IRS assailed from all sides for lack of transparency

Gregory Korte | USA TODAY

WASHINGTON -- After admitting it targeted Tea Party groups for additional scrutiny in May, the Internal Revenue Service has been called on to explain its formerly obscure process for policing political activity by tax-exempt groups.

And, by almost all accounts, it's not doing a very good job.

Last week, the non-profit publisher Tax Analysts filed suit against the IRS under the Freedom of Information Act, saying the agency failed to release training materials used by the agency's Exempt Organizations staff in Cincinnati.

Congressional investigators have complained that the agency has turned over only a small fraction of the records they've sought. House Ways and Means Committee Chairman Dave Camp, R-Mich., said the IRS' slow response to congressional inquiries "begins to look a lot like obstruction."

Within the IRS, the Taxpayer Advocate Service has criticized the agency's Exempt Organizations office for failing to reveal how agents review tax-exempt groups for political activity -- in spite of laws requiring disclosure. "This lack of transparency reduced EO's accountability to the public and made it easier to believe that EO was arbitrarily singling out applications for further review based on ideology," Taxpayer Advocate Nina Olson said in a special report to Congress in June.

Even some of the agency's biggest supporters say they've been frustrated by the IRS' failure to respond to key questions.

"Steam has been coming out of my ears for the last three months, because the IRS hasn't been able to defend itself. In a way, they're their own worst enemy," said Evelyn Brody, a law professor at the Illinois Institute of Technology's Chicago-Kent College of Law. She said the IRS' reticence is party justified by taxpayer privacy laws, but the agency could still do a better job explaining its processes.

The IRS itself would not comment on the transparency issues, except to say that it does not comment on pending litigation.

Tax Analysts filed its lawsuit in federal court in Washington last week after the IRS failed to meet legal deadlines to respond to its Freedom of Information Act request. Chris Bergin, the president and publisher of Tax Analysts, said it's perplexing that the IRS won't release records that might mitigate criticism over its handling of political groups.

"They're going to keep shooting themselves in the foot until someone forces them not to," he said. "What's worse now, is they'll go deeper into their bunker. They'll dig down, and they won't disclose."

Tax Analysts has filed 15 FOIA lawsuits against the government since 1985, and has won almost all of them, court records show. "We're not rookies at this," Bergin said. "We recognize the pattern. And this is the pattern: They keep telling you, telling you, telling you that they're going to release the records, and then they say, 'Sue us.' And we do, and it always ends badly for them."

The Tax Analysts lawsuit is actually the second FOIA lawsuit to come out of the Tea Party controversy. The Cause of Action Institute, a non-profit organization aligned with conservative causes, filed suit last month to force the agency to disclose any requests for tax returns by the White House.

"We've had this fight with the IRS now for almost two years," executive director Dan Epstein said. "They could simply say, the easiest response for the IRS to say is, no such record exists."

Instead, the IRS has not explicitly denied that tax returns have been provided to the White House, but said that they would be covered by taxpayer privacy laws if they were."

A White House spokesman did not return a call seeking comment.

The IRS won't say how many FOIA requests it's received about its handling of political groups. USA TODAY and The Cincinnati Enquirer, which are both owned by Gannett, have filed 16 FOIA requests with the agency in the last three months, and the agency has not released any of the requested records.

When USA TODAY requested public inspection files of tax exempt groups, the IRS claimed that they are not subject to the Freedom of Information Act. And on two successive days in May, USA TODAY reporters visited the IRS' Freedom of Information Reading Room only to find it closed to the public during its posted hours.

In an Aug. 2 letter to the House Oversight Committee, acting IRS Commissioner Danny Werfel said it was "inaccurate and unfair" to allege the IRS has not fully cooperated with Congress.

He said the agency has devoted 100 employees to gathering documents and that it had facilitated the interviews of 19 IRS employees with congressional investigators.

The IRS is searching for electronic records containing 81 search terms, including "Tea Party," "conservative," "liberal," and the names of White House senior adviser Valerie Jarrett and author Glenn Beck. As of Aug, 2, the IRS had produced 16,500 of a potential 1.6 million responsive documents to Congress, Werfel said.

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