Federal Courts now Focused on Allegations of Corruption at IRS

In March of 2010, it was discovered that the IRS was subjecting certain organizations applying for tax-exempt status to heightened scrutiny if their ideologies were not consistent with those of the Obama administration. Several months ago, the IRS disclosed that – well after complaints about discriminatory treatment had been lodged and Congressional investigations had been instituted – it had “lost” e-mails and other electronic documents highly relevant to these allegations of wrongdoing. Z Street, one such organization, has recently been permitted to engage in formal discovery overseen by a federal district court in the District of Columbia. Federal judges in other cases, in which the government’s motions to dismiss have now been denied, have indicated that they are unhappy with explanations from the government that conflict with earlier sworn statements and have demanded serious explanations under oath from higher level government officials.

Z Street filed an application with the IRS in December of 2009, approximately one month after its formation, seeking to be recognized as a tax-exempt organization. In May of 2010, IRS agent Diane Gentry sent a letter to Z Street, requesting completely irrelevant information about its members to “aid her review.” In a phone conversation recorded several months later, Ms. Gentry told Z Street’s counsel that the IRS scrutinizes all Section 501(c)(3) applications that are connected with Israel, and that “these cases are being sent to a special unit in the DC office to determine whether the organization’s activities contradict the Administration’s public policies.”

Following this discovery, Z Street immediately filed a lawsuit in federal court, claiming that its application for tax-exempt status was subjected to an “Israel Special Policy,” which violates the First Amendment. Z Street has requested both a declaration that this policy is unconstitutional and an injunction that orders the IRS to disclose information about this policy.

Federal Judge Kentaji Jackson recently rejected every one of the government’s arguments to dismiss the case and ruled that Z Street is entitled to press its constitutional claim in federal court. Under a court order, the IRS will be forced to produce thousands of documents and correspondence, and to fully account for any “lost” or otherwise “missing” documents.

In another case, Judicial Watch v. IRS, Federal Judge Emmet Sullivan indicated his extreme unhappiness last month with the explanations previously provided by the IRS and entered the following order:

 In light of the Declarations filed by the IRS, the IRS is hereby ORDERED to file a sworn Declaration, by an official with the authority to speak under oath for the Agency, by no later than August 22, 2014. In this Declaration, the IRS must: (1) provide information about its efforts, if any, to recover missing Lois Lerner emails from alternate sources (i.e., Blackberry, iPhone, iPad); (2) provide additional information explaining the IRS’s policy of tracking inventory through use of bar code property tags, including whether component parts, such as hard drives, receive a bar code tag when serviced. If individual components do not receive a bar code tag, provide information on how the IRS tracks component parts, such as hard drives, when being serviced; (3) provide information about the IRS’s policy to degauss hard drives, including whether the IRS records whose hard drive is degaussed, either by tracking the employee’s name or the particular machine with which the hard drive was associated; and (4) provide information about the outside vendor who can verify the IRS’s destruction policies concerning hard drives.

The changing, conflicting, and implausible explanations that have been given to date by the IRS to Congressional investigators and to federal district courts are in the process of collapsing under the serious (and powerful) scrutiny of Federal Judges who, regardless of political affiliation, are not receptive to perjury and corruption. After all, while the alleged behavior of the IRS in targeting people who have different points of view should, if true, be repugnant to all Americans regardless of their particular political views or philosophies, the ongoing dissembling, dishonesty, and “loss” of highly relevant documents can only be viewed as behavior nothing less than outrageous if not outright criminal.

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