The IRS and the Justice Department Get Their Comeuppance
This column by ACRU Policy Board Member Hans von Spakovsky was published March 24, 2016 by Conservative Review.
On Tuesday, a three-judge panel of the Sixth Circuit Court of Appeals issued a unanimous opinion in language one does not often see, castigating the IRS —- and Justice Department lawyers —- for their misbehavior in a lawsuit filed by one of the Tea Party organizations that was targeted by Lois Lerner and the IRS. The court accused the IRS and its DOJ lawyers of doing everything they can to delay, avoid, and stop the public from finding out about the IRS’s abuse of taxpayers and its political targeting of citizens.
U.S. v. NorCal Tea Party Patriots was before the Sixth Circuit as the result of a writ of mandamus filed by the Justice Department over a discovery battle in a lawsuit filed in 2013 by NorCal Tea Party Patriots. As the court opinion outlines, what happened to NorCal when it applied for tax-exempt status is typical of what happened to many other conservative organizations.
NorCal sent an application to the IRS in April 2010. In July, the IRS sent NorCal a letter requesting additional information. NorCal promptly sent the IRS 120 pages of information.
The response of the IRS and DOJ, according to the Sixth Circuit, has “been one of continuous resistance.”
Eighteen months went by with no further word from the IRS until January 2012, when the IRS suddenly demanded more information in a five-page, single-spaced letter with 19 separate requests, almost all of which had numerous subparts, with only three weeks to reply. Almost everything the IRS asked for was not needed to determine whether NorCal was entitled to tax-exempt status. NorCal provided the IRS with 3,000 more pages of material with no further response from the IRS.
One week after the Treasury Department Inspector General released his report in May 2013 about the IRS’s inappropriate targeting of organizations like NorCal, the Tea Party organization filed suit in federal district court.
Since then, NorCal has been in a discovery battle with the IRS, trying to get basic information on all of the different conservative organizations that the IRS targeted, as well as the names of the IRS employees involved in targeting activities, for the purposes of seeing whether a class action lawsuit would be appropriate. The response of the IRS and DOJ, according to the Sixth Circuit, has “been one of continuous resistance.”
In fact, the first page of the Sixth Circuit’s opinion provides a superb summary of the outrageousness of the targeting scandal itself and the administration’s subsequent delaying actions:
Among the most serious allegations a federal court can address are that an Executive agency has targeted citizens for mistreatment based on their political views. No citizen —- Republican or Democrat, socialist or libertarian —- should be targeted or even have to fear being targeted on those grounds. Yet those are the grounds on which the plaintiffs allege they were mistreated by the IRS here. The allegations are substantial: most are drawn from findings made by the Treasury Department’s own Inspector General for Tax Administration. Those findings include that the IRS used political criteria to round up applications for tax-exempt status filed by so-called tea party groups; that the IRS often took four times as long to process tea-party applications as other applications; and that the IRS served tea-party applicants with crushing demands for what the Inspector General called “unnecessary information.”
Yet in this lawsuit the IRS has only compounded the conduct that gave rise to it. The plaintiffs seek damages on behalf of themselves and other groups whose applications the IRS treated in the manner described by the Inspector General. The lawsuit has progressed as slowly as the underlying applications themselves: at every turn the IRS has resisted the plaintiffs’ requests for information regarding the IRS’s treatment of the plaintiff class, eventually to the open frustration of the district court. At issue here are IRS “Be On the Lookout” lists of organizations allegedly targeted for unfavorable treatment because of their political beliefs. Those organizations in turn make up the plaintiff class. The district court ordered production of those lists, and did so again over an IRS motion to reconsider. Yet, almost a year later, the IRS still has not complied with the court’s orders. Instead, the IRS now seeks from this court a writ of mandamus, an extraordinary remedy reserved to correct only the clearest abuses of power by a district court. We deny the petition.
In a 17-page opinion, the Sixth Circuit goes through how the IRS and DOJ lawyers misinterpreted the law and constantly fought having to produce any materials, documents, or information to the district court. The Sixth Circuit makes fun of the IRS for having claimed at one point that “it would be unduly burdensome” for the agency to collect the names of the employees who worked on the applications of the tax-exempt groups —- this “in a case where the IRS forced the lead plaintiff to produce 3,000 pages of what the Inspector General called ‘unnecessary information.’” The objections made by the IRS and DOJ lawyers were “meritless.”
As the Sixth Circuit’s opinion explains, the district court judge grew very angry over the agencies’ behavior. At a discovery conference in December 2014, the district court judge said that “everything in this case seems to be turning into an argument on discovery.” He accused the IRS of “running around in circles and not answering the questions.” In October, the judge again admonished the IRS and DOJ saying that the “government is doing everything it possibly can to make this as complicated as it possibly can, to last as long as it possibly can, so that by the time there is a result, nobody is going to care except the plaintiffs… I question whether or not the Department of Justice is doing justice.”
DOJ filed a writ of mandamus with the Sixth Circuit, asking it to squelch the discovery orders against the IRS. DOJ contended that the orders “threaten to undermine statutory protections for taxpayer privacy.” The Sixth Circuit quickly tossed out that claim, criticizing DOJ for trying to misuse federal statutes that protect taxpayer privacy. Those provisions do “not entitle the IRS to keep secret (in the name of ‘taxpayer privacy,’ no less) every internal IRS document that reveals IRS mistreatment of a taxpayer or applicant organization —- in this case or future ones. [Federal law] was enacted to protect taxpayers from the IRS, not the IRS from taxpayers.”
The Sixth Circuit ordered the IRS to immediately comply with the district court’s discovery orders of April 1 and June 16, 2015 “without redactions, and without further delay.” In closing, the Sixth Circuit reprimanded the Justice lawyers:
The lawyers in the Department of Justice have a long and storied tradition of defending the nation’s interests and enforcing its laws —- all of them, not just selective ones —- in a manner worthy of the Department’s name. The conduct of the IRS’s attorneys in the district court falls outside that tradition.