[EL] IRS releases confidential taxpayer information -> a felony (but if it's Crossroads is that ok?)

[John Pomeranz]

Let’s not be too quick to attribute to malice what can be explained by stupidity.

I think that the most likely explanation for the release of the Crossroads GPS application is that a staffer at the IRS accessed the application via the IRS document management system and sent it in response to ProPublica’s public-records request without realizing that the application was not yet a public document.  I could easily imagine such a mistake, given that the IRS can and does release 1024s after determination.  The fact that some groups are now hearing from the IRS to notify the groups of a release of their pre-determination application suggests to me that the one ProPublica request might have requested documents for a number of organizations, and the investigation of what happened in the Crossroads GPS case might have led the IRS to the discovery of these other illegal disclosures.

If all of these disclosures were the result of one wrongly handled request, it’s not surprising that the victim groups might share a political ideology.  An organization interested in digging up “dirt” on Crossroads GPS would also be likely to be interested in information on other conservative 501(c)(4)s.  These “multiple” mistakes could really be just one that had multiple victims.

Of course there was also the recent, and apparently unrelated, incident in which it appears that an unredacted IRS copy of the 990 from the National Organization for Marriage was released.  That could be stupidity too, but I admit that it would almost certainly have to be an additional error by the IRS, not part of the single incident I hypothesize above.

It seems plausible to me that the IRS would have the opportunity to make more mistakes that affect conservative groups than liberal groups.  Remember that it’s mostly liberal ideologues that are complaining that the activities of these tax-exempt organizations are violating their tax-exempt status.  Conservative ideologues, generally, would argue that constitutional arguments support a broader interpretation of permissible activities for tax-exempt organizations.  Thus, it seems logical to me that the IRS would be getting a lot more requests from liberals about conservative groups than the reverse.  (One could also argue that more requests about conservative nonprofit groups are generated because conservative groups, buoyed by their belief in their constitutional rights, are more likely to engage in edgy activities that generate public-record requests, but I don’t think this argument is necessary to explain my hypothetical imbalance in the number of public-record requests.)

And, for the record, I do condemn any release of non-public taxpayer information by the IRS or its employees, whether the result of stupidity or incompetence.


John Pomeranz
Harmon, Curran, Spielberg & Eisenberg, LLP
1726 M Street, NW, Suite 600
Washington, DC  20036
p: 202.328.3500
f: 202.328.6918
e: jpomeranz at harmoncurran.com



From: law-election-bounces at department-lists.uci.edu [mailto:law-election-bounces at department-lists.uci.edu] On Behalf Of bzall at aol.com
Sent: Tuesday, December 18, 2012 12:08 PM
To: law-election at uci.edu
Subject: [EL] IRS releases confidential taxpayer information -> a felony (but if it's Crossroads is that ok?)

As Rick would say (and should have said): "Wow!"

So the IRS gets a FOIA request for Crossroads GPS's 1024. If the application had been granted, that 1024 would have been public information. But the application has not been granted, so the 1024 is still, by law, "confidential taxpayer information." Which makes the disclosure, no matter how interesting to various people, a felony under IRC 6103. There's no exception for FOIA, and no reasonable explanation for how this happened. And there's no exception for revealing information that some people really, really want to know about groups that they don't like. In fact, courts have held that releasing information to people who might want to cause harm is an aggravating factor in the calculation of proximate cause. Jones v. U.S., 9 F.Supp.2d 1119, 1143-44 (D.Neb. 1998).

And, for those who think, "Oh, it's just some IRS munchkin who made a stupid mistake," unfortunately, this is not an isolated case. I heard today from counsel for three other conservative organizations who received calls from the IRS saying that the organizations' 1024s "may" also have been erroneously released, though no details were given. Probably a 7431 lawsuit is in order, with at least discovery for what happened and possibly civil damages.

Sounds like something even disclosure proponents should want investigated. Doesn't matter how "bad" an organization is, releasing information protected by statute should be condemned, not celebrated.

And, of course, the ProPublica analysis of the "limited" amount of spending on political activity is just ignorant at best. All the response to that question says is that the applicant won't let political activity be its primary activity, which is all the law requires. We can argue about what's "political" or not, but the existence of that dispute is not enough to outweigh felonious disclosure.

“Karl Rove’s Dark Money Group Promised IRS It Would Spend ‘Limited’ Money on Elections”<http://electionlawblog.org/?p=45447>
Posted on December 17, 2012 10:39 am<http://electionlawblog.org/?p=45447> by Rick Hasen<http://electionlawblog.org/?author=3>
ProPublica reports.<http://www.propublica.org/article/what-karl-roves-dark-money-nonprofit-told-the-irs>


Barnaby Zall
Of Counsel
Weinberg, Jacobs & Tolani, LLP
10411 Motor City Drive, Suite 500
Bethesda, MD 20817
301-231-6943 (direct dial)
bzall at aol.com<mailto:bzall at aol.com>
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