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Media

MSNBC’s ‘Morning Joe’ Slams GOP Chair For Insinuating Obama Is Involved In IRS Scandal

By Annie-Rose Strasser on May 23, 2013 at 9:56 am

On MSNBC’s Morning Joe Thursday morning, panelist John Heilemann got into a heated argument with GOP Chairman Reince Priebus over President Obama’s role in the targeting of conservative groups applying for 501(c)4 status. Priebus offered a series of comments trying to tie Obama to the scandal — which Republicans have attempted to frame the IRS scandal as Obama’s ‘Watergate’ moment — leading Heilemann to shout “that’s an assertion that’s not actually borne out by any of the facts”:

HEILEMANN: Okay. You used two phrases just now saying we have to wait for the facts but I’m entitled to my opinion and before we have the facts just wait. You then said it’s lawlessness and guerrilla warfare and Obama is in the middle of it. You say we need to have all of the facts before we can determine whether President Obama is in the middle of it and now you’re asserting the fact he’s in the middle of it. That is your public tweet.

PRIEBUS: I would say it is consistent. When I start out an investigation and say it’s low level employees in Cincinnati and then you find out there are senior level people in Washington. Then Pfeiffer goes on five Sunday morning shows and says the White House didn’t know anything about this and two days later you figure out that the chief of staff actually knew about it. You have a hundred and, what? 15 visits from Shulman to the White House and 132 Democratic senators pleading with the IRS to investigate this. And the Chief of Staff of the White House is now involved or at least knew about it when — two days earlier Pfeiffer said they didn’t know about it.

HEILEMANN: I thought you said you have the facts you need. If you don’t have the facts you need why are you saying he’s in the middle of it?

Watch it:

Sen. Rand Paul (R-KY) has also tried to tie Obama’s name to the IRS scandal, though unsuccessfully. An Investigator General’s report on the case found no indication that the targeting of certain 501(c)4 groups was part of a larger political strategy.

Politics

Rand Paul Struggles To Tie Obama To IRS Scandal

By Zack Beauchamp on May 19, 2013 at 12:00 pm

Sen. Rand Paul (R-KY) went on CNN’s State of the Union on Sunday to use the IRS scandal to attack the Obama administraiton, but flubbed a key part of his case: he couldn’t defend the claim that IRS was targeting conservative groups as part of a political strategy to help the White House.

Paul, like most Republicans, has been spinning the scandal as an Obama Administration attack on dissenters. “What the IRS did is how the KGB used to target dissidents,” he wrote in a CNN op-ed. “It is how they deal with troublemakers in China.”

Some have argued the extra IRS scrutiny was part of a failed attempt to implement election law, as opposed to a political crackdown. Host Candy Crowley asked Paul why this interpretation was wrong. He couldn’t give her a reason:

CROWLEY: We do know this one place processes 70,000 applications. Can you see in your mind’s eye a way this might not have been political, that this was a misguided stupid way to sort but that they didn’t intend it to be some kind of political attempt to harass the Tea Party?

PAUL: I would think if there’s any chance that this was a mistake, the Investigator General wouldn’t be coming out and saying otherwise, and the IRS themselves wouldn’t be saying –

CROWLEY: They say it’s a mistake. I think the question is whether it’s political.

PAUL: Well, I think we’re going to have to see the memorandum. Apparently there is a policy, and I think we’re going to find there’s a written policy that says we were targeting people who were opposed to the President. And when that comes forward, we need to know who wrote the policy and who approved the policy…now there’s rumors who wrote the policy is the person running Obamacare, which doesn’t give us a lot of confidence about Obamacare.

CROWLEY: Senator, I have to run. I’m way over on this, but I have to just go back to something you said. Are you telling me you think there’s a memo somewhere in which someone said in the memo we’re targeting people going after the president? Is that what I heard you say?

PAUL: Well, we keep hearing the reports and we have several specifically worded items saying who was being targeted. In fact, one of the bullet points says those who are critical of the President. So I don’t know if that comes from a policy, but that’s what’s being reported in the press.

It’s unclear what Paul’s source for that last claim is, but the Investigator General’s report Paul references found no evidence that conservative groups were targeted as part of a political strategy to weaken the president’s political opponents. The report blamed independent IRS management for allowing the practice to go on in the lower-level Cincinnati office.

Republicans, by contrast, have tended to portray this as part of a concerted Obama Administration strategy to attack conservatives. They have also used the controversy to attack Obamacare.

Politics

White House Pushes Back At Fox News’ Effort To Politicize IRS Scandal

By Zack Ford on May 19, 2013 at 10:15 am

On this week’s Fox News Sunday, host Chris Wallace pressured White House Senior Advisor Dan Pfeiffer about why the Obama administration didn’t act sooner to address the IRS’s inappropriate targeting of conservative groups applying for 501(c)(4) tax status, arguing that Treasury officials and administration officials were aware of an ongoing investigation.

Pfeiffer argued that it would have been “wholly inappropriate” for anyone in the White House to interfere with an ongoing investigation and claimed that the administration was never aware of the specifics of the probe. Treasury Deputy Secretary Neal Wolin was informed about the matter last year and the White House counsel’s Office learned of the examination in late April, before the results were available.

“[House Oversight Committee Chairman Darrell] Issa was also told topline things,” Pfeiffer reminded Wallace. “Here’s the cardinal rule when you deal with situations like this: you never interfere with an independent investigation, you never give the appearance of interfering with an independent investigation.”

“Issa said he didn’t talk about it publicly — when you’re dealing with a nonpartisan agency like the IRS, you wait until you have the actual facts before you go out and make assertions,” he said.

Indeed, during an interview with Bloomberg earlier this week, Issa admitted, “I knew what was approximately in it when we made the allegations about a year ago.”

Health

Michele Bachmann: The IRS Will Kill People Through Obamacare

By Sy Mukherjee on May 15, 2013 at 2:15 pm

Rep. Michele Bachmann (R-MN)

During an interview with World Net Daily, former Republican presidential aspirant Rep. Michele Bachmann (R-MN) raised the question: could Obamacare allow the IRS to “deny or delay” conservatives’ access to medical care?

Bachmann’s musings come on the heels of an ongoing IRS scandal centering on the agency’s improper scrutiny of conservative political groups. While right-wing commentators and politicians are already using the incident to smear the health law by raising questions about IRS access to Americans’ private medical data, Bachmann took things one step further:

Since the IRS also is the chief enforcer of Obamacare requirements, [Bachmann] asked whether the IRS’s admission means it “will deny or delay access to health care” for conservatives.

At this point, she said, that “is a reasonable question to ask.” […]

[S]hould Americans fear their government may try to harm them if they are conservative?

“It now is an entirely reasonable question for the American people to ask,” she said. “Will Obamacare be so politicized and misused?”

The IRS has been processing information about Americans’ health care for decades, since approximately 160 million Americans write off their tax-deductible employer-provided health benefits each year. There has been no evidence of any kind of privacy impropriety in all of that time.

Under Obamacare, the IRS will be responsible for determining whether or not Americans have insurance so that it can use household income data to provide consumers with government subsidies to buy health coverage. The agency will not determine if, when, or what benefits are provided to Americans.

This isn’t the first time Bachmann has made outlandish comments about Obamacare or health care in general. The congresswoman has previously asserted that Obamacare will “literally” kill people and propagated debunked conspiracy theories claiming that the HPV vaccine causes young girls to become “sexually promiscuous.”

Economy

How The IRS Could Make It Easier To Track Dark Money, Right Now

By Andrea Peterson on May 15, 2013 at 1:15 pm

While much of the attention currently focused on the Internal Revenue Service (IRS) surrounds the agency’s acknowledgement that non-profit groups using tea party keywords were targeted for extra scrutiny in 2012, technologist cum data liberator Carl Malamud is campaigning to convince the IRS to make it easier to track money and influence in non-profits.

Fresh off of a victory liberating the District of Columbia Code, Malamud’s Public.Resource.Org is on to a new transparency fight: Getting the IRS to release public financial records about non-profits in a useful format. In a memo last month, the organization noted that despite having Form 990 financial information about many non-profits in a machine-readable digital format, the IRS will only release the data in PDF form:

As you know, Public.Resource.Org has expended considerable effort to try to make the Form 990, the Public Reports of Nonprofit Corporations, more broadly available on the Internet. We’ve posted 6,821,105 PDF files, including all publicly released documents from 2002 to the present. Although all large nonprofits are required to e-file their returns, and many smaller nonprofits elect to do so, the IRS has not released the machine-processable e-file information, and has chosen instead to image the data onto forms and release the information as bitmap images, equivalent to a scan of a paper document.

If the documents were released in a machine-processable format, it would be much easier to analyze and see larger patterns across the non-profit sector. This could be particularly useful in understanding how dark money is being channeled through 501(c)(4) “social welfare group” non-profits engaged in political advocacy who aren’t required to disclose their donors, but are required to file a Form 990 with basic financial information.

Dark money exploded following the 2010 Citizens United v. FEC ruling that allowed outside groups to make unlimited political expenditures. While 501(c)(4) groups are allowed to engage in some political activity and still maintain tax-exempt status, electioneering is not supposed to be their primary activity. However, dark money groups combined to spend $416 million on the 2012 election — 37 percent of all money spent by independent, non-party outside groups.

The White House announced an executive order aimed at making “open and machine readable” the default for newly created government data last week. However, as Malamud noted in a statement to ThinkProgress, that order will not by itself resolve the IRS situation:

The new executive order on “Making Open and Machine Readable the Default for Government Information” is a good first step. But, it is important that we remember that we need to do more than set out principles for new government databases and web sites, we need to fix the ones we already have on-line. Some of our existing databases, such as the federal procurement database or the IRS form 990s, are in bad shape and are crucial economic engines, affecting not only the operation of government, but large sectors of the economy that depend on this information to operate efficiently and transparently.

If we’re serious about creating jobs and making our economy grow, government data is important part of making that happen. When the US Patent Office, for example, started to release machine-redable data for US Patents, that information became immediately more useful. Likewise, when the SEC started releasing information on public corporations in their EDGAR database, our markets became more transparent and more accessible.

Note: ThinkProgress is a project of the Center for American Progress Action Fund (CAPAF), which has been recognized by the IRS as a 501(c)(4) organization. CAPAF does not endorse candidates, nor does it fund “independent expenditures” or any other kind of candidate-related advertising.

Health

Republicans Seize On IRS Scandal To Smear Obamacare

By Sy Mukherjee on May 14, 2013 at 2:30 pm

(Credit: Washington Post)

That didn’t take long.

A mere four days after news broke that the Internal Revenue Service (IRS) had improperly targeted conservative political groups for scrutiny, GOP Sen. Dean Heller (NV) is threatening to introduce legislation that would “deny the IRS funds to hire new agents to implement Obamacare.” The bill would effectively make it impossible for the agency to provide millions of Americans with federal subsidies to buy the very health coverage they are required to have under the law.

Heller argues that this extreme measure may be necessary in light of the unfolding IRS scandal, echoing a growing trope among conservative politicians and right-wing commentators. Since last Friday, big-name conservatives including House Oversight Committee Chair Rep. Darrell Issa (R-CA), former presidential contender Newt Gingrich, former vice presidential candidate Sarah Palin, and various right-wing media outlets have questioned whether or not the IRS can be trusted to implement Obamacare. The implication is that if the IRS singles out conservative political groups, what’s to stop them from snooping through Americans’ private health care information or imposing fines on companies they don’t like?

This is a reduction to the absurd. The IRS has been collecting health care taxes and compliance information from employers for decades. In fact, it has to, seeing as most Americans receive their insurance through their employer and the employer health insurance tax credit is the single largest tax credit in the federal budget. That system seems to have worked without gross invasions of medical privacy since the the 1950s, and there’s no reason to assume anything will change in 2014.

Furthermore, officials with the Department of Health and Human Services have actually spoken out about the importance of protecting Americans’ medical data, and the Obama Administration has taken action to ensure it. The Health Information Technology for Economic and Clinical Health (HITECH) Act widens existing privacy and data-security protections on patients’ protected health information as more of their health records are digitized. The 2009 stimulus bill also included updates to HIPAA rules that limit “the use of patient-identifiable medical data for marketing.”

The IRS requires information from individuals and businesses that will help them determine whether Americans have insurance, and how much help they need from the government to be able to buy it. Some critics have latched onto the fact that the IRS will have access to more household income data than before when making those determinations, and that it can share this information with the statewide Obamacare marketplaces and government health agencies. But it would be impossible to implement the law without at least some data-sharing — and without it, many Americans could not receive the benefits they are due. Legislative threats such as Heller’s might make for good politics — but in reality, all it would do is prevent the 26 million Americans expected to gain insurance through the Obamacare marketplaces from receiving the tax credits that would allow them to afford it.

Justice

How Real Disclosure Laws Could Help Fix The IRS Problem

By Josh Israel on May 14, 2013 at 12:00 pm

The Internal Revenue Service is under fire from both parties for improperly targeting certain groups for additional scrutiny because their names included keywords such as “Tea Party” and “patriot.” But the challenge of addressing the skyrocketing numbers of “social welfare” groups registering for tax exempt status could be lessened by fixing the broken disclosure laws for political advertisers.

Since the Supreme Court’s controversial 5 to 4 ruling in the Citizens United v. FEC case in 2010, the IRS has seen a more than 100 percent increase in the number of groups applying for 501(c)(4) status — the section of the federal tax code that governs non-profit groups dedicated to social welfare — from 1,500 in 2010 to 3,400 in 2012.

Not all 501(c)(4) engage in political activity of any kind — the United States Chess Federation, for example, is a fairly apolitical group. Political 501(c)(4) groups are required to adhere to certain rules, including that they not be “primarily engaged” in electioneering activity. In a failed attempt to sort out which groups were apolitical and which needed additional scrutiny, the IRS reportedly tried a variety of ineffective screening methods, including flagging “patriot” groups as well as groups that focused on making “America a better place to live.”

As long as it is not their primary purpose, Citizens United allows (c)(4) groups to spend unlimited funds on “independent expenditure” ads aimed at swaying voters and the deadlocked Federal Election Commission allows these groups to avoid any disclosure of who bankrolls these advertisements. And since the 2002 law governing political advertisements came before the ruling, it does not adequately address the specific issue of disclosure for independent expenditure ads.

Because of this loophole, groups seeking to influence elections through campaign ads groups and to avoid having to make their donors public have often registered as (c)(4)s, rather than as super PACs (tax-exempt groups which can also raise and spend unlimited amounts on “independent expenditures,” but must make public all large donors). After bankrolling super PACs in the 2012 elections, mega-donors including millionaire investor Foster Friess and billionaire casino mogul Sheldon Adelson have vowed to keep future political spending secret, by giving to opaque 501(c)(4) committees instead. And good government groups have demanded the IRS investigate whether (c)(4)s like Crossroads GPS, the Commission on Growth, Hope and Opportunity, and the American Future Fund are really just super PACs in disguise.

The guidelines for what is and is not an acceptable level of political activity for a (c)(4) has never been clear — a vague “primary purpose” test — and has been little enforced. With limited staff and resources, even before massive furloughs forced by the sequester, the IRS has proved ill-equipped to monitor which (c)(4)s are really (c)(4)s and which ones are pretenders.

Congressional Republicans have thus far blocked efforts to require disclosure of political ad spending by (c)(4) groups. The proposed DISCLOSE Act and the Follow the Money Act would help bring parity to the disclosure rules goverrning independent campaign ads, without impeding on the legitimate activity of (c)(4)s. But if groups like Crossroads GPS were required to disclose the major donors behind their $70 million-plus campaign ad spending, there would be little incentive for them to masquerade as social welfare groups.

If Congress simply treated all spending on independent campaign advertisements uniformly — allowing voters to know who was really speaking and to evaluate the speech accordingly — the IRS would not have to use these clearly imperfect tests to decide what is and isn’t a legitimate 501(c)(4).

Note: ThinkProgress is a project of the Center for American Progress Action Fund (CAPAF), which has been recognized by the IRS as a 501(c)(4) organization. CAPAF does not endorse candidates, nor does it fund “independent expenditures” or any other kind of candidate-related advertising.

Update

Senate Majority Leader Harry Reid (D-NV) told reporters Tuesday that the IRS is not the agency best equipped to oversee political groups. “DISCLOSE would have taken the IRS out of the business of investigating these groups.” He noted that “not a single Republican voted for” the measure in the Senate, asking “where was the outrage from the Republicans then?” House Democratic Leader Nancy Pelosi made similar arguments Monday. Senate Minority Leader Mitch McConnell (R-KY) told reporters Tuesday that he continues to oppose the DISCLOSE Act, inaccurately claiming it was “designed to give the IRS even more power, directly, to silence the critics of this administration.”

Justice

IRS Targeted Tea Party Tax-Exempt Groups For Increased Scrutiny And Missed The Real Problem

By Josh Israel on May 10, 2013 at 2:54 pm

The Internal Revenue Service (IRS) acknowledged Friday that it had improperly flagged groups applying for tax-exempt status for additional scrutiny if they contained common Tea Party keywords in their names. Rather than addressing the real problem of political committees masquerading as 501(c)(4) groups to evade public disclosure laws, this approach instead delayed the process for several groups purely on the basis of their names.

Lois Lerner, head of the IRS unit that oversees tax-exempt groups, noted that the number of 501(c)(4) group applications doubled between 2010 and 2012. As a result of this influx, she explained, low-level workers at the agency’s Cincinnati office had flagged about 300 applications for additional review based on a keyword search. None had their status revoked or denied and the IRS apologized for the mistake.

While it unclear whether the IRS workers intentionally targeted conservative groups — an agency spokesman did not immediately respond to a ThinkProgress request for the complete list of keywords used — the office revealed that two of the terms on the list were “Tea Party” and “patriot.” As such, about 75 Tea Party groups were singled out for additional scrutiny.

The spike in 501(c)(4) groups comes after the Supreme Court’s 2010 Citizens United v. FEC decision that outside groups may make unlimited political expenditures. Since then, some 501(c)(4) organizations have begun abusing the system. Though groups engaged in some political activity may qualify as “social welfare groups” and receive tax-exempt status under this section of the tax code, electioneering cannot be their predominant activity.

Karl Rove’s Crossroads GPS, for example, told the IRS that any political ads run by the group would be “limited in amount” and “would not constitute the group’s primary purpose.” Campaign finance reform advocates have argued that, in light of more than $70 million in “independent expenditure” ad spending, the group’s primary purpose is clearly campaign activity. But rather than register with the Federal Election Commission as a political committee, Crossroads GPS continues to claim that it is not such a group and need not publicly identify its funders.

Economy

Automatic Cuts To The IRS Will Increase The Deficit

By Bryce Covert on May 3, 2013 at 12:30 pm

While sequestration was meant to be a last resort, it was originally created to force lawmakers to take action to reduce the deficit. Yet now that it’s gone into effect there are some parts that will likely do the opposite. The Internal Revenue Service (IRS) will take a hit just like all other agencies, and cuts to its budget could hamper its ability to collect tax revenues, pulling in less money to fund the federal government.

In April, the agency announced it would furlough more than 89,000 employees to cope with sequestration cuts. Operating at normal capacity, the agency collected $2.5 trillion in government revenues last year, $50 billion from enforcement activities. But reducing operations will bring in less money. Every dollar invested in its enforcement, modernization, and management system reduces the deficit by $200, and every dollar it spends on audits, liens, and seizing property from tax evasion nets $10. One estimate calculated that furloughing just 1,800 enforcement positions could mean losing $4.5 billion in revenue.

On top of regular collection activities, sequestration cuts could take some teeth out of the IRS’s efforts to crack down on tax evasion in offshore havens. As Zach Carter reports, “Since 2009, the IRS has recovered roughly $5.5 billion in unpaid taxes and penalties through amnesty programs targeting Swiss banking customers.” These programs have allowed the IRS to collect important data on which banks help people illegally hide their money as well as the accountants and advisers who help move the money over, which it could use to open new investigations. But budget troubles have kept it from taking advantage of this information. Its funding has been decreased in recent years, allowing it to only audit about 1 percent of tax returns. Sequestration will mean even fewer resources to after evasion.

The idea that spending cuts will get our economy going is misguided, given that government spending has fallen and austerity is acting as a drag on the recovery. As the case of the IRS shows, some spending cuts may end up leading to an even bigger loss in funds.

Economy

How Stupid Sequester Cuts To The IRS Could Result In A Bigger Deficit

By Pat Garofalo on Mar 1, 2013 at 2:30 pm

Federal Reserve Chairman Ben Bernanke this week patiently tried to explain to Congress how budget cuts in a weak economy can actually be counterproductive for deficit reduction. By stifling economic growth, those cuts cause more joblessness, thereby reducing revenue and increasing expenditures for programs like unemployment insurance.

The so-called “sequester” that goes into effect today barring a last-minute deal by Congress will knock 0.6 percent off economic growth and kill up to 750,000 jobs, according to independent estimates. But there’s at least one more way in which the sequester could hurt revenue — by cutting the budget of the Internal Revenue Service, the very agency charged with collecting revenue:

Here’s some welcome sequester news: The Internal Revenue Service says those across-the-board automatic spending cuts will not delay processing of individual income tax refunds, and may mean fewer audits.

The agency has warned its more than 100,000 employees to expect furloughs of one day per pay period — but not until this summer, after tax filing season ends. [...]

However, once staff cut-backs begin to take hold, the collection agency says, taxpayers could experience delays on calls to help lines and visits to taxpayer assistance centers. They will also face potentially fewer audits, with less staff to perform the reviews.

The IRS estimates that every dollar spent on enforcement brings in $4-$5 dollars of additional revenue. As Reuters’ David Cay Johnston found, every hour spent on corporate tax enforcement bring in more than $9,000 in revenue.

Already, the IRS has been facing a bigger job with fewer resources. The sequester is going to make that worse, and in the meantime, won’t even accomplish its core goal.

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