Accountability for IRS? What’s Next After New Court Decision

The IRS has not stopped targeting conservative groups seeking nonprofit status, a federal appeals court has ruled in deciding to reinstate a lawsuit against the agency.

The U.S. Court of Appeals for the District of Columbia Circuit overturned a decision by a lower court that threw out the lawsuit because the Internal Revenue Service had promised voluntarily to end discriminatory practices.

The IRS insisted “there is no reasonable expectation” that discrimination will reoccur, the ruling noted, because the tax agency has “suspended until further notice” tactics it used to target the applications of tea party and other conservative groups for nonprofit status.

That reassurance was unsatisfactory to the appeals court because it appeared temporary.

“There is a difference between the controversy having gone away and simply being in a restive stage,” Senior Judge David B. Sentelle, who was appointed by President Ronald Reagan, wrote in a unanimous decision by a three-judge panel.

As a result, Sentelle wrote in the opinion released Friday, citing case law, the IRS “is free to return to [its] old ways—thereby subjecting the plaintiff to the same harm, but, at the same time, avoiding judicial review.”

Conservatives greeted the decision as proof that the tax agency isn’t serious about cleaning up its act.

“They only stopped the targeting while people were paying attention. They had no intention of stopping the illegal conduct altogether,” lawyer John Eastman told The Daily Signal.

Eastman represents True the Vote, a conservative voting rights group that was the main party in the appeal.

In 2010, the IRS began flagging applications from conservative groups applying for nonprofit tax status. Specifically, IRS agents targeted dozens of applications that included terms such as “tea party,” “patriot,” and “government spending.”

After the scandal came to light, Lois Lerner, director of the IRS Exempt Organization Unit, stepped down from her position in September 2013. In May 2014, the House voted to hold Lerner in contempt of Congress for refusing to testify before a House committee.

When the targeting story first broke, President Barack Obama said he was “angry” and that any misconduct by IRS agents was “inexcusable.” A year later, though, the president told Fox News Channel’s Bill O’Reilly there was “not even a smidgen of corruption” at the agency.

Conservative lawmakers and activists complain that no one at the IRS has been held to account.

While the federal appeals court declined to hold individuals inside the IRS personally responsible for damages, it did agree with Eastman’s argument that political discrimination inside the agency was an ongoing problem.

Any suggestion that the IRS no longer targets conservative groups, Sentelle wrote, “is absurd” in light of the fact that “two of the appellant-plaintiff’s applications remain pending.”

The IRS argued that it couldn’t process those two applications, though, because the groups “were involved in litigation with the Justice Department.”

But the appeals court found that explanation “rather puzzling” and amounts to a Catch-22. Sentelle wrote:

The IRS is telling the applicants in these cases that, ‘we have been violating your rights and not properly processing your applications. You are entitled to have your applications processed. But if you ask for that processing by way of a lawsuit, then you can’t have it.’

The names of the two groups still under review by the IRS were not made public in the ruling, and an IRS spokesman declined to comment, citing privacy provisions in the federal tax law.

Conservatives celebrated the decision, which remanded the lawsuit to a lower court for trial and makes possible further discovery, a pretrial procedure that allows plaintiffs to search for additional pertinent information.

During discovery, a lower court could demand the IRS turn over large batches of documents, computer drives, and email archives.

The legal procedure could have significant political repercussions because any information that is discoverable in court is subsequently open to the public.

In his interview with The Daily Signal, Eastman, former dean of Chapman University School of Law in Orange, California, predicted the discovery will unearth new facts about the IRS that are “going to be even more explosive than anything we’ve seen so far.”

Plaintiffs would look for evidence of collusion among government agencies, Eastman explained. It would be illegal, for example, if the IRS shared information about conservative nonprofits with the FBI for additional review.

That’s within the realm of possibility, Eastman said, considering the experience of Catherine Engelbrecht, founder and president of True the Vote.

After her organization, which aims to curb voter fraud, applied for nonprofit status in 2010, Engelbrecht told The Daily Signal, she came under investigation by three government agencies all at once.

As first reported by National Review in 2013, the IRS requested she turn over every social media post she’d ever written, lists of political organizations she has addressed, and information on any family members interested in running for public office.

Engelbrecht and her family’s business became the target of probes by the Bureau of Alcohol, Tobacco, Firearms, and Explosives and the Occupational Safety and Health Administration as well as the FBI.

If any evidence of collusion exists among these agencies, Eastman told The Daily Signal, government employees involved could face “serious, five-years-in-prison types of felonies.”

The Justice Department could delay discovery by further appealing the decision to the full U.S. Court of Appeals for the D.C. Circuit. The Obama administration could push for all 18 appeals judges to rehear the case.

So far, conservatives have attempted to address the scandal by working through the legislative branch.

The appeals court’s decision marks the most significant treatment of the scandal by the judicial branch since the Justice Department closed its IRS investigation last October without pressing charges.

Conservative lawmakers in the House Freedom Caucus heralded the decision. It likely will give them additional ammunition in their effort to impeach IRS Commissioner John Koskinen, the agency’s top official.

Rep. Jim Jordan, R-Ohio, the caucus chairman, said the decision “confirmed what the American people have known for years: The IRS targeted conservative political organizations based on their political views.”