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6th Circuit Dings IRS in Tea Party Targeting Case

6th Circuit Dings IRS in Tea Party Targeting Case

Too little too late?

The Sixth Circuit Court of Appeals issued a blistering rebuke of the IRS today in Tea Party groups’ suit against IRS targeting.

The opinion by Chief Judge Raymond Kethledge on behalf of a three-judge panel opens:

Among the most serious allegations a federal court can address are that an Executive agency has targeted citizens for mistreatment based on their political views. No citizen—Republican or Democrat, socialist or libertarian—should be targeted or even have to fear being targeted on those grounds. Yet those are the grounds on which the plaintiffs allege they were mistreated by the IRS here. The allegations are substantial: most are drawn from findings made by the Treasury Department’s own Inspector General for Tax Administration. Those findings include that the IRS used political criteria to round up applications for tax-exempt status filed by so-called tea-party groups; that the IRS often took four times as long to process tea-party applications as other applications; and that the IRS served tea-party applicants with crushing demands for what the Inspector General called “unnecessary information.”

Yet in this lawsuit the IRS has only compounded the conduct that gave rise to it.

United States v. NorCal Tea Party Patriots, No. 15-3793, slip op. at *2 (6th Cir., Mar. 22, 2016).

The Sixth Circuit reminds us of the insidiousness of the IRS’s underlying behavior:

In 2010, the IRS began to pay unusual attention to 501(c) applications from groups with certain political affiliations. As found by the Inspector General, the IRS “developed and used inappropriate criteria to identify applications from organizations with ‘Tea Party’ in their names.” The IRS soon “expanded the criteria to inappropriately include organizations with other specific names (Patriots and 9/12) or policy positions.” As to the policy positions, the IRS gave heightened scrutiny to organizations concerned with “government spending, government debt or taxes,” “lobbying to ‘make America a better place to live[,]’” or “criticiz[ing] how the country is being run[.]” The IRS collected these criteria on a spreadsheet that would become known as the “‘Be On the Lookout’ listing” (or BOLO listing). These “inappropriate criteria remained in place for more than 18 months.”

. . .

The IRS’s application forms for tax-exempt status themselves request detailed information from every applicant group. For groups subject to the IRS’s inappropriate criteria, however, the IRS also demanded what the IG called “unnecessary information.” Among other things, the IRS demanded that many of these groups provide the following: “the names of donors”; “a list of all issues that are important to the organization[,]” and the organization’s “position regarding such issues”; “the roles and activities of the audience and participants” at the group’s events (typically over a 12-18 month period), and “the type of conversations and discussions members and participants had during the activity”; whether any of the group’s officers or directors “has run or will run for public office”; “the political affiliation of the officer, director, speakers, candidates supported, etc.”; “information regarding employment” of the group’s officers or directors; and “information regarding activities of another organization—not just the relationship of the other organization to the applicant.” These demands, according to the IG, “created [a] burden on the organizations that were required to gather and forward information that was not needed by the [IRS] and led to delays in processing the applications.” Moreover, “[f]or some organizations, this was the second letter received from the IRS requesting additional information, the first of which had been received more than a year before[.]” This second round of letters also warned that the IRS would close the applicant’s case if the IRS did not receive all of the requested information within 21 days—“despite the fact that the IRS had done nothing with some of the applications for more than one year.”

Id. at *4-6 (citations omitted).  Subjected to these extra and unlawful requirements, the NorCal Tea Party Patriots ultimately provided the IRS with more than 3,000 pages of material.  Id. at *6.

The opinion quotes the District Court:

I feel like the government is doing everything it possibly can to make this as complicated as it possibly can, to last as long as it possibly can, so that by the time there is a result, nobody is going to care except the plaintiffs. . . . I question whether or not the Department of Justice [as counsel for the IRS in the District Court] is doing justice.

Id. at *8.  From this, the Court’s negative view of the IRS and Department of Justice’s behavior is obvious.

The discreet issue in today’s decision is whether the IRS should be compelled to disclose so-called “Be on the lookout” lists of organizations the IRS targeted.  According to the 6th Circuit:

The district court ordered production of those lists, and did so again over an IRS motion to reconsider. Yet, almost a year later, the IRS still has not complied with the court’s orders. Instead the IRS now seeks from this court a writ of mandamus, an extraordinary remedy reserved to correct only the clearest abuses of power by a district court.

Id. at *2.  The Sixth Circuit discussed just a few of the many ways the IRS improperly withheld and stalled production of information in this case and then denied the IRS’s petition, upholding the United States District Court for the Southern District of Ohio’s order to produce the lists.

The legal analysis is a little closer than the government’s behavior might imply.  The District Court actually did make a legal error in ordering the IRS to produce the names of entities on the “Be on the lookout” lists.”  However, the Sixth Circuit upheld the order on a different rationale.

Notwithstanding the District Court’s error, the IRS’s attempt to withhold this information and the arguments it used in defending the attempt are highly questionable.  Without delving too far into the technicalities, the IRS claimed that a prohibition on disclosing “return information” meant that it could not disclose information from applications for tax-exempt status, even though the statutory definitions make plain that they are not at all the same thing.

The Circuit Court concluded:

In closing, we echo the district court’s observations about this case. The lawyers in the Department of Justice have a long and storied tradition of defending the nation’s interests and enforcing its laws—all of them, not just selective ones—in a manner worthy of the Department’s name. The conduct of the IRS’s attorneys in the district court falls outside that tradition. We expect that the IRS will do better going forward. And we order that the IRS comply with the district court’s discovery orders of April 1 and June 16, 2015—without redactions, and without further delay.

Id. at *17.

This is pretty heady stuff.  Both the District and Circuit Courts have admonished the government for behaving improperly and trying to hide its own misconduct in targeting political opponents.  It is a great sign that the judiciary has the power and vitality to hold executive agencies accountable for their misconduct, but deeply concerning that those agencies have become so politicized.

Full opinion here:

6th Circuit IRS/Tea Party Targeting

Follow Jonathan Levin on Twitter @JNLevin


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aloysius9999 | March 22, 2016 at 2:59 pm

So much sound and fury without criminal indictments and the DOJ has already taken a pass on Ms Lerner.

great unknown | March 22, 2016 at 3:05 pm

There’s a technical phrase that applies here: “Ain’t goin’ to happen.”

First, an appeal to SCOTUS. If that doesn’t work, delay, delay, delay. If that doesn’t work, who cares.
DOJ is not going to prosecute, not for failure to produce, and not for destroying evidence.

Common Sense | March 22, 2016 at 3:11 pm

Remember they told us were “paranoid” the government would never target citizen based on political criteria.

The lawless Obama administration will never be held accountable. Where is that scandalous president today. In Cuba with the commies!

I think our country has been damaged beyond repair!

Two, four, six, eight
All we gotta do is obfuscate.

No accountability ANYWHERE in the guvmnt.

G. de La Hoya | March 22, 2016 at 3:57 pm

Blatant disregard for the law/rule of law and no fear of the law and justice ever prevailing.

This quote of the District Court sums up virtually every governmental agency that I have had to deal with:

“I feel like the government is doing everything it possibly can to make this as complicated as it possibly can, to last as long as it possibly can…”

This is gratifying, indeed. Some of us remember that Democratic politicians demanded that the IRS go after the TEA Parties. Such encouragement from politicians for illegal agency actions based on political alignment is inconsistent with our notion of equal treatment under the laws. I am glad to see that the courts agree.

I would remind our Democratic Senators and Congressmen that their words are now immortal, and part of what is happening now is payback from voters, both nominal Democrats and Republicans, repelled by the Democratic Party’s notion of unequal justice.

Put. Them. In. Jail.
All of them.

We’ve become a banana republic. What’s next shooting protesters we disagree with? Wait…

We expect that the IRS will do better going forward.

And I expect a unicorn to walk out of my game room tonight, and fly me to Narnia.

My expectation is more realistic. And I don’t even have a game room.

Words, words, words and even STRONG WORDS . . . but never consequences.

DINORightMarie | March 22, 2016 at 7:26 pm

I have to agree with your lede…..too little, too late.

However, it is good that the courts, on some level, are still attempting to hold this executive branch to account.

NOTE: there is a slight typo, I believe, in your last imbedded quote: “…of April 1 and June 16, 2015….” I believe the year should be 2016. 🙂

P.S. Are you by chance related to The Great One, Mark Levin? 🙂

If the Justice Department states the Lerner will not be prosecuted then she has no reason to take the 5th. So why has Congress not brought her back to be questioned???? If she refuses to answer, then hold her in contempt.

Until cell doors start clanging shut behind the responsible people, none of this means anything.

Why oh why don’t judges impose sanctions on the Justice Dept. for frivolous motions, disobedience to court orders, and so forth? Clearly, Justice is shameless, so strong words don’t work. Is it that the plaintiffs need to make a motion for Rule 11 sanctions?

I was wondering how many extra months Justice got out of this frivolous Mandamus motion. It appear that it got from October to March— about 5 months— with very little cost. (It had to use some lawyer time to write the motion and briefs, but there’s so little legal justification that it knew it would lose, so it didn’t have to do more than a rough draft.)

“Blustering rebuke”=Nothing Happens. Run out the clock, IRS Abuse is just a perk of office. Nothing to see here, run along.