Lawmakers still pursuing evidence of political bias at the Internal Revenue Service learned on Friday that the inspector general may have retrieved as many as 30,000 missing emails sent or received by Lois Lerner, the since-retired head of the IRS Exempt Organizations division at the center of the 18-month-old controversy over mishandling of applications from nonprofits.
The Senate Finance and House Oversight and Government Reform committees were updated on the electronic data retrieval efforts using emergency backup tapes by investigators at the Treasury Inspector General for Tax Administration, according to statements by the chairmen. The IRS has been turning over emails for the past year, but Commissioner John Koskinen in June said many may be irretrievable.
The inspector general has not released conclusive findings on Lerner’s emails, and auditing staff plan to assess whether the data can be converted into a readable format and then deliver the materials to the Senate Finance Committee as soon as they have fully recovered and validated them, said a committee statement.
“From the onset of our bipartisan investigation, we’ve remained committed to getting to the truth and ensuring that the IRS treats all tax-exempt applicants fairly,” said Sens. Ron Wyden, D-Ore., and ranking member Orrin Hatch, R-Utah. “Since the launch of our investigation in May 2013, our investigators have interviewed more than 30 current and former IRS and Treasury employees and have reviewed nearly one million pages of documents....We will continue with our bipartisan efforts and expect to issue a complete report early next year.”
Outgoing House Oversight Chairman Darrell Issa, R-Calif., blasted the IRS for poor cooperation with Congress. “Though it is unclear whether TIGTA has found all of the missing Lois Lerner e-mails, there may be significant information in this discovery,” he told the Washington Examiner. “The Oversight Committee will be looking for information about her mindset and who she was communicating with outside the IRS during a critical period of time when the IRS was targeting conservative groups.” The IRS, he added, “first failed to disclose the loss to Congress and then tried to declare Lerner’s e-mails gone and lost forever. Once again it appears the IRS hasn’t been straight with Congress and the American people.”
The IRS gave Government Executive a statement saying Koskinen would be pleased if additional Lerner emails could be found. The agency “remains committed to fully cooperating with all of the pending investigations,” it said. “In June 2014, the IRS provided a detailed report on its efforts to locate and produce Ms. Lerner’s emails, including by producing more than 24,000 Lerner emails from the period prior to Ms. Lerner’s hard drive crash in 2011. We understand that shortly after the IRS issued its June report….TIGTA began an investigation of the hard-drive crash and a search for additional emails. The IRS has cooperated fully in this investigation, including providing TIGTA last summer with the disaster recovery tapes that had been initially used during the hard-drive ‘gap’ period and then subsequently recycled, according to standard IRS procedure at the time.”
Meanwhile, the targeting controversy has spilled over into the politics of the IRS’ fiscal 2015 budget, which must be finalized during the 113th Congress’s lame-duck session in December. Sizable cuts were announced in July via the House version of the Financial Services and General Government appropriations bill. That bill set the agency’s overall spending at $21.3 billion, or $2.3 billion less than what President Obama requested in April. Obama had asked for a hike in IRS spending of $1.2 billion along with hiring of nearly 7,000 new staff.
“This bill reflects common-sense decisions to place priority on programs and services that are effective, efficient, and essential to the financial health of our nation and the federal government’s service to our people,” said Appropriations Chairman Hal Rogers, R-Ky. “In order to make these investments and to be good stewards of each and every tax dollar, the bill focuses cuts on lower-priority or poor-performing agencies -- such as the scandal-plagued and inefficient Internal Revenue Service.”
Koskinen sounded an alarm on past and prospective budget cuts on Nov. 13 when he addressed the National Academy of Public Administration. “The agency now has 13,000 fewer permanent full-time employees than it did in 2010, even as our responsibilities have continued to expand with the Affordable Care Act” and the 2010 Foreign Account Tax Compliance Act, he said. “Between 2010 and 2014, we’re down 5,000 key enforcement personnel: that includes revenue officers, revenue agents and criminal investigators. This is forcing the agency to reduce the number of audits and collection activities. As a result, billions of dollars in enforcement revenue are not being taken in,” he said.
“Our ability to deliver quality service to taxpayers within the limits of our budget is also a major concern, especially in regard to the level of service on our toll-free help lines. We’re expecting a sharp increase in the number of people calling with questions during the upcoming filing season.”
Koskinen also warned that his agency’s information technology systems are creaky. “The IRS is the world’s largest financial accounting institution, and that’s a tremendously risky operation to run with outdated equipment,” he said. “We are running what I fondly refer to as a Model T information technology system. It’s got a nifty GPS, a resonant sound system and a rebuilt engine. But it’s still a Model T.”
On Nov. 19, the commissioner’s pleas were seconded by the all-volunteer Internal Revenue Service Advisory Council, which consists of 19 members with varying specialties related to tax administration. “The IRS is in the midst of an existential funding crisis,” said its report stressing the need for a larger staff, modern IT and improved training to maintain fairness to taxpayers. “Recent funding levels at the IRS impair the ability of the agency to perform its critical mission of providing much needed services and support to taxpayers who strive to meet their tax obligations and to identify and address the non-compliance of those who are not so inclined,” the report stated. “We say this as professionals who deal with the tax law, tax system, and tax agency on an almost daily basis. We say it because, candidly, it needs to be said: Our tax system, which is dependent on voluntary compliance, is increasingly at risk.”
Although the advisory council “recognizes the challenges that Congress faces regarding the federal budget,” it continued, “we respectfully disagree with its treatment of the IRS’ budget, which we submit is both short-sighted and counterproductive.”