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IRS NGO = non-profit status

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IRS NGO Al Mac
What the heck happened?
News etc. digested by Alister William Macintyre Here are my notes, so far, figuring out what happened with IRS scandal(s). Last updated 2013 June 10
Version 0.3

Table of Contents Introduction (2013 Jun 09).................................................................................................. 2 Big Picture (2013 June 03) ................................................................................................. 3 Good Results (2013 May 30) ...................................................................................... 4 Sources (2013 May 22)................................................................................................... 5 Audits (2013 Jun 06)................................................................................................... 5 Conservative Sites (2013 May 30).............................................................................. 5 CRS via FAS (2013 May 30)...................................................................................... 5 C-Span (2013 May 22)................................................................................................ 5 Media Matters (2013 May 30) .................................................................................... 6 Pro Publica (2013 May 30) ......................................................................................... 6 US House 2013-05-17 Ways Means (2013 May 22).................................................. 7 US House 2013-05-22 Oversight on NGOs (2013 May 22)....................................... 7 US House 2013-06-03 Appropriations (2013 June 04) .............................................. 8 US House 2013-06-03 Financial (2013 June 03)........................................................ 9 US House 2013-06-04 Ways Means (2013 May 31).................................................. 9 US House 2013-06-06 Oversight on Conference (2013 Jun 09) .............................. 11 US Senate 2013-05-21 Finance (2013 May 31) ....................................................... 12 Wikipedia (2013 May 22) ......................................................................................... 12 Glossary of Terminology (2013 June 03) ..................................................................... 12 Beyond 501 c (2013 May 30) ................................................................................... 15 #s / alpha (2013 June 03) .......................................................................................... 16 D+ Terminology (2013 June 03) .............................................................................. 17 I+ Terminology (2013 June 07) ................................................................................ 18 T+ Terminology (2013 June 03) ............................................................................... 20 Who’s Who (2013 May 29) .......................................................................................... 21 Organizational Background (2013 May 23) ................................................................. 21 Tax Laws (2013 May 29).......................................................................................... 23 Time Line (2013 June 03)............................................................................................. 24 2010+ (2013 June 04) ............................................................................................... 25 2011+ (2013 Jun 03) ................................................................................................. 27 2012 Jan+ (2013 Jun 03)........................................................................................... 28 2012 May+ (2013 June 03) ....................................................................................... 29 2012 June+ (2013 June 03) ....................................................................................... 31 2012 Election Cycle (2013 June 03)......................................................................... 32

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2012 Sep+ (2013 June 04) ........................................................................................ 33 2012 Dec+ (2013 June 04)........................................................................................ 35 2013 May+ (2013 Jun 06)......................................................................................... 37 2013 May 17+ (2013 June 06) .................................................................................. 39 2013 June+ (2013 June 03) ....................................................................................... 40 Unanswered Questions (2013 June 03)......................................................................... 40 TIGTA Audits IRS NGO mistakes (2013 Jun 06)............................................................ 40 TIGTA Audits 2010 Anaheim Conference (2013 Jun 09)............................................ 42 Anaheim Conference = Banker’s Hours (2013 Jun 09) ............................................ 43 Anaheim Dis-organizers (2013 June 09) .................................................................. 44 TIGTA other audits (2013 June 09).............................................................................. 44 TIGTA NGO Discoveries (2013 May 29) .................................................................... 45 TIGTA NGO Recommends (2013 May 16) ................................................................. 46 IRS response to TIGTA (2013 May 16) ................................................................... 47 TIGTA response to IRS (2013 May 16) ................................................................... 47 Bosses response to IRS (2013 May 22) .................................................................... 47 Examples of Bad Questions (2013 May 21) ................................................................. 48 My Absurd Suggestions (2013 June 03)....................................................................... 48 Government 5 Mistakes (2013 May 23) ........................................................................... 49 Congress 5 Mistakes (2013 May 23) ............................................................................ 51 Treasury 1 Mistake (2013 May 21) .............................................................................. 53 TIGTA 1 Mistake (2013 May 22)................................................................................. 53 IRS 7 Mistakes (2013 Jun 07)....................................................................................... 54 IRS officials alleged lies (2013 June 07) .................................................................. 56 Republican Mistakes (2013 Jun 07).............................................................................. 57 Disabled Veterans (2013 May 19) .................................................................................... 57 Political Double Standard Beliefs (2013 May 20) ............................................................ 58 Overview for Scribd (2013 May 24)................................................................................. 59 Overview to social media (2013 May 18)..................................................................... 59 Overview e-mail to pals (2013 May 16) ....................................................................... 60 Revision history (2013 June 09) ....................................................................................... 62 As of June 09 (2013 Jun 10) ..................................................................................... 63 As of May 23 (2013 May 24) ................................................................................... 65 As of May 20 (2013 May 21) ................................................................................... 65

Introduction (2013 Jun 09)
I am Alister Wm Macintyre, a semi-retired geek, news junkie, who likes to go behind the headlines, to figure out what is really going on with some stories in the news. Here are my notes trying to wrap my head around what’s going on with several IRS scandals. This is a collection of stories, with rapidly breaking news, speculations, accusations. I try to focus on what can be proven from the info which has come out so far.

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IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

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IRS NGO = non-profit status

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At about the same time that this story broke, there was also a story with AP, which I am doing the same thing with. Those notes are in my AP Gate doc. I like to use short names pointing at subject matter. Where there is a chapter title ending in a date, in parentheses, that is the date I last updated the contents of that chapter. This is an indicator of the vintage of the content, and also if someone has an earlier edition of my notes, this helps them see what chapters have been updated, or added (to), since that edition.

Big Picture (2013 June 03)
There are many separate problems at the IRS, mentioned throughout these notes. Some, but not all, are summarized here up top. There are problems the IRS has been having for many years, without satisfactory resolution. For example: coping with identity theft for fraudulent tax refunds; redesigning systems to handle Congress perpetually changing the tax code into a bigger and bigger monster. There’s also Congress’s apparent inability to do meaningful oversight. In some areas it seems like our government is not capable of self-correction when abuses are uncoveed. The IRS is supposed to manage the nation’s tax code, in collecting taxes from th e people and organizations of the nation, in a fair and impartial manner. It has fallen down on this job, as demonstrated by recent Inspector General audits, and in memories people have of similar behavior in past administrations. Having a political enemies list is unacceptable. The IRS should do its job with respect to taxpayers, and potential tax-exempt organizations, based on the facts, not on political names. There are strict rules protecting the privacy of tax payer information. These rules have been violated. The IRS scandal(s) were caused by a combination of actions, including unintended consequences from Congress, Treasury, and Citizens United, collectively sabotaging the IRS. My notes detail how this was done, and as I find additional causes, I shall add them to the collection.  Citizen’s United … see explanation in Glossary, then see Congress mistakes including the one to not update tax exempt regulations to be consistent with the US Supreme Court ruling.  Unintended Consequences by Congress … see time line 1990’s where Congressional mandates to simplify the IRS, eviscerated the IRS of guidelines how to process applications for tax-exempt status.  Unintended Consequences by Treasury … see Treasury mistake with exclusive (in law) translated to primarily (in regulations) around 1958-1959.1
1

I have seen both 1958 and 1959 mentioned in various major sources.

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In a democracy, people have friendly and unfriendly disagreements, then someone has to settle the differences. In the USA the arbiter of differences is the US Supreme Court. It is inevitable in any dispute resolution, that some people will be happier than others, and some unhappier than others. Congress had been struggling with rules for Campaign Finance reform for a long time, but some donors felt the resulting rules were too restrictive, so we got a case to Supreme Court now called Citizen’s United, in which a lot of people are unhappy with some of the results. One was that corporations enjoy the same first amendment freedom of speech rights as human people, and that giving money in campaign donations, and buying political ads is part of that freedom. A non-profit organization first forms a corporation with one of the states of the USA, then applies to the IRS for non-profit status. Before Citizen’s United, the rules for non-profits included: if you exist for educational, social welfare, type activities, and stay out of politics, you get certain privileges, like confidentiality of your fund raising, and non-taxable. Congress had mandated the IRS perform a smell test of non-profits so they obey the rules. Citizen’s United burned part of the rule booklet, so now organizations could have non profit protection, while engaged in secret political promotions. However, they still supposed to do the original social welfare type stuff. Congress did not change IRS rules on the smell test requirement. While there was a dramatic rise in organizations, using non-profit rules as a cover for massive political advertising, and allegedly not doing any of the social welfare stuff. We do not yet know for sure if this was due to Citizen’s United, or strategies associated with combating particular political policies, where the policy fight stimulated a rise in associated organizations. IRS made several mistakes, revising their smell test rules, after Citizen’s United, which has led to some scandals. See chapter listing those mistakes. Whether any of those mistakes were criminal, has not yet been determined, by the relevant authorities.

Good Results (2013 May 30)
This inept behavior, at the IRS, has done more to unite Democrats and Republicans, than any other topic in recent history. The White House is satisfied with the results so far, even though the conspiracy theorists are using this for much ammunition.2 If the Government wanted this covered up, the Inspector General report would not have been shared. If Congress wanted personnel to
2

http://townhall.com/tipsheet/guybenson/2013/05/29/good-news-white-house-satisfied-with-irs-scandalresponse-n1608761

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remember stuff from years ago, they would mandate record keeping systems to log actions they want remembered.

Sources (2013 May 22)
The info into these notes comes from many different places.  I watch TV, including C-Span, and maybe a dozen news channels, some all news, some have news programs and other content.  I use the Internet. Where possible, I try to view official sources to get official stories, while I recognize stuff can fall out of anyone’s brain.  My brain is about 70 years old. Stuff falls out of it all the time, so I rely on notes like these to help me organize info which may be next to fall out.

Audits (2013 Jun 06)
See separate chapters and sections on TIGTA reports which I have studied so far. See time line for links to other TIGTA and GAO reports which have come out about the IRS, which I have not yet downloaded, let alone studied.

Conservative Sites (2013 May 30)
 Townhall articles on the IRS scandal, and Republican conspiracy theories. 3

CRS via FAS (2013 May 30)
CRS = Congressional Research Service. These reports are available to the public, but not organized in a manner which makes them easily accessible. FAS = Federation of American Scientists. They have a “government secrecy” project which does the organization of CRS and other reports to help the public navigate. Warning: CRS reports tend to be excessively large, with a high density of government geek terminology.   501(c)(4)s and Campaign Activity: Analysis Under Tax and Campaign Finance Laws, May 17, 2013 CRS report.4 Restrictions on Itemized Tax Deductions: Policy Options and Analysis, May 21, 2013 CRS report.5

C-Span (2013 May 22)
Congressional hearings can be viewed:  In person in Washington DC, although I imagine there may be some lottery if more people want to attend than there is room in the room where it is held.  On TV via C-Span;6  On Internet via C-Span or the committee site for the hearing.  Extreme excerpts, often out of context, on TV news media.
3 4

http://townhall.com/tags/irs-scandal/ http://blogs.fas.org/secrecy/2013/05/contractors-crs/ http://www.feedly.com/home#subscription/feed/https://www.fas.org/blog/secrecy/feed 5 http://blogs.fas.org/secrecy/2013/05/contractors-crs/ 6 http://www.c-span.org/

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I prefer on TV because the reception is better, and TV less likely to get mucked up than PC connected to Internet. There were recent hearings I watched on C-Span TV, which I cannot now find on their web site.

Media Matters (2013 May 30)
Media Matters is a site which does fact checking of pronouncements in the news, such as:  Fox labeled actions by the IRS, which the IRS is mandated by law to perform, as somehow something wrong with the IRS doing their job correctly. 7  Fox used logs of visitors to the White House to try to imply a conspiracy theory of the White House orchestrating the IRS misbehavior. Fox’s source for this data, the Daily Caller, disputed Fox’s conclusions. 8

Pro Publica (2013 May 30)
Pro Publica is non-profit 501 C 3 original research Investigative Journalism in the public interest.9 Some people say it is left wing. Good starting points for Pro Publica info about this IRS scandal include:  How the IRS’s Non-Profit Division got so Dysfunctional.10  Facts lost in the IRS scandal.11  Confidential documents leaked by the IRS Cincinnati office. 12  Buying your vote with dark money:13 Over 100 articles.  How non-profits spend millions on elections, and call it public welfare. 14  Non-Profit Explorer of 990 filings with the IRS.15  Dark Money FAQ.16  How many 501(c)(4) nonprofits, active in the 2010 election, spent millions of dollars of dark money on campaigns, sometimes reporting less political spending to the Internal Revenue Service than they did to election officials. 17 o Selection Criteria available:  Most active groups  Groups operating without IRS recognition  Groups that said “no” to politics in applying for IRS recognition
7 8

http://mediamatters.org/blog/2013/05/29/fox-expands-irs-scandal-to-include-legitimate-p/194261 http://mediamatters.org/blog/2013/05/30/foxs-latest-irs-attack-debunked-by-foxs-source/194268 9 https://www.propublica.org/about/ 10 https://www.propublica.org/article/how-irs-nonprofit-division-got-so-dysfunctional 11 https://www.propublica.org/article/six-facts-lost-in-irs-scandal 12 https://www.propublica.org/article/irs-office-that-targeted-tea-party-also-disclosed-confidential-docs 13 https://www.propublica.org/series/buying-your-vote/ 14 https://www.propublica.org/article/how-nonprofits-spend-millions-on-elections-and-call-it-publicwelfare 15 https://projects.propublica.org/nonprofits/ 16 https://www.propublica.org/getinvolved/item/top-13-questions-from-our-qa-on-dark-money-in-the-2012campaign 17 https://projects.propublica.org/dark-money/

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IRS NGO = non-profit status

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 Groups that reported no political spending in tax returns  Liberal groups  Conservative groups  Grant makers to political nonprofits Two federal court rulings in 2010 paved the way for the ascent of “super PACs,” political action committees that can raise and spend unlimited amounts of money on political races, as long as they don’t coordinate with a specific candidate . And so far, they’re spending heavily on the Republican race. This app, part of our long-term investigation into "dark money," keeps track of where super PACs are spending and raising their cash to influence the presidential and congressional races.18

US House 2013-05-17 Ways Means (2013 May 22)
The House Ways and Means committee held a hearing May 17, 2013. 19 I watched this on C-Span, but now I cannot find it on the C-Span web site. There were 2 witnesses: J. Russell George Testimony Treasury Inspector General for Tax Administration (TIGTA) Steve Miller Testimony Acting Commissioner of the Internal Revenue Service (IRS) Almost every Congressional hearing gets news media coverage. 20 See the footnotes for stories about this one.21

US House 2013-05-22 Oversight on NGOs (2013 May 22)
The US House of Representatives committee on Oversight and Government Reform22 held a long hearing (almost 6 hours) on May 22, 2013, into IRS scrutiny of groups seeking certain kinds of tax-exempt status. The committee plans additional hearings on this topic. There were 4 witnesses at this hearing, of which one was excused early, because she took the 5th amendment:  J. Russell George, Treasury Inspector General for Tax Administration  Douglas Shulman, Former Commissioner, Internal Revenue Service  Neal S. Wolin, Deputy Secretary, Department of the Treasury  Lois Lerner, Director of Exempt Organizations, Internal Revenue Service, who took the 5th amendment.

18 19

https://projects.propublica.org/pactrack/#contributions=all http://waysandmeans.house.gov/calendar/eventsingle.aspx?EventID=333643 http://waysandmeans.house.gov/news/documentsingle.aspx?DocumentID=333636 20 There are meetings held in secret, to cover classified material, and secret laws, which the public is not supposed to know anything about, but sometimes even them suffer from leaks. 21 https://www.propublica.org/article/how-irs-nonprofit-division-got-so-dysfunctional 22 http://oversight.house.gov/

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IRS NGO = non-profit status

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Unfortunately it is not 6 hours of information, because many politicians asked the same questions repetitively. In other words there were some questions where: 1. Politician asks question. 2. Witness starts to answer, then is interrupted by politician. 3. Politician asks same question. 4. Repeat steps 2-3 several times. 5. Another politician asks same question. 6. Repeat steps 2-3 several times for that politician. 7. Repeat step 5 many times, with same pattern. You can watch it here on C-Span.23 There was a bathroom voting break after almost 5 hours. Here is part 1.24 Here is part 2.25 Some of the C-Span links have additional info, such as textual transcripts, in a format which is not easy to process, given the huge time frame. One of the 4 people, on the witness panel, said in advance that she would invoke the 5th amendment.26 However when the hearing came, she had a brief opening statement, then she verified the accuracy of testimony she had given TIGTA, which TIGTA had supplied the committee. This has led to some politicians questioning whether her brief statements might invalidate her 5th amendment claim, because in a court, which this hearing is not, witnesses cannot always pick and choose which questions they will take the 5th on. Usually it is all or nothing. There is also discussion whether she should be offered immunity.

US House 2013-06-03 Appropriations (2013 June 04)
The US House Appropriations27 sub-committee on Financial Services and General Government 28 held a hearing June 03, 2013 which lasted just over 2 hours. 29 There were 2 witnesses:  Mr. Daniel Werfel, the latest new Acting Commissioner, Internal Revenue Service IIRS) who has now been on the job 12 days.  The Honorable J. Russell George, Treasury Inspector General for Tax Administration (TIGTA), United States Department of the Treasury, Washington, DC. Here is some info relevant to this hearing, at the committee web site: 06.03.13 Financial Services - IRS Oversight - Chairman Rogers - Opening Statement 06.03.13 Financial Services - IRS Oversight - Chairman Crenshaw - Opening Statement

23 24

http://www.c-spanvideo.org/event/219068 http://www.c-spanvideo.org/program/CmteH 25 http://www.c-spanvideo.org/program/Scrut 26 http://www.latimes.com/news/politics/la-pn-top-irs-official-fifth-amendment-20130521,0,6645565.story 27 http://appropriations.house.gov/subcommittees/ 28 http://appropriations.house.gov/issues/issue/?IssueID=34780 29 http://www.huffingtonpost.com/2013/05/29/irs-hearings_n_3352814.html

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I downloaded both witness statements labeling my copies: House Ap Fin XXX 2013 June 03 Where XXX = TIGTA or Werfel I may use some of this material in these notes, where my citations will probably be: Testimony of NAME (of person), TITLE to US Appropriations sub-committee on Financial Services and General Government hearing June 3, 2013. 06.03.13 Financial Services - IRS Oversight - J. Russell George - Testimony (13 pages) TIGTA testimony included IRS schedule for implementing TIGTA recommendations. 06.03.13 Financial Services - IRS Oversight - Danny Werfel - Testimony (6 pages) Daniel Werfel testimony named FOUR managers who have been replaced, so far, in the wake of the IRS scandals. I viewed the hearing described above, on Monday June 03 evening. The summaries of testimony of the 2 witnesses rattled off info which was new to me, not yet in other hearings, or the part of the TIGTA report on exempt organizations which I had read so far.

US House 2013-06-03 Financial (2013 June 03)
The US House Financial Services Committee had a hearing scheduled June 3, 2013. Some sources may be confusing this with the Financial Services Subcommittee of the Appropriations Committee. Here it is on C-Span-3 Monday June-3.
 House Financial Services Subcmte. Hearing on IRS Oversight (3pm Eastern) - LIVE Do not confuse this with the Senate Finance committee hearing, May-21. I have not yet viewed the hearing described above.

US House 2013-06-04 Ways Means (2013 May 31)
The US House Ways & Means Committee had a hearing June 4, 2013, with some organizations which the IRS inflicted with unreasonable questions, and other problems. 30
Witness List

Mr. John Eastman Chairman, National Organization for Marriage (NOM) Testimony (8 pages) Ms. Dianne Belsom
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http://waysandmeans.house.gov/calendar/eventsingle.aspx?EventID=335744 http://www.huffingtonpost.com/2013/05/29/irs-hearings_n_3352814.html

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IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

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IRS NGO = non-profit status

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Laurens County Tea Party (LCTP) Testimony (2 pages) I am familiar with some groups which organize efforts to get candidate platforms to the general public, comparing their stands on important issues, and doing this in a nonpartisan fashion. This group is doing something like that, except that the selected issues they ask candidates about, are issues important to conservatives. The testimony includes a time line of their dealings with the IRS, which I have merged with my time line. See:     July 22, 2010 original application for 501 c 4 status Aug 11, 2010 promise that if any info is desired, it will be requested in 90 days Sep 6, 2012 request for info Jan 31, 2013 request for more info

The above testimony is not copyrighted, so I see no reason why I cannot upload it to Scribd. Ms. Becky Gerritson Wetumpka Tea Party (WTP) Testimony (5 pages) Ms. Karen Kenney San Fernando Valley Patriots (SFVP) Testimony (5 pages) Mr. Kevin Kookogey Founder and President, Linchpins of Liberty (LL) Testimony (4 pages) Ms. Sue Martinek Coalition for Life of Iowa (CLI) Testimony (3 pages) This is a religious and educational group, which is opposed to abortion. The above testimony is not copyrighted, so I see no reason why I cannot upload it to Scribd. I downloaded all of the above, labeling my copies as: House Way Mean XXX 2013 Jun 04 Where XXX = initials of the organization involved. I may use some of this material in these notes, where my citations will probably be: Testimony of NAME (of person) with ORG (NAME) to US House Ways & Means Committee hearing June 4, 2013.

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IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

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IRS NGO = non-profit status

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This was second hearing of this committee. See May-17 for details on the earlier one. It was scheduled for early in the morning. I was up in time for it, did not know what channel, checked all C-Span. Two were showing House & Senate floor speeches, 3rd was showing Sexual Abuse in Military hearing. Some time later I checked the channels again, and came into middle of Q+A on this, which after a while got interrupted when the House gaveled open. I hope C-Span will show it again later.

US House 2013-06-06 Oversight on Conference (2013 Jun 09)
House Committee on Oversight and Government Reform had a hearing June 6, 2013 on the Treasury Inspector General for Tax Administration (TIGTA) report on the Aug 2010 IRS conference in Anaheim Ca, where excessive taxpayer $ was spent. TIGTA had found out, thanks to an IRS employee informing them. Here is Info about this hearing at the House Committee site.31 The first panel were people from TIGTA, and IRS leadership responsible for this conference. As usual, the IRS leader did not know much about it until after the scandal broke. The second panel was the new acting commissioner of the IRS, Daniel Werfel, who had now been on the job 2 weeks. He says he has observed problems in 3 major areas of risk:  Taxpayer info should be kept confidential;  IRS should be impartial;  IRS should keep costs down, spend money wisely. He has a team, with outside relevant expertise, to help him address all these areas, work towards transparency of IRS operations, and perform better. I watched part of the hearing. The IRS people at that conference were doing Banker’s hours, which I will explain within my separate section on TIGTA audits. Conference attendees made a video, which is an insult to the memory of Star Trek, and had the audacity to have the taxpayers fund it. There were some references in the hearing to issues for which I do not yet have a clear understanding.  GSA conference scandal led to government reforms. What GSA conference?  The IRS buys swag. What is swag?  A guy in a hot tub. What?

31

http://oversight.house.gov/release/oversight-releases-ig-report-on-irs-conference-spending-hearingthursday/

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IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

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IRS NGO = non-profit status

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US Senate 2013-05-21 Finance (2013 May 31)
The US Senate Finance Committee had a hearing May 21, 2013, which lasted just over 3 hours, with a break near the middle. There were 3 witnesses:  The Honorable J. Russell George, Treasury Inspector General for Tax Administration, United States Department of the Treasury, Washington, DC. Here is an 11 page statement he submitted to the hearing, 32 which he summarized in his opening remarks.  Mr. Steven Miller, Acting Commissioner, Internal Revenue Service (IRS), Washington, DC, who has resigned at the request of the President and Secretary of the Treasury, but continues to serve until the replacement Commissioner arrives.  The Honorable Douglas Shulman, Former IRS Commissioner, Guest Scholar, Brookings Institution, Washington, DC He had the job or IRS commissioner for 4 years and 8 months ending in Nov 2012, when Mr Miller took over. Here is info about this hearing, at the Senate Finance Committee web site. 33 You can watch it here on C-Span, or at the above Senate Finance Committee site. Here is Part 1.34 Here is Part 2.35

Wikipedia (2013 May 22)
Wikipedia is edited by volunteers from all over the world. The USA is politically to the right of the political spectrum of the world, so Wikipedia tends to be to the left of US politics. Here is their general article on the IRS,36 which has links to related articles on various alleged abuses,37 and controversies.38 Here is Wikipedia article on the latest controversy.39

Glossary of Terminology (2013 June 03)
Just in case we are using acronyms, abbreviations, etc. which are unfamiliar to some people.  1 in 7 … for every $1 to the IRS for whatever function, the government gets $7 back in funds, which we would not be getting, were it not for the IRS performing that function, according to a politician at one of the hearings.  1 in 5 … for every 5 tax credit refunds from the IRS for Earned Income tax credits, one of them is improper, according to a politician at one of the hearings.
32 33

http://www.finance.senate.gov/imo/media/doc/J%20Russell%20George%20Hearing%20Testimony.pdf http://www.finance.senate.gov/hearings/hearing/?id=9b0a1cc8-5056-a032-5219-3e11fc44d504 34 http://www.c-spanvideo.org/program/RSSc 35 http://www.c-spanvideo.org/program/IRSand 36 https://en.wikipedia.org/wiki/Internal_Revenue_Service 37 https://en.wikipedia.org/wiki/Internal_Revenue_Service#Allegations_of_abuse 38 https://en.wikipedia.org/wiki/Political_profiling_at_the_Internal_Revenue_Service 39 https://en.wikipedia.org/wiki/2013_IRS_scandal

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IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

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  

IRS NGO = non-profit status

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120 days = IRS target time to process these tax-exempt applications o 1200 days is how long some of them have been processed, and not yet resolved. 400-500 days is how long some of the tax-exempt applications have been waiting for IRS resolution, according to some politicians at Congress hearings. 501© 3 = a popular type of non-profit40 organization thru the IRS, which can receive tax deductable contributions, does not need to publicly disclose contributors, must stay out of political campaigns, but may do limited lobbying, and educational advocacy. However, see Citizen’s United which tore up the rule booklet on political activities. Exactly what kinds of donations are tax deductable depends on the type of 501 © 3 involved. o The IRS received applications for tax exempt status for 501 © 3: o 65,179 in 2009 o 59,486 in 2010 o 58,712 in 2011 o 66,543 in 2012 501 © 4 and 5 and 6 = other kinds of organizations, which do not enjoy non-profit status, for contributors, so do not need not apply with the IRS for any special status. However, they do need to apply to the IRS it they want to be tax-exempt.41 Any political campaign participation must be limited (not its primary activity). These type tax-exempt organizations do not need to publicly disclose contributors. They may engage in lobbying and advocacy when that is the purpose for which they exist. However, see Citizen’s United which tore up the rule booklet on constraints on political activities. 501 © 4 = a social welfare organization. The IRS received application for tax exempt status for 501 © 4: o 1,751 in 2009 o 1,735 in 2010 o 2,265 in 2011 o 3,357 in 2012 501 © 5 = agriculture or labor organization. The IRS received application for tax exempt status for 501 © 5: o 543 in 2009 o 290 in 2010 o 409 in 2011 o 1,081 in 2012 501 © 6 = business league The IRS received application for tax exempt status for 501 © 6: o 1,828 in 2009 o 1,637 in 2010

40

http://www.stayexempt.irs.gov/ http://www.irs.gov/Charities-&-Non-Profits/How-to-Apply-to-Be-Tax-Exempt-1 https://en.wikipedia.org/wiki/501%28c%29%284%29 41 For example, a school might get most of its money thru fees for people to take classes, so that’s not tax deductable for the students. But the school might not want to be paying income taxes on those fees, or property taxes on the school real estate.

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IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

14
o 1,836 in 2011 o 2,338 in 2012

IRS NGO = non-profit status

6/10/2013 7:59:52 AM

According to the IRS Publication 557†, in the Organization Reference Chart section, the following is an exact list of 501(c) organization types and their corresponding descriptions.42                          501(c)(1) — Corporations Organized Under Act of Congress (including Federal Credit Unions43) 501(c)(2) — Title Holding Corporation for Exempt Organization[2] 501(c)(3) — Religious, Educational, Charitable, Scientific, Literary, Testing for Public Safety, to Foster National or International Amateur Sports Competition, or Prevention of Cruelty to Children or Animals Organizations 501(c)(4) — Civic Leagues, Social Welfare Organizations, and Local Associations of Employees 501(c)(5) — Labor, Agricultural, and Horticultural Organizations 501(c)(6) — Business Leagues, Chambers of Commerce, Real Estate Boards, etc. 501(c)(7) — Social and Recreational Clubs 501(c)(8) — Fraternal Beneficiary Societies and Associations 501(c)(9) — Voluntary Employee Beneficiary Associations 501(c)(10) — Domestic Fraternal Societies and Associations 501(c)(11) — Teachers' Retirement Fund Associations 501(c)(12) — Benevolent Life Insurance Associations, Mutual Ditch or Irrigation Companies, Mutual or Cooperative Telephone Companies, etc. 501(c)(13) — Cemetery Companies 501(c)(14) — State-Chartered Credit Unions, Mutual Reserve Funds 501(c)(15) — Mutual Insurance Companies or Associations 501(c)(16) — Cooperative Organizations to Finance Crop Operations 501(c)(17) — Supplemental Unemployment Benefit Trusts 501(c)(18) — Employee Funded Pension Trust (created before June 25, 1959) 501(c)(19) — Post or Organization of Past or Present Members of the Armed Forces 501(c)(20) — Group Legal Services Plan Organizations, are no longer tax exempt, but may be converted into some other relevant category such as (9) 501(c)(21) — Black lung Benefit Trusts 501(c)(22) — Withdrawal Liability Payment Fund 501(c)(23) — Veterans Organization (created before 1880) 501(c)(24) — Section 4049 ERISA Trusts, has been repealed 501(c)(25) — Title Holding Corporations or Trusts with Multiple Parents

42

https://en.wikipedia.org/wiki/501%28c%29%284%29 IRS, Publication 557 "Tax-Exempt Status For Your Organization", pp. 65-66, (Rev. June 2008), Cat. No 46573C. IRS.gov 43 https://en.wikipedia.org/wiki/Federal_Credit_Union_Act

14

IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

15
   

IRS NGO = non-profit status

6/10/2013 7:59:52 AM

501(c)(26) — State-Sponsored Organization Providing Health Coverage for HighRisk Individuals 501(c)(27) — State-Sponsored Workers' Compensation Reinsurance Organization 501(c)(28) — National Railroad Retirement Investment Trust 501(c)(29) — Qualified Nonprofit Health Insurance Issuers (Created in section 1322(h)(1) of the Affordable Care Act)

Why do groups go with 501 C 4 as opposed to 527? I suspect an element of this is confusion and ignorance regarding the relative pros & cons of different alternatives. Years ago I have been in groups which considered non-profit status, where there was a stampede to go to 501 C 3 because most people thought that was the most logical. They were unwilling to consider pros & cons of alternatives, because they were convinced, based on zero evidence they could cite to me, that 501 C 3 was the way to go.

Beyond 501 c (2013 May 30)
 527 is the IRS definition of a political committee, which has to report its donors to the IRS.44 The IRS makes those donors public. Other non-profits have to report their donors to the IRS. But the IRS doesn't make those donors publ ic… So: A super PAC with the Federal Election Commission (FEC) is a 527 with the IRS. A 501c4, with the IRS, is simply an outside spending group with the FEC. 90,000+ employees at IRS $ 440 million is what we were told in one hearing, by a politician, is what is the budget request for 2014 for the IRS to run Obama Care. $1 billion is what has been cut from IRS budget in the last couple years, according to IRS leaders testifying to Congress, which has dramatically reduced training, and the IRS no longer has the resources to do their job properly. o If true, I believe a lot of this could be recovered if the IRS could fix the problem of improper tax refunds to criminals. The IRS is unable to effectively deal with over ½ million taxpayers (including corporations) who are new victims of identity theft for the purpose of claiming improper tax refunds, many of which the IRS pays out.45 o However, in later hearings, at least one politician cited a GAO report, from 2012, showing that the claim of $1 Billion budget cut was totally false. This GAO report was before Sequestration. However, lack of funds for training had been given as one reason why these mistakes were made, dating back to 2010, when the budget cuts were in the minds of IRS leaders testifying in 2013, but not in the reality of the GAO report.

  

44

https://www.propublica.org/getinvolved/item/top-13-questions-from-our-qa-on-dark-money-in-the-2012campaign 45 I address this topic early on in my Solution Ideas. http://www.scribd.com/doc/119857289/Solution-Ideas

15

IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

16
  

IRS NGO = non-profit status

6/10/2013 7:59:52 AM

$ 10 billion is what we were told in one hearing, by a politician, is what is appropriately annually to run the IRS. $ 12.9 billion is what we were told in one hearing, by a politician, is what is the request for 2014 to run the IRS. $ 13.5 billion is what we were told in one hearing, by a politician, is what the IRS pays out, and is unable to recover, just in 2012, for improper tax refunds.

#s / alpha (2013 June 03)
  ABA = American Nar Association Acting IRS Commissioner: Steven Miller had that title, Nov 2012 thru May 2013; Daniel Werfel has that title, starting May 2013. But Douglas Shulman was IRS Commissioner, without the Acting in his title, Could it be that Congress foot dragging, on approving the nomination of Mr Miller for the job, have something to do with problems at the IRS? AP = Associated Press Audit – see Political Motivation BOLO = Be On the Look Out Break-down = terminology similar to Glitch and Mis-Step, where something got done wrong, but we may not know why. The first TIGTA audit into improper handling of tax-exempt status was to find out what was happening., as compared to what should be happening. Going into that audit, the inspectors did not know if the accusations had merit. This audit found lots of suspicions that a later audit is needed to pursue the why. Catch 22 = Title of a book describing how government regulations and systems are often so messed up and contradictory as to prohibit people of good will performing in ways the people might reasonably expect of them. Charities allow donors to deduct donations, while social welfare nonprofits don’t.46 Charities must register with the IRS for tax-exempt status, while social welfare non-profits do not need to, so that the IRS can try to identify crooked charities. Citizen’s United = a US Supreme Court case which declared that corporations have many of the same citizen rights as human people, including freedom of political speech, which includes political donations.47 o Since the Court ruled, in Citizen’s United, that the First Amendment prohibits the government from restricting political independent expenditures by corporations, associations, or labor unions; and o Since most non-profit organizations are also corporations or associations;48 o Then it stands to reason that all the tax-exempt rules which say this or that kind of non-profit may not participate in political activities, or must spend most of their money on the purpose for the non-profit, are no longer valid.

   

 

46 47

https://www.propublica.org/article/six-facts-lost-in-irs-scandal https://en.wikipedia.org/wiki/Citizens_United_v._Federal_Election_Commission 48 Some are churches and other religious organizations.

16

IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

17
  

IRS NGO = non-profit status

6/10/2013 7:59:52 AM

o It appears as if the US Government has been ignoring this implication in the regulation of tax-exempt status organizations. CREW49 = Citizens for Ethics in Washington. CRS = Congressional Research Service, a think tank for Congress.

D+ Terminology (2013 June 03)
"Dark money" is a way of describing groups which don't disclose their donors for political ads. Currently, most of the groups doing this are social-welfare nonprofits, although trade associations like the U.S. Chamber of Commerce are also dark money groups.50 See more links in Sources, under Pro Publica. DoJ = US Department of Justice Embezzlement … I got in trouble at a day job over 20 years ago, for using this term differently from how my management believed it should be used. This is relevant to politicians claiming there was malfeasance at the IRS, where they as yet are lacking any direct evidence, or smoking gun, of what person(s) made decision(s) to engage in illegal activity, or instruct others to do so. o My definition of embezzlement, at the time, was employees making mistakes, which led to them getting money from the company, which they would not have been entitled to, had they not made the mistakes. As far as I was concerned, it did not matter if the mistakes were by accident, or on purpose. o My employer’s chain of command over me in this matter, said that anyone can make mistakes, and that human mistakes are never criminal. Embezzlement is someone stealing cash money from the company, and leaving with it for South America. o A couple months later, a co-worker was fired, because she had taken checks written to the company from customers, deposited in a personal bank account, but not left the country. I asked about that. Did the fact that she did not leave for South America mean that it was not embezzlement, or was it that she took checks, and not cash, mean it was not embezzlement. I was told by the same person who gave me the earlier definition that it was not embezzlement because it was stealing. o It seems to me that in the current controversy, there are politicians applying a system of logic similar to my definition of embezzlement from 20 years ago, while my dispute with this logic is that under the constitution, you have to have smoking gun evidence, which will stand up in a court of law, before you can punish someone for what you suspect may be their motives. o The political accusation of malfeasance or corruption seems to be that some IRS employees took actions which were incorrect interpretations of the tax code, and thus they are automatically guilty, irrespective of

 

49

CREW = Citizens for Ethics in Washington

http://www.citizensforethics.org/press/entry/crew-statement-on-increasing-scrutiny-of-irs-501c4 http://www.citizensforethics.org/blog/entry/the-real-problem-at-the-irs 50 https://www.propublica.org/getinvolved/item/top-13-questions-from-our-qa-on-dark-money-in-the-2012campaign

17

IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

18

IRS NGO = non-profit status

6/10/2013 7:59:52 AM

 

     

whether that action was taken through ignorance of how Citizen’s United changed the tax code, or whether some un-identified boss told them to take those actions, or whether their actions were politically motivated. EO = Exempt Organizations Exclusively (in the law) vs. Primarily (in the regulations) is a problem illuminated throughout these notes. This has been explained by CREW51 and MSNBC, which thought IRS had done it, but Congress hearings illuminated Treasury responsibility. a. For more on the nuances of this mistake, see my chapters on: b. My Absurd Suggestions; c. Tax Laws; d. Treasury Mistakes; FEC = Federal Elections Commission. They vet much larger groups, than those the IRS was dealing with which made applications for non-profit-status, that spent hundreds of thousands and even millions in anonymous money to run election ads. There is no evidence, from the initial investigations, that the IRS worked with FEC data, in evaluating the applications.52 Fiscal Year = A 12-consecutive-month period ending on or near the last calendar day of any month. Fiscal Year Federal = The Federal Government’s fiscal year begins on October 1 and ends on September 30. GAO = US General Accountability Office GO = Governmental Organization, see NGO.

I+ Terminology (2013 June 07)
IG = Inspector General Sarah Hall Ingram, served as the IRS’ commissioner for the Tax Exempt and Government Entities Division for a portion of the period under the IG’s review. Ingram is now the director of the IRS’ Affordable Care Act office (not “running” Obamacare, just overseeing the IRS end).53 Investigation – see Political Motivation I.R.C. = Internal Revenue Code54 IRS = US Internal Revenue Service,55 best known for collecting Income Taxes. This is a US government agency within the Department of the Treasury. Lying = deliberately not telling the truth. I suspect some people are lying, but it is libelous to accuse someone of lying without smoking gun evidence which can stand up in a court of law. Here I try to share what truths I have found, and avoid repeating speculations about lying or wrong doing, which can not yet be proven.

   

51

CREW = Citizens for Ethics in Washington

http://www.citizensforethics.org/press/entry/crew-statement-on-increasing-scrutiny-of-irs-501c4 http://www.citizensforethics.org/blog/entry/the-real-problem-at-the-irs 52 https://www.propublica.org/article/how-irs-nonprofit-division-got-so-dysfunctional 53 http://factcheck.org/2013/05/republican-overreach-on-irs/ 54 http://www.irs.gov/Charities-&-Non-Profits 55 https://en.wikipedia.org/wiki/Internal_Revenue_Service

18

IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

19

IRS NGO = non-profit status

6/10/2013 7:59:52 AM

 

 

Mis-step = someone or some organization did something wrong. We do not yet know if it was an honest mistake, or deliberate malfeasance on the part of the people doing wrong, or by some other person who led them astray.56 NGO = Non-Governmental Organization, invariably also non-profit corporation, but not exclusively. Since many non-profits are in fact NGOs, this is a convenient labeling for me. Political Appointee = a person gets the job through the political process. Mr Shulman (IRS Commissioner 2008-2012) in a Congressional hearing said he lets Civil Servants handle political activity matters, because he considers it inappropriate for a political appointee to have hands on political activity matters. Political Motivation = suspicion of why some things were done a particular way o TIGTA is not saying there was none, rather o TIGTA did not yet find smoking gun proof. o TIGTA did an AUDIT, not an INVESTIGATION o The function of an AUDIT is to find out what the heck is going on with the process. o The function of an INVESTIGATION is to find out who is responsible, who authorized, and who implemented, the bad stuff. Scandal = any alleged wrongdoing in government is the responsibility of the person at the top, whether or not they knew anything about it. Congressional Republicans are trying to find any evidence that the President was somehow responsible for 100% of scandals in US government. I believe Congress shares equal responsibility for not having competent oversight. Smell Test = an organization seems suspicious, but an investigation is needed to find out for sure. Suspicions … there are some we may never know for sure. o Abu Graib … was that ordered by the Vice President of the USA, was it ordered by someone else in Washington DC, or military chain of command, or was it only by the low level people? We

56

We now know with Fast & Furious that people were put in charge of that operation whose training lacked how to do certain actions, such as work with foreign nations to trace smuggling. Since the mission included those very actions, Fast & Furious leadership re-invented the wheel. But where the topic where they lacked training, was well developed, their re-invention was deeply flawed, due to their inexperience. Lower level employees spoke out that this was wrong, pointed to various risks, but they were suppressed by the leadership, on the grounds that their voices were sabotaging the operation, they were bad employees. Keep this up and they could be fired for cause, given a bad record vs. future employment possibilities. The cause of this problem was a failure of higher management to ensure that the people placed in charge of Fast & Furious had the relevant training to do the job right. We do not yet know if the situation at the IRS was similar, but I speculate there may have been a failure of Washington DC IRS management to provide training for relevant personnel in the implications of the US Supreme Court case Citizen’s United. Further the fact that the Cincinnati office was supposed to process the tax-exempt applications in 120 days or less, but they had to wait 13 months for answers to questions, should have been reported to higher management. The 120 days is on hold, waiting on answers to questions, and how long we have been waiting for those answers, once it became a big chunk of the 120 days.

19

IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

20

IRS NGO = non-profit status

6/10/2013 7:59:52 AM

know there have been many investigations, but it is quite possible that the answers have been classified top secret.

T+ Terminology (2013 June 03)
   TEGED = Tax Exempt and Government Entities Division of the IRS. TIGTA = US Treasury Inspector General for Tax Administration57 TIGTA guy is the actual person in charge of TIGTA. The name TIGTA is both the guy, and the various auditors working that office, with many investigations, not just this one. Thus, I use “TIGTA guy” to reference the person with the title, and “TIGTA” to reference the collective office the guy is in charge of.
“TIGTA report” … many places in these notes, I say “according to the TIGTA report” but now I know there are many reports. When I say this, I am referring to the first one I studied, which is about IRS NGO mistakes, processing applications for tax exempt organizations.

 

Treasury = US Department of the Treasury Unintended Consequences = evidence of politicians not doing a good job. o Let’s suppose I am in a traffic accident, and it is found to have been caused by a combination of me being drunk, and there’s a malfunction in my auto, which could have been avoided with proper maintenance. I could claim that the accident was not intentional, that this was the unintended consequences of me not being caught up on auto maintenance, and having a bit too much to drink. No traffic court nor police would find this to be an acceptable explanation. o However, if we use the analogy of the nation being a vehicle, whose driver is Congress, we are in one horrendous accident after another, as a result of laws passed by Congress, in which the politicians explain that the accidents were unintended consequences of laws written by them. They get away with this explanation. Whistle Blower = A person who is vilified by government and corporations, sometimes imprisoned, because they put patriotism ahead of their job loyalty, to report what they believe to be evidence of serious wrong doing. There are consequences from the combination of: severity of what happens to most whistle blowers; security clearances often not supplied to anyone working in some Inspector General offices; and a lack of public education on where are the appropriate places for potential whistle blowers to make reports. These consequences include: o Lots of wrong doing is never reported. o Would be whistle blowers do leaks to news media, of government secrets, where the leakers seek to be anonymous. They want to get enough info out to trigger an investigation, then stay out of it. In consequence of this, sometimes the amount of info released to the general public is inappropriate, but the leaker lacks guidance in what should be released, thanks to the Catch-22 of the combination I described above.

57

http://www.treasury.gov/tigta

20

IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

21
      

IRS NGO = non-profit status

6/10/2013 7:59:52 AM

Who’s Who (2013 May 29)
Mr. Ken Corbin, Acting Director of EO (Exempt Organizations) at the IRS, placed in this position May 23, 2013, the day after former director Ms. Lois Lerner took the 5th at a House Oversight committee hearing.58 Mr. J Russell George = person in charge of TIGTA,59 the guy with that title. Ms Lois Lerner, Director of EO (Exempt Organizations) at the IRS. She was removed from this position May 23, 2013, the day after she took the 5 th at the House Oversight committee hearing, and replaced with Mr. Ken Corbin. Mr. Steve Miller, IRS Commissioner from Nov 2012 to May 2013 under Obama administrations. He replaced Mr. Shulman, then in turn was replaced by Mr. Werfel. Mr. Douglas Shulman, IRS Commissioner from March 2008 to Nov 2012, under Bush and Obama administrations. He was replaced in this position by Mr. Steven Miller, who previously had been Mr Shulman’s deputy. Mr. Danny Werfel = IRS Commissioner, appointed in May 2013 by President Obama, replacing Mr. Steve Miller, who was asked to resign because this scandal occurred on his watch. Mr Neal S. Wolin = Deputy Treasury Secretary. It is to him that the IRS Commissioner reports.

Organizational Background (2013 May 23)
Organizations, such as charities, seeking Federal tax exemption are required to file an application with the Internal Revenue Service (IRS). Other organizations, such as social welfare organizations, may file an application but are not required to do so. The list below, showing the table of organization, was copied from the TIGTA report, but according to a Congress hearing I watched on C-Span, there are some people mentioned in the report, missing from this big picture. I made updates to the chart as I digested info from multiple sources. The IRS’s Exempt Organizations (EO) function, Rulings and Agreements office, which is headquartered in Washington, D.C., is responsible for processing applications for tax exemption. Within the Rulings and Agreements office, the Determinations Unit in Cincinnati, Ohio, is responsible for reviewing applications as they are received to determine whether the organization qualifies for tax-exempt status. Footnotes, on each of these people, help show who knew when, that there were what kinds of problems at the IRS.  
58 59

President of USA & Congress – the buck stops with them. Secretary of the Treasury – is appointed by the President, if Senate confirms, is a member of the President’s Cabinet, reports to the President.

Also see the hearing in sources, and additional context in the time line – multiple events May 2013. TIGTA = Treasury Inspector General for Tax Administration.

21

IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

22
   

IRS NGO = non-profit status

6/10/2013 7:59:52 AM

o Treasury has several Inspector Generals. The IRS is audited by TIGTA = US Treasury Inspector General for Tax Administration60 Deputy Treasury Secretary, reports to the Secretary of the Treasury.61 Commissioner of the Internal Revenue Service (IRS) – is appointed by the President, reports to the Deputy Secretary of the Treasury. Deputy Commissioner for Services and Enforcement,62 located in Washington DC, reports to the Commissioner of the IRS. Acting Commissioner, Tax Exempt and Government Entities division (TEGED), located in Washington DC, reports to the Deputy Commissioner for Services and Enforcement. o This person has a Senior Technical Advisor63 in Washington DC. Director, Exempt Organizations (EO),64 located in Washington DC, reports to the Acting Commissioner of TEGED.  Marcus Owens ran the Exempt Organizations division from 1990 to 2000.65 o This person has a Senior Technical Advisor in Washington DC. Director of Rulings and Agreements (RA), 66 located in Washington DC, reports to the Director of EO.  In 2012, the total personnel in RA were less than 0.5 % of the total personnel in the entire IRS.67 o Manager of Technical Unit, 68 in Washington DC, reports to the Director of Rulings and Agreements.  This person has several Technical Specialists, also in DC. o Program Manager of Determinations Unit69 in Cincinnati Oh, reports to the Director of Rulings and Agreements.  This person has several Determination Specialists, in Cincinnati Oh.

60 61

http://www.treasury.gov/tigta

Mr Neal Wolin testified to Congress May 22, 2013. At that time he was the Deputy Treasury Secretary in charge of Treasury dealings with the IRS. 62 See March 2012 in time line for Deputy Commissioner for S+E launching an internal IRS investigation. 63 See March 2012 in time line for this STA of Acting Commissioner of TEGED being asked to launch an internal IRS investigation. See April 2012 for the results of that investigation. 64 See July 2011 in time line for EO Director trying to fix the bad criteria. See Feb Mar Apr 2012 in time line for EO Director fixing the time for organizations to submit the info. 65 https://www.propublica.org/article/how-irs-nonprofit-division-got-so-dysfunctional 66 See Oct 2010 in time line, for the RA Director clarifying mess for the auditors. See May 2012 in time line for RA Director trying to fix the bad criteria, and the process of managing the criteria. 67 https://www.propublica.org/article/how-irs-nonprofit-division-got-so-dysfunctional Source: IRS Data Books, IRS Exempt Organizations Annual Report 68 See time line. The Technical Unit is mentioned prominently throughout. 69 See time line. The Determinations Unit is mentioned prominently throughout. See April & Oct 2010 in time line, for Program Manager of Determinations Unit involvement in the beginning of the scandal.

22

IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

23

IRS NGO = non-profit status

6/10/2013 7:59:52 AM

o Manager of Guidance Unit, in Washington DC, reports to the Director of Rulings and Agreements.  This person has several Guidance Specialists, in DC.

Tax Laws (2013 May 29)
See Time Line, and Mistakes sections, for significant changes in tax law, and IRS tax practices, such as:  Late 1950’s = I do not have a good date yet, where the law says EXCLUSIVELY, but Treasury regulations say PRIMARILY.  1990’s streamlining the IRS included wiping out guidelines for processing nonprofit applications.  2010 Jan 21 Citizen’s United US Supreme Court Ruling tore up the rules, but many institutions ignored this (Congress, Treasury, IRS).  2010 to 2012 May: dysfunctional management & communications at the IRS. Every organization which has been recognized as tax exempt by the IRS has to file Form 990 every year, unless they make less than $200,000 in revenue and have less than $500,000 in assets, in which case they have to file form 990-EZ. Organizations making less than $50,000 don’t have to file either form but do have to let the IRS they’re still in business via an "e-Postcard."70 United States federal tax law, specifically Section 501(c)(4)71 of the Internal Revenue Code (26 U.S.C. § 501(c)), generally exempts certain types of nonprofit organizations from federal income tax.72 The original intent of the statutory language, passed by Congress, and signed into law by the President, of IRC 501(c)(4) generally requires civic organizations described in that section to be "operated exclusively for the promotion of social welfare". Treasury regulations interpreting this statutory language apply a more relaxed standard, namely, that the organization "is operated primarily for the purpose of bringing about civic betterments and social improvements."73 As a result, the IRS traditionally has permitted organizations described in IRC 501(c)(4) to engage in lobbying and political campaign activities if those activities are not the organization's primary activity.74 Some of the discussion of the latest scandals, have concluded that had the regulations not altered interpretation of the law in this way, we would never have had the scandal, because these organizations would not have been able to combine tax exempt with political activities. Also, see Citizen’s United, in the Glossary, which tore up the rule booklet on political activities.

70 71

https://projects.propublica.org/nonprofits/ https://en.wikipedia.org/wiki/501%28c%29%284%29 72 https://en.wikipedia.org/wiki/2013_IRS_scandal 73 26 CFR 1.501(c)(4)-1(a)(2)(i) 74 https://en.wikipedia.org/wiki/2013_IRS_scandal "IRS To Look At Political Activity of Section 501(c)(4) Organizations"

23

IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

24

IRS NGO = non-profit status

6/10/2013 7:59:52 AM

Time Line (2013 June 03)
Some stuff, I do not have dates handy, but will add to this as I find them. This time line has oldest stuff on top, newest on bottom. There will be some chapter headings at strategic intervals to aid navigation. February 3, 1913: Federal Income Taxation was authorized by the 16 th amendment to the US constitution.75
According to Pro Publica:

Donors, who give to social welfare nonprofits, can stay secret, for very good reasons. For example, in the 1950’s and 1960’s anyone donating to a Civil Rights Movement could face US state-sponsored death-threats.76 See Mistakes section for the Treasury Mistake about replacing EXCLUSIVELY with PRIMARILY. I have seen various sources claim this happened in 1958 or 1959.77 According to Wikipedia,78  In the 1930’s and 1940’s FDR may have used the IRS to harass his political opponents.  In the 1960’s the Kennedy administration may have used the IRS to harass right wing organizations, and companies which did not yet have price controls.  In the 1970’s President Nixon was almost impeached. One of the grievances was that he allegedly used the IRS to violate civil rights of people he did not like.  In the 1990’s the Clinton administration allegedly used the IRS to harass organizations which had criticized President Clinton.  In 2010, a pro-Israel group sued the IRS, claiming that their application for non-profit status had been delayed due to political profiling. There are additional claims of discrimination, especially against black civil rights movement organizations, mentioned in some hearings, which are not on the above Wikipedia list. According to Pro Publica,79 In the 1970s, they were flagging all applications for primary and secondary schools in the south facing desegregation.

75

https://en.wikipedia.org/wiki/Sixteenth_Amendment_to_the_United_States_Constitution http://www.forbes.com/sites/louiswoodhill/2013/05/22/irs-scandal-is-the-latest-evidence-that-we-need-afair-tax/ 76 https://www.propublica.org/article/six-facts-lost-in-irs-scandal 77 https://www.propublica.org/article/six-facts-lost-in-irs-scandal 78 https://en.wikipedia.org/wiki/Political_profiling_at_the_Internal_Revenue_Service 79 https://www.propublica.org/article/how-irs-nonprofit-division-got-so-dysfunctional

24

IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

25

IRS NGO = non-profit status

6/10/2013 7:59:52 AM

In the 1980s, during the wave of consolidation in the health-care industry, all applications from health-care nonprofits needed to be sent to headquarters. The theory was that Washington DC IRS HQ would focus on the sensitive cases, while the Cincinnati office would process the mundane applications. In the 1990’s, laws were passed designed to streamline the tax agency and make it more efficient. But they had unintended consequences for the IRS’s Exempt Organizations division. Checks and balances once in place were taken away. Guidance frequently published by the IRS and closely read by tax lawyers and nonprofits disappeared. According to the TIGTA guy at one of the Congress hearings, that IG office used to be within the IRS, then it was moved in 1998 to Treasury, pursuant to the laws passed to streamline the operations.
According to testimony at the House Oversight Committee on May 22, 2013, from Ms Lois Lerner, Director of EO = Exempt Organizations, and what I have seen from other Congress hearings:

In 2001 she started working at EO. In 2006 she became director of EO. As of May 22, 2013, she is still director of EO. As of May 23, 2013, she has been placed on administrative leave. I have heard contradictory testimony, regarding someone else replacing her as EO director, and her job responsibility shifting to being in charge of Obama Care at the IRS. TIGTA = Treasury Inspector General for Tax Administration. This organization is the Inspector General for what goes on at the IRS. Audit reports from 2007 forwards, are available at the TIGTA site.80 In 2007, Douglas Shulman was nominated by President Bush to become IRS Commissioner. In 2008, the Senate confirmed Mr Shulman as IRS Commissioner. It is normally a 5 year term. The IRS has 90,000+ employees. 900 of them report to the director of EO. 90 of them work at the Cincinnati office.81

2010+ (2013 June 04)
According to the TIGTA report, Wikipedia, and Congress hearings. 2010 Jan 21 = Citizen’s
80 81

United case decided by US Supreme Court.82

http://www.treasury.gov/tigta/oa_auditreports.shtml There are conflicting stories regarding this #. I believe the problem is that the number has changed dramatically over time, due to events explained in the time line. Also the Cincinnati office does more than the processing of tax exempt applications.

25

IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

26
  

IRS NGO = non-profit status

6/10/2013 7:59:52 AM

Since the Court ruled, in Citizen’s United, that the First Amendment prohibits the government from restricting political independent expenditures by corporations, associations, or labor unions; and Since most non-profit organizations are also corporations or associations; Then it stands to reason that all the tax-exempt rules which say this or that kind of non-profit may not participate in political activities, or must spend most of their money on the purpose for the non-profit, are no longer valid.

Also see the Glossary. 2010 = a rise in tax-exempt applications involving political activity, with no increase in resources for the personnel tasked with dealing with them, and their questions to the tax law technical specialists took 13 months to get replies. We do not know to what degree this increase in work load was due to Citizen’s United, or how politics have been evolving with opposition to various government policies, and particular issues in contemporary politics. Early in Calendar Year 2010, the Determinations Unit of the IRS, without executive involvement, began using inappropriate criteria to identify organizations applying for tax-exempt 83 status to review for indications of significant political campaign intervention. No one told them to take this action, rather they needed to do something to cope with an overwhelming work volume, and they lacked involvement of management to help them do so. Although the IRS has taken some action, it will need to do more so that the public has reasonable assurance that applications are processed without unreasonable delay in a fair and impartial manner in the future. According to Wikipedia:
84

For 27 months, starting Feb 2010, the IRS did not approve any Tea Party organizations which had submitted tax-exempt applications. My math takes that to May 2012.
According to the TIGTA report. April 2010, a team of specialists is formed to work on potential political cases, with the assistance of the Technical Unit. April 2010, the Program Manager of the Determinations Unit sent e-mail requesting the Technical Unit help. April 2010, a Technical Unit specialist was assigned to help the team of specialists, and did in fact help them. July 22, 2010 the Laurens County Tea Party filed for 401 c 4 status with the IRS, paying the $400 85 filing fee. They had first incorporated March 2010, with the state of South Carolina. See Aug 22. 2010 for next step in this time line. July 2010, TIGTA released results of other audits.
86

2010-10-085
82 83

Tax-Exempt User Fee Processing

https://en.wikipedia.org/wiki/Citizens_United_v._Federal_Election_Commission See details in TIGTA Discoveries chapter. 84 https://en.wikipedia.org/wiki/2013_IRS_scandal 85 Testimony of Ms. Dianne Belsom with Laurens County Tea Party (LCTP) to US House Ways & Means Committee hearing June 4, 2013. 86 http://www.treasury.gov/tigta/oa_auditreports_fy10.shtml

26

IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

27

IRS NGO = non-profit status Improved for Dishonored Checks and Refund of Overpayments Report Date: 07/13/2010 Audit Highlights: PDF | HTML Audit Reports: PDF | HTML

6/10/2013 7:59:52 AM

According to Wikipedia: Aug 2010 was when the “Be on the Lookout” (BOLO) list was first circulated. Aug 22, 2010 the Laurens County Tea Party received a letter from the IRS stating that if more 88 info was needed to process their application, they would be contacted in approx 90 days. See July 22, 2010 for more of this time line. They were not contacted again regarding more info needed, other than paying taxes in the interim, until Sep 6, 2012, which asked for extremely burdensome additional information. 2010 Sep 30 = end of Federal Fiscal Year 2010. According to the TIGTA report. October 2010, the team of specialists stops working on the political cases, while waiting on assistance from the Technical Unit. The Determinations Unit Program Manager did not know about this halt, thought the work was continuing. Later the TIGTA auditors were told by the Director of Rulings and Agreements, that there was a miscommunication between the Determinations Unit and the Technical Unit. According to Pro Publica:

87

Two federal court rulings in 2010 paved the way for the ascent of “super PACs,” political action committees that can raise and spend unlimited amounts of money on political races, as long as they don’t coordinate with a specific candidate .89

2011+ (2013 Jun 03)
According to the TIGTA report.

The inappropriate criteria was used for about 18 months, until higher management found out, and replaced it with other criteria, July 2011. The management involved was the Director of Exempt Organizations (EO).90 2011 July, TIGA released additional audit reports.91

2011-41-061

Individuals Who Are Not Authorized to Work in the United States Were Paid $4.2 Billion in Refundable Credits

87

https://en.wikipedia.org/wiki/2013_IRS_scandal

88

Testimony of Ms. Dianne Belsom with Laurens County Tea Party (LCTP) to US House Ways & Means Committee hearing June 4, 2013.
89 90

https://projects.propublica.org/pactrack/#contributions=all See Organizational Background chapter for the chain of management who’s in charge of what. 91 http://www.treasury.gov/tigta/oa_auditreports_fy11.shtml

27

IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

28

IRS NGO = non-profit status Report Date: 07/07/2011 Audit Highlights: PDF | HTML Audit Reports: PDF | HTML

6/10/2013 7:59:52 AM

2011 Sep 30 = end of Federal Fiscal Year 2011. 2011 Sep, TIGA released additional audit reports.
92

2011-41-083

Billions of Dollars in Education Credits Appear to Be Erroneous Report Date: 09/16/2011 Audit Highlights: PDF | HTML Audit Reports: PDF | HTML

According to the TIGTA report.

In November 2011, draft written guidance is finally supplied to Determinations Unit, by Technical Unit, regarding a process that started April 2010, and halted October 2010, due to miscommunication between the two units, which had wasted 13 months.
According to the TIGTA report.

In December 2011, additional personnel are added to the team of specialists.

2012 Jan+ (2013 Jun 03)
According to the TIGTA report.

In January 2012 two things happened – I do not know timing relative to each other. Jan 2012, the team of specialists changed the criteria without executive approval, because they believed the July 2011 criteria were too broad. The replacement criteria reverted to the original approach of focusing on policy positions of organizations instead of taxexempt laws and Treasury Regulations. So that’s 18 months bad, 5 months good, and now bad again. Jan 2012, the team of specialists began issuing additional information request letters to organizations requesting non-profit status, requesting that the info be provided in 2-3 weeks, which is standard for any IRS info request, according to the Internal Revenue Manual, but maybe 2-3 weeks is inadequate time for the volume of info requested, and the nature of some of the organizations. While the TIGTA audit was unable to determine why liberal groups were also included in the excessive scrutiny, there were in fact several subjected to this.93
According to the TIGTA report.
92 93

http://www.treasury.gov/tigta/oa_auditreports_fy11.shtml http://www.bloomberg.com/news/2013-05-15/irs-sent-same-letter-to-democrats-that-fed-tea-partyrow.html

28

IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

29

IRS NGO = non-profit status

6/10/2013 7:59:52 AM

Feb 2012, the news media begins to report on the excessive volume of info being requested by the IRS. The Director of Exempt Organizations (EO) instructs the team of specialists to stop sending out any more of those letters. Instead, every organization which already got a letter, is to get another, giving them a 60 day extension, and that they could ask for an additional 60 days if necessary.
According to the TIGTA report, and May 2013 testimony to Congress.

In March 2012, TIGTA found out, thanks to Congress, that there was a need for TIGTA action.
According to the TIGTA report.

March 2012, Deputy Commissioner, Services and Enforcement, asked Senior Technical Advisor to Acting Commissioner, Tax Exempt and Government Entities Division, to look into concerns raised by the media about delays in processing applications for tax-exempt status from Tea Party groups and the nature of the questions being asked related to the applications.
2012 March, TIGTA released results of other audits at the IRS.
94

2012-10-027

Appropriate Actions Were Taken to Identify Thousands of Organizations Whose TaxExempt Status Had Been Automatically Revoked, but Improvements Are Needed Report Date: 03/30/2012 Audit Highlights: PDF | HTML Audit Reports: PDF | HTML

According to the TIGTA report.

March and April 2012, the 60 day extension letters went out, which the Director of Exempt Organizations (EO) had requested in Feb 2012.
According to the TIGTA report.

In April 2012, Senior Technical Advisor to the Acting Commissioner, Tax Exempt and Government Entities Division, along with a team of Exempt Organizations (EO) function Headquarters office employees, held an internal IRS investigation which reviewed many of the potential political cases and determined that there appeared to be some confusion by Determinations Unit specialists, and applicants for tax-exempt status, on what activities are allowed by I.R.C. § 501(c)(4) organizations.

2012 May+ (2013 June 03)
According to the TIGTA report, and May 2013 testimony to Congress.

94

http://www.treasury.gov/tigta/oa_auditreports_fy12.shtml

29

IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

30

IRS NGO = non-profit status

6/10/2013 7:59:52 AM

Several things happened in May 2012, in which I do not yet have a clear picture of which came first, second, third etc. In May 2012, the bad conduct, regarding the criteria for selecting applications for detailed review, ended, as the TIGTA audit was later to determine. However, as of May 2013, there is still a problem with excessive time taken to evaluate applications for tax exempt status. One politician cited an example of a constituent which had applied for this status in 2009, and as of the May 22, 2013 hearing, still had not yet received approval or denial, but had received two sets of questions, both of which appeared to include inappropriate contents.

In May 2012, higher management found out what the specialists had done in Jan 2012, and once again changed the rules to reflect those from July 2011. . So that’s 18 months bad, 5 months good, 4 months bad, and now good again. The management involved was the Director of Rulings and Agreements. 95

In May 2012, as a result of changes made to criteria without management knowledge, the Director, Rulings and Agreements, issued a memorandum requiring all original entries and changes to criteria included on the BOLO listing be approved at the executive level prior to implementation. In May 2012, because of the confusion discovered by the internal investigation in April 2012, a two day workshop was given by Exemption Organization (EO) Headquarters employees to Determination Unit personnel assigned to potential political cases, regarding what exactly is in the law and regulations, to teach them how they should be doing their jobs. This was followed by a review of all open cases, to see if any more could be closed. Prior to the workshop, the specialists had completed 2% of the suspicious political applications. Due to the workshop, approx 30% were completed by Dec 2012. It was also decided that applications could be approved, but then later reviewed by a different unit, to verify their operations were consistent with passing the smell test.
2012 May 3, there was a top level meeting at the IRS. It was at this meeting that Mr Steven Miller first learned about the problems, who at that time was Deputy to the IRS Commissioner, Mr Douglas Shulman. Very soon afterwards, Mr Miller briefed Mr Shulman as follows:  Inappropriate criteria has been used, including Tea Party in a BOLO list, but at that time they did not yet have everything involved in the list.  This inappropriate activity is being stopped.  The IG is looking into it. At the time, and to this day, Mr Shulman believed that he did the right thing, by doing nothing, because he believed Mr Miller, and because when he became IRS commissioner, he inherited a system where when the IG is conducting an audit, management stands aside and does not interfere in any way with the operation which is being audited. They only step in if invited by the IG to deal with something found by the audit, or where the IG may need other help from management.

95

See Organizational Background chapter for the chain of management who’s in charge of what.

30

IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

31

IRS NGO = non-profit status

6/10/2013 7:59:52 AM

Several politicians believe they should have been notified that a serious problem had been uncovered, without having to wait until the IG report came out. They suspect that they were not told, because finding this out, in a timely manner, could have had an impact on the 2012 election. 2012 May 29, the TIGTA guy was briefed on the early results of the TIGTA audit. The allegation of inappropriate criteria had been found to be true, but the audit did not yet have full details or the scope. 2012 May 30, the TIGTA guy passed on to IRS leadership, and IRS legal counsel that the audit had found that the allegation of inappropriate criteria was true, but the audit did not yet have full details, or the scope. 2012 May, TIGTA released results of other audits at the IRS.
96

2012-40-050

Most Taxpayers Whose Identities Have Been Stolen to Commit Refund Fraud Do Not Receive Quality Customer Service Report Date: 05/03/2012 Audit Highlights: PDF | HTML Audit Reports: PDF | HTML

2012-10-046

The Exempt Organizations Function Should Take Action to Limit the Disclosure of Social Security Numbers on Publicly Available Tax-Exempt Returns Report Date: 05/04/2012 Audit Reports: PDF | HTML

2012 June+ (2013 June 03)
2012 June 4, the TIGTA guy passed on to Dept of the Treasury that the audit had begun, and so far found that the allegation of inappropriate criteria was true, but the audit did not yet have full details, or the scope. 2012 June, TIGTA informed Congress the audit had begun, but not what they had found so far. 2012 June, TIGTA released results of other audits at the IRS.
97

2012-10-058
96 97

Implementing Better

http://www.treasury.gov/tigta/oa_auditreports_fy12.shtml http://www.treasury.gov/tigta/oa_auditreports_fy12.shtml

31

IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

32

IRS NGO = non-profit status Management Controls Would Improve the Exempt Organizations Function?s Ability to Properly Oversee and Timely Process Referrals Report Date: 06/01/2012 Audit Highlights: PDF | HTML Audit Reports: PDF | HTML

6/10/2013 7:59:52 AM

2012 July, Mr Miller testified to Congress on behalf of the IRS. He was asked about the IRS targeting various groups. He denied this was going on, because the IRS had different terminology, than “targeting,” for the problems they had found out about. 2012 July, TIGTA released results of other audits at the IRS.
98

2012-42-080

There Are Billions of Dollars in Undetected Tax Refund Fraud Resulting From Identity Theft Report Date: 07/19/2012 Audit Highlights: PDF | HTML Audit Reports: PDF | HTML

2012 Election Cycle (2013 June 03)
During the 2012 election cycle, according to the TIGTA report. Some members of Congress asked for an investigation into whether any existing non-profits were improperly engaged in political campaign activity in excess of what was permitted under their non-profit status. Some members of Congress, and the news media, made allegations that the IRS was engaged in selective enforcement, not treating all applicants for non-profit status consistently. Several organizations, applying for 501 © 4 tax exempt status, complained that the IRS: 1. targeted specific groups applying for tax exempt status; 2. delayed processing the applications; 3. requested unnecessary information. According to the TIGTA report. The Inspector General audit was initiated, due to the concerns stated above, from multiple sources. The overall objective was to determine whether allegations were founded that the IRS: 1) targeted specific groups applying for tax-exempt status, 2) delayed processing of targeted groups’ applications, and 3) requested unnecessary information from targeted groups. According to the News Media, the TIGTA audit only looked at the Cincinnati Ohio IRS office. Another audit is coming, which will look at additional IRS offices.

98

http://www.treasury.gov/tigta/oa_auditreports_fy12.shtml

32

IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

33

IRS NGO = non-profit status

6/10/2013 7:59:52 AM

2012 Sep+ (2013 June 04)
Sept 6, 2012, the Laurens County Tea Party received a communication from the IRS requesting 99 extremely burdensome info to supply. See Aug 11, 2010 for earlier info on the time line for this organization. What the IRS wanted, included the following:

1. Provide copy of articles of incorporation (which we had sent with our initial application in 2010.) 2. Information about all of our committees, including Legislative, Educational, and Vetting, and HOW MUCH TIME/RESOURCES are devoted to these activities. 3. They sent about 20 pages copied from our website, and wanted confirmation that these were, in fact, from our website. Then they wanted samples from any other social media sites, including Facebook. 4. Detailed information about all meetings, rallies, events, with dates and names of speakers, agendas, any associated materials, if a guest speaker made remarks concerning upcoming elections and whether our organization took a view on anything expressed, and how much time or resources are devoted to these activities. 5. How much time/resources are devoted to vetting candidates. 6. The IRS noted that our website had a lot of videos of candidates running for local office. They wanted to know what offices the candidates were running for (which was stated in the videos), a list of all candidates for these offices and an explanation for those who didn’t participate, copies of any written materials, including invitations to the candidates, copies of any introductory statements by us, and copies of all questions asked to the candidates, whether the interviews were edited, a list of which interviews were posted on our website and explanation for any not posted, percentage of time/resources devoted to this. 7. As regards a Candidate Forum we held, more questions were asked, including the date and elective offices for which it was held, a list of candidates and explanations for those who didn’t participate, copies of opening remarks from us, who asked the questions, copies of all questions asked, copies of written materials, including invites to candidates and advertising, whether the videos posted were edited, and the percentage of time/resources devoted to this activity. 8. Provide info about voter registration: when and where, whether we target particular groups, copies of materials used, percentage of time and resources devoted to this activity. 9. Provide a list of expenses for the past 3 years, including any amounts expended in support of any candidate for Federal, state, or local public office.
Since they were aware that the IRS was apparently targeting Tea Party groups, they contacted the ACLU for help. The ACLU agreed to represent them at no charge. The original IRS request had been to deliver the info by Sep 27, 2012, which was requested Sep 6, 2012. The lawyer was able to get an extension to Jan 2, 2013, and the organization was able to supply all that the IRS had asked for, by the end of Dec 2012. Doing so, took many hours of time, stress, and aggravation. See Jan 31, 2013 for the next incident in the time line for the Laurens County Tea Party application for 501 c 4 status, filed July 22, 2010. Sept 2012, TIGTA released results of other audits at the IRS.
99
100

Testimony of Ms. Dianne Belsom with Laurens County Tea Party (LCTP) to US House Ways & Means Committee hearing June 4, 2013. 100 http://www.treasury.gov/tigta/oa_auditreports_fy12.shtml

33

IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

34

IRS NGO = non-profit status

6/10/2013 7:59:52 AM

2012-40-105

Expansion of Controls Over Refundable Credits Could Help Reduce the Billions of Dollars of Improperly Paid Claims Report Date: 09/07/2012 Audit Highlights: PDF | HTML Audit Reports: PDF | HTML

2012-20-099

Audit Trails Did Not Comply With Standards or Fully Support Investigations of Unauthorized Disclosure of Taxpayer Data Report Date: 09/20/2012 Audit Highlights: PDF | HTML Audit Reports: PDF | HTML

2012-20-112

An Enterprise Approach Is Needed to Address the Security Risk of Unpatched Computers Report Date: 09/25/2012 Audit Highlights: PDF | HTML Audit Reports: PDF | HTML

2012-40-119

The Majority of Individual Tax Returns Were Processed Timely, but Not All Tax Credits Were Processed Correctly During the 2012 Filing Season Report Date: 09/26/2012 Audit Highlights: PDF | HTML Audit Reports: PDF | HTML

2012 Sep 30 = end of Federal Fiscal Year 2012. In Fiscal Year 2012, according to the TIGTA report. 70% of all closed applications for tax-exempt status were approved during an initial review with little or no additional information from the organizations.

34

IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

35

IRS NGO = non-profit status

6/10/2013 7:59:52 AM

When substantial additional information needed, the application is placed in unassigned inventory until it can be assigned to a specialist in the Determinations Unit for further processing. The specialist develops request(s) for the additional info and issues it to the organization. Once the specialist receives all the necessary information to determine whether an organization should be afforded tax-exempt status, a final determination letter is issued to the organization either approving or denying the request for tax-exempt status. If the Determinations Unit needs technical assistance processing applications, it may call for help from the Technical Unit in the Rulings and Agreements office in Washington, D.C.

2012 Dec+ (2013 June 04)
For 296 political campaign intervention applications TIGTA reviewed as of December 17, 2012,  108 had been approved,  28 were withdrawn by the applicant,  none had been denied, and  160 were open from 206 to 1,138 calendar days (some for more

than

three years and crossing two election cycles).
Late in 2012, the IRS Cincinnati office released to Pro Publica, confidential information from several Conservative groups filings for tax-exempt status, in response to a public-records request. 101 The associated paperwork was nonstandard, indicating the Pro Publica request had not been vetted thru the proper channels. Other people within the IRS found out that Pro Publica was in possession of these materials, and informed Pro Publica that publication of the info was illegal, but Pro Publica’s lawyer is disputing this. December 2012, TIGTA published results of other audits of the IRS. 102

2013-40-009 Many Taxpayers Are Still Not Complying With Noncash Charitable Contribution Reporting Requirements Report Date: 12/20/2012 Audit Highlights: PDF | HTML Audit Reports: PDF | HTML January 2013, TIGTA published results of other audits of the IRS. 103

2013-20-016
101

Significant Delays Hindered

https://www.propublica.org/article/controversial-dark-money-group-among-five-that-told-irs-theywould-stay-out https://www.propublica.org/article/what-karl-roves-dark-money-nonprofit-told-the-irs https://www.propublica.org/article/irs-office-that-targeted-tea-party-also-disclosed-confidential-docs 102 http://www.treasury.gov/tigta/oa_auditreports_fy13.shtml 103 http://www.treasury.gov/tigta/oa_auditreports_fy13.shtml

35

IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

36

IRS NGO = non-profit status Efforts to Provide Continuous Monitoring of Security Settings on Computer Workstations Report Date: 01/24/2013 Audit Highlights: PDF | HTML Audit Reports: PDF | HTML

6/10/2013 7:59:52 AM

Jan 31, 2013 for the Laurens County Tea Party received another request for information from the IRS.104 See Sep 6, 2012 for similar prior incident in the time line for the Laurens County Tea Party application for 501 c 4 status, filed July 22, 2010. The info now requested, included:
1. Again, a request for the Articles of Incorporation. (The group had already sent them twice before.) (How many times do we need to send them?) 2. Copies of emails sent out on issues we deal with, plus copies from our Facebook group. (Since our group is closed, I took the time to black out the names of everyone who had posted in order to protect them.) 3. Copies of free and paid ads placed, pictures submitted to local papers, press releases, and materials for distribution.

They complied with these IRS requests on March 5, 2013. Then we learn about the time line details thanks to testimony of Ms. Dianne Belsom with Laurens County Tea Party (LCTP) to US House Ways & Means Committee hearing June 4, 2013. Since they originally made their application July 22, 2010, it has been just under 3 still years waiting for an answer to their 501 C 4 application. February 2013, TIGTA published results of other audits of the IRS.105

2013-40-022

Taxpayer Referrals of Suspected Tax Fraud Result in Tax Assessments, but Processing of the Referrals Could Be Improved Report Date: 02/20/2013 Audit Highlights: PDF | HTML Audit Reports: PDF | HTML

2013-40-024

The Internal Revenue Service Was Not in Compliance With All Requirements of the Improper

104

Testimony of Ms. Dianne Belsom with Laurens County Tea Party (LCTP) to US House Ways & Means Committee hearing June 4, 2013. 105 http://www.treasury.gov/tigta/oa_auditreports_fy13.shtml

36

IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

37

IRS NGO = non-profit status Payments Elimination and Recovery Act for Fiscal Year 2012 Report Date: 02/25/2013 Audit Highlights: PDF | HTML Audit Reports: PDF | HTML

6/10/2013 7:59:52 AM

February 2013, TIGTA completed their audit work at the IRS, then they needed to write up the report.

2013 May+ (2013 Jun 06)
May 3, 2013, the GAO came out with a Budget Report on the IRS. Internal Revenue Service: Preliminary Observations on the Fiscal Year 2014 Budget Request, GAO-13-599R, May 3 http://www.gao.gov/products/GAO-13-599R May 10, 2013, at the ABA conference, Ms Lois Lerner106 answered some questions, in which there was a planted question about the TIGTA report. This action may have been criminal, because before info is released by the IRS or Treasury, it is supposed to go thru a review process to verify no taxpayer info or confidential info is included. This review process was not followed in this case. It was thanks to the info revealed at the ABA, that Mr Neal Wolin107 found out for the first time that this wrongdoing had happened, and that there had been an IRS internal review looking into it. May 13, 2013, the GAO came out with a Management Report on the IRS: Improvements Are Needed to Enhance the Internal Revenue Service's Internal Controls, GAO-13-420R, May 13 http://www.gao.gov/products/GAO-13-420R May 14, 2013, the TIGTA report was released.108 A DoJ investigation was launched on the same day.

2013-10-053 Inappropriate Criteria Were Used to Identify TaxExempt Applications for Review Report Date: 05/14/2013 Audit Highlights: PDF | HTML Audit Reports: PDF | HTML
106

Ms Lois Lerner was director of Exempt Organizations (EO) for the Internal Revenue Service (IRS) during the time period studied by the Treasury Inspector General for Tax Administration (TIGTA) report, but the replacement IRS Commissioner, Danny Werfel, removed her from that position on May-23, the day after she took the 5th at the House Oversight Committee meeting. 107 Mr Neal Wolin is Deputy Secretary, Department of the Treasury. It is to him that the IRS is supposed to report, and all this stuff was news to him, about the same time that the rest of the world was finding out about it, according to his testimony to the House Oversight committee hearing on May-22. 108 http://www.treasury.gov/tigta/oa_auditreports_fy13.shtml

37

IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

38

IRS NGO = non-profit status

6/10/2013 7:59:52 AM

It was thanks to the TIGTA report being released, that several key officials found out for the first time the relevant details,109 even though a draft discussion version had been released earlier:  Mr Steven Miller, who became IRS Commissioner after Mr Shulman, and who in turn is resigning in May 2013.  Mr Douglas Shulman, IRS Commissioner 2008-2012  Mr Neal Wolin, Deputy Treasury Secretary, to whom the IRS Commissioner reports. Mr Wolin immediately initiated discussions at Treasury what needs to be done to prevent similar mistakes again in the future. May 15, 2013, President Obama discussed the IRS.110 He said, QUOTE: "I’ve reviewed the Treasury Department watchdog’s report, and the misconduct that it uncovered is inexcusable," he said. "It’s inexcusable, and Americans are right to be angry about it, and I am angry about it. I will not tolerate this kind of behavior in any agency, but especially in the IRS, given the power that it has, and the reach that it has, into all of our lives. And as I said earlier, it should not matter what political stripe you’re from -the fact of the matter is, is that the IRS has to operate with absolute integrity. The government generally has to conduct itself in a way that is true to the public trust. That’s especially true for the IRS." UNQUOTE The President laid out a series of steps, aimed at holding the responsible parties accountable, and putting new safeguards in place to prevent future issues. Read more in the President’s full remarks, or watch the statement. Once the TIGTA report became public information, a mountain of commentators had various conspiracy theories to explain and label the IRS behavior.111 After the TIGTA report came out, Congress held several hearings seeking clarification.

109

This is according to their testimony in May 2013 to Congress. See elsewhere in these notes to relevant sources. 110 http://www.whitehouse.gov/blog/2013/05/15/president-obama-discusses-internal-revenue-service 111 http://reason.com/archives/2013/05/20/the-irs-v-the-first-amendment http://www.usatoday.com/story/news/politics/2013/05/14/irs-tea-party-progressive-groups/2158831/

38

IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

39

IRS NGO = non-profit status

6/10/2013 7:59:52 AM

2013 May 17+ (2013 June 06)
May-17, see elsewhere in this doc for links to US House Ways and Means committee hearing on that date. US House Ways and Means committee asked a person in charge of the IRS, who was now resigning, and the person in charge of the TIGTA report, a great many questions. One question was what the IRS needs, so they can do a better job. Answer:  Better and more clear rules.  Budget so we don’t have 150 people trying to process 70,000 applications. May-21, see elsewhere in this doc for links to US Senate Finance committee hearing on that date. May-22, see elsewhere in this doc for links to US House Oversight committee hearing on that date. At that hearing, Lois Lerner took the 5 th amendment, refusing to answer questions. May-22 or 23, it is not clear to me yet, the new acting IRS Commissioner Daniel Werfel, took over the post. He has been given a mandate from the President, and the Secretary of the Treasury to:  Get to the bottom of what has gone wrong at the IRS;  Do a complete Accountability review;  Where managers had been engaged in mismanagement causing these scandals, determine whether they can be accountable in the future, and if not, remove them;  Restore the public trust in the IRS as a fair and impartial agency. As he works through this process, he intends to inform the President, the Secretary of the Treasury, and Congress, what he finds out. May-23, the day after Lois Lerner refused to answer questions at the US House Oversight committee, the new commissioner of the IRS, Danny Werfel replaced her, as head of the IRS’s Exempt Organizations (EO) division with Ken Corbin who has worked for the IRS for 27 years, and who is now acting head of that division.112 Corbin comes to this position as deputy director in the wage and investment division, where he oversees 17,000 employees responsible for processing 172 million individual and business tax returns. There is not yet a replacement person for Corbin’s old job, so he temporarily holds the two positions. Age 62 Lerner has been placed on paid administrative leave.

112

I read about this in USA TODAY Fri May 24 weekend edition.

39

IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

40

IRS NGO = non-profit status

6/10/2013 7:59:52 AM

The Treasury Inspector General came out with two reports on the IRS this month:

2013-10-037 Review of the August 2010 Small Business/SelfEmployed Division’s Conference in Anaheim, California Report Date: 05/31/2013 Audit Highlights: PDF | HTML Audit Reports: PDF | HTML 2013-10-053 Inappropriate Criteria Were Used to Identify TaxExempt Applications for Review Report Date: 05/14/2013 Audit Highlights: PDF | HTML Audit Reports: PDF | HTML

2013 June+ (2013 June 03)
Monday June-3, the House Appropriations committee has scheduled a hearing with the new acting IRS chief Danny Werfel.113 As of that hearing, there were 4 parallel reviews engaged in interviews, at the IRS:     Congress investigations staff; DOJ-FBI following up on the TIGTA audit regarding political targeting; IRS internal investigations launched by the new IRS chief Daniel Werfel; TIGTA additional audits.

Tues June-4, the House Ways and Means committee has scheduled another IRS hearing.114

Unanswered Questions (2013 June 03)
Why should political groups be tax advantaged & avoid campaign transparency? Is the definition of political consistent across 501/527 etc. sub-groups>

TIGTA Audits IRS NGO mistakes (2013 Jun 06)
TIGTA = US Treasury Inspector General for Tax Administration115 IRS = US Internal Revenue Service, best known for collecting Income Taxes. NGO = Non-Governmental Organization, usually also non-profit corporation.

113

http://thehill.com/blogs/on-the-money/domestic-taxes/302143-first-hearing-for-new-irs-chief-scheduledfor-monday 114 https://www.nydailynews.com/blogs/dc/2013/05/another-irs-hearing
115

http://www.treasury.gov/tigta

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I found 3 places from where we can download this report:  US Dept of Treasury116  SCRIBD.117  Wall Street Journal.118 The Inspector General (IG) involved, is for Tax Administration, from the US Treasury Department.119 The report’s full title: Inappropriate Criteria Were Used to Identify Tax-Exempt Applications for Review May 14, 2013 Reference#: 201310-053. Information determined to be restricted from public release has been redacted from this
version of the document.

2013-10-053

Inappropriate Criteria Were Used to Identify Tax-Exempt Applications for Review Report Date: 05/14/2013 Audit Highlights: PDF | HTML Audit Reports: PDF | HTML

This report on IRS NGO mistakes is 1.2 meg 54 pages. The report on California conference is 1.8 meg, 63 pages.
Some of what I learned from this report I have placed in other chapters, such as: Time Line. According to the TIGTA report, the audit found: The IRS used inappropriate criteria that identified for review Tea Party and other organizations applying for tax-exempt status based upon their names or policy positions, instead of indications of potential political campaign intervention. Ineffective management: 1) allowed inappropriate criteria to be developed and stay in place for more than 18 months, 2) resulted in substantial delays in processing certain applications, and 3) allowed unnecessary information requests to be issued. Although processing of some applications with potential significant political campaign intervention was started soon after receipt, no work was completed on the majority of these applications for

13 months.120

This was due to delays in receiving assistance from the Exempt Organizations function Headquarters office. More than 20 months after the initial case was identified, processing the cases began in earnest. Many organizations received requests for additional information from the IRS that included unnecessary, burdensome questions (e.g., lists of past and future donors). The IRS later informed some organizations that they did not need to provide previously requested
121

116

http://www.treasury.gov/tigta/auditreports/2013reports/201310053fr.pdf http://www.scribd.com/doc/141606149/Inspector-General-s-Report-on-IRS-Reviews-of-Taxexempt-Applications 118 http://online.wsj.com/public/resources/documents/TIGTA-201310053fr-revised-redacted-1.pdf
117
119 120

http://www.treasury.gov/tigta

Just over 1 year. 121 Just under 2 years.

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information. IRS officials stated that any donor information received in response to a request from its Determinations Unit was later destroyed.

TIGTA Audits 2010 Anaheim Conference (2013 Jun 09)
TIGTA = US Treasury Inspector General for Tax Administration122 IRS = US Internal Revenue Service, best known for collecting Income Taxes. There was a TIGTA audit originally due out in early June 2013, into IRS spending excessive money on frivolous films for conventions and conferences of IRS employees, but at the end of May 2013, TIGTA issued the following audit report:

2013-10-037 Review of the August 2010 Small Business/SelfEmployed Division’s Conference in Anaheim, California Report Date: 05/31/2013 Audit Highlights: PDF | HTML Audit Reports: PDF | HTML I downloaded this, naming my copy: IG IRS Conference 2013 May. The one on the California conference is 1.8 meg, 63 pages. The one on IRS NGO mistakes is 1.2 meg 54 pages. Allegedly the purpose of the $ 4.? million conference included:  New hires needed training;  There had been an incident in Austin Tx, so there needed to be overall security education. The precise cost of the conference is unknown, because IRS book keeping is flawed. The IRS holds taxpayers to a much higher standard, than they apply to the IRS. There is an unproven allegation. $137 million was appropriated for new hires, but towards the end of the year, there was still $18 million unspent, so that was transferred to training, inefficiently, just to get the money spent, so that in the next fiscal year, the IRS could go to Congress and show how they needed a whole lot more money for the same thing. There is this allegation that this is not a problem just with the IRS, but with all government departments and agencies, that it is more important to them to spend the money, than to spend it wisely.

122

http://www.treasury.gov/tigta

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Anaheim Conference = Banker’s Hours (2013 Jun 09)
I had downloaded the TIGTA report, but not yet read it, when I watched part of a Congress hearing about it. Those IRS participants were working banker’s hours, which I will explain. Several years ago, before banks had implemented computerization to the degree they have today, they had to spend a lot of time doing accounting manually, so banks were typically open from 10-11 am until 1-2 pm. The general public thought that meant that bankers were only working 4 hours when everyone else had an 8-10 hour day. Similarly teachers must spend a lot of time outside the classroom, preparing lesson plans, grading papers, working on what text books are to be used in future years, but the public only witnesses the time they are in the classroom, not fully realize the full scope of their work load. So while I believe neither bankers nor teachers were working what traditionally were called banker’s hours, it sure sounds like the IRS people at the Anaheim conference were doing that. We were told that the conference was for the purpose of education in evolving new laws and regulations, which the IRS employees needed to have a good understanding of. But this conference was 3 days of 8 hours each, where each evening the participants were tourists and vacationers in Anaheim. I have been to several conventions on a similar scale with the IRS one. There have been large Science Fiction conventions, Origins = National Games Convention and Expo, and Common = national conference for people working on mid-sized IBM business computer systems. All of them were all day and all evening string of events. The first seminars at Common, which I attended, were at 7 am. I had to hustle to get awake, breakfast, alert, etc. to get to 7 am seminar. There may have been some earlier, but not on my radar screen. With maybe ½ hour for lunch, the seminars were 1-2 hours back to back on 30-40 tracks until maybe 6-7 pm. In the evening we had Birds of a Feather (BoF) meetings, around topics of common interest. We filled out forms in which just under ½ page was for us to propose topic of meeting, then there was room for people to sign up, sharing interest in the meeting. Periodically convention organizers would remove sign up sheets which had the most signatures, so far, schedule what rooms and times they would be held, return the sheet with that info, and post the schedule. At a Common around 1990, I proposed a BoF meeting on issues surrounding Y2K. The meeting was packed. I participated in BoF meetings until about 11 pm, then had to get some sleep, although other people were in them into the wee hours. The purpose of Common is education. We spent every waking hour, with only brief meal breaks, in a 16 hour day, getting that education, over a period of approx 1 week, from one weekend thru another. Yes, some of the attendees partied in the evenings, instead of participating in the BoF meetings. It was similar when I went to IBM school, which is held at various Universities across the USA, and at IBM business partners. The classes go from 8 am to 4 pm, then in the

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evening we are hitting the books to review the material. I took a couple extra days off work, as vacation, to spend after the classes to first catch up on my sleep, get a day of real vacation, and also hit the books some more. This IBM education costs $1,000.00 or more a day, paid for by the attendees. The next biggest expense is the convention hotel. In my case, instead of paying $500.00 a nite there, I stayed at Bed & Breakfast in the convention city. Occasionally some attendees can get their employers to subsidize some of the expense.

Anaheim Dis-organizers (2013 June 09)
There is also evidence that the organizers of the Anaheim conference were unskilled when it comes to planning an event of this kind. Again, I have some relevant experience with comparable activities. In the 1970’s I w as a volunteer with the Cincinnati Computer Club, which joined a Midwest Association of Computer Clubs, which existed in many US and Canadian cities. We had an annual convention, hosted each year by one of the member clubs, with the other clubs providing all the events at the convention. On the last day of each convention there was a meeting to discuss how it went, how we can do better in the future, and to hear proposals by various clubs willing to host this in future years. About 3 months after we agreed on next year host, we were invited to a meeting in next year host city, which was a tour of proposed sites, with presentation of pros & cons of each, then a vote of the various clubs which was best for our needs. I attended some of these meetings. I ran some of the events. It was all voluntary. The only money to me was partial reimbursement of some of my expenses. When the money is out of our own pockets, we are careful to spend it wisely. When we spend other people’s money, we should be even more careful. It seems to me that IRS planners for the Anaheim conference did not share this philosophy. They spent the taxpayer funds like the stereotype of drunken sailors.  Some hotel rooms were $3,500 a night, paid for by the tax payers.  $ 133,000 was paid to some outside group to perform tasks the organizers were not able to do themselves. There were 3 planning trips by IRS people, mainly from Washington DC, to the site of the Anaheim conference. 1. 3 staff members 2. 5 staff members 3. 16 staff members … the purpose of the final trip was to make sure the site was setup good. It was a few days before the conference.

TIGTA other audits (2013 June 09)
There is a TIGTA audit in progress regarding IRS employees getting generous bonuses at a time when federal employees in other government agencies have a wage freeze.

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There is a scenario, still being looked into, where it is suspected that there was fraud both with someone in the IRS, and a person outside the IRS, regarding a $ ½ billion procurement contract set aside for a hub zone. There was a promise of many jobs for local under employed people, but instead very small jobs were given a very few college students. There is an accusation that the improper targeting of Tea Party groups, going on by the Cincinnati office of the Tax Exempt Organizations (EO), was also going on with the IRS general audit division. The new acting IRS commissioner, Daniel Werfel, has launched a review looking into this.

TIGTA NGO Discoveries (2013 May 29)
TIGTA = US Treasury Inspector General for Tax Administration123 The Determinations Unit developed and used inappropriate criteria to identify applications from organizations suspected of being “political cases” because they used the words:  Tea Party (initial focus)  Patriots  9/12 project  Other “political sounding” names  Government spending, taxes, or budget  Criticize how the nation is being run  Advocacy/lobbying to “Make America a better place to live.” They were not looking at what type of non-profit status was requested, just on the group’s name or policy position. This criteria was developed not because anyone asked them to do so, but because they were overwhelmed with the work load, and lacked management direction how to deal with it. This bad criteria was used for 18 months, before higher authority found out, and put a stop to it. The higher authority was Ms. Lois Lerner, Director of Exempt Organizations (EO) in June 2011. So in July 2011 she directed the criteria be changed to focus on the potential “political, lobbying, or general advocacy” activities of the organization. Subtract 18 months gets us starting this, the beginning of 2010. However, 5 months later, in Jan 2012, the lower level personnel reversed management’s directives and returned to the bad criteria. See time line for additional changes to the criteria, made without internal notification within the IRS, and thus errors went unobserved for many months.124
123 124

http://www.treasury.gov/tigta

The story is reminiscent of the project mismanagement from hell which led to the BP Gulf Oil Spill, where changes were made in safety policies and rules, without notifying the people who needed to know. Had there been competent communication of problems, and of decisions how to deal with the problems, that disaster might never have occurred.

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The entire process demonstrated a lack of understanding of:  what their job was supposed to be;  distinctions between different types of non-profit status;  how this could look bad from a public perception. All applications, forwarded to the specialists for checking, experienced significant delays, in being processed. The TIGTA audit took samples of each category of application, to review the impact of the IRS procedures. The audit sample found 2% of the applications without those BOLO words, from outfits with significant political activity, which should have been checked, but which were approved without checking. Based on their statistical sample, 2% comes to 44 applications approved, which should have been checked first. The audit sample found 6% of the applications forwarded for checking, which did not appear to have any political activity. Based on their statistical sample 6% comes to 141 applications subjected to heavy scrutiny which would not have been, had appropriate criteria been used. All applications identified as potential political cases, as of May 31 2012, were checked by the TIGTA audit. In most cases, the auditors agreed that the applications included indications of significant political campaign intervention. However, the auditors did not identify any indications of significant political campaign intervention for  91 (31%) of the 296 applications with complete documentation, some of which had been obtained after the Determinations Unit relayed the applications to the specialists.  17 (19%) of the 91 applications, with no evidence of violations, involved Tea Party, Patriots, or 9/12 organizations. The auditors discussed their findings with IRS officials, who disagreed with the auditor findings, but were unable to cite any documentation to support their position.

TIGTA NGO Recommends (2013 May 16)
According to the TIGTA report, TIGTA recommended that the IRS:  finalize the interim actions taken,  better document the reasons why applications potentially involving political campaign intervention are chosen for review,  develop a process to track requests for assistance, finalize and publish guidance,  develop and provide training to employees before each election cycle,  expeditiously resolve remaining political campaign intervention cases (some of which have been in process for three years), and  request that social welfare activity guidance be developed by the Department of the Treasury.

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IRS response to TIGTA (2013 May 16)
In their response to the report, IRS officials agreed with seven of TIGTA nine recommendations, and proposed alternative corrective actions for two of TIGTA recommendations.

TIGTA response to IRS (2013 May 16)
TIGTA does not agree that the alternative corrective actions will accomplish the intent of the recommendations and continues to believe that the IRS should  better document the reasons why applications potentially involving political campaign intervention are chosen for review  and finalize and publish guidance. The IRS response states that TIGTA report views approvals as evidence that the Exempt Organizations function should not have looked closely at those applications. TIGTA disagrees with this statement. TIGTA’s objection was to the criteria used to identify these applications for review. TIGTA believes all applications should be reviewed prior to approval to determine whether taxexempt status should be granted. The IRS’s response also states that issues discussed in the report have been resolved. We disagree with this statement. Nine recommendations were made to correct concerns we raised in the report, and corrective actions have not been fully implemented. Further, a substantial number of applications have been under review, some for more than three years and through two election cycles, and remain open. Until these cases are closed by the IRS and our recommendations are fully implemented, we do not consider the concerns in this report to be resolved. IRS Management’s complete response to the TIGTA draft report is included as Appendix VIII.

Bosses response to IRS (2013 May 22)
The President and Secretary of Treasurer asked for and received several resignations at the IRS, within 24 hours of them receiving the TIGTA report. At a Congress hearing we were told that there are only 2 political appointees at the IRS:  The Commissioner of the IRS, who is selected due to managerial skills;  The Legal Counsel for the IRS, who is hired because he or she is a lawyer, familiar with the US tax code.

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After the President and Secretary of Treasury had received and digested the TIGTA report, they instructed the IRS to comply with ALL of the recommendations.

Examples of Bad Questions (2013 May 21)
These examples come from what politicians in hearings asked TIGTA and IRS representatives.    One group was asked by the IRS about the content of their prayer meetings. One group was asked by the IRS for their church membership list. One group was told by IRS that they could have tax exempt status if they promised never to protest Planned Parenthood.

My Absurd Suggestions (2013 June 03)
Maybe some of my suggestions are not absurd. Hopefully poor ideas can stimulate the brain to think around some issues, to come up with better suggestions. See Citizen’s United in the Glossary. I think the US Government needs to initiate an action which can go to the US Supreme Court seeking a ruling on whether it was the intent of the Court to invalidate the tax-exempt regulations. They might include the exclusive vs. primary controversy in there as well. I believe some cases can get there other than the usual court case appeal progression. For example, how did the Florida Bush vs. Gore vote counting chad125 issue get there? Since TIGTA126 goes where the facts lead, and Politicians go where conspiracy theories lead, perhaps Congress should ask DOJ127 to do to IRS what they did to Petraeus128 and AP,129 to map contacts with IRS employees who used the inappropriate criteria, to see if there is any evidence of who might have called upon them to do so, since they are denying anyone told them to do so, as influenced by having a boss in the same room as the auditor, when interviewed. Government agencies need to both have minutes of meetings, made available to relevant Congress oversight committees, and advance notification of meetings, such that Congress may send staff members to sit in and observe meetings. Thus the relevant committees would know what’s going on at the government agencies they have oversight responsibility for, instead of waiting until some scandal breaks.

125

Chad = the bits of paper in the holes of punched cards involved in counting ballots. If the bits are still stuck in there, a vote can be invalidated. The state-of-art of punched holes in paper or cards, is such that they often come loose where unintended, and can gum up any mechanical machinery. 126 Treasury Inspector General for Tax Administration. 127 Department of Justice. 128 See my Petraeus Gate doc, which I have no longer been keeping current. 129 See my AP Gate doc, which as of this writing had not yet been uploaded to Scribd, but can be delivered some other way, by request.

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In addition to the above ideas, some places in my notes, after I explain some problem, I then share my ideas on what, if anything we can do about it. See:  Congress Mistakes = Unintended Consequences are avoidable, in my opinion.  Treasury Mistakes = Exclusively vs. Primarily130 & then one idea how to resolve.

Government 5 Mistakes (2013 May 23)
Here are mistakes I have figured out so far, which cross lines between different parts of government.

Government mistake # 1: People, who get out of jail, can then get jobs in the
financial industry such as selling sub-prime mortgages, or working for the IRS.131 There should be some vetting regarding whether the crime they were incarcerated for means they are vulnerable to some temptation, that this job is supplying them.

Government mistake # 2: Government agencies are provided with a budget to
perform certain tasks. Their work load can evolve over time, sometimes dramatically after key events like US Supreme Court decisions, new laws passed. Thus, it is important to maintain statistics on the nature of the workload, statistics about the work load, and when there is significant change in this, to report that fact to Congress and up the chain of Administrative command. This was not done, as the IRS began to be challenged with a dramatic growth in certain kinds of non-profit organization applications. Thus, Congress and the Administration were unaware the IRS was having serious difficulties. Even if informed, they might have been unwilling or unable to act constructively, but they were never told, until a scandal revealed the situation.

Government mistake # 3: I can see in multiple reports by the GAO, and
Inspector Generals, that there are disagreements over the appropriate ways to make sure that employees know their job, do it correctly. The auditors say one thing, the agency management disagrees & says we know better than you how things should be done, we will do it this other way. In my opinion, both ways are incomplete. We need something better than the auditors and the agencies talking past each other, not solving problems. The two different approaches they are fighting over are: 1. There should be written guidelines on what is to be done. 2. There should be training in what is to be done. I have worked in private enterprise my entire career. I have witnessed both approaches, and seen both fail. 1. Employees are handed some booklet, maybe sign confirmation we got it, read it. In my case, I send the form back where I dispute some of the rules as being contrary to my ability to do my job as I understand it, stating that I refuse to obey
130 131

Exclusively vs. Primarily mapped out in the Glossary.
https://www.propublica.org/article/how-irs-nonprofit-division-got-so-dysfunctional

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these new rules until I get clarification from my boss regarding the conflict between the rules, and prior instructions from my boss. Then everyone puts the rule booklet, and responses away in some file, and we forget all about them. 2. Employees have learned how to do their job over a period of many years, and they get this 1-2 day workshop. They try to get in the habit of doing some things differently because of what was communicated in the workshop, and usually fail. There is a turnover of new workers, who never got the workshop, learn how to do the job from the old way of doing things. What is needed is an audit process at least annually, preferably every few months, to make sure that what the staff is doing, comports with either the training or the written guidelines. This system needs to be designed so that with personnel turn-over, the new people learn the right system. The overall problem is a failure to think through the big picture. This is a common problem in contemporary organizations, as I shall illustrate with a few personal anecdotes. Several years ago, a friend of mine was office manager of a company, where they had backups of everything at home, and a list of all their equipment. They had a burglary, then they said, no problem, we will use the list of equipment to order replacements, paid for by our insurance, then bring in backups from home. They discovered that much of their hardware was no longer available on the market, because hardware evolves rapidly. Thus their insurance was inadequate for the cost of disaster recovery. Several years ago, one of the departments of a company where I worked, first got some new software and installed it on a PC, with tape backup, then the PC broke down, and they replaced the PC, then discovered that the tapes from the old PC could not be read by any tape drive now on the market, and they needed immediate access to that data to do their job properly. Then they came and asked me what their options were. I said that before I answer that, I want to show you something. I took them to a closet in my work area & opened it up and pointed at some devices. Do you know what those are? They are spare pieces of hardware. If key hardware breaks, it typically takes several weeks to get it fixed or replaced, so when something breaks, we swap it with the spare one, so we keep operating without disruption, while getting the broken one fixed or replaced. In other words, the budget needs to allow for having backup hardware like this. Then if we discover that our old hardware is no longer available on the replacement market, we find out when stuff is still operating Ok, so we have time to do something about it. In my opinion, in your situation you are better off getting the old PC repaired, assuming the hard drive is not toast, then install on it state-of-art backup hardware, then migrate to a newer PC, which uses the same kind of backup hardware. Then they had to go thru reregistering the software for the replacement hardware. Several years ago, one of the departments of a company where I worked, got some new software, without consulting me. Since I was a computer specialist, people in that

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department called me with some questions. I asked to see the system documentation & was told there was none. I asked how they know how to do anything on this system. “We were sent to a class by the people selling the software.” I asked if my co -workers could call those people for follow-up questions. No, it was the class, then we got the new system. I told them I cannot troubleshoot the system, unless I see software written in one of the computer languages which I know, and/or some system documentation, of which neither existed, so they need to consult with their boss about this. I told their boss that I had a lot of relevant experience, so be sure to check with me if you need help on a computer conversion. Within a few months, all the people who had gone to the class, had left my employer to go work for some other company, with everything they had learned from the class, leaving the company in their heads, and not with the company. Hopefully my anecdotes show that systems are often managed by people who have some assumptions which are contrary to practical reality. Government mistake # 4 by example, when top IRS official(s) knew that employees had been breaking the rules, had done an internal investigation to confirm allegations, and had launched an Inspector General (IG) investigation to look into it in more detail, their replies when Congress specifically asked about allegations about that mistake, sounded like perjury. This happened because of terminology differences, which is a problem Congress needs to address, since it is not only IRS where this type problem is occurring. For example, Congress asks about IRS harassing certain kinds of taxpayers, and targeting specific kinds of companies, then an IRS official says this is not happening, because the official uses terminology other than harassing or targeting for the activity. There needs to be a common set of definitions shared between the politicians asking questions, and the civil servants and political appointees giving answers, with a copy to the general public watching on C-Span. Government mistake # 5: There needs to be a log of answers sent Congress to their questions, indexed by subject matter, within each government agency, so that when subsequent audits and investigations determine that those answers are now known to not be correct, then there should be follow up letters, to notify the relevant people in Congress about the facts which have come out to show that the earlier communications were mistaken. Here is a correction to the record.

Congress 5 Mistakes (2013 May 23)
Here are relevant mistakes I have figured out so far … I may periodically adjust the #s, to insert additional mistakes. Congress mistake # 1 is not to have any checking for the possibility of unintended consequences in the laws they pass.132
132

See Unintended Consequences in the Glossary.

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According to Pro Publica,133 In the 1990’s, laws were passed designed to streamline the tax agency and make it more efficient. But they had unintended consequences for the IRS’s Exempt Organizations division. Checks and balances once in place were taken away. Guidance frequently published by the IRS and closely read by tax lawyers and nonprofits disappeared. I believe Congress should establish a body which functions similarly to CRS, GAO, OMB. Its role would be to evaluate a bill, before final passage, to try to locate possible unintended consequences, and suggest where it should be further amended to keep the spirit of the proposed law, without the horrible implications. Congress could then decide to amend to fix, or keep the consequences, which are in fact intended. Congress mistake # 2: When you ask questions of representatives of government agencies, you need to recognize that they may define words differently from you. For example, when you asked IRS officials about “harassment” of tax -payers, or “targeting” of specific groups, those officials may know of activity that people in Congress may consider to be “harassment” and/or “targeting” but have other names for the ac tivities, and thus could answer honestly that there is no such thing happening, which is misleading, because of flaws in how you phrase your questions. Congress mistake # 3: After laws are passed, Congress should ask GAO to inspect the relevant government agencies to see if they are carrying out the laws faithfully, and if not, suggest what should be done to fix it. Congress has apparently taken no meaningful action regarding IRS problems in this area. Congress mistake # 4: When Citizens United tore up the rule book,134 Congress did not seek briefings from various agencies of government, to find out the impact, then replace the rule book with something sensible, reflecting original intent of the law, as adjusted by the changed mandates from the US Supreme Court. So now we had a mess, and Congress was ignoring it. Congress mistake # 5: You wrote a letter to the IRS with some concerns. The IRS responded that they share your concerns, and are looking into the matter. You should have followed up with a request, that once the IRS finds out results from what they are looking into, that they should write you again, with whatever they find out. If you thought IRS was giving you the finger, then you should have made that more obvious to the American People.

133 134

https://www.propublica.org/article/how-irs-nonprofit-division-got-so-dysfunctional See more info in Glossary.

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Treasury 1 Mistake (2013 May 21)
Treasury mistake # 1 was to establish guidelines which altered the letter of the law to make the reality more complicated. This has been explained by CREW 135 and MSNBC, which thought IRS had done it. IRS leadership was asked about this at a Senate Finance Committee hearing. They said this is in Treasury guidelines. The IRS does not have the authority to make changes in the laws, or in Treasury guidelines. It is higher up in the chain of command, than IRS. When TIGTA was asked about it, Mr. George said this is outside the scope of his office, The law says these various organizations must exclusively engage in whatever is the reason for their existence, without any involvement in political campaigns for or against any political candidates. The regulations say these organizations must primarily engage in whatever focus. How do we fix this after 50 years of 70,000 organizations a year getting tax exempt status under the primarily rules?136 I think Congress with help of Congressional Research Service (CRS) needs to figure out how Citizen’s United has altered the original law. Then there needs to be a revised law, giving some date deadline when tax-exempt organizations can no longer operate under the primarily regulation, and switch to the exclusively law, as modified by Citizen’s United.

TIGTA 1 Mistake (2013 May 22)
Here from the Terminology Glossary are some key references for this chapter:  EO = Exempt Organizations  IG = Inspector General  TIGTA = US Treasury Inspector General for Tax Administration137  TIGTA guy is the actual person in charge of TIGTA. The name TIGTA is both the guy, and the various auditors working that office, with many investigations, not just this one. Thus, I use “TIGTA guy” to reference the person with th e title, and “TIGTA” to reference the collective office the guy is in charge of. Here are relevant mistakes I have figured out so far. TIGTA mistake # 1: During the audit there were 41 interviews with Cincinnati people who were involved in the inappropriate criteria, where an IG auditor asked “Who asked you to do this?” At 36 of those 41 interviews, in the room was their EO boss from Washington DC. The first
135

CREW = Citizens for Ethics in Washington

http://www.citizensforethics.org/press/entry/crew-statement-on-increasing-scrutiny-of-irs-501c4 http://www.citizensforethics.org/blog/entry/the-real-problem-at-the-irs 136 Also see My absurd suggestions. If the US Supreme Court is to be sucked into this again, maybe that should be done first, then fix the regulations, guided by their wisdom.
137

http://www.treasury.gov/tigta

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the TIGTA guy knew about this was at a May 22, 2013 hearing, when politicians asked about it. He plans to look into it & get back to Congress with more clarification later. The problem with doing this is that if in fact Cincinnati Oh office was told to do this by a Washington DC boss, having such a boss in the room, when the question was asked, means the person is inhibited from being as honest as they might be if the boss was not in the room. Also, if there is a cover-up being attempted, having in the same room, different participants, tends to mean that the questions will not get at different answers. When witnesses are questioned in isolation from one another, and instructed not to discuss their testimony with anyone other than the auditors, until the auditors are finished, then the auditors are more likely to get info about who knew what when, and identify where there are differences between different witnesses, and more likely to identify who is involved in any wrong doing. Yes, it sometimes makes sense to have someone in the room who has worked in areas other than the person being questioned, to help click their memory where one person may know more than the other.

IRS 7 Mistakes (2013 Jun 07)
Here are relevant mistakes I have figured out so far … periodically I adjust the #s, to insert additional mistakes. Read the TIGTA report for lots of stuff gone wrong, where some of the problems are not simple mistakes. TIGTA characterizes the behavior at the IRS as:  Inappropriate selection criteria;  Gross Mismanagement in Cincinnati Ohio, and Washington DC. IRS mistake # 1 is to make taxpayers pay for IRS mistakes. In one of the hearings I watched, where the head of the IRS, and the head of the IG audit, were questioned by members of the House Ways and Means Committee, one of the politicians described a situation with one of their constituents: A non-profit run totally by volunteers, had been in existence for 60 years. A representative of the IRS told them, that they no longer needed to file annual 990 reports, so they stopped doing so. Then they get a letter from the IRS informing them that because 990 reports are mandatory, and because they haven’t filed them, their non -profit status is being revoked. Now they have to go thru the process again, seeking that status again, which we have seen from the bigger picture, can take up to 3 years. IRS mistake # 2 was to have 2-3 weeks as standard time to demand info from taxpayers, regardless of how much info was being demanded, or the type of taxpayer involved.138
138

See Jan 2012 in time line.

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IRS mistake # 3 was not to have a policy, where if the rules for the organization are to be altered, then the overall organization should get a heads up about the rules change. We saw the same problem with the Fast & Furious scandal. Alcohol, Tobacco, Fire Arms and Explosives (ATF) had well established rules how to deal with particular scenarios, then people were put in charge of operations, who did not know those rules, so they had to reinvent the wheel. Had that process of reinvention been communicated to upper management, they would have seen that there was huge ignorance, and fix it before we got such a bad mess. IRS mistake # 4 was to focus on new Tea Party and related alleged non-profits instead of doing the same kind of smell test on ALL non-profits. In fact the IRS effectively sat on its hands while a mountain of organizations held up a middle finger to the rules.139 Then after groups were approved, which were to spend their money primarily on the nonpolitical purpose for which they were formed, their annual reports140 show they spent 65%+ on political, and the IRS does nothing about it. IRS mistake # 5 when employees were found to be breaking the rules, in defiance of their boss telling them otherwise, perhaps it was time to replace them with other employees, instead of letting them continue to break the rules.

IRS mistake # 6 was failure to inform Congress, and their administration chain of
command, fully about the discovery and handling of serious allegations. IRS leadership learned about allegations of misconduct.  Did they initiate an internal investigation? Yes  Did they inform Congress or their chain of Administrative Command? No. Maybe they should have sent a report summarizing the allegations, and promising an update after the investigation completion. IRS leadership gets results of investigation into alleged misconduct.  Did they inform Congress or their chain of Administrative Command? No. The results, of the internal IRS investigation, were that the misconduct had occurred.  Did they take action to deal with the wrong doing, to try to correct it? Yes, but questions have been raised about how long it took to implement.  Did they inform Office of Inspector General at Treasury? Yes.  Did they inform Congress or their chain of Administrative Command? No. Congress found out, and asked specific questions.  IRS officials only informed Congress when the questions terminology matched that of IRS terminology, and the person asked is in the know.
139 140

http://www.citizensforethics.org/blog/entry/the-real-problem-at-the-irs http://www.citizensforethics.org/press/entry/crew-and-reform-groups-call-on-congress-to-deal-withtwo-irs-scandals

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IRS told Congress about the allegations, after the investigation found they were true, but not that the investigation found they were true.

IRS mistake # 7 is to treat innocent requests for non-profit status, like the request is from a serious enemy. At Congress hearing with Holder, one politician asked about one specific constituent. A husband and wife team have operated a small business for 20 years. They decided that they wanted to start a non-profit to engage in education about voter fraud, so they made an application in 2010. The IRS has bombarded them with hundreds of questions. It wants to know 100% of all postings they have ever made to Facebook or Twitter, and 100% of all Comments ever posted on their social media pages. It wants to know all the places they have ever had a speaking engagement, and all they will ever do in the future. Until now, they have never had an IRS audit, but immediately after they applied for non-profit, there have been IRS audits of their personal and business tax returns. They have had 6 visits by the FBI, visits by the ATF, and OSHA, all unannounced. They also do not yet have an answer from the IRS whether or not they can get non-profit status. This sounds to me like way over the top of any reasonable investigation of anyone, unless there is credible evidence from the early results of some criminal wrong doing. At Congress hearing with the current heads of IRS and the IG report, a politician mentioned another constituent. There was a book club which wanted non-profit status. The IRS asked for a list of all books they had ever included in their club, all they might include in the future, and copies of all book reviews they ever had.

IRS officials alleged lies (2013 June 07)
According to Fact Check org, May 21, 2013, QUOTE:141

Lois Lerner, director of the IRS’ exempt organizations division, falsely
claimed that she first learned of employees singling out conservative groups in 2012, because of media reports. But the inspector general’s report shows she was briefed on the practice in June 2011 and took action to try to correct it. Lerner told a House committee in May 2012 that the IRS is justified in requesting information from conservative groups about their donors and policy interests in certain cases. That’s true, but she failed to disclose that nearly a year earlier she learned that IRS staffers in Ohio were making what she deemed “unnecessary” requests for such information in dozens of instances. Lerner blamed a heavy workload for the problem, telling reporters that the applications for 501(c)(4) nonprofit status had “more than doubled,” from 1,500 in 2010 to over 3,400 in 2012. That’s true, but use of the “inappropriate criteria” began in March 2010 and 501(c)(4) applications declined in the fiscal year that ended Sept. 30, 2010, according to the inspector general’s report.

141

http://factcheck.org/2013/05/irs-officials-misled-congress-public/

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Acting IRS Commissioner Steven Miller was asked at a July 2012 congressional hearing, “What kind of … action is taking place at this time that you are aware of” to address complaints that groups seeking nonprofit status were being harassed. Miller said an increase in 501(c)(4) applications was causing processing delays, but he did not disclose that he had learned two months earlier that conservative groups were being inappropriately singled out for extra scrutiny. Douglas Shulman, the IRS commissioner at the time, falsely told a House committee in March 2012 that there was “absolutely no targeting” of conservative groups. Shulman testified at a Senate hearing on May 21 that he learned in spring of 2012 that the list of group names targeted for review included t he term “tea party,” but he did not know “the scope and severity of the list” until this month.

UNQUOTE Also, according to Fact Check org, May 18, 2013, QUOTE142 The Internal Revenue Service is not exactly an “independent agency,” as President Obama claimed during a May 13 press conference. In fact, it is a bureau of the Treasury Department, an executive agency within the federal government. And it is the president who nominates the head or chief executive of the IRS, and who has the authority to remove the individual in that post at his or her will. UNQUOTE

Republican Mistakes (2013 Jun 07)
I suspect that most all Republican mis-statements of fact are intentional for political theater.143  The IRS will not have access to personal health records, Republican claims to the contrary.  The Inspector General looked at a wide range of sources, to figure out who knew what when, contrary to Republican claims.  Treasury Inspector General’s report found that employees in the Cincinnati office, not any administrators in Washington, “developed and implemented” the flawed policies, although having DC boss sitting in on interviews with Cincinnati workers may have lowered degree to which those workers volunteered info. Several in Washington tried to fix it, with incompetent follow-thru. Their fixes were in accordance with the law. Thus for Republicans to claim that the promotion of someone from the Washington chain of command over non-profit into Obama Care supervision, implied anything improper, is pure political theater with no basis in fact.

Disabled Veterans (2013 May 19)
There is an allegation that:144
142 143

http://factcheck.org/2013/05/irs-not-so-independent/ http://factcheck.org/2013/05/republican-overreach-on-irs/ 144 http://voices.yahoo.com/how-irs-launders-veterans-disability-checks-12136745.html

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Under USA laws, disability checks to veterans from the Veterans Administration (VA) are 100% exempt from taxes. The IRS has been taking taxes on those checks out of veteran bank accounts.

It is possible that the disabled veteran, who wrote this story, is a victim of identity theft, that the $157k the IRS claims the veteran earned, was in fact associated with a crook, using the veteran’s identity. Approx ½ million Americans have their identity stolen each year, for the purpose of claiming tax refunds, in the name of those people. The IRS gives the money to the crooks, then when they figure out it was fraudulent, they try to collect the stolen money from the real persons of those identities. It typically takes the real persons in excess of 6 months of hassles with the IRS to prove they had nothing to do with the fraud, and then from that point on, they have to go thru continuing hassles, because the IRS is not competent to combat identity theft. The USA is losing $billions in tax payer money each year, thanks to this IRS incompetence. I share some ideas on what can be done to put a stop to this mess, in my Solution Ideas notes.145

Political Double Standard Beliefs (2013 May 20)
Dave Whipp posted to a Google Plus thread:146 QUOTE Can't help thinking about the stark hypocrisy of the IRS scandal. At one level, we have groups who are supposedly in favor of lower taxes and lower spending getting upset when the government adds additional scrutiny before forcing me, a taxpayer, to pay for those groups' political expenditures. But OK, this is simply the same kind of hypocrisy that some see in Al Gore using a private jet to fly to a climate conference: the rules are the rules, even when you want to change them. But then there's the hypocrisy of the complaints of being singled out for extra scrutiny based on their beliefs. Many of the same people, who publicly support and speak for support these groups on the national stage, also speak in favor of TSA agents profiling people who look "Muslim", or want local police to check the immigration status of people who look "illegal"; or who are happy if the highway patrol pulls over a driver who looks black. I understand why Democrats, who are against these things, will speak out against the IRS agents' behavior --and perhaps that's what gives the "scandal" its legs. The president denounces the activities; and the logic of scandal is that any wrongdoing in government is the responsibility of the person at the top. UNQUOTE
145

See the section starting “Identity for Government” in http://www.scribd.com/doc/119857289/Solution-Ideas 146 https://plus.google.com/u/0/108030325771614004712/posts/KpmeoteKtfr

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Overview for Scribd (2013 May 24)
When I upload this doc,147 a brief description is needed. Here are my notes trying to unscramble the recent IRS scandal(s) for managing applications for tax-exempt status. I include:  links to where you can find the IG report, and other major sources;  time-line;  itemization of mistakes;  an effort to figure out who knew what when, because some in Congress claim they were lied to. TAGS are also desirable: IRS, IG, Treasury, tax-exempt, non-profit, Tea Party, Citizen’s United, scandal,

Overview to social media (2013 May 18)
Copy Paste to Google Plus loses footnotes and hyper links, so the urls need to be in full. I do not use tiny links because:  There are badware risks;  They conceal what the real site is. I have begun to follow the IRS story, and have a few tips for others on a parallel path. #1 acronym to digest (of many) might be TIGTA = US Treasury Inspector General for Tax Administration http://www.treasury.gov/tigta For people who share my interests, here are two places from which you can download the recent Inspector General Report into problems with how the IRS has been handling applications for non-profit status: Scribd

http://www.scribd.com/doc/141606149/Inspector-General-s-Report-on-IRSReviews-of-Tax-exempt-Applications and Wall Street Journal
http://online.wsj.com/public/resources/documents/TIGTA-201310053fr-revisedredacted-1.pdf If you plan to watch Congress Hearings about this on C-Span, before doing so, I suggest you check out what CREW has to say, because then you will see that politicians are ignorant of where this disaster started, long before Citizens United, as they question administration officials in charge of various things, but neglect to look inward at Congress responsibilities.

CREW = Citizens for Ethics in Washington
http://www.citizensforethics.org/press/entry/crew-statement-on-increasing-scrutiny-of-irs-501c4

http://www.citizensforethics.org/blog/entry/the-real-problem-at-the-irs

147

http://www.scribd.com/doc/142707892/IRS-NGO-Al-Mac

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Overview e-mail to pals (2013 May 16)
As I have learned about pieces of the scandals, I have shared some urls with some friends. Then I copy pasted here, what the substance of them were. Also, some of this material has since been copied to other chapters. I will probably be following this story. I have not yet decided if I will put my notes in a new doc, or in with an existing one like Petraeus Gate. I am seeing quotes from the IG report in the news media, so it has got to be out there to find. Someone has uploaded it to SCRIBD.148 I will try to download (even though it is public, SCRIBD sometimes gives people a hassle about downloads) If successful, I will call my copy: “IG IRS non profit 2013 May” & store it in my Scandals folder. I got it, 54 pages, but then cannot find it where I remembered just putting it. Google Desktop time line had no record of it, so I downloaded a different way, now confirmed I do have it. I also found this link on Wikipedia, to a copy on Wall Street Journal.149 It is also 54 pages … I wonder about the revised redacted … are there multiple versions?

Is NPR (National Public Radio … I think like PBS) non-profit I wonder, and have they been hassled by the IRS in the past. NPR paints the IRS as an incompetent and cruel agency, when it comes to handling non-profit status.150 They might sit on someone application for 3 YEARS, not doing anything, then send the person a demand for info, giving them 3 WEEKS to deliver the info. Well the IRS is not alone in such practices. I have previously noticed they lack competence when it comes to fighting identity theft. According to Business Week, the IRS is not on a vendetta against conservative groups.151 No, NPR says it is a combination of rogue employees, and language designed so no one can understand the rules.152 Both articles agree it is a bungling agency. Here’s Pro Publica story on the IRS scandal. 153

148

http://www.scribd.com/doc/141606149/Inspector-General-s-Report-on-IRS-Reviews-of-Taxexempt-Applications 149 http://online.wsj.com/public/resources/documents/TIGTA-201310053fr-revised-redacted-1.pdf 150 http://www.npr.org/blogs/itsallpolitics/2013/05/15/184246228/ten-things-we-learned-from-theirs-inspector-general-report 151 http://www.businessweek.com/articles/2013-05-15/whats-in-the-irs-inspector-generals-report 152 http://www.npr.org/blogs/itsallpolitics/2013/05/15/184246228/ten-things-we-learned-from-theirs-inspector-general-report 153 https://www.propublica.org/article/how-nonprofits-spend-millions-on-elections-and-call-itpublic-welfare

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Pro Publia reported that the IRS rejected only 56 of more than 14,000 501(c)(4) applications in the decade that ended in 2011. The inspector-general report says about 2 percent of IRS applications showed evidence of not being organizations appropriate for tax-exempt status. Someone else reported, in an article I do not now have handy, that the IRS gave Pro Publica preferential treatment, when revealing statistics to them. The stories just get worse and worse. Time to read the actual IG report. There was also what seemed to me, some confusion at Congress hearing with Holder. Is the IRS an independent agency, not part of any dept of govmt, like the CIA? Is it within Treasury Dept? The President appoints the IRS commissioner. Does that person report to the President or to Secty of Treasury? According to Wikipedia, the IRS is part of the Treasury Dept, and there are many problems at the IRS.154 A survey of IRS executives and managers by the Josephson Institute of Ethics revealed that 75% felt it was acceptable to lie when testifying before a congressional committee. I believe this is part of the culture of many gov agencies, not just the IRS. Third investigation mentioned by Wikipedia?155 1. Congress … IRS lied to it 2. IG is latest 3. IG is doing another As part of this, IRS employees in the Tax Exempt Government Entity group received an email warning them "URGENT: Do not wipe laptops/desktops". The investigation involves "copying every hard drive in TEGE across the IRS [ in order to preserve ] all the data on every hard drive that TEGE employees use Congress will also have more hearings. Holder was asked about cooperation. People asked to testify can say “I can’t comment because of the on -going investigation” How long do these investigations last? IRS FAQ about what’s in the news.156 Yes, this is written for beaurocrats, not for ordinary people.
154

https://en.wikipedia.org/wiki/Irs https://en.wikipedia.org/wiki/Political_profiling_at_the_Internal_Revenue_Service 155 https://en.wikipedia.org/wiki/IRS_Tea_Party_investigation 156 http://www.irs.gov/ http://www.irs.gov/uac/Newsroom/Questions-and-Answers-on-501%28c%29-Organizations

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There’s some stuff in there I did not know before. Section 501(c)(3) organizations are required to get IRS approval. Others, including section 501(c)(4) organizations, are not required to get IRS approval, but often seek it. Wow, I previously thought ALL 501-etc., needed IRS approval. CREW statements:157 The statutory language (the law) as written requires 501© 4 groups to work ‘exclusively’ for the social welfare, while the IRS has substituted the word ‘primarily’ instead, since 1959. MSNBC had been harping on this, and no other media or organization joined the harping until CREW spoke out. This causes a lot of problems, because groups then claim to work 51% for the social welfare and 49% for politics, but the reality is very different from what they claim.

Revision history (2013 June 09)
I have uploaded this to SCRIBD,158 and placed it in my Critical Infrastructure collection,159 which also has access to the Inspector General report on this IRS situation. Check list of additional stuff I plan to do, or look into, to enhance these notes, and put everything into better context.  527 in the tax code is often mentioned, because of some relation to 501 c status. Is it relevant to this mess?  Court Cases – there may have been some which altered the reality of laws passed by Congress, signed by President, interpreted by Treasury and IRS regulations – can I locate any, and include references?  C-Span – can I get a list of all the hearings on this, and provide links to info about each? o There have been many hearings, there may be more, so revisit occasionally seeking an updated directory. o Many of the hearings added stuff to official records of the committee investigations. Can the public see any of that stuff, such as WHEN what
157

CREW = Citizens for Ethics in Washington

http://www.citizensforethics.org/press/entry/crew-statement-on-increasing-scrutiny-of-irs-501c4 http://www.citizensforethics.org/blog/entry/the-real-problem-at-the-irs
158 159

http://www.scribd.com/doc/142707892/IRS-NGO-Al-Mac http://www.scribd.com/collections/4108500/Critical-Infrastructure This has 20 documents at time of adding IRS NGO. Others written by me = Boston Bombing; Economic Disasters; Indy Gas Boom; Solution Ideas; Weather Science Haiti. 14 by other people, on related topics.

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 

 

 

letter sent from Congress to IRS, and when WHO at IRS sent what reply, Q+A after the hearing? Congress hearings on C-Span – continue to watch them, then incorporate my scribbled notes into these – some of them threw out many names and incidents with rapid fire – can I get a Text Transcript? … I want correct spellings and titles of those names. Day Job: on multiple occasions, I have several days of heavy focus there, which takes me away from this hobby. Input. As of early June, I have read less than ½ of the IG report on IRS NGO mistakes, not yet cracked the one on the IRS California conference. I have ½ a dozen witness statements from Congressional testimony I want to study, and many pages of notes from watching them on C-Span. Obama Care – add to time line, key dates of passage, implementation, court rulings etc. because this scandal involved groups opposed to it Official sources where practical, what do they have to say about this, because a lot of speculation has a high risk of making it into news media, and especially social media, then labeled as fact. As I locate official sources, share coherently in my notes two ways: o Info in a context, with footnotes or “according to” identification where I got the info from. o Chapter or Section charting critical links so eay for me, & other readers of my notes, to pursue those sources for review, refresh memory, any new relevant info since last visitation. Signing Statements – Sometimes a President signs legislation into law, and at the same time has a statement how to interpret anything which seems ambiguous to the President. Do we have any relevant to this topic, and if so, can I add links to them? White House gov … anything about that on that site? Wikipedia info expand on some of this o FEC? Federal Elections Commission o IRS & Treasury – does it have dates of people in and out of specific job roles? o Tax-Exempt status … does it have dates of what legislation, regulations

As of June 09 (2013 Jun 10)
Sun nite June 09 I felt I was at a good break point in adding more info to these notes, although it is the nature of the stories, that there are many areas in need of additional links, so I decided to upload version 0.3 pending a small review of overall what’s here so far, and well indexed. At this point the notes, including Revision history, were approx:  65 pages from 40 & 22 earlier editions  159 footnotes from 95 & 39 earlier editions  TOC = 67 headings, almost 2 pages, approx 1 page in prior edition  567 k doc from 392 & 209 prior editions 63 IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

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# k PDF Approx 50 % increase from what was shared in version 0.2 This is version 0.3 last updated June 09, 2013. Scribd had 241 reads of earlier editions (4 were me) so far, +2 likes, and now was #/# visible.

Major areas updated between May 23 2013 version 0.2 and the next shared edition:  Note dates at end of chapter and section headings. However, some updates were either minor additions, or relatively small, compared to volume already in those chapters. There were updates and additions through most of my notes.  Big Picture introduction got added a summary of Major Causes of the IRS scandal(s), which I have found so far.  Congress Hearings … as of V 0.2 I had identified, and watched THREE … by June-7 that was up to SEVEN, in which I had info about an alleged eighth which I had not watched.  Inspector General reports … as of V 0.1 and 0.2, I had ide ntified, and was studying ONE … by V 0.3, I had downloaded TWO, and identified MANY MORE, in the Time Line, and found other topics currently being investigated, for which the reports are not yet out. I now have many links to other investigations (footnotes show TIGTA directory of audits available, many more there than the ones I selected, which seemed to me to be most relevant to my recent interests), added to the Time Line … when those reports came out.  Organization … early June, before downloading more t estimony, and reports, I decided to restructure where on my PC … instead of STUDIES / SCANDALS, of which I have a bunch other major topics in addition to SCANDALS, I am now going with STUDIES / SCANDALS / IRS with the new sub-folder getting all of this. Other stuff in my Scandals folder includes: o Accountability Charities … this is about organizations which collect money allegedly for some good cause, but really line their own pockets, and the government looks the other way. That has been going on for decades. o Child Abuse o Cruise Ship incident in Italy o Food prices and the Fed o Gun Control o Lying Dutchman o Ma Chemist o Petraeus Gate o School Scandals  Organization … a week after the above, I restructured a bit more, so that within my STUDIES / SCANDALS / IRS I now have separate folders for TIGTA and CONGRESS TESTIMONY downloads. I also moved a download in my STUDIES / NATIONAL SECURITY folder into the IRS one, regarding ID theft thru fraudulent IRS tax refunds to crooks.

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There is now a Who’s Who section near the top , between Glossary of Terminology, and Organizational Structure at the IRS. Some chapter headings have been inserted, with nothing there yet. Stuff is planned, and these headings are my decision where to insert the info, as it arrives.

As of May 23 (2013 May 24)
May 23, 2013 mid day I was at another convenient break point, and shared version 0.2. At this point the notes, including Revision history, were approx:  40 pages  95 footnotes  TOC = 45 headings, just over 1 page  392 k doc  225 k PDF  Not quite double what was shared in version 0.1  This is version 0.2 last updated May 23, 2013.  Scribd had 86 reads (2 were me) so far, and had advanced to 4/5 visible without my input (someone +1 liked it). Major areas updated between May 20 2013 version 0.1 and the next shared edition:  Note dates at end of chapter and section headings. However, some updates were either minor additions, or relatively small, compared to volume already in those chapters. There were updates and additions through most of my notes.  Citizens United – added date of US Supreme Court ruling to the time line, since that ruling, and lack of any apparent interest in the consequences by Congress, or tax law specialists or management at the IRS, is suspected of being significant causes of this scandal.  Glossary of Terminology grew from approx 2 pages to approx 4.  Links found for 2 House and 1 Senate hearing. I remember seeing more than that, will need to dig thru my notes to find the others. I watch so many hearings on so many topics, it is possible my memory is flawed.  Mistakes identification increased. o V 0.1 = Gov-3 Congress-3 IRS-8 (one got moved to Treasury) = total-14 o V 0.2 = Gov-5 Congress-5 Treasury-1 TIGTA-1 IRS-7 = total-19  Sources section was added, with links to several major info sources.  Time Line section grew from approx 4 pages to approx 7. May 22, 2013 nite, 2 days after uploading version 0.1, I see this doc has had 79 reads, 1-2 of which were from me getting the thing loaded, and description applied.

As of May 20 (2013 May 21)
May 20, 2013 I decided I had done enough, that I could share first version of my notes on this topic. At this point the notes were approx:  22 pages  39 footnotes  TOC = 23 headings, almost 1 page worth 65 IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder

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IRS NGO = non-profit status

6/10/2013 7:59:52 AM

209 k doc 137 k PDF This is version 0.1 last updated May 20, 2013. At time of uploading it, this took my Scribd statistics from 53 to 54 uploads, with collectively 61,032 reads and counting, but this doc is still 3/5 discoverable.

Concurrent with the development of these IRS NGO notes, I was also looking into several other major issues, including:  AP Gate  Boston Bombing  Cyber Security  Day job – multiple distractions  Drone Nations  Drone Reports  Drone Robots  Gas Boom  Personal computer services going haywire, some due to upgrades into hell  School Scandals  Seminar I attended, with follow-up  Solution Ideas

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IRS NGO / in Al Mac SCANDALS folder / IRS sub-folder