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How the IRS's Nonprofit Division Got So Dysfunctional

— By Kim Barker and Justin Elliott, ProPublica — Sat, 18 May 2013 10:00:09 +0000

This story first appeared on the ProPublica website.

The IRS division responsible for flagging Tea Party groups has long been an agency afterthought, beset by mismanagement, financial constraints and an unwillingness to spell out just what it expects from social welfare nonprofits, former officials and experts say.

The controversy that erupted in the past week, leading to the ousting of the acting Internal Revenue Service commissioner, an investigation by the FBI, and congressional hearings that kicked off Friday, comes against a backdrop of dysfunction brewing for years.

More MoJo coverage of the IRS tea party scandal

The IRS Tea Party Scandal, Explained

IG Report Says IRS Has No Idea What Its Own Rules Mean

5 Things You Need to Know in the Inspector General's IRS Tea Party Scandal Report

Did the Acting IRS Commissioner Mislead Congress?

Word of the Month for May: BOLO

Ex-IRS Director: Tea Party Groups Deserved Scrutiny, But IRS Bungled the Job

Moves launched in the 1990s were designed to streamline the tax agency and make it more efficient. But they had unintended consequences for the IRS's Exempt Organizations division.

Checks and balances once in place were taken away. Guidance frequently published by the IRS and closely read by tax lawyers and nonprofits disappeared. Even as political activity by social welfare nonprofits exploded in recent election cycles, repeated requests for the IRS to clarify exactly what was permitted for the secretly funded groups were met, at least publicly, with silence.

All this combined to create an isolated office in Cincinnati, plagued by what an inspector general this week described as "insufficient oversight," of fewer than 200 low-level employees responsible for reviewing more than 60,000 nonprofit applications a year.

In the end, this contributed to what everyone from Republican lawmakers to the president says was a major mistake: The decision by the Ohio unit to flag for further review applications from groups with "Tea Party" and similar labels. This started around March 2010, with little pushback from Washington until the end of June 2011.

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Is the Government Spying on Reporters More Often Than We Think?

Julian Sanchez — Fri, 17 May 2013 20:01:56 +0000

The Justice Department's seizure of call logs related to phone lines used by dozens of Associated Press reporters has provoked a flurry of bipartisan criticism, most of which has cast the decision as a disturbing departure from the norm. AP head Gary Pruitt condemned the decision, part of an investigation into leaks of classified information, as a "massive and unprecedented intrusion." Yet there's plenty of circumstantial evidence suggesting the seizure may not be unprecedented—just rarely disclosed.

The Justice Department is supposed to follow special rules when it seeks the phone records of reporters, in recognition that such snooping conflicts with First Amendment values. As Pruitt complained in an angry letter to Attorney General Eric Holder, those logs provided the government a "road map" of the stories his reporters were investigating, and there is evidence that such seizures deter anonymous sources from speaking to the press—whether they’re discussing classified programs or merely facts that embarrass the government.

Federal regulations require that the attorney general personally approve such a move, ensure the request is narrow and necessary, and notify the news organization about the request—in advance whenever possible. In this case, however, the Justice Department seems to have used an indiscriminate vacuum-cleaner approach—seeking information (from phone companies) about a wide range of phone numbers used by AP reporters—and it only notified AP after the fact.

It wouldn't be surprising if there were more cases like this we've never heard about. Here's why: The Justice Department's rules only say the media must be informed about "subpoenas" for "telephone toll records." The FBI's operations guidelines interprets those rules quite literally, making clear the requirement "concerns only grand jury subpoenas." That is, these rules don't apply to National Security Letters, which are secret demands for information used by the FBI that don't require judicial approval. The narrow FBI interpretation also doesn't cover administrative subpoenas, which are issued by federal agencies without prior judicial review. Last year, the FBI issued NSLs for the communications and financial records of more than 6,000 Americans—and the number has been far higher in previous years. The procedures that do apply to those tools have been redacted from publicly available versions of the FBI guidelines. Thus, it's no shocker the AP seizure would seem like an "unprecedented intrusion" if the government doesn't think it has to tell us about the precedents. And there's no telling if the Justice Department rules (and the FBI's interpretation) allow the feds to seize without warning other types of electronic communications records that could reveal a journalist's e-mail, chat, or Web browsing activity.

Is it paranoid to fear the Justice Department and the FBI are sidestepping the rules? Consider a case first reported in 2008, and discussed at length in a damning (but heavily redacted) 2010 report from the Justice Department's Office of the Inspector General. In this instance, the FBI obtained nearly two years of phone records for lines belonging to Washington Post and New York Times bureaus and reporters—even though the FBI had initially requested records covering only seven months. In what the OIG called a "serious abuse of the FBI’s authority to obtain information," agents seized these records under false pretenses, "without any legal process or Attorney General approval." And these records remained in the FBI’s database for over three years before the OIG or the press found out.

It gets worse. The OIG report noted that the FBI had made "community of interest" requests to phone carriers; these requests sweep in not only the target's call records, but those of people the target has spoken with—which can include reporters. Such requests can provide investigators an incredibly revealing portrait of entire social networks. Yet the OIG found that agents used boilerplate requests for information from the carriers; some claimed they submitted the requests without actually knowing exactly what "community of interest" meant, and even when they did it didn't necessarily occur to them that they were likely to obtain reporter records through such requests. In other words, FBI agents often made these requests without fully understanding what they were requesting.

Only in January 2009 did the FBI think to ask the Justice Department's in-house lawyers whether the press restrictions apply when reporter records are obtained through indirect means such as community of interest requests. Government lawyers said yes, but the FBI concluded it didn't have to tell the press in the specific case it had inquired about, because agents had not "understood at the time the subpoenas were issued that the subpoenas called for reporters' records."

Lawmakers at a House Judiciary Committee hearing Wednesday grilled Holder about the AP investigation with little success: Holder had recused himself from this leak inquiry and was reluctant to discuss an "ongoing investigation." But there's plenty lawmakers can do beyond slamming Holder. Congress could demand an audit of previous government spying on reporters. Such a review would reveal whether the Justice Department believes it must disclose to its media targets when it has spied on reporters using methods other than subpoenas and whether its rules concerning obtaining reporters' records cover internet material. This sort of audit would also cover how many journalists have been swept into government databases—directly, or indirectly under "community of interest" requests.

The real scandal may be just how much snooping on the media the current rules permit. To fully understand the AP seizures, the media and the public need a clearer picture of the rules governing all forms of spying on media—and how often such info-grabs have happened. Maybe the seizure of AP records is an extraordinary case. Or maybe the only extraordinary thing is that we're hearing about it.

WATCH: Snuggly Bear from DOJ Says, "Don't Worry About the AP Scandal" [Fiore Cartoon]

Mark Fiore — Fri, 17 May 2013 17:21:48 +0000

Mark Fiore is a Pulitzer Prize-winning editorial cartoonist and animator whose work has appeared in the Washington Post, the Los Angeles Times, the San Francisco Examiner, and dozens of other publications. He is an active member of the American Association of Editorial Cartoonists, and has a website featuring his work.

Actually, Tea Party Groups Gave the IRS Lots of Good Reasons to Be Interested

Stephanie Mencimer — Fri, 17 May 2013 14:02:20 +0000

Virtually everyone in Washington agrees on at least one thing about the IRS scandal: The tax agency's trolling for tea party groups and giving extra scrutiny to their applications for nonprofit status was an egregious violation. Exactly how and why that conduct took place remains under investigation. But as conservatives in particular decry the IRS failure, it's also worth considering the dubious fiscal history of some tea party groups, including their pursuit of non-profit status. While the IRS had absolutely no business profiling any groups based on political criteria, it is not blaming the victim to observe that scrutiny was warranted in specific cases—and they include some major tea party outfits and their leaders, documents show.

Indeed, despite the tea party's emphasis on fiscal prudence in government, would-be nonprofit groups launched since the movement's rise in 2009 have left a trail of tax-code shenanigans, infighting, and fiscal irresponsibility. Money raised by some groups was spent frivolously, and in some cases in ways that appeared to flout the tax rules barring nonprofits from political activity. There have been lawsuits between competing organizations over money, and tea party groups have disintegrated because of financial and other mismanagement.

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The Next Senator From Georgia Will Probably be Nuts

Tim Murphy — Fri, 17 May 2013 10:00:11 +0000

The race to replace retiring Sen. Saxby Chambliss (R-Ga.) is starting to take shape, and it's looking pretty one-sided. Rep. John Barrow, the Democrats' most-promising statewide candidate, has already announced he isn't running. The Republican field is growing. Former Georgia secretary of state Karen Handel, who gained notoriety last summer for attempting to sever the Susan G. Komen breast cancer foundation's ties to Planned Parenthood, is reportedly considering a run. David Perdue, the cousin of former Gov. Sonny Perdue, launched an exploratory committee on Wednesday. If they both formally enter the race, they'll join three candidates who made their intentions clear weeks ago: Reps. Phil Gingrey, Paul Broun, and Jack Kingston.

In their time in the House, the three congressmen have earned reputations as some of the lower chamber's most conservative members—and also some of the most prone to going completely off the rails. Together, they pushed to block the Environmental Protection Agency from regulating greenhouse gases on the grounds that climate change is a hoax (more on that in a second). They've called on the Smithsonian to be investigated (Kingston), proposed personhood for zygotes (Broun) and sought to block the reauthorization of the Voting Rights Act (Kingston again).

Here are some of their choicest quotes, each paired with a photo of an adorably confused animal so as to offset the general absurdity of suggesting (for example) that basic biology is a lie "straight from the pit of Hell":

Africa Studio/Shutterstock

Who said it? Gingrey, coming to the defense of failed Missouri Republican senate candidate Todd Akin, whose suggestion that a woman who had been the victim of "legitimate rape" had "ways to shut that whole thing down." Gingrey told a breakfast audience in January that as an ob-gyn, he often tells women who have trouble bearing children to "relax."

FotoYokov/Shutterstock

Who said it? Broun, offering a justification for introducing a congressional resolution to make 2010 the "Year of the Bible." "This doesn't have anything to do with Christianity," he told Politico.

Dorottya Mathe/Shutterstock

Who said it? Broun, discussing a recent trip to the airport on a 2011 edition of C-SPAN's Washington Journal.

Liliya Kulianionak/Shutterstock

Who said it? Kingston, in 2005, as part of the first-ever installment of Stephen Colbert's "Better Know a District" series.

otsphoto/Shutterstock

Who said it? Broun, in 2012, speaking in front a wall full of mounted deer heads. In response, he was repudiated by none other than Bill Nye, the Science Guy, who said Broun is "unqualified to make decisions about science, space and technology."

Mat Hayward/Shutterstock

Who said it? Broun, one week after the 2008 election, just trying to bring attention to the fact that the president-elect might be a Marxist.

Maxy M/Shutterstock

Who said it? Gingrey, making his own ill-fated appearance on the Colbert Report, responding to the host's suggestion that gay adoption is unnecessary because gay men can simply decide to become heterosexual.

Andrey_Kuzmin/Shutterstock

Who said it? Broun, pulling out all the stops in a floor speech during the 2010 debate over the Affordable Care Act.

S.P./Shutterstock

Who said it? Kingston, in a 2011 appearance on Real Time With Bill Maher.

Mark Herreid/Shutterstock

Who said it? Broun, totally not comparing Obama to Adolf Hitler, in 2010.

Schubbel/Shutterstock

Who said it? Gingrey, to Colbert.

How Congress Helped Create the IRS-Tea Party Mess

Andy Kroll — Fri, 17 May 2013 10:00:11 +0000

One of the biggest revelations in the Treasury Department inspector general report on the unfolding IRS-tea party debacle is this: The IRS staffers vetting hundreds of tea party groups and conservative outfits seeking nonprofit status for potential political activity weren't themselves sure what they were looking for. And who bears the ultimate responsibility for this? The very folks who are getting so worked up about the alleged abuses and the dark-money explosion that made them possible: Congress.

The IRS-tea party scandal revolves around 501(c)(4) nonprofits, also known as "social welfare" groups. They can dabble in politics, but it can't be their "primary activity." In other words, they can't be a political party, campaign committee, or a super-PAC in disguise. Yet as the IG report makes clear, the tax law and IRS regulations are foggy on how much politics is too much politics. Not only are activists, lawyers, and political operatives drawing their own conclusions here; even IRS staffers don't know exactly where the line is drawn. The IRS rules on political nonprofits are like a Jackson Pollock painting: Five people can look at them and arrive at five different conclusions about what they're seeing.

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Benghazi: What Did the CIA Know, and When Did It Know It?

David Corn — Fri, 17 May 2013 10:00:09 +0000

More MoJo content about the September 2012 attacks on the US consulate in Benghazi, Libya and the resulting scandal

Benghazi: What Did the CIA Know, and When Did It Know It?

Benghazi Isn't Watergate. But the White House Didn't Tell the Full Story.

Dick Cheney, Benghazi, and White House Lies

What We Now Know About the CIA's Benghazi Turf War

Here's Why Benghazi May Finally Have Legs

Benghazi Talking Points: "A Bureaucratic Knife Fight Pitting State vs. CIA"

A (Very) Brief Benghazi Timeline Recap

Benghazi is the Conspiracy Theory That Just Won't Go Away

GOP scandal-chasers have been obsessed with the Obama administration's talking points about the attack on US facilities in Benghazi, Libya, that left four Americans dead, and the White House on Wednesday tried to put the pseudo-scandal to rest by releasing a batch of interagency emails related to the talking points.

These emails thoroughly undercut the conservative charge that the White House massaged the talking points to whitewash the attack and protect President Obama's reelection prospects. One email from a CIA official noted that the White House "cleared quickly" the talking points drafted by the CIA but the State Department had concerns. Poof—there goes the conspiracy theory that Obama's aides excised references to terrorism and an Al Qaeda-linked group for campaign-related reasons. But questions about the Benghazi episode remain, particularly this one: Has the CIA avoided scrutiny for its central role in this affair?

Last week, the Washington Post's Glenn Kessler noted that the revised talking points indicated that Obama administration officials in various agencies were inhibited by a key fact as they were grappling with what could be said publicly about the attacks in Benghazi: The assault had targeted a CIA annex in addition to a temporary State Department mission. That made the job tough for the drafters of the talking points. As Kessler wrote,

from the State Department perspective, this was an attack on a CIA operation, perhaps by the very people the CIA was battling, and the ambassador [Chris Stevens] tragically was in the wrong place at the wrong time. But, for obvious reasons, the administration could not publicly admit that Benghazi was mostly a secret CIA effort.

Kessler emphasized an obvious point: The initial talking points drafted by the CIA implied that "State screwed up, even though internally, it was known that this was a CIA operation." Naturally, at the time, Victoria Nuland, the State Department spokeswoman, objected to this. So here was a bureaucratic tussle—not White House skullduggery. Yet the CIA's attempt to duck blame may be the more important story than what UN Ambassador Susan Rice was handed in preparation for her Sunday talk show appearance.

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Study: Conservative Anti-Immigration Paper by Controversial Scholar Had Basic Errors

Gavin Aronsen — Thu, 16 May 2013 21:48:00 +0000

The Heritage Foundation report on the costs of immigration reform co-authored by controversial scholar Jason Richwine has been widely debunked, and Richwine himself has resigned from Heritage in the wake of revelations about his history of arguing that blacks and Latinos are dumber than Jews and Irish people. But Richwine's study was even worse than previously thought, according to a new Scholars Strategy Network brief (PDF) by Richard Alba, a sociology professor at the Graduate Center of the City University of New York who studies immigration and assimilation. Alba's review of the report concludes that Richwine and Robert Rector, a Heritage research fellow, made several basic errors that, collectively, overstated the costs of amnesty for the country's 11 million immigrants by more than $4 trillion.

Richwine's report estimates that, over the next 50 years, immigrants legalized through amnesty would receive a collective $9.4 trillion in government benefits and services and pay just $3.1 trillion in taxes, resulting in $6.3 trillion in new costs. Alba estimates that, "according to the report's own logic," that new costs number should be closer to $2 trillion, not $6.3 trillion. Even then, Alba writes, this adjusted figure is unreliable because the report uses unreliable 2010 figures from the height of the recession.

There are three other major problems that inflate the Heritage report's estimate, Alba argues:

Costs incurred regardless of legalization ($1.6 trillion): The Heritage report counts services that would exist regardless of amnesty, such as the education of children of immigrants who are citizens by birth, in its calculation of the costs of amnesty. It also assumes that the cost of educating undocumented people will stay constant until immigrants retire. That's not usually the case.
Using numbers that show there are few undocumented immigrants above the age of 50, the Heritage report also assumes that, in the absence of reform, most undocumented immigrants would leave the United States for their home countries by age 55. But the smaller number of older undocumented immigrants is not due to emigration. It's because many older formerly undocumented people received amnesty following the passage of the Immigration Reform and Control Act of 1986.
In total, the Heritage report includes $1.62 trillion of costs that would be incurred regardless of whether immigration reform happens, according to Alba.
Future retirement benefits ($1.6 trillion): Another major error, Alba writes, is owed to the "morally repugnant assumption that the US can steal the Social Security and Medicare contributions of the undocumented." Many undocumented people currently work and pay Social Security and Medicare taxes. The estimated $1.6 trillion those immigrants would collectively receive "represents a moral if not yet a legal obligation," Alba argues, and "should not be regarded as part of the cost of legalization."
Taxes ($1 trillion): Beyond that, Alba writes that the Heritage report underestimates the tax contributions newly legalized immigrants would provide. Because legalization would allow immigrants to rise up from the underground economy and find better-paying jobs, Alba estimates that the Heritage report low-balls the taxes that would be received from newly legalized immigrants by over $1 trillion.

Darrell West, an expert on immigration policy at the Brookings Institution, agrees with Alba's critiques of the Heritage report. "It is very problematic because it uses inaccurate assumptions to estimate costs and benefits, overestimating the cost and underestimating the benefits," he says.

Alba argues that because of the influence a similarly specious 2007 Heritage immigration report had in defeating reform legislation, "reform proponents need to be cautious about concluding that a stake has been driven through the heart of the new report."

West is more optimistic: "I'd be surprised if this study were decisive just because it has been criticized so roundly, both by Democrats and Republicans," he says. "That's a very different situation than 2007, when it was seen as a credible report and did not suffer the criticisms that this report has gotten."

In either case, Alba writes, "The inevitable conclusion is that the report wildly overstates the costs of legalization and is worthless for an understanding of its fiscal ramifications."

This Copyright Bill Could Help Small Business Owners, Girl Talk, Service Members, and the Blind

Dana Liebelson — Thu, 16 May 2013 10:00:11 +0000

The last time Congress tried to pass major copyright reforms, 2011's Stop Online Piracy Act (SOPA) and Protect IP Act (PIPA), it pissed off just about every corner of the internet, from Google to Wikipedia to the Teen Witch Fan Club. SOPA and PIPA critics certainly wanted an update to America's rusty copyright laws, just not one that trampled on free speech in the name of catching criminals.

The bipartisan Unlocking Technology Act of 2013, introduced by Rep. Zoe Lofgren (D-Calif.) on May 8, may be the compromise that privacy advocates have long desired. Instead of giving law enforcement more power to crack down on internet users, the bill protects law-abiding Americans who modify the cellphones, computers, and software that they own—a proposal that could help everyone from DJs to the visually impaired. There's just one problem: The two giant entertainment industry lobbying groups that backed SOPA—the Motion Picture Association of America (MPAA) and the Recording Industry Association of America (RIAA)—might not back Lofgren's bill.

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Saws Cut Off 4,000 Fingers a Year. This Gadget Could Fix That.

Myron Levin — Thu, 16 May 2013 10:00:10 +0000

A longer version of this story appears at FairWarning.

Gerald Wheeler caught the hot dog demonstration at the International Woodworking Fair in Atlanta in 2002. A man took an Oscar Meyer wiener and pushed it into the blade of a table saw spinning 4,000 times per minute. As the hot dog touched the whirring saw, the blade came to a dead stop in about three one-thousandths of a second, leaving the dog with only a minor nick.

The saw was equipped with a safety device called SawStop that could distinguish between wood and flesh and then stop the blade fast enough to prevent a gruesome injury. Wheeler was amazed. As the operator of a wood shop in Hot Springs, Arkansas, he was all too aware of the unforgiving nature of table saws. Not long before, two of his employees had been maimed within a few weeks of each other. Wheeler felt awful about the injuries, the loss of two good workers, the $95,000 in medical bills, the doubling of his workers compensation rates. Watching SawStop in action, Wheeler thought: If only this had come along sooner.

Those kinds of injuries are all too common: Each year, more than 67,000 workers and do-it-yourselfers are injured by table saws, according to the Consumer Product Safety Commission (PDF), resulting in more than 33,000 emergency room visits and 4,000 amputations. At an average cost of $35,000 each, these accidents lead to more than $2.3 billion in societal costs annually including medical bills, lost wages, and pain and suffering.

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