Who’s Keeping the IRS Scandal Alive? We Are, and Here’s Why

SOME TAX-EXEMPT APPLICATIONS REMAIN “UNRESOLVED”

by Guillermo Jiminez, Tax Revolution Institute, ©2016

(Sep. 19, 2016) — “Who’s keeping the IRS ‘scandal’ alive?” Newsweek posed this question to its readers in an opinion column published on August 28.

The author, Neil H. Buchanan, a professor of law at George Washington University, originally published the article in a blog under the title “How to Make a Dead IRS Conspiracy Theory Look Not Completely Dead,” which is far more revealing of his intentions than the inquisitive Newsweek headline.

For those who need some catching up, the scandal in question here is, of course, the IRS’s wrongful targeting of certain nonprofit groups and the “inappropriate” levels of scrutiny to which these groups were subjected when they sought to obtain tax-exempt status in 2010.

In his article, Buchanan essentially attempts to make the case that the scandal, at this point, is long gone. Whatever wrongdoing took place has already been addressed and corrected, and anyone still talking about this is fomenting a “right-wing conspiracy theory.”

In fact, the only reason one would even refer to IRS abuses in the present tense, he argues, boils down to a simple procedural hiccup within the agency.

The issue here is that the IRS, until very recently, had still not begun to process the tax-exempt applications of two groups who were among the hundreds initially flagged by the agency’s “be on the lookout” (BOLO) lists.

The reason for that, the IRS said, is the agency’s internal policy of placing reviews on hold for cases that are under litigation. In early August, however, a DC court of appeals blasted the IRS for this “Catch 22” of a policy and in effect forced the agency’s hand.

“The IRS is telling applicants in these cases that ‘we have been violating your rights and not properly processing your applications. You are entitled to have your applications processed. But if you ask for that processing by way of a lawsuit, then you can’t have it,’” one of the judges wrote in the decision.

The court further mocked the agency’s procedures by saying “it is absurd to suggest that the effect of the IRS’s unlawful conduct, which delayed the processing of appellant-plaintiffs’ applications, has been eradicated when two of the appellant-plaintiffs’ applications remain pending.”

IRS Commissioner John Koskinen then responded two weeks later in a letter to members of the Senate Finance, House Ways and Means, and House Oversight committees. The commissioner confirmed that the “applications of the remaining three organizations have not been resolved because they opted for litigation.”

It’s unclear who the third nonprofit is that Koskinen is referring to in his statement, but the two named in the aforementioned court proceeding are True the Vote and Linchpins of Liberty.

“After reading the DC Circuit’s opinion,” the commissioner wrote, “I have asked the IRS Exempt Organizations leadership to consult the Department of Justice and attempt to resolve the applications that remain pending by making determinations as soon as practicable.”

So, there it is. Either these groups’ applications have already been processed by now, or they will very soon, and that’s the end of that. Case closed, right?

Not even close.

What Newsweek and the rest of those who would prefer to dismiss the issue as a “dead conspiracy theory” seem to forget is the ongoing blowback this scandal caused in the form of Regulation 134417–13, otherwise known as the IRS “muzzle rule.”

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