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03/31/2017

The IRS Responds to Our Report on Targeting – but Misses the Point

As detailed in our recent report, the IRS targeting scandal has a hidden cause which remains unaddressed to this day – a rule in the agency’s own manual that directs employees to treat applications differently if they might “generate media or Congressional attention.”  This rule is what initially prompted low-level IRS tax specialists to hold up applications from Tea Party groups, ultimately resulting in both years of delays for taxpayers and widespread embarrassment for the agency.

The report was accompanied by an op-ed in the Wall Street Journal and was reported on by, among other outlets, Fox News and the EO Tax Journal.  Both of these news reports included quotes from an IRS statement responding to our findings – or at least the agency’s interpretation of them.  Although the aggressive tone of the IRS response surprised the editor of the EO Tax Journal, it serves as a classic example of the bureaucratic mindset that led to the targeting scandal happening in the first place.  Here is the IRS statement in full, as reported in the EO Tax Journal:

“The IRS strongly disputes the [Cause of Action] report and any suggestion or allegation that Exempt Organizations is targeting taxpayers. The IRS emphasizes that this point has been confirmed by independent third parties, including the Treasury Inspector General for Tax Administration. There should be absolutely no doubt on that point, and the continuing commitment by the IRS to be guided by the tax law and nothing else.”

“[Sensitive Case Reports] are used within the IRS to bring to upper management’s attention cases that may generate press or Congressional attention, present unique or novel issues, or affect large numbers of taxpayers. It’s important to note that IRS internal guidelines on sensitive case reports do not instruct the employees to stop working a case or direct employees on how to work a case.

It is head-spinning that the IRS can argue in one sentence that it should be guided by tax law “and nothing else” and then insist in the very next sentence that it is proper to consider “press or Congressional attention” as a criterion, delaying a final decision on tax-exempt applications as a result.  The only purpose of this rule is to avoid possible embarrassment.  Yet an application for tax exempt status is no more related to the notoriety of the applicant than a driver’s license is to the fame of the driver – if you pass the test, you should get the status

The problem with rules that mandate this kind of PR-minded defensiveness is that, as amply documented by the many investigations into the targeting scandal, it drags the application process through multiple echelons of bureaucracy and involves higher officials with strong political leanings. The IRS’s statement claims that it was absolved by the Treasury Inspector General for Tax Administration (TIGTA), but in reality, a report from that office repeatedly criticized the IRS for “using inappropriate criteria” to scrutinize applications – criteria which ended up focusing overwhelmingly on political opponents of the administration in power.  IRS officials insisted on seeing every application from Tea Party-affiliated groups because of the “media attention” they were attracting, and as shown in the same TIGTA report, the result was an endless array of delays and invasive questioning.

John McGlothlin is counsel at Cause of Action Institute

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03/31/2017

Hundreds of Regs Vulnerable to Repeal under Congressional Review Act

Washington D.C. – Cause of Action Institute (“CoA Institute”) today released a list of 835 economically significant rules and regulations that are susceptible to repeal under the Congressional Review Act (“CRA”). While there is a 60-day statutory limit for rules to be reviewed by Congress under the CRA, hundreds of rules have not been properly reported to Congress giving the Trump administration an unprecedented opportunity to repeal costly rules dating all the way back to 1996 when the CRA was first signed into law.

“While Congress is currently reviewing and disapproving numerous regulations from the last year of the Obama Administration, we believe the CRA provides a broader opportunity and Congress should begin examining the rules we’ve identified as well,” said John Vecchione, Cause of Action Institute President and CEO.

Read Cause of Action Institute’s column in The Hill for more information on the CRA and how the Trump administration can pursue an aggressive anti-regulatory agenda by coordinating with Congress.

The Hill

The Congressional Review Act and a Deregulatory Agenda for Trump’s Second Year

By John J. Vecchione

A cold front may have killed-off nearly half of D.C.’s famous cherry blossoms, but Washington gridlock has emerged in full bloom. With the defeat of the Republican “repeal and replace” bill in the House, and the Democrats’ united opposition to the president’s agenda, it’s looking increasingly difficult for Congress to get things done.  Fortunately, there exists a stimulatory, free market weapon in the hands of the Congress and the President to stay on the offensive on deregulating and freeing the economy.

By simple majority vote, the Congressional Review Act (“CRA”) can overturn any regulation that affects a third-party. This is a powerful and underutilized tool. The CRA is not subject to the filibuster and provides the majority with a vast deregulatory agenda with a high chance of success.  Read More

CoA Institute is partnering with Pacific Legal Foundation and several other organizations on the Red Tape Rollback project, an effort to identify rules that have not been properly reported to Congress under the CRA.

For information regarding this press release, please contact Zachary Kurz, Director of Communications at CoA Institute: zachary.kurz@causeofaction.org

 

 

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03/31/2017

FOX News: IRS still allowed to target political groups, according to watchdog org

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IRS still allowed to target political groups, according to watchdog org

FoxNews.com

The IRS is still able to target certain political groups despite being publicly exposed for the unfair practice more than five years ago, according to a new report by a watchdog group.

A rule in place at the IRS allows the federal agency to delay the applications of non-profit groups looking for tax-exempt status, claims the Washington-based Cause of Action in its report, “A Hidden Cause of the IRS Targeting Scandal.” The IRS admitted in 2013 that leading up to the 2012 election the agency unfairly targeted right-leaning groups as well as those with “Tea Party” or “patriot” in their name. More than five years after the practice was exposed, Cause of Action says the IRS has not made changes to end the practice.

“The regulation that allows them to do this is still there,” John Vecchione, executive director of Cause of Action told Fox News. “It’s bureaucratic inertia until someone makes a change.” Read More

 

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03/31/2017

Office of Special Counsel accepts CoA Institute’s FOIA regulation recommendations

The U.S. Office of Special Counsel (“OSC”) published a final rule yesterday to update its Freedom of Information Act (“FOIA”) regulations. In addition to implementing changes required by the FOIA Improvement Act of 2016, OSC adopted various changes recommended by Cause of Action Institute (“CoA Institute”).

Last summer, CoA Institute was one of two organizations to submit a comment to OSC on its proposed regulatory revisions. First, we asked the agency to revise its fee category definition for a “representative of the news media,” which still included outdated “organized and operated” language.  In 2015, the D.C. Circuit recognized this “organized and operated” standard as superseded by statutory amendment in its landmark decision in Cause of Action v. Federal Trade Commission.  Similarly, we suggested—and OSC agreed—that the fee category definition should include a non-exhaustive list of entities that, in light of alternative and evolving news formats, qualify as a news media requester.  Finally, we recommended that OSC add explicit language detailing its records retention obligations for FOIA-related federal records.  On all counts, OSC substantively agreed with CoA Institute’s proposals.

Our successful comment is yet another small step in our ongoing efforts to provide effective and transparent oversight of the administrative state.

Ryan Mulvey is counsel at Cause of Action Institute

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03/23/2017

CoA Institute Uncovers EPA Investigation into Employees’ Use of Encrypted Messaging App

Hours after filing a lawsuit demanding that the Environmental Protection Agency (“EPA”) disclose records about its employees’ use of an encrypted messaging application, Cause of Action Institute (“CoA Institute”) received a letter from the EPA’s Office of General Counsel acknowledging that there is an “open law enforcement” investigation looking into the matter.

The EPA indicated that records created or received by its employees on “Signal,” and records concerning efforts “to retrieve, recover, or retain” those messages, were “part of one or more open law enforcement file(s).” The agency claimed such records were exempt from disclosure under the Freedom of Information Act (“FOIA”) because they were compiled for “law enforcement purposes” and their disclosure “could reasonably be expected to interfere with ongoing enforcement proceedings.”  Further, the EPA stated that it could not find any records reflecting “permission, clearance, or approval” for the use of the encrypted messaging app.

Cause of Action Institute Assistant Vice President Henry Kerner: “The EPA’s response to our lawsuit is unsurprising, but still deeply disturbing.  The unauthorized use of an encrypted messaging app by a government employee is inappropriate, and the EPA appears to agree that its employees might have broken the law.  Although we are pleased to learn that the agency is examining potential wrongdoing, we will continue to fight for the disclosure of records responsive to our FOIA request because we do not agree that the law prohibits the disclosure of the Signal messages.  It will be up to the courts to decide.”

Even though the EPA purports to have provided a final response to CoA Institute’s FOIA request, the recently filed lawsuit will continue. CoA Institute disputes the sufficiency of the EPA’s determination, which suggests that a search for potentially responsive records was never carried out. In addition, we disagree with the agency’s reliance on FOIA Exemption 7(a).

The EPA’s letter can be found here

 

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03/22/2017

Report Finds Threat of IRS Targeting Continues Today

Washington D.C. – Cause of Action Institute (“CoA Institute”) today released a staff report titled, “Sensitive Case Reports: A Hidden Cause of the IRS Targeting Scandal,” outlining how seven years after the IRS targeting scandal began, the rule that enabled this inexcusable behavior remains in place.

IRS targeting during the Obama administration involved invasive questioning and years-long delays in the processing of applications by non-profit organizations for tax-exempt status, and focused disproportionately on right-leaning groups, especially those with “Tea Party” in their name. The policy that enabled this targeting is an internal rule that singles out applications from any group interested in issues that might garner attention from either the media or Congress. In such cases, the merits of the application are ignored as IRS employees develop “Sensitive Case Reports” for consideration by those above them in the IRS hierarchy.  In the targeting scandal, the existence of this rule allowed partisan concerns to overtake the process, leading to the unfair treatment of groups holding political viewpoints at odds with the Obama administration.

The report explains that unless and until that rule is removed from the internal manual used by all IRS employees, targeting of political opponents will remain a very real threat. Fortunately, removing the offending provisions is a simple process that can be started at any time and completed without the need for new legislation.

The full report can be accessed HERE

In Case You Missed It…

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‘Media Attention’ and IRS Abuse
A simple rule fix could end partisan targeting tomorrow.

By John J. Vecchione | March 21, 2017

The Internal Revenue Service’s targeting of Americans for their political views may have ended with the Obama administration—or even with its exposure in 2013. But it could easily recur. Even now, an internal IRS rule singles out applicants for nonprofit status who might be tied to anything newsworthy.

The genesis of the targeting scandal was Section 7.29.3 of the Internal Revenue Manual. As noted in a report my organization is issuing Wednesday, this manual dictates how IRS employees handle everything from customer service to criminal investigations… Read More

 

For information regarding this press release, please contact Zachary Kurz, Director of Communications at CoA Institute: zachary.kurz@causeofaction.org

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03/22/2017

Lawsuit Demands Records on EPA Employees’ Use of Encrypted Messaging App

Washington, D.C. – Cause of Action Institute (“CoA Institute”) has filed a lawsuit in the U.S. District Court for the District of Columbia after the Environmental Protection Agency (“EPA”) failed to disclose records about its employees’ use of an encrypted messaging application, “Signal,” to discuss the Trump administration’s expected changes to the agency’s policy agenda.

The lawsuit follows a February 2, 2017 Freedom of Information Act (“FOIA”) request, which sought all records of Signal communications created or received by EPA officials, as well as records concerning the EPA’s efforts, if any, to retriever, recover, or retain such work-related correspondence in accordance with federal records management laws.

Cause of Action Institute Assistant Vice President Henry Kerner: “Career employees at the EPA appear to be using Signal to avoid transparency laws and vital oversight by the Executive Branch, Congress, and the public.  Communications on this encrypted application, however, which relate to agency business must still be preserved under the Federal Records Act and be made available for disclosure under the FOIA.  Taxpayers have a right to know if the EPA’s leadership is meeting its record preservation obligations.”

According to media reports, at least a dozen EPA career employees have been using Signal to communicate about work-related issues, including how to prevent President Trump’s political appointees from “undermin[ing] their agency’s mission to protect public health and the environment” or “delet[ing] valuable scientific data.”  CoA Institute’s investigation into this matter has been widely discussed in the press, along with Congress’s request for the EPA’s watchdog to independently investigate the matter.  To date, the EPA has failed to issue a timely determination on CoA Institute’s FOIA request, let alone produce any responsive records.

The full complaint can be found here.

For information regarding this press release, please contact Zachary Kurz, Director of Communications: zachary.kurz@causeofaction.org

 

 

 

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