The Answer Is in Washington

A lot has happened with the IRS scandal. A week has gone by, and there haven’t been any new Congressional hearings (because Congress was out of session last week). That will change this week. The White House is still stating the scandal isn’t political, and that it’s some number (2, 4, or 88) “low-level” IRS employees. Let’s look at what we really know, and don’t know, and what conclusions we can accurately draw.

First, CBS and McClatchey both noted that this scandal goes beyond organizations applying for 501(c)(4) status.

Next, we find that at least one of the individuals who signed letters to the applicants for 501(c)(4) status has been promoted! A job well done or a coincidence?

Let’s move on to the Sunday talk shows. Congressman Darrell Issa (R-CA), chairman of the House Oversight Committee, is not happy.

Via NRO:

“The administration is still — their paid liar, their spokesperson, picture behind,” Issa said on CNN’s State of the Union this morning, where the set has a picture of Carney behind host Candy Crowley, “he’s still making up things about what happen[ed] and calling this local rogue.” 

“The reason that Lois Lerner tried to take the fifth [amendment] is not because there’s a rogue in Cincinnati,” he added. “It’s because this is a problem that was coordinated. in all likelihood, right out of Washington headquarters.”

Meanwhile, Powerline has a post including commentary from a former IRS employee in Criminal Investigations:

What this means, though, is that policy was spread over five groups. This isn’t just something that happened with one or two people in one group, or even a “rogue” GM. Somebody set a policy for an entire office, and made sure at least five Groups got the word. That could only have happened in writing, and must have come from at least two levels above the GM. The level above is a Branch Chief, and Branch Chiefs don’t make policy either. Neither does the level above that. Again, I don’t know exactly how Exempt Organizations is structured, but in CI, a Branch Manager (the Assistant Special Agent in Charge) wouldn’t have more than four groups. Policy comes from DC.

So let’s look at the possible sources of the scandal. They are:

  1. Two or four ‘rouge’ IRS agents in Cincinnati decided to implement this policy; or
  2. One or more mid-level managers in Cincinnati, Laguna Niguel, El Monte, and elsewhere implemented this policy; or
  3. A high-level employee in Washington decided to implement this policy; or
  4. The policy came from the White House.

Let’s look at each of these and see if we can determine if they’re still plausible.

1. Two or four ‘rogue’ IRS agents in Cincinnati implemented this policy. I put the chance of this at zero. There were too many IRS employees involved in offices throughout the country. Employees in Cincinnati forwarded information to Washington…and the policy wasn’t stopped. It fails both the smell test and the real world test. In all my dealings with the IRS bureaucracy one thing that has been emphasized is the rigidity of policy. Sooner or later my manager would scold me to high heaven if I were to do this. Additionally, those low-level employees have stated that the direction for this came from Washington. The current excuse being peddled by the White House is clearly wrong.

2. One or more mid-level managers in Cincinnati, Laguna Niguel, El Monte, and elsewhere implemented this policy. This also can’t be correct for the same reasons as above. Mid-level IRS managers don’t make policy, they implement it. Additionally, the policy existed nationally. The answer is not mid-level managers.

3. A high-level employee in Washington decided to implement this policy. High level employees at the IRS do make policy. Thus, let’s examine the structure of the Tax Exempt & Government Entities division of the IRS.

The IRS provides a web page noting how it is structured. At the top is the Commissioner of the IRS (currently Daniel Werfel is the Acting Commissioner). Underneath him are two Deputy Commissioners: Deputy Commissioner for Services and Enforcement (DCSE) and Deputy Commissioner for Operations Support. It’s DCSE where we need to go, as here there are nine reports, including the Commissioner of Tax Exempt and Government Entities Division (TEGE). The DCSE? Well, it’s listed as former IRS Acting Commissioner Steven T. Miller, the Acting Commissioner for Tax Exempt and Government Entities is Michael Julianelle. (You can see the top-level of the IRS Organization Chart here.)

Mr. Julianelle is new to his position; back in 2012 Sarah Hall Ingram was Commissioner for TEGE and Joseph H Grant was Deputy Commissioner. Under them was Lois Lerner, Director of Exempt Organizations. Breitbart published a post which included the IRS organizational charge for TEGE from February 2011 showing these individuals. What we can state as factual is that all of these individuals were based in Washington.

As you might remember, Ms. Lerner took the Fifth when testifying before Congress. She made a statement where she said she wasn’t guilty of anything. That might be true. However, if she didn’t implement the policy, her bosses had to order her to do so. It could not have been at a level below hers. Indeed, I suspect it was done above her level…but that’s just a suspicion.

4. The policy came from the White House. Today, there is absolutely no evidence of this. But the IRS is part of the Executive Branch. Could this have been ordered from the White House? Certainly. (Note that when I say “from the White House” I do not mean it had to be President Obama. It could have been the President, the Secretary of the Treasury, the White House Chief of Staff, etc.)

The reason there are suspicions that this comes from above the IRS is the reports of individuals who filed the 501(c)(4) applications receiving scrutiny in other ways. The individuals were subject to audits (from another division of the IRS), scrutiny by the Bureau of Alcohol, Tobacco, and Firearms, the Department of Labor, etc. It is theoretically possible that these are all coincidences. Today, there’s no proof that these are not coincidences. But it sure feels improbable to me.

I’m reminded of one of my favorite lines in literature. Sir Arthur Conan Doyle wrote, “When you have eliminated the impossible, whatever remains, however improbable, must be the truth.” I think we can safely eliminate the first two possible causes (listed above). That leaves just two possible sources of the policy. Having dealt with the IRS for fourteen years, I can safely state that given that this policy was in force for over two years, there is no chance it was started by low-level employees or mid-level managers. It’s impossible.

[My thanks to my good friend Randy for inspiring me on this post.]


3 Responses to “The Answer Is in Washington”

  1. You make a compelling case that there must have been direction from above Ms. Lerner for the IRS’ behavior. Do you think we will ever get to the bottom of it? Do you think the IRS’ ability to do its job (encourage and enforce our voluntary tax system) will be irreparably harmed?

    • Russ says:

      I do think we’ll get to the bottom of this (eventually). There were too many people involved, and the low-level employees will out the managers; the manager(s) will blame [ ], someone in Washington. It may take months, but sooner or later we’ll know who ordered this.

      This will hurt the IRS in the short-term, but given that government must have revenue, the IRS will in the long-run be OK. However, the ability to implement ObamaCare may be irreparably harmed.