Lawsuits Against IRS Piling Up

As the Internal Revenue Service scrambles to turn over documents to congressional staff probing its mishandling of applications for tax-exempt status, the agency is also busy going to court.

Tax Analysts, a nonprofit trade publisher based in Falls Church, Va., this month filed suit against the IRS seeking to accelerate the agency’s response to its May Freedom of Information Act request for all materials used since 2009 to train IRS personnel in the IRS exempt organizations office in Cincinnati, the unit at the center of the controversy over political targeting of nonprofits.

Separately, the Freedom from Religion Foundation, a Madison, Wis.-based watchdog for enforcing separation of church and state, won a legal victory Aug. 20 when a U.S. district judge tossed out an IRS motion to dismiss its suit seeking to require the tax agency’s exempt organizations division to step up enforcement of rules against church politicking.

And last week, Rep. Chris Van Hollen, D-Md., announced that he had joined with several campaign finance reform groups in a suit to force the Treasury Department and IRS to rescind an ambiguous regulation that tasks tax-agency mid-level employees with judging the extent to which nonprofit groups seeking tax-exempt status are political.

Tax Analysts, which has sued the IRS on transparency grounds multiple times beginning in 1972, in May performed its own analysis of nonprofit groups mentioned obliquely in a May audit by the Treasury Inspector General for Tax Administration. The May report found the groups had been singled out for extra scrutiny that delayed processing of their applications.

After the publisher made its FOIA request in May, it “asked the IRS to expedite the process and it agreed, telling us that our request had `priority’ and that it would `make every effort to respond as quickly as possible,’ Tax Analysts President and Publisher Christopher Bergin wrote on his blog. “But on June 25, the IRS invoked a 10-day extension period, which extended the deadline to July 10. But in the same letter, the IRS also told us it wouldn't be meeting that deadline either, and unilaterally extended the response date to August 9.”

When the agency subsequently revised its promised delivery date to Sept. 20, the publisher felt it had no choice but to sue. “Apparently, and unfortunately, the greater the public interest, the more difficult it is to get expedited treatment to a request for information,” Bergin said. “A large reason the IRS is in the current trouble that it’s in is because it was playing its old, familiar, and apparently favorite, game of hide-the-ball. And it was playing that game with the United States Congress.”

In an interview with Government Executive, Bergin explained that what he hopes to add to the IRS scandal mix is “an objective analysis, not a political food fight.” Tax Analysts has “no desire to become Darrell Issa’s best friend,” he added, referring to the California Republican helping lead the probe of IRS as chairman of the House Oversight and Government Reform Committee.

The tax publisher’s experience with the IRS Chief Counsel’s Office has shown that it is “historically secret for many reasons, and is loath to release things. The IRS did something stupid,” Bergin added, “but I don’t yet see anything criminal. I am a huge supporter of the agency, so if the politicians do it a lot of damage, it is bad for the country. This information needs to get out there and get out now.”

In the Wisconsin case brought last December by the Freedom from Religion Foundation, U.S. District Judge Lynn Adelman on Aug. 19 wrote, “If it is true that the IRS has a policy of not enforcing the prohibition on campaigning against religious organizations, then the IRS is conferring a benefit on religious organizations (the ability to participate in political campaigns) that it denies to all other 501(c)(3) organizations, including the foundation.”

The foundation’s complaint notes that the law prohibits tax-exempt 501(c)(3) organizations, including churches, from intervening or participating in political campaigns on behalf of or in opposition to any candidate. But “in recent years,” the foundation says, “churches and religious organizations have been blatantly and deliberately flaunting the electioneering restrictions of §501(c)(3), including during the presidential election year of 2012.”