GAO report finds IRS can still target Americans based on their beliefs

A new report from the Government Accountability Office (GAO) warns that the Internal Revenue Service is just as free to audit Americans over their personal beliefs as it was in 2013 — before the Tea Party political discrimination scandal erupted.

Since the scandal, the GAO found, “[u]nfortunately, the IRS has not taken sufficient steps to prevent targeting Americans based on their personal beliefs.”

That assessment comes as part of a lengthy report describing how the agency singles out tax-exempt entities for audit. The House Ways and Means Committee on Thursday held a hearing to review the report, surmising its key findings like this:

GAO’s final report shows that the current audit process indeed is ripe for improper targeting. According to GAO, “the control deficiencies GAO found increase the risk that EO (Exempt Organizations unit) could select organizations for examination in an unfair manner — for example, based on an organization’s religious, educational, political, or other views.”

The GAO report’s supporting findings include:

• IRS’s audit procedures are not sufficiently documented or followed, and in some instances, GAO found that even the IRS did not have a record of why certain cases were selected for audit.
• The same small group of people have been reviewing audit referrals, which are essentially third-party complaints made to IRS, for years without sufficient review or oversight of their decisions.
• Management within IRS does not consistently monitor selection decisions, which could allow people with bias to unfairly select organizations for audit.

These weaknesses undermine the agency’s commitment to serving taxpayers, as well as the integrity of tax administration as a whole. Audits can cost a huge amount of time and money — and can devastate a non-profit organization. After all that has taken place, it is astonishing that the IRS still operates in a way that allows the targeting of people based on their beliefs to go unchecked.

The renewed focus on the open politicization of IRS enforcement activity — or, at least, the potential for it — could serve to “reignite the controversy over the Internal Revenue Service’s targeting of conservative non-profits,” The Fiscal Times observed.

Rep. Peter Roskam (R-Ill.), who chairs the Ways and Means Committee’s Subcommittee on Oversight, appeared to do exactly that in his remarks to open Thursday’s hearing. “To date, the IRS has basically tried to assure this committee and the American people that this won’t happen again simply by saying ‘Lois Lerner doesn’t work here anymore,” he said.

“… It is stunning that in response to these findings, the IRS said that ‘although the report states that a hypothetical risk exists that returns could be selected unfairly, the draft report did not find any evidence that this has happened.’

“As we will show today, that’s just not true. The Inspector General tells this committee they have referred multiple cases of improper audit selection to the Justice Department for criminal prosecution in 2014 alone. There’s nothing hypothetical about that.”

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