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Official at Heart of IRS Tea Party Scandal Spiked Audits of Big Dark-Money Donors

Andy Kroll — Thu, 23 May 2013 10:00:14 +0000

You'd have to search long and hard to find a member of Congress not outraged that politics and partisanship crept into the work of the IRS, leading to the wrongful targeting of tea partiers and other conservative groups seeking tax-exempt status. "The American people have a right to expect that the IRS will exercise its authority in a neutral, non-biased way," Sen. Orrin Hatch (R-Utah) said on Tuesday. "Sadly, there appears to have been more than a hint of political bias" by the IRS staffers vetting nonprofit applications. Hatch's Republican colleagues in the House and Senate could hardly contain their anger. "Do either of you feel any responsibility or remorse for treating the American people this way?" Sen. Chuck Grassley (R-Iowa) asked the former IRS chiefs Douglas Shulman and Steven Miller on Tuesday.

More MoJo coverage of the IRS tea party scandal

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

The IRS Tea Party Scandal, Explained

Is This Big Tea Party Group Really an Innocent Victim of the IRS?

How Congress Helped Create the IRS-Tea Party Mess

Official at Heart of IRS Tea Party Scandal Spiked Audits of Big Dark-Money Donors

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

Yet lawmakers have no qualms with using politics to bend Congress to its will. In 2011, under pressure from House and Senate Republicans, Miller, then the IRS' deputy commissioner, spiked audits investigating whether five big donors to 501(c)(4) groups—the type of nonprofit that can get involved in campaigns and elections but can't make politics its "primary activity"—avoided paying taxes on their donations. Miller's decision erased any worry that wealthy donors might have had about giving millions to nonprofits during the 2012 campaign season.

For some tax lawyers, it was a surprising move that raised red flags. "They were stopped mid-audit, which is an extraordinary move," says Marcus Owens, a tax lawyer who ran the IRS division that oversees politically active nonprofits for 10 years. "I've been practicing tax law for close to 40 years, and I've never seen that. To have Miller reach out and stop those audits, that's something that really deserves an inquiry."

The identities of the donors and nonprofits being scrutinized were never revealed. Owens says he suspects most, if not all, of the five had contributed to Republican groups because GOP lawmakers were the ones raising a ruckus on Capitol Hill. Greg Colvin, a San Francisco-based attorney who represented one of the donors, declined to give any details about his client and the donation under review.

The tax matter at issue was whether these donors had sidestepped the gift tax. Created in 1924, the gift tax acts as a safeguard of sorts, backstopping both the estate tax and the income tax. Before its creation, people could donate all their money before they died to avoid the estate tax or give away their assets to relatives in lower income tax brackets. The gift tax does not apply to donations to traditional charities (the Red Cross), trade groups (the US Chamber of Commerce), or political nonprofits formed under the 527 section of the tax code (Swift Boat Veterans for Truth and America Coming Together). In the 1980s, the IRS said that the gift tax did cover contributions to 501(c)(4)s, yet for decades the agency never bothered donors about the gift tax on their donations to such nonprofits.

That changed in early 2011, when the IRS told five big donors to 501(c)(4) groups that they were being investigated for possibly dodging the gift tax. One of these letters read, "Donations to 501(c)(4) organizations are taxable gifts and your contribution in 2008 should have been reported on your 2008 Federal Gift Tax Return." That was a potentially a big deal. The way the gift tax works, a donor who in 2008 gave more than $2 million to one or more nonprofits could owe hundreds of thousands of dollars to the taxman—a doozy of an unexpected tax bill. If the IRS vigorously applied the gift tax to these sort of donations, donors would be less likely to give (or would give less) to nonprofits, tax experts say.

In May 2011, news of the IRS' big-donor probe went public. Republicans reacted furiously. On June 3, 2011, Rep. Dave Camp (R-Mich.), the chairman of the House ways and means committee, sent a letter to then-IRS commissioner Doug Shulman demanding the names and titles of IRS staffers involved in the gift tax probe, and the criteria used to pick which donors to scrutinize. "Every aspect of this tax investigation, from the timing to the sudden reversal of nearly thirty years of IRS practice, strongly suggests that the IRS is targeting constitutionally-protected political speech," Camp said. (The IRS denied that the probe was influenced by politics in any way.)

The following month, Miller halted the agency's donor audits. In a public memo, he wrote, "This is a difficult area with significant legal, administrative, and policy implications with respect to which we have little enforcement history." The IRS would study the gift tax, Miller added, and if it launched future audits of donors, it would do so only after alerting the public.

If nonprofit donors had once worried about getting slapped with a big tax bill, Miller's memo eased those fears—just in time for the 2012 campaign season, in which politically active nonprofits raised and spent hundreds of millions of dollars. Miller's memo "gave donors a green light" to finance 501(c)(4)s, Colvin says. "Ever since then donors have been able to give to c-4 organizations who may or may not be active in politics."

Miller, who lost his job in the latest IRS scandal, was not a political appointee, unlike Shulman, who was named to his post by President George W. Bush. (The staffers who launched the short-lived gift tax probes weren't political appointees, either.) Yet Marcus Owens, the former IRS director, says Miller's decision to stop the audits smacked of politics after receiving so much pressure from Congress. "The deputy commissioner's office does not normally step in to stop audits," he says. "It's getting too close to politics at that point."

Colvin says that Miller and the IRS did the right thing by stopping the donor audits, which had little precedent. "I thought that was a pretty good example of a situation that had the potential to be a scandal and it turned out to be much better managed than this latest thing," Colvin says.

But all the tax experts tend to agree that the gift tax law, like the rules and guidelines for politically active nonprofits, badly needs fixing. The gift tax is so murky, Colvin says, that some of his clients proactively have paid millions in taxes to avoid the slim chance of an IRS audit. Yet other donors don't sweat it and pay no gift taxes at all. Ellen Aprill, a Loyola Law School professor, says, "If you're trying to reform 501(c)(4) groups, you should try to address the uncertainty about the gift tax too."

As for Republicans in Congress, they seem to want it both ways: hammering IRS officials for letting partisanship influence their agency's work, yet at the same time applying all the political pressure they can muster to get what they want.

Mississippi Could Soon Jail Women for Stillbirths, Miscarriages

Kate Sheppard — Thu, 23 May 2013 10:00:13 +0000

On March 14, 2009, 31 weeks into her pregnancy, Nina Buckhalter gave birth to a stillborn baby girl. She named the child Hayley Jade. Two months later, a grand jury in Lamar County, Mississippi, indicted Buckhalter for manslaughter, claiming that the then-29-year-old woman "did willfully, unlawfully, feloniously, kill Hayley Jade Buckhalter, a human being, by culpable negligence."

The district attorney argued that methamphetamine detected in Buckhalter's system caused Hayley Jade's death. The state Supreme Court, which heard oral arguments on the case on April 2, is expected to rule soon on whether the prosecution can move forward.

If prosecutors prevail in this case, the state would be setting a "dangerous precedent" that "unintentional pregnancy loss can be treated as a form of homicide," says Farah Diaz-Tello, a staff attorney with National Advocates for Pregnant Women, a nonprofit legal organization that has joined with Robert McDuff, a Mississippi civil rights lawyer, to defend Buckhalter. If Buckhalter's case goes forward, NAPW fears it could spur a wave of similar prosecutions in Mississippi and other states.

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I Built This AK-47. It's Legal and Totally Untraceable.

Bryan Schatz — Thu, 23 May 2013 10:00:13 +0000

The wooden and steel parts I need to build my untraceable AK-47 ï¬t within a slender, 15-by-12-inch cardboard box. I ï¬rst lay eyes on them one Saturday morning in the garage of an eggshell-white industrial complex near Los Angeles. Foldout tables ring the edges of the room, surrounding two orange shop presses. The walls, dusty and stained, are lined with shelves of tools. I'm with a dozen other guys, some sipping coffee, others making introductions over the buzz of an air compressor. Most of us are strangers, but we share a common bond: We are just eight hours away from having our very own AK-47—one the government will never know about.

The AK-47, perhaps the world's best-known gun, is so easy to make and so hard to break that the Soviet-designed original has spawned countless variants, updated and modified versions churned out by factories all over the globe. Although US customs laws ban importing the weapons, parts kits—which include most original components of a Kalashnikov variant—are legal. So is reassembling them, as long as no more than 10 foreign-made components are used and they are mounted on a new receiver, the box-shaped central frame that holds the gun's key mechanics. There are no fussy irritations like, say, passing a background check to buy a kit. And because we're assembling the guns for our own "personal use," whatever that may entail, we're not required to stamp in serial numbers. These rifles are totally untraceable, and even under California's stringent assault weapons ban, that's perfectly within the law.

Among those ready to get going at this "build party" (none of whom wanted their names used) are a father-son duo getting in some bonding time and a well-bellied sixtysomething with a white Fu Manchu who "loves" the click-ack! sound of a round being chambered. Assembling a Romanian variant is a builder wearing a camo jacket and a hat embroidered with an AR-15 rifle above the legend "Come and take it." His knuckle tattoos read "PRAY HARD."

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Why Julian Assange Hates "We Steal Secrets"

Dave Gilson — Thu, 23 May 2013 10:00:12 +0000

Julian Assange already hates this movie. That six-word review may be all that his diehard supporters need to know about We Steal Secrets, Alex Gibney's exhaustive and exhausting new documentary on the rise and fall of WikiLeaks. Apparently without having seeing the film, which hits theaters tomorrow and will be available on demand on June 7, Assange has condemned it as a hatchet job, starting with its name. "An unethical and biased title in the context of pending criminal trials," WikiLeaks tweeted in January when the movie screened at Sundance. "It is the prosecution's claim and it is false."

Assange's preemptive attack one of the film's main themes: What happens when an admirable cause is headed by a thin-skinned, combative prick?

Like many observers of WikiLeaks' short, chaotic history, Gibney (Taxi to the Dark Side, Client 9: The Rise and Fall of Eliot Spitzer) starts out sympathetic before souring on Assange. At first, We Steal Secrets seems enthralled with its subject. When Assange quotes a favorite Midnight Oil song, Gibney obligingly blasts the tune—a haranguing one even by the band's standards—over a title sequence that ricochets through cyberspace.

What follows is a complimentary look at Australia's "most infamous hacker," a peripatetic cryptographic whiz who recognized the promise and threat posed by a site that could publish anonymous leaks from around the globe. Robert Manne, a professor of politics at La Trobe University in Melbourne, gushes that Assange is "a humanitarian anarchist, a kind of John Lennon-like revolutionary, dreaming of better world." Or as Assange declares with casual bravado, "I enjoy crushing bastards."

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High School Student Slashes Cost of Driverless Cars

Kevin Drum — Thu, 23 May 2013 04:19:41 +0000

Ionut Budisteanu, a high-school student from Romania has invented a system that slashes the price tag of driverless cars:

"The most expensive thing from the Google self-driving car is the high resolution 3-D radar, so I was thinking how I could remove it," he told NBC News. His solution relies on processing webcam imagery with artificial intelligence technology to pick out the curbs, lane markers, and even soccer balls that roll onto the road. This is coupled with data from a low-resolution 3-D radar that recognizes "big" objects such as other cars, houses, and trees.

All of this information is collected and processed real time by a suite of computers that, in turn, feed into a "supervisor" computer program that calculates the car's path and drives it down the road....The high-resolution 3-D radar used by Google, he noted, costs about $75,000. His whole system should work for no more $4,000.

Actually, it's not the cost savings that are interesting here. Google's engineers are undoubtedly well aware of cheaper alternatives to their high-res radar, but have stuck with their current system because it provides better feedback and price is no object when you're still in the prototype stage. What's interesting is the fact that Budisteanu's system essentially replaces Google's expensive hardware with cheap processing power. This is one of the keys to the future of artificial intelligence. As recently as a few years ago, Budisteanu couldn't have done what he did because the processors then available wouldn't have been powerful enough. Today they are, which means that brute force plus some software can do the same thing as Google's sophisticated radar.

Brute force isn't the answer to all AI problems, but lots of processing power is a minimum necessary component. Without it, you simply have no chance of coming close: a hamster-sized brain can't solve differential equations no matter what you feed it. But once you get a bigger, faster brain, possibilities start to open up that seemed impossible only a short time before. Budisteanu's invention is a pretty good example of this.

Immigration Bill Heads to the Full Senate, 200 Amendments Later

Gavin Aronsen — Thu, 23 May 2013 00:39:52 +0000

The Senate Judiciary Committee approved a sweeping immigration reform bill on Tuesday, but only after sifting through more than 200 amendments. The bill would give the nation's estimated 11 million undocumented immigrants a 13-year pathway to citizenship, which would be the biggest change to the immigration system in years.

So, is it the same compromise that its authors, the so-called "Gang of Eight," originally hammered out? The committee made a total of 141 revisions to the bill; here's a quick look at a few of the most notable:

No protections for same-sex couples: Democrats reluctantly let this widely discussed measure die in order to keep Republicans on board. It would have allowed a foreign-born member of a same-sex couple petition for legal residency, just as straight couples may do. Because it was withdrawn by its sponsor, committee chairman Patrick Leahy (D-Vt.), it's not technically a revision. "With a heavy heart, and as a result of my conclusion that Republicans will kill this vital legislation if this anti-discrimination amendment is added, I will withhold calling for a vote on it," Leahy said. "But I will continue to fight for equality."
Protections to keep families together: An amendment introduced by Sen. Al Franken (D-Minn.) would require officials to ask immigrants in detention centers whether they are the parents or guardians of children so that the impact of their potential deportation on their families can be assessed.
Additional benefits for DREAMers: An amendment introduced by Sen. Richard Blumenthal (D-Conn.) would allow immigrants who arrived before the age of 16 to join the military and subsequently apply for citizenship as an alternative to deportation. Another amendment, introduced by Sen. Mazie Hirono (D-Hawaii), would give high school grads access to financial aid (with the exception of Pell Grants).
Limiting the use of solitary confinement: Currently, immigrants being processed through detention facilities are sometimes held in solitary confinement for weeks on end: The New York Times recently reported 35 cases of immigrants held there for more than 10 weeks. Another Blumenthal amendment would largely prohibit involuntary confinement exceeding 15 days.
Visa allowances: Sen. Orrin Hatch (R-Utah) won approval for an amendment backed by the tech industry that would allow companies to hire foreign workers with H-1B visas before first offering the jobs to qualified citizens, as it is now required, unless more than 15 percent of the current employees in a specific field within that company are already on H-1B visas.
Safer deportations: Sen. Chris Coons (D-Del.) authored an amendment to cut down on risky deportations. Mexican immigrants might still be dropped off in a border towns rife with kidnappings and gang violence, but Coons' revision to the immigration bill would stop the practice of nighttime deportations.
Airport tracking system: Another amendment introduced by Hatch would set up fingerprint tracking systems in 10 major airports. Officials currently keep tabs on immigrants flying into the United States; this amendment would require immigrants to be fingerprinted upon both departure to a foreign country and arrival back in the US.

Overall, the immigration reform bill cleared the Judiciary Committee without any fundamental changes. But, in order to not upend the precarious bipartisan balance struck by the Gang of Eight, the committee rejected some more partisan amendments such as the LGBT protection measure and a border security measure from Sen. Chuck Grassley (R-Iowa). Now it's off to the full Senate, where senators will have the chance to offer even more amendments on the floor in June before voting on the final bill.

The Obama Administration Finally Admits Killing 4 Americans

Asawin Suebsaeng — Wed, 22 May 2013 23:00:31 +0000

After nearly two years of (officially) keeping quiet about what the whole world already knew, the Obama administration on Wednesday formally acknowledged that the United States government had indeed killed four American citizens in drone strikes in Pakistan and Yemen. This had been fairly common knowledge ever since the strikes occurred in 2011, but the White House, CIA, and other involved parties have maintained (but not really) an official policy of not acknowledging that a targeted killing program exists.

Attorney General Eric Holder confirmed that the administration had signed off on a drone strike that killed, without due process, the Al Qaeda-linked cleric Anwar al-Awlaki in Yemen in September 2011 in a letter sent to congressional leaders on Wednesday, which was obtained by New York Times reporter Charlie Savage. The letter also acknowledged the killing of Samir Khan (killed in the same drone operation), Awlaki's teenage son Abdulrahman al-Awlaki (killed in Yemen later that month), and Jude Mohammed (killed in Pakistan in November 2011). However, all except Anwar al-Awlaki were "not specifically targeted by the United States," according to Holder's letter.

"Today's disclosure builds on the administration's effort to pursue greater transparency around our counter-terrorism operations," an anonymous White House official told Fox News correspondent Ed Henry.

Here is Holder's letter:

The letter was released the day before President Obama is scheduled to deliver a big speech on national security at the National Defense University in Washington, DC. He is expected to touch on his administration's controversial ramped-up use of drone warfare and the status of the detention facility at Guantanamo Bay, Cuba.

The last time Obama publicly discussed US drone strikes and his administration's targeted killing program was in a Google+ "Fireside Hangout" on February 14:

First of all, I think, there's never been a drone used on an American citizen on American soil. And, you know, we respect and have a whole bunch of safeguards in terms of how we conduct counter-terrorism operations outside the United States. The rules outside the United States are going to be different then the rules inside the United States. In part because our capacity to, for example, to capture a terrorist inside the United States are very different then in the foothills or mountains of Afghanistan or Pakistan.

But what I think is absolutely true is that it is not sufficient for citizens to just take my word for it that we are doing the right thing. I am the head of the executive branch. And what we've done so far is to try to work with Congress on oversight issues. But part of what I am going to have to work with Congress on is to make sure that whatever it is we're providing Congress, that we have mechanisms to also make sure that the public understands what's going on, what the constraints are, what the legal parameters are. And that is something that I take very seriously. I am not someone who believes that the president has the authority to do whatever he wants, or whatever she wants, whenever they want, just under the guise of counter-terrorism. There have to be legal checks and balances on it.

Boy Scouts: Gays Okay. Treehuggers Not So Much.

Kate Sheppard — Wed, 22 May 2013 22:56:20 +0000

The board that governs the Boy Scouts of America plans to vote on Thursday on a proposal to lift the ban on gay members.

But while the organization may soon welcome gay scouts, they are apparently not so welcoming of treehuggers. The Center for Investigative Reporting posted a story this week on the Scouts booting out Kim Kuska, a naturalist and former biology teacher who been affiliated with the Scouts for 50 years, over his "obsession" with protecting the rare Dudley's lousewort:

Since the 1970s, the Eagle Scout and adult Scout leader-turned-whistle-blower has worked to protect the plant from extinction at Camp Pico Blanco, a Boy Scout camp nestled in the mountains along the Little Sur River south of Monterey, Calif. The camp is home to nearly 50 percent of all known specimens of Dudley’s lousewort, a flowering fern-like plant found in only three places in the world.

But over the past four decades, Scout officials and camp staff have threatened its existence repeatedly by harvesting old-growth trees it needs to survive, crushing some of the few remaining plants and introducing potentially competitive species. Under state law, it is illegal to harm a plant that is classified as rare.

The camp also cut down several trees in the old-growth forest in 2011 without a permit, a Scout official acknowledged.

Kuska's whistleblowing reportedly got him drummed out of the Scouts earlier this month. Read the whole story here.

Grassroots Greens Challenge Environmental Defense Fund on Fracking

Kate Sheppard — Wed, 22 May 2013 20:49:22 +0000

A coalition of grassroots environmental groups—plus a few professors and celebrities—issued a public message to the Environmental Defense Fund on Wednesday: You don't speak for us on fracking.

The coalition of 67 groups released an open letter to EDF President Fred Krupp criticizing his organization for signing on as a "strategic partner" in the Center for Sustainable Shale Development (CSSD), a Pittsburgh-based nonprofit that bills itself as an "unprecedented, collaborative effort of environmental organizations, philanthropic foundations, energy companies and other stakeholders committed to safe, environmentally responsible shale resource development." CSSD's partners include Chevron, CONSOL Energy, and Shell. The partners have been working together on voluntary industry standards for hydraulic fracturing, or fracking, a controversial process used to extract natural gas from shale rock.

The groups that signed the letter included national organizations such as Greenpeace and Friends of the Earth, as well as regional environmental outfits such as the Ohio Valley Environmental Coalition and Catskills Citizens for Clean Energy. Actors Mark Ruffalo and Debra Winger also signed the document. They wrote:

The very use of the word sustainable in the name is misleading, because there is nothing sustainable about shale oil or shale gas. These are fossil fuels, and their extraction and consumption will inevitably degrade our environment and contribute to climate change. Hydraulic fracturing, the method used to extract them, will permanently remove huge quantities of water from the hydrological cycle, pollute the air, contaminate drinking water, and release high levels of methane into the atmosphere. It should be eminently clear to everyone that an economy based on fossil fuels is unsustainable.

Gail Pressberg, a senior program director with the Civil Society Institute, criticized EDF for a "willingness to be coopted" by industry in a call with reporters about the letter. "For too long, nationally-oriented groups have tried to call the shots on fracking," she said. "These local people can and should be allowed to speak for themselves."

EDF's Krupp responded with his own letter on Wednesday, defending the group's participation in CSSD and its record of "fighting for tough regulations and strong enforcement" on natural gas extraction:

Let’s be clear about where EDF stands. It’s not our job to support fracking or to be boosters for industry. That is not what we do. In fact, we regularly clash with industry lobbyists who seek to gut legislation protecting the public, and we have intervened in court on behalf of local communities and their right to exercise traditional zoning powers. We have made it clear that there are places where fracking should never be permitted. But if fracking is going to take place anywhere in the U.S.—and clearly it is—then we need to do everything in our power to protect the people living nearby. That includes improving industry performance in every way possible. In our view, CSSD, a coalition that includes environmental organizations, philanthropic foundations, energy companies and other stakeholders, is one way to do that.

Make no mistake: CSSD is not and never will be a substitute for effective regulation. Stronger state and federal rules, along with strong enforcement, are absolutely necessary. However, voluntary efforts can build momentum toward regulatory frameworks.

I've covered the sparring between EDF and grassroots groups over gas before. At the heart of it is that many of the grassroots groups want there to be no fracking, period. EDF's position is that fracking is "never going to be without impact, never going to be risk free," as EDF Vice President Eric Pooley described it to me, "but we're also mindful that it's happening all over the country." Voluntary standards, Pooley said, are not the ultimate goal—but they can help reduce impacts in communities that already have drilling, and lay the groundwork for actual regulations. "How could we not, in good consciousness, want to engage if we see an opportunity to reduce impacts in communities?" he said.

For what it's worth, both enviros and industry folks have berated CSSD for being too accommodating of the other side.

New Louisiana Law Will Jail Journos for Publishing Gun Info

Gavin Aronsen — Wed, 22 May 2013 19:39:37 +0000

On Tuesday, the Louisiana Senate passed a bill that would imprison and fine journalists who intentionally publish information about the state's concealed-carry handgun permit holders. Reporters who violate the law would face penalties of up to $10,000, six months in jail, or both; public safety officials and police officers who leak permit information to the press would face penalties of up to $500, six months in jail, or both. Journalists in Louisiana say the bill is clearly unconstitutional, but that won't stop it from becoming law: After the Senate vote, it headed to Gov. Bobby Jindal's desk for his signature.

Pamela Mitchell, executive director of the Louisiana Press Association, the state's official newspaper trade organization, says the bill is a clear example of prior restraint—the preemptive censorship of free speech. "That's patently unconstitutional," she says—"think Pentagon Papers," referring to the landmark case New York Times Co. v. United States.

"It's one of those tricky areas, because in some ways [the bill] works as prior restraint, but in others, if they make it a law that penalizes you for publishing [the information], you're being penalized after the fact," says Gregg Leslie, legal defense director at the Reporter's Committee for Freedom of the Press. "So it's not actually keeping you from publishing it." But, he adds, the state "would have to show a compelling interest" to apply a content-based restriction on free speech, and that test "is rarely met."

The Louisiana law is more extreme than other bills that aim to protect the privacy of concealed-carry permit holders. The National Rifle Association and pro-gun lawmakers around the country have pushed hard for state laws forbidding the release of concealed-carry information since last December, when the Lower Hudson Journal News, a local New York paper, published interactive Google maps that pinpointed handgun permit holders' names and addresses in two New York counties. But Louisiana already had a law banning the state from releasing concealed-carry information, so state Rep. Jeff Thompson decided his proposal needed to go even further by banning reporters from publishing the data.

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