What Should We Think Now About the IRS? We Are All Paying the Price for Republicans’ Underfunding and Vilifying of the Tax Agency

In February 2010, an insane man killed his family in his home, and then flew his private plane into an IRS office building in Austin, Texas, killing himself and an IRS employee, and injuring fourteen other people.  The deranged man left a rambling and incoherent note, complaining about a tax dispute and a number of other matters and ending with a bizarre critique of capitalism.

Shortly after that deadly attack, I wrote a column titled: “The Austin Tragedy and the Dangerous Myth of the IRS Out of Control.”  There, I worried about the public’s tepid response to the attack (and especially to the death of an IRS employee, who was a grandfather and a war veteran).  I noted in particular the palpable sense in much of the commentary that it was somehow understandable—if not quite acceptable—to attack the IRS.  The ensuing Congressional resolution condemning the attack did not even pass unanimously, with two Republican congressmen refusing to vote for anything that might make it seem that the IRS is a legitimate part of our government.

The point of my column went beyond deploring the nod-and-wink acceptance of IRS hatred that infused so much of the commentary.  I specifically argued not only that the IRS’s employees—no less than any other group of people—deserved to be treated with respect and protected from public hatred, but also that the IRS’s track record revealed it to be a model agency.

I specifically noted that claims that the IRS regularly “punished taxpayers” had been found to be completely unfounded.  At one point, I argued as follows: “While no agency—public or private—can claim to be above reproach, our tax collectors continue to set a standard for behavior that is a testament to how well a large bureaucracy can operate, even under severe constraints.”

With the recent controversy over IRS employees’ added scrutiny of certain politically conservative groups’ applications for status as “social welfare organizations” (known, based on the relevant section of the tax code, as 501(c)(4)’s)), the question now arises as to whether my comments from early 2010 should be revised or rejected.

Recently, for example, I received an email from someone who had read that column, who suggested icily: “You might want to pull [that article].  Another, better option is to write another demonstrating that the initial piece could not have been more incorrect in the facts and assumptions.”

Upon re-reading my column, I certainly see no reason to pull it.  Everything in it was true, and I stand by it.  Still, the current moment does present the opportunity to ask what we know now that we did not know back then, and what the lessons of this IRS non-scandal should be, as we try to put it in perspective and move forward.

The most obvious lesson that we have learned is that even the best-run agencies, staffed by dedicated public servants, will suffer from years of underfunding and official hostility.  Once again, we have learned that we get what we pay for.  Despite admirable efforts to do ever more with less and less, the IRS did make an important mistake.  That is unfortunate, but under the circumstances that Republicans in Congress have created, some kind of mistake was inevitable.

The best thing to do now is to give the IRS the tools it needs to once again do its job as well as it has historically.  We will all benefit if Congress puts aside its habitual political grandstanding and actually allows the IRS to serve the public well.

The Current Investigations Are Not the First Attempts to Understand What Happened: Republicans’ Convenient Amnesia Regarding the Inspector General’s Report

One could be forgiven for forgetting, in the current political environment, that the news about the IRS’s treatment of applications from some conservative political groups was not the beginning of the investigation of what happened.  To hear some Republicans and conservative commentators describe it, we need to frantically dig up the facts of what happened, in order to answer unanswered questions.

The reality, however, is that this case had already been heavily investigated, even before it had hit the evening news.  The first news reports about the matter, in May, concerned the IRS’s announcement of the results of a months-long investigation by the Treasury Inspector General for Tax Administration (TIGTA).  A sort of “internal affairs bureau” for the tax police, TIGTA had gathered evidence and issued an independent report of its findings.  Key Republican leaders, moreover, had been informed of the investigation long before it made news last month.

The TIGTA report found that some poorly trained and lightly supervised employees of the IRS, working at an office in Cincinnati that had become the central point for assessing applications for 501(c)(4) status, had used search criteria that were more likely to turn up far-right conservative organizations than other organizations.  Because eligibility for 501(c)(4) status is properly denied if an organization engages primarily in political activity, it was hardly a stretch to imagine that groups openly touting themselves as dedicated to defeating President Obama and electing “true conservatives” to public office might not merit treatment as non-profit social welfare organizations (whose donors would enjoy legal anonymity).

As logical as that conclusion was, however, it was an inappropriate way for the agency to proceed, because the search criteria did not merely look for organizations that were likely to engage in politicking, but in particular, those that were likely to engage in conservative politicking.  Therefore, when a supervisor first learned that this was happening, she ordered it stopped.  As the TIGTA report explained, it then took several months (and a second intervention by the higher-level manager) to finally set things right.

Rather than treating the TIGTA report as an important—and potentially dispositive—statement of what had happened, Republicans have, instead, responded as if that independent report had been issued by a Democratic public relations agency.

Although it is often appropriate for Congress and other agencies to dig further into matters of public import, it truly is astonishing to see Republicans in the current case act as if the most definitive statement of the facts is presumptively a pack of lies.

Unsurprisingly, further digging by various Congressional committees and the press after the TIGTA report was released has turned up some inconsistencies in the recollections of various witnesses.  Nothing, however, has come to light to undermine the core conclusions of the Inspector General.

As far as we can tell, the entire affair was a matter of miscommunication between various levels of the tax agency, including some exchanges between the Cincinnati office and relevant supervisors at some IRS offices in Washington.  After six weeks, the story that the TIGTA report told is still essentially unchallenged by further fact-finding.   But you would not know that from the press coverage—and certainly not from the Republicans’ repeated claims of deeper conspiracies.

Republicans’ Self-Revealing and Unsupported Claims of Political Involvement by the White House: In Fact, There’s Nothing Nixonian Here

From the moment that reports first emerged about this misnamed “scandal,” key Republicans in Congress and many conservative commentators leapt to the conclusion that this “targeting” of some local conservative groups must have been a Nixonian political “hit” by the Obama White House.  (My fellow Verdict columnist John Dean, who knows something about Nixonian tactics, debunked that idea early on.)

I must say that it has never been clear why a President who wanted to harm his political enemies would focus his attention on tiny groups of poorly funded political neophytes (while ignoring the biggest conservative 501(c)(4)s, like Karl Rove’s Crossroads group)—or would use the IRS to do so only by delaying those groups’ 501(c)(4) applications, rather than doing something more directly damaging.  And, as I noted above, there is absolutely no evidence that any such political retaliation was at work here.

Even so, the Republican Congressmen chairing various House committees investigating the matter have stated repeatedly that there is no question in their minds that this was a politically motivated operation.  It is almost as if they are applying the legal concept known as res ipsa loquitur, which literally means “the thing speaks for itself.”  In their minds, there is simply no other possibility than that the President and his henchman ordered the IRS to do their bidding.  That these Republicans are incapable of imagining a White House that is not abusing its power, however, says much more about them than it does about the facts of this case.

The idea that “It simply must have been a liberal plot” has now become the evidence-free meme that drives much Republican commentary.  For example, a former Republican Governor of Maryland recently penned an op-ed in the Baltimore Sun, in which he assured readers that the IRS story is the worst scandal ever.  Even so, immediately after announcing breathlessly that there is “irrefutable evidence” that the IRS had given extra scrutiny to conservative groups (evidence that no one would try to refute, because that extra scrutiny is the very reason for the initial investigation), the former governor then insinuated that the problem ran much deeper: “Only time and future investigation will tell how far up the chain the miscreant trail will lead, but I’m betting this was not simply a basement operation confined to” Cincinnati.

Because the aggrieved groups are the President’s enemies, and because this happened “smack dab in the middle of a tense presidential campaign,” as the former governor put it, we are to “bet” that this was driven by the White House.  Evidence?  Who needs it!  Innuendo is the order of the day for Republicans.

As it happens, the evidence that has been gathered not only has failed to uncover any larger conspiracy, but it also supports the original conclusions of the TIGTA report.  After an increasingly bitter public dispute with the committee’s chair, the ranking Democrat on the House Oversight Committee yesterday released transcripts showing that there was no political aspect to the IRS’s actions—and certainly nothing about those actions that was driven “from Washington.”

Because most of the IRS’s offices are literally in Washington, of course, there was communication between people in Cincinnati with supervisors in DC.  But that is still mid-level administrative activity, not White House-directed political manipulation.

The bottom line is that the current evidence is confirming what we have known for weeks: This is simply not the scandal that the Republicans wanted it to be.

Out-of-Control Bureaucrats, or Political Hit-Men?  No, Just Underpaid and Overworked Government Employees

What is especially odd about the “hit job” narrative that is being told by Republicans is that they are usually the ones who want to claim that the IRS is a law unto itself, utterly out of control—not that the IRS is a tool of the White House.  Although it is possible that the IRS agents who supposedly “run amok” are doing so only at the behest of Democratic presidents, the claim has long been that IRS agents—regardless of which party is in office—are given far too much power and latitude to make people’s lives miserable.

Which is it? Bureaucrats who have been given far too much power and independence, or political operatives doing the dirty work of the President’s men?  Actually, as I argued in my earlier column, it is neither.  Generally speaking, the IRS has long been an exemplary agency.  Even so, is there anything new to say now about it?

Actually, there is.  What we are now learning is that, at almost exactly the time that I was writing that column in 2010, the IRS was finally at the breaking point, unable to maintain all of its standards, after enduring years of hostility from Congress.

In particular, an especially intense campaign of Republican attacks on the IRS that began in the mid-1990’s, which I described in my earlier column, had finally destroyed the morale of many long-serving civil servants, who had begun to leave the agency in droves.  Moreover, the IRS’s budget had been bled dry for years, with newer employees being underpaid and left essentially untrained.

Indeed, one of the reasons that the 501(c)(4) applications had been centralized in Cincinnati was that it was cheaper to hire non-lawyer employees there.  When those new, low-level employees tried to seek guidance from lawyers higher up the chain of command, those supervisors were themselves too overwhelmed to offer engaged guidance.

In short, what we did not know in 2010 was that the ability of IRS employees, and of the agency’s culture as a whole, to withstand Republicans’ constant attacks and funding cuts—all while being saddled with ever more responsibilities, including interpreting vague laws passed by Congress—had reached a critical point.  That the agency has generally continued to do its work so well, despite its host of challenges, is truly to be admired.

Of course, we all wish that the bad decision to flag 501(c)(4) applications from conservative groups had never occurred.  That it happened, however, is not proof that the IRS as a whole is out of control.  And there is certainly no evidence that the IRS is the enforcement arm of a political cabal.  However, that bad decision provides yet more evidence that we need to stop vilifying and underfunding the IRS.  The agency and its employees—and the American people—deserve much better.