Advocacy Group: IRS' Problems 'Won't Be Cured by Removing Lois Lerner'

Following months of Freedom of Information Act requests, a team of conservative lawyers has sought to rewrite the narrative of the targeting controversy that has plagued the Internal Revenue Service for two years.

In a report leaked to National Review, the nonprofit legal group Cause of Action concluded that employees who mishandled applications for tax-exempt status were following the official agency manual as much as they were their allegedly politicized bosses. The unreleased 35-page report challenges the explanations for the mishandling of applications offered by the congressional Republicans, the White House and the Treasury Inspector General for Tax Administration.

TIGTA, in a May 2013 report that triggered the controversy, said the IRS relied on improper criteria for evaluating primarily conservative applicants and delayed applications with burdensome questions. Many congressional Republicans argued and inferred from later-released emails that former Exempt Divisions chief Lois Lerner’s Democratic political leanings prompted staffers to target conservative groups. And the White House said the actions were taken by a few employees in the agency’s Cincinnati office.

The Cause of Action report shows “what happened at the IRS between 2010 and 2014 and that, in fact, the targeting was baked in the cake,” wrote reporter Eliana Johnson. The decision by staffers confronting applications from Tea Party and other groups to forward the cases to Washington was done because, she writes, “the Internal Revenue Manual directs tax-law specialists to create what is known as a ‘sensitive-case report’ if, among other possible criteria, the application ‘is likely to attract media or congressional attention.’ ”

Cause of Action’s 35-page report is said to conclude that the Internal Revenue Manual must be fundamentally reformed in order to prevent future targeting. “While there are certainly complex or new issues that would warrant or even require an employee to elevate the issue to a manager, the IRS’ desire to be portrayed in a positive light by the media is certainly not one of those issues.”

Reached by Government Executive, Cause of Action leader Daniel Epstein said his group’s “findings, to-date, indicate that the IRS has exercised discretion in ways that incentivize staff to engage in misinterpretations of the law and, in some cases, misconduct.  We believe congressional oversight is crucial on these and other IRS-related matters Cause of Action has examined and agree with the claims of many that a special counsel is appropriate.”

National Review described Cause of Action as “a group of 13 attorneys funded by the Koch brothers’ sprawling network of donors.” But Epstein denied that his group receives funding from the Koch brothers, and that his group is conservative, though he said he “understands why that makes the story easier for the public to digest.” The problem at the IRS is institutional, he said.  “It won’t be cured by removing Lois Lerner, or a bang of the gavel, but by institutional reform and responsibility from the legislative and executive branches in terms of accountability and civic trust.”

IRS did not respond to inquiries, and a TIGTA spokesman said he would decline to comment on the National Review article.

Attorney Paul Streckfus, an IRS veteran who edits an Exempt Organizations newsletter, responded to the National Review article by critiquing use of the term “targeting.” Every law enforcement agency uses targeting, he wrote. The IRS does not spend much time auditing wage earners subject to withholding who take the standard deduction,” he noted. “Rather, they ‘target’ someone who has $50,000 of income and is claiming a $10,000 charitable deduction. ….Sensitive case reports are another aspect of IRS procedure that is being attacked. I believe sensitive case reports are important as they keep the IRS’ top management informed of sensitive developments.”

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