Archives for 2014

Transparency and Good-Government Groups Encourage Legislative Efforts to Bring Transparency and Accountability to Federal Grant-Making

Cause of Action and the following groups submitted a letter to Congress concerning discretionary grant spending and the GRANT Act:

Cause of Action
Center for Effective Government
Citizens for Responsibility and Ethics in Washington – CREW
Defending Dissent Foundation
Project on Government Oversight – POGO
Taxpayers for Common Sense

Read the letter here.

GRANT Act Coalition Letter

Washington Post: Unions, trade associations worried about possible IRS rule changes

Read the full story: Washington Post

Several of the groups from across the political and ideological spectrum have also filed comments themselves. On Tuesday, the American Civil Liberties Union said that it agreed with the effort to define political activity more clearly but that it has “serious concerns . . . both from a First Amendment perspective and as a simple matter of workability.”


The Heritage Foundation, worried about the impact on its advocacy arm, Heritage Action for America, argued that the Treasury Department doesn’t have the authority to impose the rules. And on Wednesday, Cause of Action, a conservative watchdog group, filed suit to delay the rules, calling them “a back door attempt to stifle political opponents” and arguing that they would impose “voluminous recordkeeping requirements on small non-profits.”

The Hill: The politics of targeting

Cause of Action’s Dan Epstein writes in The Hill:

In the wake of the IRS political targeting scandal, Congress missed two opportunities for strategic investigating: First, Congress never “specially authorized” a committee with investigative authority over the IRS’s inappropriate treatment of certain groups seeking tax-exempt status; Second, Congress never appointed a special counsel to investigate the IRS, nor hired an outside counsel to advise it in its investigations.

But on January 8, 2014, Rep. Darrell Issa (R-Calif.), the chairman of the Committee on Oversight and Government Reform, and Rep. Jim Jordan (R-Ohio), the chairman of the Oversight subcommittee on Regulatory Affairs, Stimulus Oversight and Government Spending, chastised Attorney General Eric Holder for the appointment of Barbara Bosserman, a career attorney supposedly “leading the DOJ/FBI investigation” into the IRS.

The Oversight Committee didn’t disclose that Bosserman was employed at the Justice Department (DOJ) in 2004 and 2008 when she made her political contributions to the Democratic National Committee.  It is obvious Bosserman was not hired into the DOJ because of her support for the administration and has been a committed Democrat long before a potential conflict could arise between her activities and the work she is assigned.

If DOJ assigned a non-political appointee attorney on a matter because of her political contributions, then Chairmen Issa and Jordan should be raising Hatch Act concerns and potential questions concerning prohibited personnel practices.  Yet Issa and Jordan’s letter to DOJ Attorney General Holder was only carbon copied to DOJ Inspector General Michael Horowitz, not the Office of Special Counsel, who would be responsible for investigating prohibited personnel practices and Hatch Act concerns.

Furthermore, if it is true that Bosserman was assigned to the matter for political reasons, then the DOJ would be subjecting itself to enormous risk by admitting to having knowingly violated the law in publicly stating that “removing a career employee from an investigation or case due to political affiliation, as Chairmen Issa and Jordan have requested, could also violate the equal opportunity policy and the law.”

But that conclusion seems attenuated.  Moreover, neither Chairman Issa nor Subcommittee Chairman Jordan appear at all concerned that the DOJ assigned a Civil Rights Division attorney to investigate the IRS.  The Civil Rights Division mostly prosecutes hate crimes cases and conspiracies to violate civil rights. The Civil Rights Division has no jurisdiction to investigate criminal violations that result when an officer or employee of the United States who “with intent to defeat the application of any provision of [the Internal Revenue Code] fails to perform any of the duties of his office or employment” or when the President, the Vice President, or any of their employees (as well as cabinet secretaries) “directly or indirectly” requests that the IRS “conduct or terminate an audit or other investigation of any particular taxpayer”.

Now the Oversight Committee wants Bosserman to testify before it this week in yet another hearing by a committee which has already spent months investigating the IRS’s political targeting.  As Principal Deputy Attorney General Peter J. Kadzik wrote to Subcommittee Chairman Jordan on Jan. 24, “Your decision to impugn the integrity of a career attorney raises serious concerns, . . . Targeting career attorneys in this manner could plainly have a chilling effect on the valid exercise by federal employees of their basic right to participate in the political process.”

Parsing through the Oversight Committee letter, it would seem that the only point Issa and Jordan are trying to make is that they don’t like that a federal employee has exercised her political speech.  That sounds like political targeting 101.



Cause of Action Sues IRS Over Proposed Regulations Affecting Nonprofits

Today Cause of Action took three actions to push back against the IRS’s proposed regulations concerning political activity by nonprofits.

1. A request for the IRS to extend the comment period for its proposed rules affecting 501(c)(4) social welfare organizations.

2. An Information Quality Act petition challenging the IRS’s paperwork burden estimate for its proposed rules restricting 501(c)(4) social welfare organizations.

3. A lawsuit seeking for the court to:

 a. Delay the IRS issuing a final rule until the IRS produces responsive records; and

b. Order the IRS to re-open the comment period on the proposed rule after the IRS produces all responsive records.

Cause of Action Executive Director Dan Epstein commented:

“The IRS’ proposed regulation is simply a back door attempt to stifle political opponents, to protect Administration policies, and to restrict and hamper grassroots education regarding the Constitution, limited-government, and economic freedom. We’ve seen a pattern spanning decades of the IRS being used to deter political dissenters and stifle criticism.  The government’s proposed rules continue this pattern and are but one more example of the Executive Branch abusing its administrative power.  Every American is entitled to government transparency and accountability which is why Cause of Action is filing this lawsuit.”

Video: Dan Epstein Discusses NJ Governor Chris Christie on NewsmaxTV

Wall Street Journal: FTC Cyber Case Has Nearly Put Us Out of Business, Firm Says

Read the full story: Wall Street Journal

The dispute is now playing out in an administrative law court. Nonprofit group Cause of Action in November also filed a lawsuit in Washington, D.C., federal court against the FTC on behalf of LabMD.


Mr. Daugherty and Cause of Action have alleged that the FTC investigation of the alleged data security problems has been onerous. “Complying with the FTC’s demands has cost LabMD hundreds of thousands of dollars as well as thousands of hours of management and employee time,” Cause of Action said in a press release.

Washington Free Beacon: Chicago Transit Authority Sued for ‘Systemic Fraud’

Read the full story: Washington Free Beacon

Cause of Action sent its findings to the Department of Transportation, DOT Inspector General, and Department and Justice, but it says there has been no federal investigation. DOJ declined to investigate the matter in December.


“We are pursuing this fraud lawsuit against the CTA because American taxpayers deserve accountability,” said Cause of Action’s Executive Director, Dan Epstein. “The reputations of political insiders cannot be more important than the integrity of federal programs and the protection of taxpayer funds. When the federal government, including Department Inspectors General, cannot be counted on to discourage fraud, citizen watchdog groups like ours must intervene.”