Originally Published on The Leather Library
If you live in America, chances are pretty good you hated the Internal Revenue Service (IRS) before it was cool to hate them.
Every April 15th, it’s American tradition to moan and groan about having to pay taxes no matter how much you appreciate the things provided with taxes.
Among other powers, the IRS can audit you (which means they can check over your records), garnish your wages, and imprison you if your trespasses are egregious enough. Nobody likes them, but just about everyone thinks of them as reasonably “fair” – or, at least, if you’re in trouble with the IRS, it’s likely your fault, not theirs.
Or, at least, they did until May 2014.
It all started in July 2008, with a conservative lobbying group called Citizens United. They wanted to run a series of commercials promoting a film targeting Hillary Clinton. The United States District Court for the District of Columbia ruled that they couldn’t. The group appealed and the U.S. Supreme Court agreed to hear the case. I won’t bore you with all the particulars, but the outcome is important to the story: In January 2010, the Supreme Court issued an opinion reversing it in part. The Court found it was unconstitutional to ban free speech. As a result, the number of nonprofits applying for tax exempt status dramatically increased.
March 2010 was where it all started to go wrong.
Some IRS agents in Cincinnati, Ohio began to target groups based on key words, specifically, words that were overwhelmingly conservative in nature. In August of 2010, the IRS issued a BOLO (Be On the Look Out) for specific words, mostly revolving around Tea Party groups (which are wholly conservative). In June 2011, the BOLO increased its targets to include other conservative groups, including phrases like patriots, 9/12, and constitutional literacy. Then acting Director of Exempt Organizations, Lois Lerner, was advised of the practice.
And did nothing.
It wasn’t until February 2012, almost two years after the targeting began, that any news of it at all was reported to the media. And it still attracted relatively little notice. On March 22, 2012, then Commissioner of the IRS Doug Shulman testified before Congress that there was absolutely no targeting going on. One could argue that even if the Commissioner of the IRS actually didn’t know what was going on, he should have. (He ended up stepping down at the end of his term, just before the scandal began to garner more media attention and then gave a non-apology apology – if you can call it an apology). On May 10, 2013, Lerner admitted the targeting. And the next day, the IRS released an audit admitting wrong doing. On May 14, 2013, the Federal Bureau of Investigations opened a criminal probe into IRS activities. Also in this month, Shulman was informed by previous IRS Commissioner Steven Miller of what had been going on. (Steven Miller would later take Shulman’s place).
(Interestingly enough, it was Attorney General Eric Holder who asked for the investigation. Why interesting? Well, let’s just say that Eric Holder has some character issues in his record).
Of course, probes don’t necessarily mean there’s anything to see there. And nobody wants groups taking advantage of the rules unfairly. But as we now know, there wasn’t so much a smoking gun in the IRS as there was a five alarm fire. And another grand American tradition began: lawsuits. Very expensive lawsuits.
The probe revealed, among other things, that Cincinnati was not the only office to be affected by the BOLO. Agents in Washington D.C. and at least two offices in California also had the BOLO lists. A number of the conservative groups had to wait for years for their applications to go through while more progressive groups had their applications approved on the spot. It is true that some groups should have been investigated. (In other words, to give credit where credit is due, the IRS was doing its job with some of the applications).
The day after the probe was announced, for the first time in IRS history, the Commissioner Steven Miller resigned. President Obama appointed Daniel Werfel on May 16, 2013. On May 17, Miller had to testify before Congress. (Not his best week).
But the biggest surprise was on Wednesday, May 22, 2013. Lois Lerner went before Congress; she said, and I quote: “I have not done anything wrong. I have not broken any laws. I have not violated any IRS rules or regulations. And I have not provided false information to this or any other congressional committee.” She then pled the 5th. (The amendment against self-incrimination). Which is an interesting plea for someone who hasn’t done anything wrong or broken any laws. (She also took this moment to claim she was bad at math. Maybe not the best excuse for someone who is in a position of authority at the IRS). Former Commissioner Shulman claimed he was “absolutely sure” he hadn’t told anybody in the White House about the targeting of groups, despite his visits there (though it does not appear they occurred as often as some have asserted).
When the proverbial shit hit the fan, Americans were, shall we say, displeased.
Tea Party groups and others demonstrated in front of the White House, Cherry Hill, New Jersey (where the IRS main office is located), and other places. The next day, May 23, Lois Lerner who refused to resign was placed on “administrative leave“. (She finally retired in September 2013). And on June 12, 2013, the BOLOs were suspended. But by this time, Congress found itself very interested in exactly who knew what and when. The news just kept getting worse for the IRS. It didn’t help when news reached the media that the IRS was all set to pay out $70 million dollars in employee bonuses: $42,000 of it went to Lois Lerner and $100,000 to former Commissioner Miller. By July 10, Congress was threatening to slash the IRS budget.
Finally, things quieted down for a little while until December, when Commissioner Werfel stepped down. January 2014 was when the FBI revealed there would be no criminal charges resulting from their probe. Which made lawmakers unhappy. In January 2014, John Koskinen was appointed IRS Commissioner by President Obama. Which gives us a reason for an interesting aside.
Unless you live in the USA and have taken out a substantial loan, you have probably never heard the name Freddie Mac. Created in 1970, the Federal Home Loan Mortgage Corporation (FHLMC) known as “Freddie Mac” was engineered to expand the market for mortgages. In 07, Freddie Mac was found to have a significant role in creating a market where houses sold for much more than they were worth and selling houses to people who could not afford them, given their assets and credit. (The reason why they were doing this is fairly complex, and would take a whole series of posts to adequately explain, but essentially boils down to the oldest reason in the book: Money). It paid a record fine for this (still peanuts to the company) and people were fired or resigned.
Why am I telling you this? What does any of this have to do with the IRS?
John Koskinen? Was one of the executives over Freddie Mac. He’s given large donations to Democrats (none to Republicans). I’m sure that had nothing to do with his being given a government post.
Aside over, in April 2014, Koskinen revealed that, so far, the IRS investigations had cost tax payers $14 million dollars. And in May 2014, the House of Representatives held Lois Lerner in contempt.
Then it got worse. (No, really!)
Despite repeatedly assuring Congress they were going to turn over the emails from Lois Lerner, in June 2014, the IRS revealed it had “lost” Lois Lerner’s emails in a hard drive crash. (The reason they couldn’t just go to the inbox and retrieve them? You’ll enjoy this, because it’s stupid: The e-mail client allowed only several hundred megabytes of storage). Needless to say, a lot of people raised eyebrows at this turn of events. The White House learned about the crash six weeks before Congress did. And the IRS? First knew about it in February of 2014. [Bonus: the story Lerner gave about the letter that supposedly crashed her hard drive? Likely fake]
You would think the very, very least the IRS could do is apologize, right? Well, according to Koskinen, there’s nothing to apologize for. (I think I could come up with a fairly lengthy list. Like, oh, say, not following the law and having a credibility problem). Congress grilled Koskinen over the missing emails. Koskinen denied he had misled Congress about the missing emails and claimed there was no obstruction of Congress. He now claims he never said he would provide Congress with the emails. (Despite video evidence to the contrary). Even though it turned out that seven people related to the investigation had “lost” emails. (One of them sure was at the White House a lot – all together, say it with me now: coincidence !). The IRS claimed that part of the problem was that they had canceled their contract with the data backup service Sonasoft just after the Lerner emails went missing (a claim Sonasoft is now denying). And the whole charade has even led to some people in Congress apologizing to Koskinen. (Oh, how I wish I was making that up).
Congress demanded answers. They called on the National Security Administration (NSA) to release the emails. (Which, funnily enough, the NSA got in trouble for doing not so long ago). If the NSA can produce these emails when the IRS could not (or would not), there’s really only one conclusion we can come to.
The NSA ought to be in charge of collecting taxes.
(Special thanks to Forbes for their timeline). You can find funny things about the IRS mess at these links:
By: Sarah Abbett – Author