpayers for purposes of the income, estate, gift, excise and payroll taxes.

Of course, same-sex couples will now also face the “marriage penalty” for filing their taxes jointly. The “penalty” is the higher tax rate some married couples must pay if they are a middle to upper class couple with roughly similar incomes.

The proposed rule changes were announced in October, left open for comment, and finalized on Friday, with barely any fanfare or objections. One submitted comment to the proposed rule — to replace the words “husband” and “wife” with “spouse” — might have made more sense. Congress could still make that change in the future.

Another commenter suggested the IRS include the words “same-sex marriage” to better explain the changes, but the IRS dismissed the concern. According to The Washington Examiner, “Treasury and the IRS believe that the definitions in the proposed regulations apply equally to same-sex couples and opposite-sex couples, and that no clarification is needed. Amending the regulations to specifically address a marriage of two individuals of the same sex would undermine the goal of these regulations to eliminate distinctions in federal tax law based on gender.”

The changes do not apply to domestic partnerships or civil unions, in order to allow couples to choose alternative tax treatment that might benefit them more than being married. (For more from the author of “IRS Redefines ‘Husband’ and ‘Wife’ to Eliminate Sex” please click HERE)

Watch a recent interview with the author below:

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‘Just a Charade’: House Conservatives Decry IRS Chief’s Capitol Hill Visit

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Internal Revenue Service Commissioner John Koskinen made the rounds Wednesday on Capitol Hill to discuss his potential impeachment, meeting with two of the largest GOP House caucuses.

Members of the conservative House Freedom Caucus were furious about Koskinen’s visits with lawmakers who belong to the moderate Tuesday Group or the conservative-leaning Republican Study Committee.

These conservatives have been calling for the top taxman’s impeachment since October.

One of the members who quarterbacked the impeachment effort, Rep. Tim Huelskamp, R-Kan., described the Koskinen tour as tantamount to allowing a defendant to chat up a jury “while the prosecuting attorney is away.”

“You’re going to give the most hated official in the Obama administration a free platform, without testifying under oath, to defend himself and his targeting of conservative groups?” Huelskamp told The Daily Signal. “This is just a charade.”

Conservatives have bickered for months over impeachment with GOP leadership, including House Speaker Paul Ryan, R-Wis. And pessimism was rank among members of the Freedom Caucus after word got out of the top IRS agent’s congressional visit.

“Life on Capitol Hill can’t get any more cynical,” Rep. Dave Brat, R-Va., told The Daily Signal. He blamed centrist Republicans for “asking for testimony, not under oath, that allows someone with a proven track record of obfuscation and destruction of evidence to get a free pass in the media.”

The Freedom Caucus says the IRS commissioner has to go because he obstructed a congressional investigation into the agency’s unfair treatment of conservative groups. Conservatives have slammed leadership for being “too timid to go after corruption” in the past.

The Obama administration has been unwavering in its defense of the beleaguered tax chief. And for his part, Koskinen has described allegations of wrongdoing as “unwarranted” and the articles of impeachment lodged against him as “without merit.”

To force the impeachment issue, the Freedom Caucus employed a parliamentary mechanism known as a privileged resolution from the House floor in April. The tactic triggers a floor vote on impeachment and bypasses a laborious committee process.

Wednesday morning, Ryan said the House will hold a vote next week on whether to impeach Koskinen. But by afternoon, the tax chief was touring Capitol Hill in an effort to sway lawmakers to vote against his impeachment.

A leadership aide told The Daily Signal that Ryan didn’t play a hand in bringing Koskinen to the House, adding that the Republican conference will huddle Sept. 15 to discuss the party’s official position on impeachment.

The meeting will be an open-mic opportunity for conservatives to air their case against Koskinen and to bring other members, some of whom haven’t followed the controversy closely, up to speed.

Though the RSC meeting with Koskinen was cordial, Chairman Bill Flores, R-Texas, told reporters, it was hardly a meet-and-greet. Nearly 40 members met with the tax bureaucrat, grilling him with “pointed questions,” Flores said.

Some members of the RSC, including Oversight Committee Chairman Jason Chaffetz, R-Utah, want to fire Koskinen.

Chaffetz told The Daily Signal on Tuesday that he would “certainly be supportive of” a privileged resolution to force a vote.

But the Utah representative, who first introduced articles of impeachment in October, said that first “we have to get the entirety of our team, aka the Republicans, moving in the right direction.”

Chaffetz’s office didn’t respond to The Daily Signal’s inquiries about who was on the sidelines of the impeachment push or if the Koskinen tour hindered that effort.

The impeachment debate comes as conservatives and GOP leadership are in a standoff over spending levels.

One member of the Freedom Caucus suggested conservatives might be persuaded to soften their stance on Koskinen if the establishment would agree to keep any spending bills from taking flight during the lame-duck session.

”It might very well be that we back off of Koskinen until the first of [next] year,” the lawmaker told The Daily Signal on condition of anonymity, “if you [GOP leaders] do a continuing resolution through March.”

Other members of the Freedom Caucus remain intent on getting their political pound of flesh. The IRS targeting scandal has been a focal point for Republicans since the public first learned in 2013 that the agency put conservative groups under extra scrutiny.

The IRS started flagging and holding up applications for nonprofit status from conservative groups in 2010. Agents specifically targeted applications that included terms such as “tea party,” “patriot,” and “government spending.”

While multiple investigations were underway, President Barrack Obama told Fox News host Bill O’Reilly on Super Bowl Sunday in 2014 that there was “not even a smidgen of corruption” at the IRS.

Conservatives argue that no one at the IRS has been held accountable for the unfair targeting.

Rep. Mick Mulvaney, R-S.C., said he wishes Koskinen would agree to testify before the House Oversight and Government Reform Committee.

“It’d be interesting to see if the song and dance would be different under oath,” he told The Daily Signal. (For more from the author of “‘Just a Charade’: House Conservatives Decry IRS Chief’s Capitol Hill Visit” please click HERE)

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The IRS Just Admitted They Could Resume Targeting Conservatives

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As we all know, the Obama administration has made sure that no one at the IRS suffers any consequences for the political targeting of conservatives prior to the 2012 election. Eric Holder and Loretta Lynch have refused to prosecute any of the bureaucrats who were involved. They have declined to enforce the contempt citation against Lois Lerner for refusing to provide any information to Congress about her misbehavior and the inexcusable (and unlawful) abuse of the IRS’s power and authority for political purposes. But thanks to the U.S. Court of Appeals for the District of Columbia, some of the organizations that were persecuted, like True the Vote and Linchpins of Liberty, may finally get their day in court.

On Friday, Judge David Sentelle, writing for a unanimous three-judge panel of the D.C. Circuit, reinstated a portion of the lawsuits filed against the IRS by these and other organizations. In 2014, a district court had dismissed both the plaintiffs’ claims for money damages against the IRS and some of its employees, as well as their request for an injunction and a declaratory judgment (what is known as equitable relief) to stop the IRS from ever doing this again.

The district court held that money damages could not be obtained against the IRS or its employees and that the claims for equitable relief were “moot” because the IRS had supposedly stopped its wrongful behavior. While the court of appeals agreed with the ruling on money damages because of past precedent, it reversed the ruling on equitable relief and sent the cases back to the district court for further proceedings.

For those who have blindly accepted the claims of the administration and their political supporters in Congress that nothing untoward happened with the IRS, this opinion should be a wake-up call. As the appeals court says, “there is very little factual dispute between the parties as to the conduct committed by the IRS.” Instead of routinely processing their applications as it was obligated to do “in the normal course of IRS business, as would have been the case with other taxpayers, the IRS selected out these applicants for more rigorous review on the basis of their names, which were in each instance indicative of a conservative or anti-Administration orientation.”

The appeals court pointed out that the IRS had taken no action in this litigation “to disavow or discredit the report of investigation by its parent department.” This refers to the now well-known report of May 14, 2013, of the Treasury Inspector General for Tax Administration (IG) that exposed the “Inappropriate Criteria” being used by the IRS to target conservatives. That criteria included looking for any organizations with “Tea Party, Patriots, or 9/12 in the organization’s name” and then adding them to a “Be-On-The-Lookout” or BOLO list for special scrutiny.

That IG audit report, according to the court, recognized “that the IRS’s handling of exemption applications from persons of disfavored viewpoints utterly failed” to fulfil the mission of the IRS, which is to apply “the tax law with integrity and fairness to all.” The audit report is “replete with details of discriminatory processing and delay.”

As the court warned the IRS, the First Amendment bans the government from restricting “expression because of its message, its ideas, its subject matter, or it content.” In administering the tax code, “the IRS may not discriminate on the basis of viewpoint.” Processing “exemption applications pursuant to different standards and at different rates depending upon the viewpoint of the applicants” is a “blatant violation of the First Amendment.”

Indeed, the appeals court said that it is “plain to the Inspector General, the district court, and this court that the IRS cannot defend its discriminatory conduct on the merits.” Thus, the question is “whether the controversy is moot.” While the district court concluded that it was, “we conclude that it is not.”

The IRS argued that it had stopped its wrongful behavior. But the appeals court said there is a difference between a controversy where the defendant has stopped his wrongful conduct but could resume it at any time, and a controversy where there is no “reasonable expectation that the conduct will recur” and “interim relief or events have completely and irrevocably eradicated the effects of the alleged violation.” This latter concept is referred to legally as “voluntary cessation.”

But the IRS cannot meet the “voluntary cessation” criteria according to the appeals court. Why? Because “voluntary cessation has never occurred.” The IRS admitted that the “applications for exemption by some of appellant-plaintiffs have never to this day been processed.” The IRS “proudly boasts” that “no more than two” applications are still pending. To that boast, the court said it “would advise the IRS that a heavy burden of establishing mootness is not carried by proving that the case is nearly moot, or is moot as to the a ‘vast majority’ of the parties. Their heavy burden requires that they establish cessation, not near cessation.”

The court also faulted the IRS for its “rather puzzling explanation for why the continued failure to afford proper processing to at least some of the victim applications should not prevent a finding of cessation.” The IRS’s explanation is that the applications have not been processed because of the litigation filed by the organizations. As the court says:

It is not at all clear why the IRS proposes that not ceasing becomes cessation if the victim of the conduct is litigating against it. The IRS position is reminiscent of Catch-22 from the novel of the same name. Under that ‘catch,’ World War II airmen were not required to fly if they were mentally ill. However, anyone who applied to stop flying was evidencing rationality and therefore was not mentally ill.

The result is a catch-22 situation, according to the court: “The IRS is telling the applicants in these cases that ‘we have been violating your rights and not properly processing your applications. You are entitled to have your applications processed. But if you ask for that processing by away of a lawsuit, then you can’t’ have it.’”

The IRS’s only other attempt to justify this was to refer to it as “longstanding policy.” But the court admonished that “if you haven’t ceased discriminatory conduct, the fact that you have been failing to cease it for a long time does not create cessation.”

While the main focus of the court’s opinion was on the delay in processing the applications of the organizations, it also held that the claims about “harassing, probing, and unconstitutional requests for additional information that … required applicants to disclose, among other things, donor lists, direct and indirect communications with members of legislative bodies, Internet passwords, and user names, copies of social media and other Internet postings, and even the political and charitable activities of family members” were not moot.

In a final warning that should scare all taxpayers, particularly conservatives, the court pointed out that even if the IRS had ceased its wrongful conduct with regard to these organizations, the IRS failed to show that there is no reasonable expectation that the conduct will reoccur. The IRS itself said that it had only “suspended” the use of BOLO lists “until further notice.” A “violation of a right that is ‘suspended until further notice’ has not become the subject of voluntary cessation, with no reasonable expectation of resumption.” At most, it is advising “the victim of a violation – ‘you’re alright for now, but there may be another shoe falling.’”

In other words, there are no real legal barriers in place to prevent the IRS — one the most powerful agencies in the federal government — from targeting Americans for their political viewpoints again. (For more from the author of “The IRS Just Admitted They Could Resume Targeting Conservatives” please click HERE)

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ACLJ Wins Significant Victory in Case Against IRS

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The American Center for Law and Justice won a major victory against the Internal Revenue Service when an appeals court ruled the organization has yet to prove it’s ended discriminatory practices against conservative groups seeking tax exempt statuses.

The U.S. Court of Appeals for the D.C. Circuit unanimously reversed a 2014 lower district court ruling that previously dismissed the lawsuit originally filed against the agency in 2013.

The federal court found that the IRS committed some “unconstitutional acts against at least a portion of the plaintiffs,” including numerous conservative, Tea Party, and pro-life groups.

Certain organizations were on “Be-On-The-Lookout” or “BOLO” lists where applications for tax-exempt status “were subjected to extended delay” and “were not receiving the same processing as those of other organizations,” CNN reported. (Read more from “ACLJ Wins Significant Victory in Case Against IRS” HERE)

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