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Thursday, June 19, 2014

Taxpayers Are Pressured To Keep Good Records Meanwhile, The IRS Loses Lerner's Emails

Taxpayers Are Pressured To Keep Good Records

Meanwhile, The IRS Loses Lerner's Emails

The IRS—remember those jaunty folks?—announced Friday that it can't find two years of emails from Lois Lerner to the Departments of Justice or Treasury. And none to the White House or Democrats on Capitol Hill. An agency spokesman blames a computer crash.

Updated July 16, 2014 8:06 p.m. ET

Justice Department Investigates Lost IRS Emails

Testimony by Deputy Attorney General, Scheduled for Thursday, Underscores Potential Seriousness of Missing Information

The Justice Department is investigating the loss of Internal Revenue Service emails that might shed light on the agency's treatment of conservative groups.

As part of its criminal probe into the IRS's treatment of politically active conservative groups, the Justice Department is "investigating the circumstances of the lost emails from [former IRS official Lois Lerner's] computer," according to prepared testimony by James Cole, the deputy attorney general. Mr. Cole is set to appear at a hearing scheduled for Thursday before a House Oversight and Government Reform subcommittee. 

Ms. Lerner, now retired, headed the IRS division that oversees tax-exempt organizations. Republicans in Congress say she is a central figure in the IRS's alleged targeting of conservative tea-party groups for lengthy delays and intrusive scrutiny as they sought tax-exempt status, starting in early 2010. They also believe she had a hand in encouraging the agency to give unfavorable treatment to other, larger conservative groups. Democrats say that some liberal groups were also scrutinized, and that the overall controversy has been overblown to score political points against the Obama administration.

Mr. Cole's comments underscore the potential seriousness of the recently disclosed email loss, which has roiled congressional probes of the matter and angered some top GOP lawmakers. His testimony also could indicate that administration officials sense political vulnerability on the issue.

The IRS has blamed the loss on a crash of Ms. Lerner's hard drive,—a common occurrence at the agency, officials say. They add a backup tape also was routinely recycled after six months.

Ms. Lerner's attorney, William Taylor III, declined to comment on Wednesday. Earlier this month, he said: "The facts are that Ms. Lerner did not destroy any records subject to the Federal Records Act, she did not cause the computer assigned to her to fail, and she made every effort to recover the files on the computer."

Ms. Lerner has declined to answer questions before the oversight panel, citing her Fifth Amendment right against self-incrimination. Lawmakers contend that she waived her privilege, and the House voted in May to hold her in contempt of Congress. Ms. Lerner and her lawyer have denied that she did anything improper.

Some Republicans regard the timing of the email loss in 2011 as suspicious, noting that it came just days after Republicans began questioning the agency's treatment of politically active conservative donors and groups. They also are unhappy that the IRS and the Obama administration waited weeks before disclosing the email loss to Congress in June. Congressional Republicans have been looking into the IRS targeting controversy since an inspector general's report on the problem in May 2013, and demanded all of Ms. Lerner's emails as far back as last year.

Republicans also want to know more about an instant messaging system IRS officials used. In a recently disclosed email from 2013, Ms. Lerner said she had warned colleagues to be cautious about what they say in emails, given past congressional inquiries. She asked an information technology executive whether instant messages also were searchable.

GOP lawmakers have questioned the Justice Department's response to the controversy, noting that the agency announced it was conducting a criminal investigation days after the scandal broke in 2013, but has produced no charges so far.

Republican lawmakers also have criticized the fact that Ms. Lerner gave a full interview to the Justice Department, while declining to answer lawmakers' questions.

Lawmakers doubt that the Justice Department will seek charges against Ms. Lerner in the contempt matter. Lawmakers contend Ms. Lerner waived her Fifth Amendment privilege by making a statement asserting her innocence at a hearing last year, an argument that some legal scholars question.

"Finally, someone in the administration admits that the destruction of two years of emails from Lois Lerner is fishy," said Rep. Jim Jordan (R., Ohio), the chairman of the subcommittee that is holding Thursday's hearing. He repeated Republican calls for the Justice Department to appoint a special prosecutor.

Mr. Cole's testimony says that when the department's investigation is finished, it will "provide Congress with detailed information about the facts we uncovered and the conclusions we reached in this matter."

Democrats on the committee distributed a memo rebutting GOP charges against the Justice Department—for example, that it has let politics skew its handling of the matter. Democrats say there is no evidence to support those claims.
June 20, 2014
Investigation of IRS Targeting (CSPAN Video)

Never underestimate government incompetence, but how convenient. The former IRS Director of Exempt Organizations was at the center of the IRS targeting of conservative groups and still won't testify before Congress. Now we'll never know whose orders she was following, or what directions she was giving. If the Reagan White House had ever offered up this excuse, John Dingell would have held the entire government in contempt.

The suspicion that this is willful obstruction of Congress is all the more warranted because this week we also learned that the IRS, days before the 2010 election, shipped a 1.1 million page database about tax-exempt groups to the FBI. Why? New emails turned up by Darrell Issa's House Oversight Committee show Department of Justice officials worked with Ms. Lerner to investigate groups critical of President Obama.

How out of bounds was this data dump? Consider the usual procedure. The IRS is charged with granting tax-exempt status to social-welfare organizations that spend less than 50% of their resources on politics. If the IRS believes a group has violated those rules, it can assign an agent to investigate and revoke its tax-exempt status. This routinely happens and isn't a criminal offense.

Ms. Lerner, by contrast, shipped a database of 12,000 nonprofit tax returns to the FBI, the investigating agency for Justice's Criminal Division. The IRS, in other words, was inviting Justice to engage in a fishing expedition, and inviting people not even licensed to fish in that pond. The Criminal Division (rather than the Tax Division) investigates and prosecutes under the Internal Revenue Code only when the crimes involve IRS personnel.

The Criminal Division knows this, which explains why the emails show that Ms. Lerner was meeting to discuss the possibility of using different statutes, specifically campaign-finance laws, to prosecute nonprofits. A separate email from September 2010 shows Jack Smith, the head of Justice's Public Integrity Unit (part of the Criminal Division) musing over whether Justice might instead "ever charge a 371" against nonprofits. A "371" refers to a section of the U.S. Code that allows prosecutors to broadly claim a conspiracy to defraud the U.S. You know, conspiracies like exercising the right to free political speech.

The IRS has admitted that this database included confidential taxpayer information—including donor details—for at least 33 nonprofits. The IRS claims this was inadvertent, and Justice says neither it nor the FBI used any information for any "investigative purpose." This blasé attitude is astonishing given the law on confidential taxpayer information was created to prevent federal agencies from misusing the information. News of this release alone ought to cause IRS heads to roll.

The latest revelations are a further refutation of Ms. Lerner's claim that the IRS targeting trickled up from underlings in the Cincinnati office. And they strongly add to the evidence that the IRS and Justice were motivated to target by the frequent calls for action by the Obama Administration and Congressional Democrats.

One email from September 21, 2010 shows Sarah Hall Ingram, a senior IRS official, thanking the IRS media team for their work with a New York Times reporter on an article about nonprofits in elections. "I do think it came out pretty well," she writes, in an email that was also sent to Ms. Lerner. "The 'secret donor' theme will continue—see Obama salvo and today's [radio interview with House Democratic Rep. Chris Van Hollen ]."

Several nonprofit groups have recently filed complaints with the Senate Ethics Committee against nine Democratic Senators for improperly interfering with the IRS. It's one thing for Senators to ask an agency about the status of a rule or investigation. But it is extraordinary for Illinois's Dick Durbin to demand that tax authorities punish specific conservative organizations, or for Michigan's Carl Levin to order the IRS to hand over confidential nonprofit tax information.

And it's no surprise to learn that Justice's renewed interest in investigating nonprofits in early 2013 immediately followed a hearing by Rhode Island Sen. Sheldon Whitehouse in which he dragged in officials from Justice and the IRS and demanded action.

It somehow took a year for the IRS to locate these Lerner exchanges with Justice, though they were clearly subject to Mr. Issa's original subpoenas. The Oversight Committee had to subpoena Justice to obtain them, and it only knew to do that after it was tipped to the correspondence by discoveries from the watchdog group Judicial Watch. Justice continues to drag its feet in offering up witnesses and documents. And now we have the two years of emails that have simply vanished into the government ether.

New IRS Commissioner John Koskinen promised to cooperate with Congress. But either he is being undermined by his staff, or he's aiding the agency's stonewalling. And now that we know that Justice was canoodling with Ms. Lerner, its own dilatory investigation becomes easier to understand. Or maybe that was a computer crash too.

Monty Henry, Owner

Additional Resources:

Number of Americans Renouncing Citizenship Surges To Escape Oppressive Tax Rules

Dropping Off The Grid: A Growing Movement In America: Part I

Online Privacy Tools and Tips

What is BitCoin and How Does It Work?

The Creature From Jekyll Island
This Blog And Video Playlist Explains Why The U.S. Financial System is Corrupt and How It Came To Be That Way


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