“An Untenable Position”: How John Boehner And Republicans Helped Create The IRS Scandal
The political powers the IRS was recently accused of abusing to harass Tea Party groups were given to it against its will by Congress — including some of the agency’s biggest critics today — over 10 years ago, according to documents and a former senior tax official. The revelation, which has been missing in most if not all of the commentary on the scandal, adds a key bit of context to it.
In a half-measure effort to strengthen campaign finance disclosure laws in 2000, Congress put the IRS, effectively for the first time, in the awkward position of having to make judgment calls about whether nonprofit advocacy groups would be required to disclose their donors because too much of their activities crossed the theoretical line between “issues advocacy” and “political campaign intervention.” It’s a messy and inherently subjective business, and something officials did not want to get more involved in, predicting it would lead to exactly the kind of controversy we just witnessed. “The IRS would inevitably be subject to claims of discrimination and political bias for actions taken or not taken,” an internal memo from the Treasury Department’s office of Tax Policy sent in June 2000 and obtained by Salon reads.
“The fuse was lit in 2000 with this law, which put the IRS in an untenable position. It’s almost surprising it didn’t explode on them earlier,” Steven Arkin, a former senior Treasury and IRS official, who proceeded Lois Lerner as the director of rulings and agreements for the IRS’ tax exempt organizations office, told Salon.
The law, a stand-alone bill numbered H.R.4762, had the best of intentions, but backfired thanks to an enormous loophole. After a comprehensive campaign finance bill failed, reformers pushed a narrow bill to increase disclosure of groups organized under section 527 of the tax code. That was reserved for groups primarily involved in electoral politics — but before this law, 527s that didn’t engage in explicit electoral intervention didn’t have to file any paperwork of any kind with the IRS. They incorporated as legal entities in their states, and that was that. No information on donors, expenditures or even their existence needed to be made public. If they did engage in electioneering, they would have to disclose that information to the FEC, but only for each specific activity. Thanks to the lax standards, these groups earned the moniker “Stealth PACs” and became the bane of campaign finance reform advocates.
When lawmakers brought up a bill to force 527 groups to disclose their donors just before Congress was about to go on its July 4 recess in 2000, they made a concession to skeptical Republicans and some Democrats who were looking out for liberal nonprofits: 501(c) groups — business leagues and the so-called social welfare organizations at the center of this year’s IRS controversy — would not be included. This didn’t seem like a big deal at the time, since almost everyone who wanted to meddle in politics organized as a 527 and not a 501(c)4. Both types of groups are tax-exempt, but 527′s had free rein to engage in electoral politics, while 501(c)4′s are limited to spending less than half their money on it. Social welfare and other groups are permitted to engage in unlimited issue advocacy, so long as their efforts to elect or defeat particular candidates were not their “primary” activity.
But former Sen. Russ Feingold, a staunch campaign finance reform advocate, saw what would happen if you cracked down on 527′s and not 501(c)4′s. “By only focusing on disclosure in one type of tax-exempt organization and not on others, we leave open the use of the other type of tax-exempt organizations by those who want to hide their contributions and activity behind the cloak of anonymity that these tax-exempt organizations provide,” Feingold warned on the floor during the Senate’s very short debate. He added that he was concerned that the IRS was “not prepared” to take on this burden, given the administration’s concern.
Sen. John McCain, the Senate sponsor, said that while it would be nice to do all groups, “focusing narrowly on 527 organizations” was necessary to “ensure that the legislation survives a constitutional test.” In the House, Wisconsin Democrat Tom Barrett, acknowledged that “this bill is not perfect” since it exempted social welfare organizations, but said including them might be “poison pill provisions” that would “scuttle this important reform effort.”
The bill passed overwhelmingly in both chambers. In the House, it was 385-39, with the “yay” column including Republican Reps. John Boehner, Dave Camp, Paul Ryan, Jim DeMint and many others who would later make hay of the way the IRS regulated 501(c) groups. Meanwhile, the Senate approved it 92-6, with McCain, Lindsey Graham, Rick Santorum and many others voting in favor. Sen. Mitch McConnell, a longtime opponent of campaign finance reform, voted no, but said, “I recommend to my Republican colleagues that they vote for this bill,” calling it “relatively benign and harmless.”
The fallout was not particularly surprising. Two months after the law went into effect, the Washington Post reported that “instead of complying with the new law, a number of groups are instead reconstituting themselves under other provisions of the tax code that do not force them to reveal their donors.” Ben Ginsberg, a prominent GOP election lawyer, told the Post he couldn’t keep up with with his clients’ requests to convert. “We’d be running out of fingers and toes” just to count them all, he said. Claiming to be new groups, they reorganized as 501(c)4′s, which can do basically all the same things the old 527′s did, just under a different section of the tax code. So in the end, Congress swapped out 527 “Stealth PACs” for 501(c)4 “Dark Money” groups.
But while the change seems banal, it effectively transferred oversight of this species in the campaign finance ecology to the IRS, an agency less well equipped to handle delicate political questions than the FEC, which was designed with a bipartisan commission and other features precisely to handle touchy political issues, including fundraising matters impacting members of Congress themselves.
“The proposals to amend the Internal Revenue Code would put the IRS in the position where it, rather than the FEC, must become the “watchdog,” the Treasury Department memo, first reported by Sam Stein at the Huffington Post, warned before the law passed. “Imposition of such a burden on the IRS would be an administrative nightmare for the agency.”
“It never should have been given to the IRS,” said Arkin, the former tax official.
It’s a fitting coda to the IRS scandal that the problem was largely created by the people most outraged by it.
By: Alex Seitz-Wald, Salon, July 11, 2013
“A Misleading Pretend Scandal”: It Turns Out IRS Commissioner Did Not Visit The White House 157 Times After All
One of the more enduring legends put forth by those working overtime to stoke the fires of scandal within the walls of the Obama Administration, is the often cited tale of how the now departed IRS Commissioner, Douglas Shulman, visited the White House 158 times during his years serving the Obama Administration.
Surely, as the logic goes, there could be but one credible explanation for an agency boss spending so much time within the epicenter of executive power. If Commissioner Shulman had pitched his tent and made the White House his second home, it could only mean that he was a co-conspirator in a well-coordinated effort on the part of the president and White House staff to influence the 2012 election by putting a beat down on conservative money groups looking to gain tax exempt status and the ability to hide the names of their contributors as they raised millions to defeat the Obama re-election effort.
So compelling is this argument that it has become a ‘go to’ bit of circumstantial evidence in the effort to take the IRS ‘scandal’ to the doorstep of the Oval Office and beyond.
And why not? The story does add up to a fairly decent piece of speculative evidence…or at least it would if the story were true.
Sadly (for the scandal mongers), it turns out that the entire meme falls dramatically short when someone actually takes the trouble to dig just a millimeter under the surface to discover what really happened here.
The ball on this enticing bit of scandal bait got rolling when The Daily Caller, the conservative hatchet rag operated by Tucker Carlson, reported in a May 29th piece that IRS Commissioner Douglas Shulman had racked up more visits to the White House than “even the most trusted members of the president’s cabinet.” The article appeared to be carefully put together, so much so that it came complete with a chart revealing how the second most active visitor to the West Wing, Rebecca Blank, was a very distant second to the tally put up by Commissioner Shulman.
The problem is—in what is becoming something of a tradition for The Daily Caller—the website managed to sort of ‘semi-report’ the story without feeling much of a need or desire to gather or report all of the details and facts as, to do so, would have been highly inconvenient to the intent of the article.
Reacting to the Daily Caller story, Bill O’Reilly immediately demanded that Mr. Shulman “explain under oath what you were doing at the White House on 157 separate occasions.” Considering how odd such an extensive visitation history would be for the boss of a second level government agency, O’Reilly’s request was not an unreasonable one.
However, Mr. O’Reilly’s insistent demand turns out be unnecessary as readily available public records have already answered the questions he sought to have answered. All someone need to do is look at these records to know the reason for Shulman’s visits (which turn out to be far, far fewer than 157.)
As reported by Garance Franke-Ruta in The Atlantic —
“And yet the public meeting schedules available for review to any media outlet show that very thing:
Shulman was cleared primarily to meet with administration staffers involved in implementation of the health-care reform bill. He was cleared 40 times to meet with Obama’s director of the Office of Health Reform, and a further 80 times for the biweekly health reform deputies meetings and others set up by aides involved with the health-care law implementation efforts. That’s 76 percent of his planned White House visits just there, before you even add in all the meetings with Office of Management and Budget personnel also involved in health reform.”
If you are wondering why the IRS Commissioner would be so actively involved in meetings involving the implementation of the Affordable Care Act, you will want to keep in mind that the Internal Revenue Service is at the center of the action when it comes to enforcing the mandate and penalty provisions of the law. As a result, any serious meeting regarding the execution of the Affordable Care Act would not make much sense without Shulman, or a high-ranking member of his staff attending in his place.
But even this does not tell the entire story.
You see, while the records reveal that Mr. Shulman was cleared for entry into the White House 157 times, these records speak only to the result of the clearance required by the Secret Service for someone seeking entry into the building and do not speak to whether or not Shulman actually attended the meetings for which he was cleared.
As someone who has, myself, been to the White House on a few occasions, I am keenly aware that nobody without a permanent entrance pass (given to those who have their office in the complex) gets in the door of the White House or the Executive Office Building unless specifically cleared for entry on a particular date and time by the Secret Service. Indeed, on one occasion, I had been cleared by the Secret Service to attend an event but, at the last minute, I had to pass on the White House visit when something came up. Yet, using the list relied upon by The Daily Caller, my skipped visit would be counted as an additional visit on my part if someone were counting.
What’s more, Franke-Ruta’s research reveals that the records tracking the time and date that a visitor signs in and out of a White House event suggests that Mr. Shulman signed in for just 11 events during the years 2009 through 2012 and signed out of 6 events during that same time frame.
Given the discrepancy between the ‘sign in’ and ‘sign out’ records noted above, it is certainly possible that Franke-Ruta may have actually been at the White House on additional occasions. However, there is absolutely no record—as claimed—that Mr. Shulman was at the White House 157 times. All we learn is that Shulman was cleared to come into the building for various meetings and events; meetings and events that made all the sense in the world given his key role in implementing Obamacare.
If you are wondering why Mr. Shulman would require Secret Service clearance so many more times than, say, cabinet members, it turns out that there is a very simple and clear explanation for this too—along with some understanding of Shulman’s testimony before Congress when he referenced going to the White House for an Easter Egg Roll.
“But there is no record that Shulman attended a White House Easter Egg Roll under Obama, most likely because large events organized by the East Wing, like that one, don’t always show up in the visitor’s access records. Neither do visits by staffers, journalists covering large events, or people who enter the White House grounds in their pre-cleared cars, like Cabinet members, who do not wait for badge swipes at the gate with the policymaking hoi polloi.
So, how can there be so much confusion when it comes to White House records tracking who comes in and who comes out?
Prior to Obama’s arrival, there were no such records published for the public to review. The decision to do so was a part of Obama’s stated quest for transparency when he first took office. As Franke-Ruta adds, “The real problem with combing through the White House visitor logs is that they were a system designed for Secret Service clearance and White House security, not as comprehensive means of documenting every visitor to the White House, high to low. They miss the top end and some of the social end of people visiting the White House — people who are cleared through separate processes designed to protect presidential security other than getting swiped in at the front gate for an appointment.”
Clearly, there is nothing even close to evidence suggesting that Commissioner Shulman visited the White House anywhere near the number of times suggested by The Daily Caller and immediately seized upon as a juicy bit of supposed evidence of White House involvement in this juicy story perpetuated by Darrell Issa and friends.
The true bottom line, however, is that those trying—and failing miserably—to make these pretend scandals stick should themselves be investigated within an inch of their lives for failing to set forth the true facts and data when the same becomes readily available. Failure to do so—whether on the part of supposed journalists or supposedly concerned Congressional committee chairmen—is malpractice, pure and simple, and a purposeful, malevolent misleading of the American public who would actually like to know what really happened here.
By: Rick Ungar, Op-Ed Contributor, Forbes, July 7, 2013
“Targeting Conservative And Liberal Groups Alike”: The So-Called IRS Scandal Ends With a Whimper
With Edward Snowdon on his whirlwind tour of countries unfriendly to the United States and the Supreme Court handing down a bunch of important decisions, this is a good week for stories to get lost in the back pages. So you may not have noticed that late yesterday, the IRS scandal, supposedly Worse Than Watergate™, came to a sputtering halt with the release of new documents in the investigation. The whole scandal, you’ll recall, is about how conservative groups applying for 501(c)(4) status were given extra scrutiny, while other kinds of groups just slid by. Well, it turns out, not so much:
The instructions that Internal Revenue Service officials used to look for applicants seeking tax-exempt status with “Tea Party” and “Patriots” in their titles also included groups whose names included the words “Progressive” and “Occupy,” according to I.R.S. documents released Monday.
The documents appeared to back up contentions by I.R.S. officials and some Democrats that the agency did not intend to single out conservative groups for special scrutiny. Instead, the documents say, officials were trying to use “key word” shortcuts to find overtly political organizations — both liberal and conservative — that were after tax favors by saying they were social welfare organizations.
But the practice appeared to go much farther than that. One such “be on the lookout” list included medical marijuana groups, organizations that were promoting President Obama’s health care law, and applications that dealt “with disputed territories in the Middle East.”
Taken together, the documents seem to change the terms of a scandal that exploded over accusations that the I.R.S. had tried to stifle a nascent conservative political movement. Instead, the dispute now revolves around questionable sorting tactics used by I.R.S. application screeners.
Questionable sorting tactics! Not quite the scandal of the century. So why did the Inspector General’s report that started this whole thing characterize it only as the singling out of conservative groups, ignoring the fact that liberal groups got treated unfairly too, and with the same means, the BOLO (“be on the lookout” memo) that instructed agents to give special scrutiny to certain kinds of groups? Steve Benen points out that the Inspector General (IG) was responding to a request from Darrell Issa to investigate the treatment of conservative groups, so that’s the likely reason his inquiry was restricted in that way. So Issa first asked the IG for a restricted investigation, then he released excerpts of interviews with IRS officials cherry-picked to make things look worse than they actually were, and now this.
But this “scandal” was already dying. Despite the most fervent wishes of conservatives, there hasn’t been any actual evidence showing that orders to crush the Tea Party came right from the White House. So in the last few weeks they’ve been reduced to arguing that there was a conspiracy of winks and nods, whereby everybody just knew what to do, even if nobody actually told anybody what to do. President Obama gave a speech criticizing “dark money,” and IRS agents swung into action! Or maybe there was a real conspiracy, but we just haven’t found it yet despite all the looking (“Some person or persons made the decision to target, harass, delay and abuse,” wrote Peggy Noonan. “Some person or persons communicated the decision. Some persons executed them.”). You can sustain that for a while, but eventually, you have to produce something real. You can’t just speculate forever.
And frankly, I’m not sure there’s anything wrong with these BOLO lists per se. If you have a situation where a bunch of similar groups are being created all at the same time and they all appear to be political groups masquerading as social welfare organizations, it’s perfectly reasonable to group them together and have the same agents develop an understanding of what they do and whether they deserve tax-exempt status. The problem isn’t that they got put into a pile, it’s what happens afterward. And what’s been really appalling from what we’ve learned is that the IRS agents seemed to have only the barest understanding of what the law was and how they were supposed to apply it. Maybe once this is all over, we can get around to fixing that.
By: Paul Waldman, Contributing Editor, The American Prospect, June 25, 2013
“Open Mouth, Insert Foot”: Darrell Issa Reverses Position, Refuses To Release Full Transcripts Of IRS Interviews
Representative Darrell Issa (R-CA), chairman of the House Committee on Oversight and Government Reform, is refusing to release the full transcripts of interviews with Internal Revenue Service agents which supposedly prove his allegation that the White House directed the IRS to target Tea Party groups.
Last week, Issa shared excerpts of the interviews, which included allegations that “Washington, D.C., wanted some cases.” As a result, Issa declared on CNN’s State of the Union that the targeting was “a problem that was coordinated in all likelihood right out of Washington headquarters — and we’re getting to proving it.”
Issa also vowed that “the whole transcript would be put out,” presumably providing the evidence that his allegations have thus far lacked.
Since then, Issa has reversed his position. In a letter to Representative Elijah Cummings (D-MD) — the ranking Democrat on the Oversight Committee, who has called on Issa to release the full transcript — Issa wrote that “if a full transcript were released, it would serve as a roadmap of the Committee’s investigation,” and called such an action “reckless.”
“It should be clear to you that the release of full interview transcripts at a point where additional witness interviews are likely would needlessly jeopardize the integrity of the investigation and hamper the Committee’s ability to get the truth,” Issa added.
Issa’s letter also explained why he thinks it was not a double standard to release a portion of the transcript on national television.
“The release of excerpts from witness interviews can serve to provide important updates to the public as the investigation progresses,” Issa wrote. “Limited releases of testimony may also serve to empower other witnesses to become whistleblowers and serve to vindicate individuals who have been subject to criticism or retaliation at the hands of their managers.”
Of course, it’s no coincidence that Issa’s limited releases strongly supported his long-held belief that President Obama is “one of the most corrupt presidents in modern times.” By contrast, the excerpts that Cummings released on Wednesday — in which a self-identified “conservative Republican” IRS manager said that he did not have “any reason to believe that anyone in the White House was involved in the decision to screen Tea Party cases” — would not encourage the type of witnesses from whom Chairman Issa wants to hear, so he would rather keep that part of the record buried for as long as possible.
Issa’s selective leaking and complete about-face on releasing the full transcripts are just the latest in a series of hyper-partisan moves that have put some of his fellow Republicans on edge. With every day, it appears more and more likely that — as an unnamed senior Republican warned Politico – Issa “could jeopardize the biggest gift handed to them in months.”
By: Henry Decker, The National Memo, June 12, 2013
“Memo On IRS Scandal”: Putting A Damper On “Exceptionalism”
To all state and regional IRS managers:
As a result of the critical government report about our agency’s 2010 convention in Anaheim, Calif., the following changes are being implemented immediately.
1. Funds are hereby terminated for all future training videos, including but not limited to “Cupid Shuffle” line-dancing and “Star Trek” parodies.
This rule is retroactive, which means that, sadly, we are cancelling the Game of Thrones parody that is now in production at our Cincinnati office.
(I screened the rough cut of the video and it was impressive. The costuming was authentic, and I thought Herm from our 401(c) Task Force totally nailed it as Tyrion Lannister — especially that British accent! Unfortunately, building a medieval castle on the set cost way more than all those puny Tea Party returns could ever bring in.)
Another casualty of the new spending rules is the multimedia dance video that was to be featured during our coming convention this August. The entire Birmingham office has been working out some smooth moves every afternoon (between audits) for nearly a year.
I’m told the choreography and exotic stagecraft put the Cupid Shufflers to shame. Unfortunately, because of the recent controversy, we won’t get to see “Big Ira and the Itemizers” show off their Gangnam Style groove.
2. Funds are hereby terminated for the hiring of event planners for IRS conferences.
As the inspector general noted, the agency spent more than $133,000 on three outside planners to secure our hotels and catering arrangements in Anaheim. The inspector general’s view is that taxpayer money could be more prudently spent, and I agree.
From now on, all convention planning will be done in-house by IRS personnel utilizing Web sites such as “Google” and “Bing,” which I am told will actually provide current information about hotel pricing in almost any city.
Apparently even the phone numbers of hotels are available online, thereby eliminating the need for our agency to pay an outside contractor to find the numbers and dial them. Who knew?
3. Funds are hereby eliminated for so-called “scouting trips” to IRS conference sites in advance of the event.
Back in 2010, we dispatched 25 employees in the months before the big annual convention, at a cost of about $36,000. The harsh criticism now being heaped upon our agency overlooks the steep logistical challenges in a city as cosmopolitan and confusing as Anaheim.
To simulate the tourist experience, a squad of our designated convention scouts went to Disneyland to navigate the intimidating labyrinths of Mickey’s Toontown and Splash Mountain.
Others ventured to an Angels baseball game, where it’s not uncommon for zestful visitors to become disoriented and require police escorts from the ballpark.
All scouting exercises were conducted in order to steer convention attendees away from local pitfalls. From now on, however, agency guidance will be limited to providing detailed street maps and portable Breathalyzers.
4. Funds are hereby eliminated for hiring outside speakers to address IRS conferences.
In Anaheim the agency paid more than $135,000 in fees to 15 different speakers. The well-meaning effort, meant to motivate and inspire our managers, has become part of the nasty media controversy.
One speaker who received $27,000 got up and told us that “seemingly random combinations of ideas can drive radical innovations.”
Maybe it wasn’t the most penetrating or original idea, but many of our attendees remained totally alert during his presentation.
Another paid guest speed-painted portraits of six famous persons to dramatize the value of creative thinking. For the record, not one of the Kardashians was featured as a portrait subject, yet still the backlash has been intense.
The total cost of the Anaheim shindig was $4.1 million, part of $37.5 million spent by the IRS in 2010 on conferences, meetings and conventions. Those days are over, as you are all aware, because the Obama administration cracked down the following year.
In 2012 the agency spent only $4.8 million on conventions, and we’re committed to reducing our partying budget even more. This year all our speakers will be unpaid.
Linda in our east Portland office has volunteered to present the keynote (“Re-Thinking Form 8949 — Whither Short-Term Capital Assets?”). Afterward she’ll be doing pencil sketches of your favorite family pet, so don’t forget to bring snapshots!
Yours in service,
Acting IRS Commissioner (for now) Danny Werfel
By: Carl Hiaasen, The National Memo, June 11, 2013
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