RANCHO SANTA FE, Ca., June 30, 2014 – The Internal Revenue Service has historically functioned as the glue that bonds Conservatives and Liberals together: No one likes the IRS. Unlike Robin Hood, who took from the rich and gave to the poor, the IRS takes from the rich and poor alike and gives to the inept (i.e., Congress). Correspondingly, its audit and confiscatory tactics would make the Sheriff of Nottingham pine with envy. Yet, it has finally found a way to split the country apart like so many of its sister agencies.
Conservatives now see the IRS as an evil wing of partisan enforcement while Liberals see it as an innocent agency whose minions made a few minor mistakes. Such is the politically polarized world in which we live today.
As a result, we miss an intelligent discussion about how our Nation survived its first 125 years without an income tax, why the Congressional budget isn’t indexed to force prioritization and preclude irresponsible spending, and even why IRS regulations are presupposed to supersede codified Federal law.
With regard to the latter, the recent battle over the possible partisan bias in its investigation of 501(c)(4) organizations ignores the contradictory standards established by 26 U.S.C. 501(c)(4)(A) versus Reg. 1.501(c)( 4)-1(a)(2)(i).
Under the Revenue Act of 1913, Congress passed 26 U.S.C. 501(c)(4)(A), which provides tax-exempt status to “Civil leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare or local associations of employees, the membership of which is limited to the employees of a designated person or persons in a particular municipality, and the net earnings of which are devoted exclusively to charitable, educational, or recreational purposes.”
In 1959, the IRS created Reg. 1.501(c)(4)-1(a)(2)(i), which provides tax-exempt status to “An organization (that) is operated exclusively for the promotion of social welfare if it is primarily engaged in promoting in some way the common good and general welfare of the people of the community. An organization embraced within this section is one which is operated primarily for the purpose of bringing about civic betterments and social improvements.”
Unfortunately, the word “exclusively” applies to an absolute standard while “primarily” suggests a subjective analysis, and therein lies the problem.
Conservatives would like the term “primarily” to be interpreted liberally with regard to political organizations while Liberals would like the word to be interpreted conservatively. However, the current problem resides with the fact that the law can be subjectively interpreted at all.
The popular conservative view is that someone in high office directly or indirectly commanded, influenced or condoned a partisan interpretation of the Regulation in a manner that precluded, or at least impeded Conservative groups from receiving 501(c)(4) tax-exempt status.
The popular Liberal view is that someone in low office acted independently to preclude or at least impede Conservative groups from receiving 501(c)(4) tax-exempt status during a Presidential election cycle.
Should we be asking the question: “Who is correct” or “Who cares?”
The first question goes to the essence of the political turf war. Many Conservatives would like to impeach the President since they have not been able to find a way to beat him in an election. Conversely, many Liberals would ignore any fact pattern brought before them to protect their President (just as the Conservatives did during the two terms of the prior Bush Administration).
The compelling nature of the question “Who cares?” is that it suggests that there may be a greater issue to solve; i.e., the two Parties’ willingness to divorce themselves from reason in an effort to continue their affair with their two favorite mistresses, money and power. As a result, political manipulation has now crafted a world in which money is “speech,” corporations are people (just as unions have pretended to be), contradictory statements are to be ignored, and facts are to be dismissed as coincidences.
An intelligent approach to campaign finance reform would address the issues of money being equated to “speech” and the fiction that corporations and unions are people. Since the Parties will never permit that, let’s concentrate on the more readily identifiable cases of contradictory statements and untenable coincidences.
President Obama and former Press Secretary Carney provide stellar examples of contradictory statements.
- April 22, 2013: Jay Carney mentioned that White House Counsel had been apprised of the Inspector General’s pending report about the handling of tax-exempt applications by the IRS office in Cincinnati.
- May 10, 2013: In an effort to preempt the impact of the IG’s report, which was to be submitted to White House Counsel later that day, Lois Lerner responded to a question at the American Bar Association’s conference that she had “planted” the day before. She exposed the “inappropriate” targeting of Conservative groups by a few low-level IRS employees in her answer.
- May 13, 2013: President Obama says, “I first learned about it (the IRS targeting) from the same news reports that I think most people learned about this. I think it was on Friday.” He goes on to describe the behavior as “outrageous.” Some believe it is “outrageous” to believe that White House Counsel would not have apprised the President of the pending report.
- May 14, 2013: Perhaps recognizing the conflict with his comment of April 22nd, Jay Carney stated that the White House was notified about the IRS targeting of Tea Party groups “several weeks ago” but that neither he nor the President were personally notified. This calls into question how he could have mentioned it at a Press Conference on April 22nd when he says he didn’t know about it. Later that day, the President termed the behavior described in the IG report as “intolerable and inexcusable.”
- February 2, 2014: President Obama did an interview with Bill O’Reilly (Fox News) and responded to a question of whether the IRS had been used for political purposes to target Conservative groups by saying: “That’s not what happened… (a few IRS officials made) some bone-headed decisions… (and there is) not even a smidgen of corruption.” Note: This statement came after the President’s original assessment of the situation and after IRS Commissioner Doug Shulman and his successor, Steven Miller, both stepped down, and after Lois Lerner asserted her Fifth Amendment right, was placed on administrative leave, and then “retired” from the IRS.
- June 24-27, 2014: The President dismissed the challenges to his Administration as nothing more than “Washington fights” and “fabricated issues,” and he claimed that the Republican Party had created “an endless parade of distractions, political posturing and phony scandals” with regard to the IRS.
While those are but a few of the contradictory statements, they exhibit the full range of variance we have experienced: From “outrageous,” “intolerable and inexcusable” to “fabricated” and “phony.” No wonder people are confused.
Next, let’s examine coincidences. Here are a few relevant facts from which you can draw your own conclusions.
- Colleen Kelley, President of the National Treasury Employees Union (NTEU) that represents employees of the IRS and 30 other government agencies, met with President Obama in 2010. The NTEU’s PAC supported the President’s campaign in 2008 (and again in 2012) and consistently opposed TEA Party candidates.
- The day after the meeting, it appears that IRS employees began using certain phrases associated with the TEA Party to isolate 501(c)(4) applications for screening.
- A few months later, emails are exchanged between an IRS official and an IRS attorney suggesting that the Washington-based Exempt Organization Technical (EOT) unit “is working the TEA Party applications in coordination with Cincy” and that Washington needs to be kept in the loop.
- About a month later, the first “Be On The Lookout” (“BOLO”) memo is issued by the IRS calling for agents to pay particular attention to TEA Party groups seeking tax-exempt status as well as those of other groups that appear to be critical of the Obama Administration.
- In a February 2011 email that wasn’t lost, Lois Lerner advised her staff that the TEA Party is “very dangerous” and that its applications could potentially be used to re-litigate the Citizens United case.
- On June 3, 2011, David Camp, Republican Chairman of the House Ways and Means Committee, made the first of numerous Congressional inquiries of IRS Commissioner Doug Shulman about the unusually high number of audits that are being conducted by the IRS with respect to Conservative 501(c)(4) groups and their donors. Commissioner Shulman denied the presence of any political influence about a month later.
- Ten days later, Lois Lerner’s computer crashed, which resulted in the loss of all emails sent and received by Ms. Lerner between
- January 2009 and April 2011 (even though Federal law mandates that such records be archived).
- On September 8, 2011, the IRS canceled its email-archiving contract with Sonasoft after six years. Note: The Federal Records
- Act requires that Federal agencies save email records both offsite and in hard copy format to prevent the loss of data in the event of a hard drive crash.
- A month prior to that, a meeting was held with IRS Chief Counsel William Wilkins, one of only two Presidential appointees in the IRS, in which he was informed of the targeting of Conservative groups. Subsequently, Carter Hull, an IRS attorney who oversaw tax-exemption applications, was told that any TEA Party applications would need to be referred to the Chief Counsel’s office (something that had never before been required during Mr. Hull’s nearly 50-year career with the IRS).
- Republican Senators and Representatives continued to pressure IRS Commissioner Shulman about the screening anomalies as Democratic Senators and Representatives pressured him to “take… steps immediately to prevent abuse of the tax code by political groups focused on federal election activities.”
On March 22, 2012, Commissioner Shulman testified before the
- House Ways and Means Oversight Subcommittee that, “I can give you assurances… (t)here is absolutely no targeting” and the IRS reaffirmed the same in its report to the Subcommittee the next day.
- Both Parties continued to press their points of view with Commissioner Shulman, Lois Lerner, then-Deputy Commission for Services and Enforcement Steven Miller, et al. causing Mr. Miller to order an internal review.
- IRS Chief Counsel William Wilkins met with President Obama in the White House on April 23, 2012.
- The next day, Commissioner Shulman, two other IRS officials, the Director of the Office of Management and Budget (OMB) Jeffrey Zients, and a top White House official met in the White House for 8.5 hours. One day later, Chief Counsel Wilkins released new guidelines for screening Conservative applications.
- On May 3, 2012, the IRS’ internal review determined that there had been a significant and inappropriate targeting of Conservative group applications.
- A few days later, Steven Miller suggested that two “rogue agents” in Cincinnati were responsible and had been disciplined.
On June 4, 2012, the Treasury Department’s Deputy Secretary and General Counsel were informed by the Inspector General that an investigation into the targeting was underway, which makes it difficult to assert that the White House had not been put on notice nearly a year before Press Secretary Carney acknowledged that fact.
- The IRS remained in denial mode in its response to Congressional inquiries.
- On March 27, 2013, Lois Lerner sent an internal email about possible assistance from the Federal Election Commission (FEC) in which she stated, “So, don’t be fooled about how this is being articulated – it is ALL about 501(c)(4) orgs and political activity.”
On April 22, 2013, Jay Carney mentioned the IG report that was pending, and the public saga began to unfold.
More recently, John Koskinen, the new IRS Commissioner told a Congressional Committee that 26 months of Lois Lerner’s e-mails had been lost and her hard drive had been shredded. He only informed Congress in June after he was specifically questioned about the issue even though he testified that he had learned about it in April. He also stated that the IRS reported the problem in February… just not to him.
Please note that Lois Lerner and others obviously knew of the issue before the formal investigation began because the crash occurred three years ago on June 13, 2011.
We were told that the unrecoverable emails involved communications with other federal agencies including the White House, the Justice Department, the Federal Election Commission, the Treasury Department, and Democratic Members of Congress. Commissioner Koskinen also revealed that six other systems, which contained potentially relevant evidence with respect to who knew what and when they knew it, crashed. As Lois Lerner said of the original crash, “Sometimes stuff happens.”
Perhaps it’s just a strange series of coincidences that have befallen the IRS. After all, coincidences do happen.
For example, it’s probably a coincidence that Commissioner Koskinen reached the conclusion that “I don’t think an apology is owed (for the 26-month gap in Lois Lerner’s email record and the six other relevant crashes)” even though a majority of Americans seem to disagree. After all, he was brought in to “restore public confidence in the IRS” as the non-partisan head of the IRS.
In his previous role as a Presidential appointee, serving as Non-Executive Chairman of Freddie Mac, Mr. Koskinen received a total compensation of $550,713 from the Obama Administration. Prior to that, he had been a major supporter of Democratic candidates and groups for a number of years donating over $100,000 to their campaigns.
Additionally, no apology is necessary for the IRS’s recent need to spend tax dollars to cover a $50,000 settlement for illegally disclosing the confidential donor information of a particular Conservative group. Speaking of coincidences, one of the Articles of Impeachment against Richard Nixon charged that he “endeavored to obtain from the Internal Revenue Service, in violation of the constitutional rights of citizens, confidential information contained in income tax returns for purposes not authorized by law, and to cause, in violation of the constitutional rights of citizens, income tax audits or other income tax investigation to be initiated or conducted in a discriminatory manner.” It’s just like a certain 18.5-minute gap in a tape recording that would be the 1970s equivalent of a hard drive crash.
In today’s political environment, contradictory statements are common, and coincidences seem to occur as frequently as the concept of plausible denial. It would be nice to see the current Administration rise above the fray, recognize the legitimate concern the general public may have with the IRS, and take definitive steps to ensure that the facts will be thoroughly vetted by an impartial entity to ensure the full transparency that helped win the 2008 Presidential election.
Congressional Committees have proven to be ineffective in this role as have the political appointees and the Department of Justice. Perhaps it’s time for the President to call upon the DOJ to appoint an Independent Prosecutor to consolidate the investigative efforts. Let the facts be considered without any political bias and let the chips fall where they may. The Preamble to the Constitution calls upon us “to establish justice.” Let’s demonstrate that we still have that capacity.
T.J. O’Hara is an internationally recognized author, speaker, and strategic consultant in the private and public sectors. In 2012, he emerged as the leading independent candidate for the Office of President of the United States and the first nominee of the Whig Party in over 150 years.
This article first appeared in T.J. O’Hara’s recurring column, A Civil Assessment, in the Communities Digital News (CDN).