Hello, faithful readers! If you happen to be wondering where Kathryn has been, she has just been liberated from one semester of ever-engaging schoolwork and has been plunged, not one week later, into another round of classes. In the interim, all of the kerfuffle going on in the government of late caught my attention, and so I decided to take the time to thoroughly look into what was going on with the IRS. It's an ongoing thing, so this post isn't as late as I keep telling myself it is. Ultimately I am very happy that I did this, but what I found was quite sobering and gave me much food for thought.
So what does this mean for you, dear readers? You probably have a vague idea of what was going on if you are anything like me, but the Treasury Inspector General for Tax Administration report (whew!) is a bit much for anyone to swallow. But lucky you, I’ve done the hard work already, and I’m about to tell you what the deal is with the IRS. Let’s start first with a refresher on what happened:
It has come to public attention that the Internal Revenue Service (hereafter known as the IRS) specifically targeted certain political organizations that were applying for tax-exempt status, and caused long delays in the processing of these applications. The targeting was based primarily upon organization names, specifically those related to certain conservative groups. The IRS created a list of political party names meant to trigger extra review for applications based upon whether or not certain keywords were featured in the application name. The keywords included phrases such as “Tea Party,” “Patriots,” and the “9/12 Project.” The organizations singled out were sent to a team of specialists for review, and 98 of the 170 applications sent to these people were held back from completion for ridiculous amounts of time.
Give me a moment to break in here and say something that’s relevant – I promise. Legally, an organization can sue the IRS after 270 calendar days and force them to come to a decision concerning their tax-exempt status. The average time these delayed applications remained open was 574 days – which essentially equates to two election cycles for the time period between 2010 and 2013 when this was happening. None of the organizations have sued the IRS so far, despite the fact that they have more than a right to. However, let’s give Jay Sekulow some time, and I’m sure he’ll come up with something. And now, back to our main program!
During this period where the applications remained open, the IRS did not come to a conclusive decision to reject or accept these applications for tax-exempt status. While the applications remained open, donors to these organizations continued to pay taxes on their donations, where they otherwise would not have had to. At present there has been no conclusion as to whether or not any crimes have been committed, but officials in the IRS may be guilty of civil rights violations, lying to Congress, and violating the Hatch Act – which says, in terms of this issue, that officials in the IRS may not make politics a part of doing their job.
And now, another commercial break: So aside from getting things done in a timely manner, why is it important that organizations eligible for tax-exempt status were not granted it? These conservative political organizations are responsible for spending money that influences elections. The money they get comes from the people, some of whom are donating very large sums of money that the government could take a lot of tax out of. Think about it this way: now that we know that there was partisan manipulation of money going on in the IRS, big donors to political parties are having their confidence shaken about where their money is going, and whether or not it is being given into honest hands. If the IRS purposefully decided to deny revenue to politically conservative organizations – by preventing them from becoming tax-exempt – that spells big trouble for political parties everywhere in the U.S. Donors will not be able to trust where their money is going, and parties will lose proceeds as a direct result, which would be disastrous for freedom of speech and expression in politics.
Anyway, this came to public attention when the agency official who oversaw tax-exempt groups at the IRS planted a question at the (American Bar Association’s) Tax Section’s Exempt Organizations Committee Meeting. Her name is Lois G. Lerner. She personally called a tax attorney by the name of Celia Roady, and requested that Roady ask a question concerning partisan bias towards applicants for tax-exempt status. In the days following this revelation, Steven T. Miller, the acting head of the IRS, resigned his position; Joseph Grant, the commissioner of the agency’s tax-exempt and government entities division, decided to retire early; and Sarah Hall Ingram, who used to be in charge of tax-exempt organizations, was put in charge of the Affordable Care Act Office (which is an extension of Obamacare at the IRS). Lerner herself is currently on paid leave, because she refused to resign her position.
I would like to direct your attention to Ingram for a moment as ask why any president in his right mind would place an official involved with the tax-exempt division, which is now in the midst of a government scandal, in a position of authority with his newly-minted healthcare.
Carry on.
So now we have established the basic facts of the matter, and some of you are still with me. Thank you! I am proud of you, really – and you will be glad to know that the Inspector General (IG) report will make that much more sense because you’ve made it this far. Shall we break it down? According to the report:
- In July of 2010, there was a spreadsheet (the “list”) created that specifically indicated that “political sounding” (as quoted from the IG report) parties should be singled out for review. The report also stated that organizations with names that had something to do with the Tea Party were the first to be singled out, and other “criteria” – other party names – were added on later.
o IRS officials later claimed that use of the term “Tea Party” was meant to be office shorthand for an entire list of things to look for in applications. My personal opinion is that these same officials probably never pay poker because they always lose. Lerner couldn't name a single non-conservative organization that had been singled out in this manner.
- Applications selected for review were sent to a team of specialists, who would send out letters asking for more information about the corresponding organizations. These letters would claim that the information originally provided was not complete.
o Often, these letters would be followed up by others stating that the information requested had not been necessary. Some organizations waited a year or more – past the sue-able date of 270 days – to hear back from the IRS after each letter was sent out.
o The IG report stated that the information requested from the organizations was not necessary to clear the applications for tax-exempt status. Sample questions asked for information concerning:
§ Names of donors to the organization
§ A list of the issues important to the organization, and what their position was on other issues
§ The roles or activities of the audience and participants of the organization, and what kinds of discussions participants had in the organization
§ The political affiliation of the organization
§ The employment status of members in the organization, and how many hours they worked
§ The relationships each organization had with other organizations
- In July of 2011, the criteria used to identify applications eligible for review was changed to look at “political, lobbying, or [general] advocacy” (as quoted from the IG report) as opposed to party names.
- In January of 2012, the team of specialists independently decided, without executive approval, that the regulations put into effect in 2011 were too broad, and changed the criteria to suit their tastes.
- By this point, members of Congress and some of the organizations that had been suffering from the lag in the processing of their applications raised the issue of looking into the IRS. The IG audit began in early 2012 as well – around the time of the election – and was run by J. Russel George, the watchdog for the IRS.
o He did not inform Congress than an audit was under way, which is illegal according to the Inspector General Act.
§ Does this raise a red flag for anyone? Oh good. I’m glad it’s not just me.
- There were eventually nine recommendations that the IG report made, seven of which the IRS implemented. The two that they did not comply with and wished to alter were the following:
o The IG recommended that there ought to be a specific procedure for applications chosen for review by specialists, that would specifically state the reasons why the applications were chosen.
§ The IRS begged to differ. They stated that they would like to add to the current training procedure, so long as any additions did not waste time in the procedure.
- The IG report essentially commented that the current procedure could not possibly get any longer, as the average delayed application was open for 574 days. If there was an award for “Most Sarcastic Inspector General Report Made While Maintaining a Straight Face,” these guys would get it.
o The IG recommended that the IRS ought to have specific training for the specialists, and that the information given in their training should be put online for the clarity and general understanding of the public.
§ The IRS would prefer not to do this, thank you very much. They waffled for a bit about modifying the current policy but came across as very adverse to changing their current training procedure, much less posting it on the web.
§ Considering how closely they had been bothering politically conservative groups about incomplete information, it is more than a little ironic that the IRS now balks at the idea of posting the particulars of their specialists’ training online.
I know, I know that was long and hard and painful. Again, thanks for sticking with me here – and now you know the bare facts of what was going on. If you want to read the full report for yourself, I present you with the following link to the Washington Post here. I admit to sticking a little color in there, in the form of asking questions, but I am trying to make you think. One thing I have realized as I enter the world of journalism is that you cannot stare blankly at the news like a sheep and keep moving on without formulating an opinion. You now have one of two options: leave this page and draw your own conclusions, or keep on going to see what I have decided about this. And then you can tell me if I am right, if I am wrong, and whether or not this is really as big a deal as I’m making it. But I would like to know that my livelihood is being dealt with fairly, and so I would click the link below. Feel free to come right along with Kathryn, and feel free to yell at me (nicely!) when we’re done. Come on!
Read Part Two:
Read Part Two:
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