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04/22/2016 / By Ethan Huff
The Internal Revenue Service (which isn’t a real government agency, by the way – it’s a private corporation that works for the private Federal Reserve!) is in deep doo-doo for flagrantly violating a court order barring the entity from destroying evidence related to its illegal targeting of conservative groups.
When news about the scandal went public, the IRS found itself in even deeper hot water, after it was revealed that the entity hired an outside trial law firm known as Quinn Emanuel to do its dirty work, which included pursuing software giant Microsoft.
Microsoft responded by filing a Freedom of Information Act (FOIA) request calling on the IRS to produce data showing what it was up to, data that was stored on the hard drive of its former director of transfer pricing operations at the IRS Large Business and International Division, Samuel Maruca.
The U.S. Department of Justice (DOJ) ordered a freeze on all documents and data related to the IRS’s hiring of Quinn Emanuel, which included the hard drive in question. But the IRS recently informed the DOJ that it wiped the hard drive clean back in April of last year, after the hold was put in place.
Despite the fact that Quinn Emanuel has no experience whatsoever dealing with sensitive taxpayer data, the IRS reportedly paid the firm upwards of $1,000 per hour to illegally probe the tax-exempt status filings of groups associated with the “Tea Party” and other conservative movements.
According to Americans for Tax Reform, the IRS had signed a secret deal with Quinn Emanuel establishing an initial contract of $2.2 million for the company’s work. This prompted many Senate Republicans to question the IRS’s motivations, including why it would even hire an outside and unnecessarily expensive law firm to handle audits.
There are currently some 40,000 IRS employees who are tasked with doing such work internally, which suggests that the entity had intentionally brought in outsiders to perform tasks that required a shroud of secrecy.
According to Microsoft, Quinn was “directing the IRS’s newly aggressive tactics – an impermissible ‘outsourcing’ … of the IRS’s audit power,” to quote Alison Frankel from Reuters.
A federal judge has since dubbed the IRS’s hiring of Quinn “troubling,” and many are now asking what the IRS was hiding on that conveniently-destroyed hard drive. So, not only did the IRS break the law in violating the court order, but it also broke the law in hiring an outside contractor – using taxpayer dollars – to perform shady audits.
“It is inappropriate for the IRS to use private law firms to perform audits and administer tax law,” stated the press secretary for Illinois, Republican Peter Roskam, following the order issued by U.S. District Judge Ricardo Martinez. “Federal law does not allow for contracting out these inherently governmental activities, not least of all because it threatens taxpayer privacy and confidentiality.”
Republican Senator for Utah, Orrin Hatch, created a three-page letter for Microsoft that stands in full agreement with this position, noting that the hiring is illegal on multiple fronts.
“The IRS’s hiring of a private contractor to conduct an examination of a taxpayer raises concerns because the action: 1) appears to violate federal law and the express will of the Congress; 2) removes taxpayer protections by allowing the performance of inherently governmental functions by private contractors; and 3) calls into question the IRS’s use of its limited resources.”
Where the case will go from here is anyone’s guess. But in a just world, the IRS would be held fully accountable for its crimes, and possibly even disbanded entirely.
Sources for this article include:
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