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08/21/2013

Statement: Cause of Action responds to Rep. Levin and Cummings on IRS investigating ACORN-related groups

Yesterday, the House Ways and Means Committee released new documents claiming “IRS Scrutiny of Progressive Groups,” by highlighting the IRS’ attention to ACORN and its successors.

Dan Epstein, Cause of Action’s executive director responded:

Rep. Levin and Rep. Cummings are claiming that the IRS targeted ACORN in the same fashion as pro-liberty groups.  The difference, however, as Cause of Action demonstrated one year ago, is that ACORN and its successors engaged in potentially illegal activity, so of course its successors, such as New York Communities for Change, Texas Organizing Project, and Alliance of Californians for Community Empowerment, should be on the ‘Be on the Lookout’ lists. Two problems exist: First, we see no evidence that the IRS is actually conducting a diligent oversight of rebranded ACORN groups, and secondly there is no evidence that Tea Party groups engaged in illegal activities.

To compare a law-breaking organization like ACORN to True to the Vote is not only illogical, it’s unethical.

For more information on Cause of Action’s investigations into the IRS, click here.

 

 

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08/20/2013

USA Today: IRS assailed from all sides for lack of transparency

IRS assailed from all sides for lack of transparency

Allies and critics alike frustrated by the IRS’ lack of transparency in Tea Party affair

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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08/9/2013

Cause of Action Sues TIGTA over Release of Taxpayer Info

Cause of Action filed a lawsuit against the Treasury Inspector General for Tax Administration (TIGTA) for potentially violating the Freedom of Information Act (FOIA).

TIGTA told Cause of Action in March of this year, in response to a FOIA request, that it could “neither confirm nor deny the existence of records” of communication between the White House and IRS concerning taxpayer information, particularly interactions that were not made pursuant to 6103(g) of the tax code, which authorizes the President to request any individual’s tax return information from the IRS.

Yet, the media reported that TIGTA sent a letter to Senator Charles Grassley July 3, 2013, acknowledging eight instances involving potential unauthorized access or disclosure of tax records belonging to political donors or candidates since 2006.

By revealing to Senator Grassley the existence of these communications, TIGTA has potentially violated FOIA with Cause of Action, therefore we are filing a lawsuit against TIGTA in the U.S. District Court for the District of Columbia.

ECF No. 1_Complaint

ECF No. 1-1_Exhibits 1-10 to Complaint

ECF No. 1-2_Civil Cover Sheet

ECF No. 1-3_Summons

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08/1/2013

Liability Alert Letter to the General Counsel of Covered California regarding Enroll America

Cause of Action sent a letter to Covered California, California’s state health exchange, to alert them of liabilities under federal and state laws and guidelines. Enroll America will be a liaison to state health exchanges across the country, such as Covered California, who manage the sale of health insurance policies.

“The risk of spending federal money in wasteful, fraudulent or abusive ways as they fund outreach activities to enroll the uninsured should put state exchanges on high alert,” said Dan Epstein. “Covered California creates a one-stop insurance marketplace, while conducting outreach similar to that of Enroll America, and we want these exchanges to be aware of the numerous laws and regulations that could present multiple liabilities for them as enrollment begins.”

Liability Alert Letter to the General Counsel of Covered California regarding Enroll America

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08/1/2013

Government Executive: IRS Probe Continues to Divide House Oversight Panel

By Charles S. Clark
July 30, 2013

Two conservative groups with long-standing tax-exempt status were unfairly targeted by the Internal Revenue Service and merit a new investigation by the inspector general, according to two members of the sharply divided House Oversight and Government Reform Committee.

Reps. Darrell Issa, R-Calif., chairman of the panel, and Jim Jordan, R-Ohio — acting without cooperation from the panel’s ranking member Elijah Cummings, D-Md. — on Monday wrote a letter complaining about audits and unfair paperwork demands that a controversial unit of the tax agency imposed on the Arlington, Va.-based Leadership Institute and the Herndon, Va.-based Claire Boothe Luce Policy Institute.

“The totality of your ‘targeting’ investigation along with evidence obtained by the committee points to the fact that the IRS may have selected certain conservative organizations for additional scrutiny after the IRS already approved their tax-exempt status,” Issa and Jordan said in a letter to J. Russell George, the Treasury inspector general for tax administration.

The Leadership Institute, founded in 1970 and run by longtime conservative activist Morton Blackwell, reported about $15 million in assets in 2012. During IRS audits, the lawmakers’ letter said, the group had to turn over 23,430 pages of documents at a cost of some $50,000. Staff told congressional investigators that they were asked “invasive questions, including requests for information about its interns and where they worked after their internships.”

The Clare Booth Luce Policy Institute, founded in 1993 to advance conservative women and run by Michelle Easton, an Education Department appointee during the Reagan and George H. W. Bush administrations, reported assets of some $2 million. Easton told congressional staff that its treatment by the IRS amounted to “harassment,” and that its audit “took the greater part of 2011 and cost tens of thousands of dollars.”

Both have 501(c)3 nonprofit status.

The Republican lawmakers want auditors to determine whether the Cincinnati-based entity within the IRS’ Exempt Organization Division called the Review of Operations Unit had been flagging groups with longtime tax-exempt status in addition to the 300-400 groups that had applied for the status beginning in 2010 that became the subject of this spring’s IRS scandal. Issa quoted an email from Lois Lerner, the director of Exempt Organizations who is on administrative leave and who so far has declined to testify to Issa’s panel, instructed underlings that “[o]ne of the recommended actions is going to be to send ROO referrals for those cases that cause us concern resulting from organizations making changes after being questioned during our case development.”

The request on Tuesday drew a rebuke from Cummings, who in a letter to Issa, said, “your letter appears to provide partial and incomplete information and to disregard key evidence that is contrary to your political narrative.”

Quoting from transcripts of congressional staff interviews with IRS employees who processed the nonprofits’ applications, Cummings said Issa’s version fails to explain that the head of the Exempt Organizations Determinations Unit in Cincinnati told the committee that referrals to the ROO were not “systematic,” but instead were done on a case- by-case basis. Also left out of the request to TIGTA, Cummings added, was the testimony from another employee saying that a referral to the ROO did not automatically result in an audit of the organization.

“The committee,” Cummings concluded, “has identified no evidence that the IRS discriminated against conservative groups that had been approved for tax exempt status.”

In another sign that the political and legal maneuvering stemming from the IRS scandal are not fading away, a transparency advocacy group called Cause of Action on Monday announced that it has hit the IRS’ Exempt Organizations Division with a complaint about Enroll America, a nonprofit that is also a 501(c)3 that works on a parallel track with the Health and Human Services Department to promote enrollment in health insurance exchanges during implementation of the Affordable Care Act.

Cause of Action is seeking removal of Enroll America’s charitable status because it operates “like a business league or trade association,” providing a profit incentive and performing marketing and lobbying for medical and insurance interests rather than charitable acts. “If Enroll America is designed to benefit insurance companies instead of the American public, then its charitable status no longer applies,” argued Dan Epstein, Cause of Action’s executive director. “An organization that has been granted tax deductible status but is actually depriving the American people of taxable revenue warrants an investigation.”

To read the full article, click here.

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08/1/2013

Cause of Action Files IRS Complaint Against Enroll America For Violating the Internal Revenue Code

FOR IMMEDIATE RELEASE                                                                                             

July 29, 2013

Cause of Action Files IRS Complaint Against Enroll America For Violating the Internal Revenue Code

WASHINGTON – Today, Cause of Action (CoA), a government accountability organization, filed a complaint before the Internal Revenue Service (IRS) asking for the IRS to revoke the charitable status of Enroll America, the nonprofit whose mission is to enroll individuals in the Patient Protection and Affordable Care Act’s insurance exchanges. Enroll America is, the complaint alleges, improperly classified as a 501(c)(3) organization and therefore in violation of the Internal Revenue Code.

“If Enroll America is designed to benefit insurance companies instead of the American public, then its charitable status no longer applies,” said Dan Epstein, executive director of Cause of Action. “An organization that has been granted tax deductible status but is actually depriving the American people of taxable revenue warrants an investigation.”

Cause of Action has conducted previous investigations into how non-profit groups are handling federal grant money as well as how the IRS monitors tax-exempt groups. Their report on potential violations of the law concerning stimulus funds that went to a program called Communities Putting Prevention to Work can be found here. A report released last month delves into a little known provision of the tax code called fiscal sponsorship, which is ripe for abuse and not being monitored well by the IRS.  The report can be found here. This Enroll America complaint is the latest in CoA’s work to ensure that organizations benefiting from taxpayer dollars and tax exemption are adhering to the law.

Cause of Action is requesting an immediate investigation to address the following:

  1. Enroll America does not operate as a 501(c)(3) charity; it is organized more like a trade association for the healthcare industry, employing marketing and political tactics to sell health insurance.  Accordingly, Enroll America is not organized and operating exclusively for a charitable purpose.
  2. The for-profit healthcare providers represented on EA’s board of directors and advisory board stand to reap a substantial private benefit from EA that is not shared by its intended beneficiaries, meaning Enroll America fails the private inurement and private benefit doctrines.

Cause of Action will also be sending a letter to Covered California, California’s state health exchange, to alert them of liabilities under federal and state laws and guidelines. Enroll America will be a liaison to state health exchanges across the country, such as Covered California, who manage the sale of health insurance policies.

“The risk of spending federal money in wasteful, fraudulent or abusive ways as they fund outreach activities to enroll the uninsured should put state exchanges on high alert,” said Dan Epstein. “Covered California creates a one-stop insurance marketplace, while conducting outreach similar to that of Enroll America, and we want these exchanges to be aware of the numerous laws and regulations that could present multiple liabilities for them as enrollment begins.”

The complaint can be found here.

The liability alert letter to the General Counsel of Covered California is here.

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07/30/2013

Washington Examiner: Cause of Action files IRS complaint against Obamacare advocate Enroll America

Cause of Action files IRS complaint against Obamacare advocate Enroll America

BY KELLY COHEN | JULY 29, 2013 AT 7:35 PM

Cause of Action, a Washington-based non-profit government accountability group asked the IRS Monday to withdraw the tax-exemption of Enroll America, which was formed explicitly for the purpose of encouraging Americans to enroll in the Obamacare health insurance exchanges.

Cause of Action believes Enroll America should have its nonprofit status revoked because it does not adhere to the requirements in the tax code for tax exempt 501(c)(3) educational foundations.

In its complaint to the federal tax agency, Cause of Action said Enroll America “is engaged in commercial, for-profit business activities” and the “directors/officers/persons are using income/assets for personal gains.”

In addition, Cause of Action said the group “is organized more like a trade association for the healthcare industry, employing marketing and political tactics to sell health insurance. Accordingly, Enroll America is not organized and operating exclusively for a charitable purpose.”

Dan Epstein, Cause of Action’s executive director, said “an organization that has been granted tax deductible status but is actually depriving the American people of taxable revenue warrants an investigation.”

Cause of Action also plans to contact Covered California, California’s state health exchange, “to alert them of liabilities under federal and state laws and guidelines.”

Go here for more information on the Cause of Action complaint.

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