By: Philip Hackney
The Treasury Inspector General for Tax Administration (TIGTA) just issued a new report four years and five months after rebuking the IRS for using “inappropriate” criteria to select applications for tax exempt status for scrutiny. In the first report, TIGTA rebuked the IRS for pulling the applications of conservative leaning organizations for greater scrutiny.
This time it considers the fact that the IRS over a period of 10 years used liberal leaning names such as ACORN, Emerge, and Progressive as criteria for pulling applications for greater scrutiny. This resulted in the IRS applying greater scrutiny to these organizations. Some might say the IRS targeted these organizations. Those organizations appear to have faced long wait times as well, and sometimes some questions of limited merit.
I write this piece to make two points: (1) had this information been in the initial report, I don’t think we would have had the “scandal” that shook the IRS and the political world of the time; and (2) the TIGTA report built its primary claim on a garbled faux legal postulate. The original report did terrible damage to the IRS and individuals by failing on both of these fronts.
The report makes clear the IRS did not “target” conservative organizations to the exclusion of others. In fact, as demonstrated in the report, the IRS denied some the applications of some liberal organizations such as the Emerge group. While some of this information was reported in 2013, many people continued to believe the IRS exercised its discretion in a biased manner against organizations because of their conservative bent. Just pick a day of Tax Prof Blog’s IRS Scandal Day collating of all stories on the matter to get this sense.
Just last year in June there was reporting that the IRS really seemed to bollix the application process. There was evidence from discovery in a court case that the IRS looked at a lot more conservative organizations than liberal ones.
At the time, I suggested the TIGTA Report and this new information was being used to make two primary claims: 1) the IRS scrutinized conservative nonprofits more than liberal nonprofits in its application process, and (2) either (a) the IRS did this intentionally, or (b) the IRS did this negligently.
Although the TIGTA report provided evidence toward some of these claims, it failed to prove any of those claims. It actually seemed to conclude that if the IRS was guilty of (1), it did it negligently and not intentionally. The information discovered in the court case only went again to (1), but did nothing to improve our knowledge on whether (1) was true, and did nothing to help us on (2).
This new TIGTA report now provides evidence that even (1) might not be true. In other words, the new evidence suggests it might be that the IRS always provided the right level of scrutiny to political organizations. It’s primary sin was bumbling through the process, taking too long, and sometimes asking intrusive questions, but it did not go on some partisan witch hunt. But, we still don’t know because both of these audits are incomplete to the question asked. Did the IRS apply the right level of scrutiny to all political organizations no matter what political leanings they represented? My guess is at this point we will never know for sure.
It’s not entirely clear why TIGTA is providing this information now. It’s years late and millions of dollars short. The harm to lives is done. And, as is well noted by fellow Surly blogger and #taxprof Leandra Lederman here, the harm to the IRS is more than done.
TIGTA suggests in the report that it performed this audit because of requests from Senators and Representatives. I’m glad TIGTA performed the audit for posterity, but it just highlights the major significant flaws of the deeply skewed picture that it provided.
And that brings me to my second point: the original report said that the IRS was wrong to use names of conservative organizations to apply greater scrutiny to applications for tax exempt status. This was “inappropriate.” TIGTA seems to be saying that after identifying a series of groups called “Tea Party” groups that seem to be applying for status, the IRS cannot make the simple common sense decision to try to pull all applications with like names for uniform scrutiny. It must blindly go through the many applications it receives annually as if the past did not exist.
This is absurd both as a matter of common sense and a matter of law.
There simply is no law written by Congress imposing such a rule. In fact, the idea of an IRS audit presumes that the IRS will use information to smartly select persons for audit. While this was a different process focused on evaluating applications, the same principle should hold. Using a name is often a smart way to do that. The Constitution certainly provides protection against being targeted for your speech, but this is not what happened here. None of the investigations concluded otherwise.
I wrote about this flaw in the report at length in Should the IRS Never Target Taxpayers. Unfortunately, this faux legal postulate has become accepted as just the way things are. As Emerson said, “a foolish consistency is the hobgoblin of little minds.” But here we are four years and five months later still operating on a belief that is mostly wrong and way underdeveloped at best.
As I wrote on the day the report came out, let’s continue to try to be on the lookout for false partisan witch-hunts.