My Wall St Jrn op-ed: IRS Political Targeting Since FDR

Wall Street Journal, May 15, 2013

A Brief History of IRS Political Targeting
One survey found that 75% of IRS respondents felt entitled to deceive or lie to Congress.

By JAMES BOVARD

Many Republicans are enraged over revelations in recent days that the Internal Revenue Service targeted conservative nonprofit groups with a campaign of audits and harassment. But of all the troubles now dogging the Obama administration—including the Benghazi fiasco and the Justice Department’s snooping on the Associated Press—the IRS episode, however alarming, is also the least surprising. As David Burnham noted in “A Law Unto Itself: The IRS and the Abuse of Power” (1990), “In almost every administration since the IRS’s inception the information and power of the tax agency have been mobilized for explicitly political purposes.”

President Franklin Roosevelt used the IRS to harass newspaper publishers who were opposed to the New Deal, including William Randolph Hearst and Moses Annenberg, publisher of the Philadelphia Inquirer. Roosevelt also dropped the IRS hammer on political rivals such as the populist firebrand Huey Long and radio agitator Father Coughlin, and prominent Republicans such as former Treasury Secretary Andrew Mellon. Perhaps Roosevelt’s most pernicious tax skulduggery occurred in 1944. He spiked an IRS audit of illegal campaign contributions made by a government contractor to Congressman Lyndon Johnson, whose career might have been derailed if Texans had learned of the scandal.

President John F. Kennedy raised the political exploitation of the IRS to an art form. Shortly after capturing the presidency, JFK denounced “the discordant voices of extremism” and derided people who distrust their leaders—President Obama didn’t invent that particular rhetorical line. Shortly thereafter, JFK signaled at a news conference that he expected the IRS to be vigilant in policing the tax-exempt status of questionable (read: conservative) organizations.

Within a few days of Kennedy’s remarks, the IRS launched the Ideological Organizations Audit Project. It targeted right-leaning groups, including the Christian Anti-Communist Crusade, the American Enterprise Institute and the Foundation for Economic Education. Kennedy also used the IRS to strong-arm companies into complying with “voluntary” price controls. Steel executives who defied the administration were singled out for audits.

A 1976 report by the Senate Select Committee on Government Intelligence on the Kennedy program noted: “By directing tax audits at individuals and groups solely because of their political beliefs, the Ideological Organizations Audit Project established a precedent for a far more elaborate program of targeting ‘dissidents.'”

After Richard Nixon took office, his administration quickly created a Special Services Staff to mastermind what a memo called “all IRS activities involving ideological, militant, subversive, radical, and similar type organizations.” More than 10,000 individuals and groups were targeted because of their political activism or slant between 1969 and 1973, including Nobel Laureate Linus Pauling (a left-wing critic of the Vietnam War) and the far-right John Birch Society.

The IRS was also given Nixon’s enemies list to, in the words of White House counsel John Dean, “use the available federal machinery to screw our political enemies.”

The exposure of Nixon’s IRS abuses during congressional hearings in 1973 and 1974 profoundly weakened him during the uproar after the Watergate hotel break-in. The second article of his 1974 impeachment charged him with endeavoring to obtain from the IRS “confidential information contained in income tax returns for purposes not authorized by law, and to cause, in violation of the constitutional rights of citizens, income tax audits or other income tax investigations to be initiated or conducted in a discriminatory manner.” Congress enacted legislation to severely restrict political contacts between the White House and the IRS.

In the following decades, the IRS regularly sparked outrage by abusing innocent taxpayers, but there was not much controversy about the agency’s politicizing until Bill Clinton took office.

In 1995, the White House and the Democratic National Committee produced a 331-page report entitled “Communication Stream of Conspiracy Commerce” that attacked magazines, think tanks and other entities and individuals who had criticized President Clinton. In the subsequent years, many organizations mentioned in the White House report were hit by IRS audits. More than 20 conservative organizations—including the Heritage Foundation and the American Spectator magazine—and almost a dozen individual high-profile Clinton accusers, such as Paula Jones and Gennifer Flowers, were audited.

The Landmark Legal Foundation sued the IRS in 1997 after being audited. Its brief quoted an IRS official who had explained at an IRS meeting in San Francisco that audit requests from members of Congress or their staff had been shredded and also suggested how future requests from Capitol Hill could be camouflaged. The IRS told the court that it could not find 114 key files relating to possible political manipulation of audits of tax-exempt organizations.

One potential bombshell of the Clinton era that went relatively unrecognized was an Associated Press report in 1999 that “officials in the Democratic White House and members of both parties in Congress have prompted hundreds of audits of political opponents in the 1990s,” including “personal demands for audits from members of Congress.” Audit requests from congressmen were marked “expedite” or “hot politically” and IRS officials were obliged to respond within 15 days. Permitting congressmen to secretly and effortlessly sic G-men on whomever they pleased epitomized official Washington’s contempt for average Americans and fair play. But because the abuse was bipartisan, there was little enthusiasm on Capitol Hill for an investigation.

The IRS has usually done an excellent job of stifling investigations of its practices. A 1991 survey of 800 IRS executives and managers by the nonprofit Josephson Institute of Ethics revealed that three out of four respondents felt entitled to deceive or lie when testifying before a congressional committee.

The agency also has a long history of seeking to intimidate congressional critics: In 1925, Internal Revenue Commissioner David Blair personally delivered a demand for $10 million in back taxes to Michigan’s Republican Sen. James Couzens—who had launched an investigation of the Bureau of Internal Revenue—as he stepped out of the Senate chamber. More recently, after Sen. Joe Montoya of New Mexico announced plans in 1972 to hold hearings on IRS abuses, the agency added his name to a list of tax protesters who were capable of violence against IRS agents.

With the current IRS scandal, we may have seen only the tip of the iceberg. Thorough congressional investigations would no doubt help reveal the extent of the operation, and the criminal investigation announced by the Justice Department on Tuesday may prove fruitful as well. Regardless of what these inquiries uncover, though, we can be almost certain that IRS audits will remain irresistible political weapons.

Tagline: Mr. Bovard is the author, most recently, of the e-book memoir “Public Policy Hooligan.”