I testified yesterday afternoon at a U.S. House Oversight Committee hearing on the IRS’s use of politicized search terms to single out 501(a)(4) organizations for additional scrutiny. The hearing also looked into the Department of Justice (DOJ) investigation of the IRS scandal and the fact that a lead lawyer for the DOJ investigation has been a major campaign contributor to the President.
http://oversight.house.gov/wp-content/uploads/2014/02/Painter-Testimony.pdf
A few highlights from the hearing:
Organizations under Section 501(c)(4) of the Internal Revenue Code have proliferated in recent years. Citizens United opened the floodgates through which private money – from corporations, individuals and unions – flows into the political process. This is part of a corrupt system of campaign finance that in my view must be fixed. Nobody on the Committee commented on that point.
I told the Committee that close IRS scrutiny of 501(c)(4) applications to discern a “political purpose” of an organization is not the way to arrive at a better system of campaign finance. The notion that “social welfare” is somehow distinguishable from “politics” is in my view unworkable, particularly in a society where politics is the process by which we choose our government and social welfare is to a great extent affected by government.
Ineffective regulations for 501(c)(4) organizations are no excuse for the conduct that occurred at the IRS in 2010-2012, but the regulations should be revised and if necessary the underlying statute should be amended. The IRS should focus on collecting taxes not ferretting out politics.
The scope and purpose of the DOJ investigation of the IRS misconduct is unclear. The staffing of the investigation, however, has introduced yet more controversy. I agree with Bruce Green and other experts who submitted written opinions to the Committee stating that ethics rules do not prohibit a career prosecutor who has made campaign contributions to the President from participating in, or even directing, an investigation such as this one.
However, the impartiality rule -- 5 CFR 2635.502 -- has catch-all language that government employees, including career prosecutors, should consider in these situations. The purpose of the rule is not necessarily to disqualify an employee from a particular assignment but to encourage an employee to consult with agency ethics officials before making a decision about whether it is the best interest of the agency to go forward with a particular assignment where there could be an appearance of partiality. Because of the enormous controversy about alleged politicization of the IRS, I would not have staffed this DOJ investigation with a senior lawyer who was strongly identified with either of the two political parties, but this is a matter about which reasonable persons could disagree. I do hope, however, that such a conversation about staffing this investigation occurred at the DOJ and 5 CFR 2635.502 intended for that conversation to occur.
The conversation discussed above would probably have to be initiated by the employee because it would be improper under the Hatch Act and civil service laws for DOJ officials to look up campaign contributions of career DOJ attorneys.
Finally, I am frustrated at not knowing the purpose and scope of the DOJ investigation. Comments were made by Members at the hearing that the President of the United States was a potential target of the investigation even though I am not aware of any evidence linking anyone at the White House to the gross misconduct at the IRS. There was even reference to “impeachment.” I am concerned that the rhetoric in this investigation may be getting ahead of the facts.