A federal judge, Judge Susan J. Dlott—ironically in Cincinnati, where the Obama administration's first bumbling explanation for targeting was "rogue IRS agents"—has ordered the IRS to produce a list of all 298 conservative nonprofits the IRS targeted. ‘Huh, what targeting?’ one can imagine Justice Department officials mumbling. Mr. Obama’s Justice Department fought to keep the list private despite promises his would be the most transparent administration ever.
The lawsuit by conservative groups could end up certified as a class action for violating their constitutional right to equal treatment. The judge determined that the litigants were entitled to know so the judge ordered the IRS to release the list of targeted Tea Party groups. If the judge also certifies the case as a class action, the disclosures could be broader still.
The timing is propitious, coming just as Targeter in Chief Lois Lerner was exonerated by the Obama administration. It has confirmed in a tortured seven-page letter that there will be no criminal charges for Lois Lerner. Meanwhile, controversial IRS Commissioner John Koskinen recently claimed that the changes at the IRS are so significant that “you could hang a sign out at the front of the headquarters saying ‘Under New Management.'” That's right, any alleged targeting was in the past.
The suit was filed even before the latest Hearings of the Committee on Oversight & Government Reform. On February 26, 2015, the Treasury Inspector General said he is investigating possible criminal activity at the IRS. Remember all the millions and millions in taxpayer money spent looking? One report said over 250 IRS employees spend 100,000 hours, costing taxpayers at least $14 million. IRS Commissioner John Koskinen testified that recovery efforts had been thorough, and the tapes and emails couldn’t be found.
Yet the Inspector General now reports that the IRS had not even asked for the backup tapes when the ‘hard drive crash’ excuse was first used. The tapes were easy to find and the emails were easy to recover. It is astounding, and yet Democrats still pooh-pooh the targeting and imply it is the fault of the conservative groups in the first place.
This narrative started in 2010. Ms. Lerner and Justice Department officials met in 2010 about going after conservative organizations in the wake of the Supreme Court’s Citizens United case. In August 2010, the IRS distributed a ‘be on the lookout’ list for Tea Party organizations. By March 2012, amid reports of targeting, former IRS Commissioner Doug Shulman testified there is “absolutely no targeting” by the IRS.
And now Judge Susan J. Dlott has said that Tea Party groups can pursue their claims that the IRS violated their First and Fifth Amendment rights, along with a section of federal law that prohibits the government from releasing private information contained in tax returns. The lawsuit wants a list of 'all dissenting groups targeted for additional scrutiny by the IRS from January 20, 2009, through July 15, 2013.' The court said this information was "directly related to the issue of class certification in this federal court proceeding."
Some names on the list will be no surprise, as a partial list was unearthed by USA Today in September 2013. An IRS spreadsheet characterized the activities of some groups as "propaganda." Judge Dlott ordered the IRS to tell the court whether or not that list was authentic, The Washington Times reported. It sad to see the IRS used for political purposes, and sad to see the endless difficulty private parties and Congress have had getting answers. Perhaps that will change.
For alerts to future tax articles, follow me on Forbes. You can reach me at Wood@WoodLLP.com. This discussion is not intended as legal advice, and cannot be relied upon for any purpose without the services of a qualified professional.
