Enough Already On IRS Targeting! Maybe, But Whose Tax Returns Went To White House And Why?

We discussed IRS targeting during 8 months of 2013, and all of 2014. It is now 2015. We are all tired of it. Many Democrats accuse conservatives of blowing the IRS scandal out of proportion, conducting a ‘witch hunt.’ They say, as Mr. Obama said to Fox News, that there is not even a smidgen of corruption. Yet it should be no wonder that some people still aren’t so sure. Transparency hasn’t characterized much of what has happened over the course of these 20 months.

To find the missing emails from the key figure who refused to testify, the IRS said it spent $10 million of taxpayer money. Even those expensive recovery efforts were unsuccessful. Then, embarrassingly, the lost or destroyed Lois Lerner emails were recovered after all by the Treasury Inspector General. Among other things, the emails showed Justice Department involvement. Yet that too has been explained with a spin that seems to point the finger at conservatives.

DOJ had to look into conservative organizations, goes the narrative, because they were so bad. Because the focus isn’t on who did what and why, we are still in the dark about much of it. For there are really two scandals. One is alleged targeting, although it really isn’t alleged any longer. Lois Lerner, the IRS, and the Inspector General all admitted it.

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Questions remain how involved the administration was, how one-sided it was solely to conservatives, etc. Still, the administration’s gyrations and shifting stories consumed 20 months. A parade of narratives ranged from confused IRS employees, to rogue IRS employees, to lost emails, recycled backups, $10 million of search efforts, and more. It should be upsetting to every American. And it should be embarrassing to government officials, though they do not show it.

Who can blame Americans for being suspicious? It was a whole year into a Congressional investigation before the IRS first said the emails were ‘lost.’ Would such a belated “oh by the way…” ever be tolerated if an American taxpayer voiced it? Even the ‘take the Fifth’ attitude is disturbing, regardless of one’s understanding of our Constitutional protections. As one report slams ‘culture of bias’, is it over-reacting to be bothered by this?

Even if it is, the second IRS scandal, the alleged release of confidential taxpayer data to the White House, is far more debilitating. It too isn’t just alleged. We know it happened. What we do not know is how much was released, whose tax records they were, or who over at the White House requested them. Even worse, we do not know if we will ever know.

We wouldn’t know anything about this more debilitating scandal except for a lawsuit for transparency against this promised most transparent administration in history. A non-profit group, Cause of Action, began investigating whether the IRS was improperly sharing taxpayer information with the White House in 2012. Cause of Action filed a Freedom of Information Act request for any correspondence between the IRS and White House about tax returns for individuals or businesses. When the IRS refused the request, the group filed a lawsuit.

Having to sue sure doesn’t seem transparent, but it gets worse. There have been a number of allegations of politically motivated IRS leaks. But proving such a thing is difficult, particularly when even the Treasury Inspector General for Tax Administration, TIGTA, errs on the side of keeping taxpayer information confidential. Even if the confidentiality law was broken, the theory goes, it would be breaking it again to reveal the confidences that were revealed to the White House in violation of the law.

Kafkaesque as it sounds, it makes some sense. Still, we need to know. A judge ruled that the IRS must turn over any relevant documents to Cause of Action. The Treasury Inspector General admitted that it has thousands of pages of responsive documents containing private taxpayer data. That admission seems conclusive. We just do not know whose tax records they are and who at the White House wanted them. Why would communications between the IRS and the White House contain confidential taxpayer information that by law is restricted to the IRS?

The Treasury Inspector General withheld nearly all of the 2,500 documents it located related to unauthorized IRS leaks to the White House. It released only 31 pages, 27 of which were already publicly available. Eventually, we hope to see them all, but that is still not certain. Regardless of whether the White House asked for any taxpayer information or someone at the IRS just sent it (‘hey, take a look at this…’), the IRS transmitted some.

There could be an explanation. Perhaps pages were stuck together by mistake. Perhaps it was more intentional, but perhaps the reason for the breach of law is somehow excusable, like speeding can be excused when driving to a hospital with an injured passenger. But shouldn’t we get to the bottom of this and hear the explanation if there is one?

After all, any transgression of these rules is serious. This kind of thing can make Americans look differently at anyone or anything from the IRS. That may not be fair, but it is understandable. There is no system more central to the functioning of our government than the tax system, and the last thing we should do is to undermine it. Besides, there are thousands of dedicated IRS employees doing their best to fairly administer the tax system. Personally and professionally, their positions have been undermined, their agency has let them down.

White House Press Secretary Mr. Josh Earnest has said the Obama administration “has been very rigorous in following all of the rules and regulations that govern proper communications between Treasury officials and White House officials and the Internal Revenue Service.” Maybe that is all true, but this sure looks sloppy or worse. Especially given all the platitudes about transparency, it would be nice if we could get to the bottom of this and then finally move on. After all, it is 2015.

For email alerts about tax stories, follow me on Forbes.com. Or email me at Wood@WoodLLP.com. This discussion is not intended as legal advice, and cannot be relied upon for any purpose without the services of a qualified professional.

via The Tax Lawyer http://ift.tt/13P5t2i

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