The IRS scandal has not disappeared – it’s gotten worse

Judging by the reaction of many elected officials and media outlets, the latest report on the IRS targeting scandal is cause for relief. But a closer look shows the opposite is true – by finding that the agency mistreated a variety of left-leaning groups, the report widens the scope of IRS misconduct and increases the urgency of further changes at the agency.

The original report from TIGTA, the Treasury Inspector General for Tax Administration, was published in 2013 and detailed how the IRS used “inappropriate criteria” to decide which nonprofit groups to scrutinize. Instead of relying on evidence, the agency dragged every organization with particular words in its name through an unnecessarily harsh process that lasted up to three years. 

{mosads}At the time, the statistics showed that right-leaning groups were vastly more affected, facing three times as many questions from the IRS and a much higher likelihood of having their applications denied. Democrats said this was due to more conservative applicants, while Republicans pointed to a disparate impact even when this was factored in. But neither side focused on the larger point – that citizens from both sides of the political spectrum were being denied their rights. 

The reaction to the latest TIGTA report shows this partisan focus has not changed, and citizens remain vulnerable to IRS abuse as a result. In an audit dating back to 2004, TIGTA found that as many as 146 additional applications were processed based on their names instead of their actions, the majority of which had names that indicated a left-leaning ideology. 

Instead of the outrage that would be expected (and justified) at IRS mistreatment of these groups, the ranking Democrats on both the Senate Finance Committee and the House Oversight Committee released statements that presented the report as somehow absolving the agency of wrongdoing.

Sen. Ron Wyden (D-Ore.) praised the IRS for ensuring “both sides of the political spectrum were treated the same,” and Rep. Elijah Cummings (D-Md.) emphasized in his statement that “progressive groups were also selected for heightened scrutiny” and their applications were “severely delayed as a result.”

It’s a strange defense of the IRS to say that it treated both sides inappropriately instead of focusing its abuse on just one type of group. Yet this is the kind of faulty logic that comes from a relentlessly partisan approach, and it is preventing long-term solutions from being implemented. 

As noted in a report published earlier this year by my organization, Cause of Action Institute, an important cause of the targeting scandal was a section in the IRS manual that allows the agency to treat applications differently if they might receive “media or Congressional attention.”  In other words, what matters is whether the agency is going to be scrutinized because of an application, not whether the application has merit.

This rule was consistently cited by IRS employees throughout the targeting scandal as a reason for their behavior. At best, this creates an arbitrary process where the fate of an application for tax-exempt status depends on what TV channel an IRS employee watched last night. At worst, it provides a ready-made excuse to hold up applications belonging to people with certain political beliefs.  

Either way, the rule is a clear attempt by the agency to look out for its own reputation at the expense of a fair process for taxpayers – and it’s still on the books. 

The IRS could change this internal rule tomorrow by simply publishing a notice that it was doing so along with a few trivial pieces of information.  It’s that simple. 

Unfortunately, it is not the nature of bureaucracies to reduce their own power. The new TIGTA report includes no recommendations, and the IRS has consistently sought to downplay the problem. After our report was published, the agency responded by generically stating that it has a “continuing commitment… to be guided by the tax law and nothing else.”  

There is nothing in the law about basing the treatment of taxpayers on media reports and political whims, and nothing in the IRS’s own rules should allow this to happen.  The latest report makes it clear that the consequences of this rule extend beyond any one administration or ideological group.  If we wish to prevent this kind of misconduct from happening again, we must continue to insist that the IRS change its policy and place citizens’ rights above its own desire to avoid embarrassment.

John McGlothlin is counsel at Cause of Action Institute, a Washington, D.C. non-profit oversight group advocating for economic freedom and individual opportunity.