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Washington D.C. – Cause of Action Institute (CoA Institute) today called upon Treasury Inspector General for Tax Administration (TIGTA) J. Russell George to investigate whether IRS employees violated the law by disclosing more than a million pages of confidential information on tax-exempt groups to the FBI and DOJ’s Public Integrity Section.  CoA Institute also demanded DOJ Inspector General Michael Horowitz examine whether FBI and DOJ employees violated taxpayer confidentiality laws by inspecting that data.

CoA Institute President and CEO, and former federal judge, Alfred J. Lechner, Jr.: “The intentional disclosure of taxpayer information, especially information about groups that may have been targeted for their political viewpoints, not only violates the law but represents a breach of public trust.  Americans deserve to know how Washington handles their most private information.  Vigilant oversight is necessary to determine whether federal officials improperly accessed IRS records.  This incident may be the largest and most significant breach of taxpayer confidentiality laws by the federal government in U.S. history.”

The call for investigation comes more than three years after CoA Institute first submitted a request for records seeking information relating to the disclosures.  The IRS finally responded to the request on March 9, 2016, showing that, between 2009 and 2012, neither the FBI nor the DOJ submitted the statutorily-required requests for disclosure of sensitive tax return information.  CoA Institute investigators also obtained reports submitted by the U.S. Treasury, which oversees the IRS, to the Joint Committee on Taxation of Congress, which reported only around 2,000 routine tax disclosures from IRS to the DOJ, mainly through U.S. Attorneys’ Offices. However, the IRS actually disclosed more than 1.1 million pages of tax return information to the FBI in October 2010, and the DOJ Public Integrity Section appears to have inspected that information.

To read the full letter, click HERE.

Section 6103 of the Internal Revenue Code provides a strict rule of confidentiality for tax returns and return information.  Unless a statutory exception applies, government agencies and their employees may not disclose or inspect such information.  Violations can include fines, termination from employment, and imprisonment.

The information in today’s letter will be incorporated into a comprehensive investigative report to be released in the coming weeks by CoA Institute. The report will outline a pattern of abuse by the Obama administration relating to the safeguarding of confidential taxpayer information.

CoA Institute Executive Director Daniel Epstein: “Our staff’s detailed review of thousands of documents over more than fifty months has confirmed the lack of compliance by this administration with statutory requirements designed to safeguard Americans’ most private information.  As our forthcoming report will reveal, the administration’s revealed indifference to compliance has serious implications not only for the politicization of the bureaucracy but for the freedoms of any individual targeted by that bureaucracy’s menacing crosshairs.”

BACKGROUND

In October 2010, the IRS Exempt Organizations segment of the Tax Exempt and Government Entities Division disclosed more than 1.1 million pages of return information on 21 disks to the FBI and DOJ Public Integrity.  DOJ Public Integrity and the FBI sought this information to investigate potential prohibited political activity allegedly undertaken by these groups.  As part of a Freedom of Information Act lawsuit against the IRS and DOJ, CoA Institute obtained records demonstrating that neither the Public Integrity Section nor the FBI ever submitted a request for disclosure of tax return information to the IRS between 2009 and 2012, as required by federal statute.

CoA Institute alerted TIGTA about the possible violation of Section 6103 with respect to the October 2010 disclosure by letter dated July 23, 2015.  But that notice went unanswered.  Similar concerns raised in June 2014 by the U.S. House Committee on Oversight and Government Reform also were ignored.  Now, newly-disclosed IRS records confirm these earlier concerns that the IRS, DOJ, and FBI likely broke laws prohibiting the unauthorized disclosure and inspection of taxpayer information.

As described in today’s letter, both the FBI and DOJ Public Integrity failed to file requests for disclosure under the relevant provisions of Section 6103, and the IRS lacked authorization to disclose the 1.1 million pages of tax-exempt entity return information.  Given the pattern of abuse in the current Administration with respect to tax-exempt organizations, independent inquiry into what actually happened is not only appropriate, but necessary.

To access CoA Institute’s June 29, 2016 Letter to TIGTA and the DOJ IG, click here.
A full list of exhibits can be accessed here.
To access CoA Institute’s July 23, 2015 letter to TIGTA, click here.

Washington, DC – The Cause of Action Institute (CoA Institute) today filed a legal complaint against the Internal Revenue Service (IRS) and its commissioner, John Koskinen, for refusing to capture and preserve electronic communications of employees that deal with official business, as required by the law.

CoA Institute President & CEO Alfred J. Lechner, Jr.: “The IRS and Commissioner Koskinen have a legal obligation to preserve official work communications between employees. It appears that federal records are being deleted because the IRS, in a deal with its employee union, refuses to preserve certain types of electronic communications. This lawsuit seeks to ensure that IRS follows the law. No agreement with a union or any other party can supersede Americans right to know how the IRS makes decisions.”

Documents obtained by CoA Institute show that the IRS has a private agreement with its employee union stipulating that the agency will not save the instant message records of its employees. But the IRS cannot allow such an agreement to supersede its statutory obligations to preserve records.  In addition, the IRS is violating the law by regularly deleting all employee text messages as a matter of convenience.

CoA Institute filed its lawsuit with the U.S. District Court for the District of Columbia to force the IRS to comply with its obligations under the Federal Records Act (FRA) to capture and preserve all relevant records.  The complaint seeks an order from the court to require the IRS to establish appropriate guidelines for the preservation of federal employees’ instant message and text message records and to preserve all such records permanently until the establishment of those guidelines.

Background:

Failure to preserve instant messages:

On June 30, 2015, the Treasury Inspector General for Tax Administration issued a report on the hard drive failures within the IRS that resulted in the loss of numerous agency records, including the email communications of Lois Lerner, former head of the IRS tax-exempt organizations unit.  That report revealed that the IRS maintained an instant messaging system for employee communications. But as a result of a memorandum of understanding between the IRS and the National Treasury Employees Union, the IRS did not capture, preserve, or retain such instant message records.  When CoA Institute submitted a FOIA request seeking information regarding this policy, the IRS confirmed that it “does not capture or maintain” the instant message records of its employees.

Failure to preserve text messages:

As part of an investigation into how federal agencies process their text message records, CoA Institute submitted a FOIA request to the IRS in November, 2014, asking it to produce the text message records of five high-ranking agency officials.  In response to that request and in follow-up communications, the IRS revealed that, due to “routine system housekeeping” and “spacing constraints,” text messages are retained for only 14 days and are thereafter deleted.

To access Cause of Action Institute’s complaint, click here. The accompanying exhibits may be found here.

Media Contact: Geoff Holtzman | geoff.holtzman@causeofaction.org | 703-405-3511

WASHINGTON — In a significant victory for transparency advocates, a federal judge today ordered the IRS to turn over potential requests that the White House may have made to the agency in search of private taxpayer information.

Judge Amy Berman Jackson of the United States District Court for the District of Columbia wrote that the IRS cannot hide behind taxpayer confidentiality laws, known as section 6103 of the tax code, in order to refuse to say whether those records may exist.

Cause of Action Executive Director Dan Epstein issued the following statement in response to today’s ruling:

“As we have said all along, this administration cannot misinterpret the law in order to potentially hide evidence of wrongdoing. No administration is above the law, and we are pleased that the court has sided with us on this important point.”

In her opinion, Judge Berman Jackson wrote:

“Congress amended section 6103 in 1976 ‘in the wake of Watergate and White House efforts to harass those on its ‘enemies list,’’ in order to ‘restrict[] government officers and employees from revealing ‘any return’ or ‘return information,’’ and its ‘core purpose’ is to ‘protect[] taxpayer privacy.’

“So, this Court questions whether section 6103 should or would shield records that indicate that confidential taxpayer information was misused, or that government officials made an improper attempt to access that information.

“The IRS argues that ‘section 6103’s definition of ‘return information’ . . . makes no distinction based on the purpose for which a person might seek disclosure of the documents.’ But accepting this argument would require a finding that even requests for return information that could involve a violation of section 6103 constitute ‘return information’ that is exempt from disclosure under FOIA Exemption 3 and section 6103.

“The Court is unwilling to stretch the statute so far, and it cannot conclude that section 6103 may be used to shield the very misconduct it was enacted to prohibit.”

BACKGROUND

Cause of Action filed a Freedom of Information Act request with the Treasury Inspector General for Tax Administration (“TIGTA”) and the Internal Revenue Service (“IRS”) to discover any records of an investigation into whether unauthorized officials at the White House may have illegally accessed private taxpayer information.

We sent this FOIA after TIGTA admitted that it had launched such a review in response to a letter from six Republican senators. However, TIGTA’s forthcoming report was never released to the senators or the public.

Our FOIA request to both agencies was then divided into two separate FOIA lawsuits; one against the IRS and one against TIGTA. The court’s holding today requires the IRS to go back and search for records that it previously tried to shield from disclosure.