A Special Counsel to Investigate the IRS Targeting of Tea Party Groups

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Posted in: Government

On July 30, 1974, President Nixon released the White House tape recordings to comply with a U.S. Supreme Court order. A day earlier, the House Judiciary Committee approved Articles of Impeachment. Article 2 dealt with “abuse of power.” The first impeachment count, 40 years ago, complained that the President attempted to use the Internal Revenue Service to harass his enemies.

(1) He has, acting personally and through his subordinated and agents, endeavored to obtain from the Internal Revenue Service, in violation of the constitutional rights of citizens, confidential information contained in income tax returns for purposes not authorized by law, and to cause, in violation of the constitutional rights of citizens, income tax audits or other income tax investigation to be initiated or conducted in a discriminatory manner. [Emphasis added.]

Note that the charge was not that the President had caused the IRS to engage in discriminatory enforcement of the tax laws. No, the claim was that the President had tried, unsuccessfully, to do so. I remember the incident better than most because I was assistant majority counsel to the Senate Watergate Select Committee.

On that same date, July 30, 40 years later, the House Judiciary Committee held a hearing: The IRS Targeting Scandal: the Need for a Special Counsel. I was one of the witnesses. The question was whether Attorney General Eric Holder should appoint a Special Counsel to investigate the IRS targeting scandal, discover how far it went, and determine who was involved in the cover-up.

We all will agree on the seriousness of any claim that any federal official has ever tried to use the IRS to harass those perceived to be political opponents, because such actions undercut our faith in a nonpartisan IRS. Our tax system is largely voluntary: we report our income and list our deductions. When the people lose faith in the IRS, we are all the worse. Thus, we should all be happy if the President is correct when he assured us that there is “not even a smidgen of corruption” regarding Lois G. Lerner and the IRS targeting of Tea Party groups.

The problem is that there is more than a smidgen of corruption. First, it is hard to argue that the IRS did not target conservative groups because the IRS has now “apologized” for doing so and the nonpartisan Inspector General for the IRS concluded that the IRS “systematically” used ‘‘Inappropriate Criteria” to identify these groups.

That, of course, does not mean that the President was involved. However, we would like to know whether the scandal stopped with Lois Lerner or went beyond her to include her superiors or officials at the Department of Justice. Did any such officials help to cover up the scandal?

We would also like to know the basis for the President’s assurance that there is not a smidgen of corruption. Did someone at the Department of Justice mislead him, intentionally or through incompetence? What did the Department of Justice tell him that caused him to assure us that there is not a smidgen of corruption? We would not expect the President to plead Executive Privilege to that information because the point of him receiving it was to pass it on to the people, to all of us.

The House has passed a special, bipartisan House Resolution, calling for the Attorney General to appoint a Special Counsel. The House found

  • The Department of Justice (DOJ) interviewed Lois Lerner about the IRS targeting (after she pled the Fifth Amendment), but DOJ has, oddly enough, not disclosed the content of her interview—although doing so could support the President’s claim that there is not a “smidgen of corruption” if she really did nothing wrong.
  • Since February of 2010 (about nine months before the elections of 2010), The IRS began targeting conservative nonprofit groups for enhanced scrutiny when they filed their routine application for tax-exempt status.
  • The IRS focused on groups with “Tea Party” in their name, and on February 1, 2011, Lois G. Lerner wrote that the ‘‘Tea Party matter [was] very dangerous.’’
  • Months after the President assured us that there is not a “smidgen of corruption,” the Inspector General for Tax Administration (IG)) issued an audit report that concluded that the IRS “systematically” used ‘‘Inappropriate Criteria” to “Identify Tax-Exempt Applications for Review.’’
  • On May 15, 2013, the President called the IRS’s targeting ‘‘inexcusable,” but on February 2, 2014, he represented that there was ‘‘not even a smidgen of corruption.’’ He has not explained what information caused him to change his mind.
  • We recently learned, from an email, that Ms. Learner was also interested in using IRS powers against Senator Charles E. Grassley (Republican, Iowa). Any IRS investigation can be very onerous, although the targeted taxpayer has done nothing wrong. The IRS can demand records going back many years.
  • Many emails and other forms of electronic communication related to the Lois Lerner matter have disappeared, or perhaps not disappeared—the IRS has not been completely and promptly forthcoming on this issue. The emails that the IRS belatedly said are “lost” just happen to fall within the time frame from January 1, 2009, and April 2011, the relevant period.

We also know that in August 2014, Federal Judge Emmet Sullivan launched an independent inquiry into the issue of the missing emails associated with former IRS official Lois Lerner.

In June, the IRS agreed to pay $50,000 for the illegal disclosure of tax return information—“leaking” the 2008 tax return and list of major donors of the National Organization for Marriage [NOM] to an activist who turned over that tax data to NOM’s adversary, the Human Rights Campaign. The President of that organization happened to be the national co-chair of President Obama’s Reelection Campaign. This relationship certainly suggests a conflict of interest, when lawyers supporting the President are ultimately in charge of the investigation that involves the national co-chair of President Obama’s Reelection Campaign.

When NOM deposed the activist who received the confidential IRS tax information, he (like Ms. Lerner) pled the Fifth Amendment. The DOJ indicated that it would not be filing any charges against this person. Hence, NOM asked the DOJ to give him immunity, to force him to testify. Doing so would not compromise any criminal investigation against him because the DOJ said it would not be filing charges. Inexplicably, the DOJ refused to grant him immunity.

There is no longer a special statute that provides for a Special Prosecutor or Independent Counsel. However, the Attorney General does not need a statute to appoint a Special Counsel. There was a Special Counsel in the Teapot Dome scandal despite a lack of statutory authorization. Similarly, there was no statutory authorization for the Special Counsel in the Watergate scandal.

What we have now, as in the case of Watergate, is a regulation, in Title 28 of Code of Federal Regulations, Section 600.1. It provides that the Attorney General “will appoint a Special Counsel” when he determines that “criminal investigation of a person or matter is warranted,” and the Department of Justice has a “conflict of interest” and “it would be in the public interest to appoint an outside Special Counsel to assume responsibility for the matter. “

The Attorney General has already been investigating. We also know that the President (the chief law enforcement officer of the United States) announced last February that there has not been a “smidgen of corruption” even though neither he nor the Department of Justice could have examined all the evidence, in particular the emails and other electronic information. The Attorney General and all top officials of the Department of Justice serve at the pleasure of the President. They are in an apparent conflict because an impartial investigation may undercut the assurance of the President that there is not a smidgen of any IRS corruption in the Lois Lerner affair. The Department of Justice is also in a conflict because an impartial investigator will have to determine whether DOJ lawyers were aiding Mr. Lerner in a cover-up of the IRS targeting scandal. The DOJ is now defending the IRS in that scandal, so we would not expect the DOJ to impartially investigate itself.

Moreover, a majority of the federal government’s Inspectors General (IGs) (47 out of 73 IGs) have signed an extraordinary joint letter on August 5, 2014, complaining that the Obama administration is obstructing their investigations into government mismanagement and corruption. President Obama appointed many of these IGs, including one of the signers, who is the Inspector General of the Department of Justice. The DOJ, for example, is refusing to provide the IG records that in the past it has given without objection. The Peace Corps also refuses to provide its IG with full access to sexual assault records.

The present circumstances are extraordinary. Emails disappear. IRS backup disks are destroyed, while the IRS is involved in litigation to turn over those backup disks. The IRS does not appear to keep the records that the law requires it to keep. The President assures us that there this is no hint, “not a smidgen of corruption,” before the DOJ completed its purported investigation. That prejudgment undermines the investigation. There is also the appearance of a conflict when Department of Justice lawyers who are political appointees of the President are in charge of the investigation that involves the national co-chair of President Obama’s Reelection Campaign. The Washington, D.C., Rules of Professional Conduct governing lawyers, Rule 1.7(b)(4), provides there is a conflict if a lawyer’s professional judgment “may be adversely affected” by his own “personal interests.”

Let me put the matter in another way: if the DOJ and the Attorney General wanted to hide the evidence that one or more Administration officials used the IRS to harass opponents, they would act exactly the way they are acting now.

The Attorney General can restore America’s faith in the nonpartisanship of the Internal Revenue Service by fulfilling his duties under § 600.1 to appoint a Special Counsel. During the Watergate controversy, the Attorney General appointed a prominent Democrat, first Archibald Cox and then Leon Jaworski. If a Democrat had given Nixon a clean bill of health, the people would have believed it. Similarly, if now, the Attorney General appoints a prominent Republican to investigate the misuse of the IRS, and if that person finds not a smidgen of corruption, the people will believe that. If, on the other hand, the Special Counsel finds corruption and a cover-up, well, let the chips fall where they may.

Granted, this Special Counsel regulation is not a statute, but it is still the law. As the Supreme Court explained in United States v. Nixon, when referring to the regulations that governed the Attorney General’s appointment of a Special Counsel: “So long as this regulation is extant it has the force of law.” The Court went on to summarize the precedent as holding that “so long as the Attorney General’s regulations remained operative, he denied himself the authority to exercise the discretion delegated to the Board even though the original authority was his and he could reassert it by amending the regulations.”

Government officials require us to turn square corners with dealing with them. They should turn square corners when they deal with us. The Attorney General should follow his own regulations, which appear to deny himself the authority to exercise discretion to refuse to appoint a Special Counsel.

  • hammer48

    It is shameful we may never no what happen.

  • Don’t let up. This is a very important investigation. We cannot let one party control the IRS for their own purposes.

  • Ken Martin

    This Attorney General should be locked up and tthe key thrown away.

  • t jones

    A year and a half ago, Prof. Buchannan calmly examined the evidence
    concerning this “scandal.” Worth reading before taking Prof. Rotunda at
    his word:
    http://verdict.justia.com/2013/06/20/what-should-we-think-now-about-the-irs