IRS Hands Over Tax-Exempt Training Materials to Nonprofit Publisher

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By Ken Berry
 
The congressional committees investigating the Tea Party scandal – including the House Oversight and Government Reform Committee chaired by Darrell Issa (R-CA) – aren't the only ones trying to get their hands on sensitive IRS documents. In response to a lawsuit initiated by Tax Analysts, a nonprofit publisher of tax information and expert analysis, the IRS has released almost 3,000 pages of training materials used by its Exempt Organizations (EO) division, most of them dating from 2012.
 
It's a big slice of the pie, but not the whole enchilada, of what Tax Analysts hopes to receive from the request it made under the Freedom of Information Act (FOIA). The materials are expected to shed some light on the methods the IRS used to target the tax-exempt applications of conservative groups for extra scrutiny. It could be the match that lit the fire that has scorched the IRS these past few months.
 
The IRS is still experiencing the fallout. In May, acting IRS Commissioner Steve Miller was effectively forced out, and the head of the EO division during the time of the infractions, Lois Leaner, resigned in September. Three separate committees are investigating related matters, and a criminal probe has been launched by the Justice Department.
 
"It is unfortunate that Tax Analysts needed to go to court to get this process started," said Christopher Bergin, president and publisher of Tax Analysts, said in a prepared statement. "An important mission of Tax Analysts is to promote transparency in tax administration. We will vigorously continue to pursue that mission."
 
Tax Analysts initially requested the documents in May when the controversy over the tax-exempt applications first surfaced. Subsequently, it filed a lawsuit against the IRS on August 13, asking for an expedited processing of the FOIA request. The IRS released roughly1,000 pages in September followed by another 1,800 pages this month.
 
"Our motion for a preliminary injunction is on hold pending the IRS' continued processing of documents," said Cornish F. Hitchcock, an attorney for Tax Analysts. "Although the IRS has indicated that they have produced the bulk of the training documents we're seeking, we've pointed out some items that seem to be missing. The Service has until November 27 to produce all remaining documents or explain to the court why it can't do so."
 
As part of its public service mission, Tax Analysts strives to bridge the ever-deepening chasm between the IRS and the taxpaying public. It says that it seeks equal tax treatment for taxpayers of all stripes.
 
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Perhaps Tax Analysts as part of its "public-service mission" will discover an entirely different story, that the IRS has for much of its existence, especially under Republican administrations, catered to the rich and powerful, those who are privileged to interact with the IRS' inner circles or who have large and politically connected law firms to engage in their place -- people for whom the Tea Party is but a tool.

In fact, if Tax Analysts looks closely enough, they may find that the breaks and benefits given to tax-exempt foundations and charities set up by and serving the rich far exceed the meager harm done by the IRS' impulsive -- but let's be honest, correctly motivated -- crackdown on applicants for tax-exempt status hiding behind Congressional cover to justify not paying taxes while planning and conducting political activity forbidden true tax-exempts.

I've been reading similar materials, assiduously. Based on my understanding of the law and history (I was a top legislative policy analyst with the California Legislature for a decade and have been an IRS Whistleblower for several years), it's pretty clear that even without the IRS distorting its methods, the big, rich, and powerful tax-exempts and their lawyer-lobbyists -- and the 501(c)4s blatantly violative of the spirit and perhaps the letter of the law -- have been able to adapt to and co-opt IRS regulations and methodologies for dealing with tax-exempts. Karl Rove and his ilk have shown without any surreptitiousness how this is done. Reading the proceedings of the dozens of advisory committees that advise the IRS, committees staffed principally by attorneys and accountants whose clients are large and powerful tax-exempt organizations, and academics who collectively live off the tax-exempts' grants, it's easy to see how commercial and private interests become public tax policy via sugar-sweet regulations and treatment coerced from underpaid and overworked civil servants.

My ongoing action in United States Tax Court, Jacobson v. Commissioner of the IRS, Docket No. 8447-13W, is a case study in how this works. My beef as a public-interest Whistleblower is less with the IRS, which regrettably but understandably responds to political muscle -- who doesn't? -- than with the perpetrators of tax frauds and partisan abuses of tax-exempt status, well-paid cynics who brazenly exert undue influence at the IRS so that undeserving tax-exempts get their way. Too often, they succeed with their perfect crimes, avoiding billions in taxes and of late winning seats in the Congress and state houses. I suspect Issa knows all about it.

Now that it has the goods, will Tax Analysts be as candid and revealing as the IRS has been, since it doesn't answer to the FOIA? Or has it, as this article suggests, an agenda that prevents such openness? They haven't covered my case in Tax Court; maybe it sends the wrong message. It remains to be seen.