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Attorney General Holder Orders FBI Inquiry Into IRS Scrutiny Of Tax Exempt Applications

Kelly Phillips ErbMay 14, 2013July 11, 2020

Just days after the news surfaced that the Internal Revenue Service improperly targeted certain applications for tax-exempt status based on keywords and politically charged language, Attorney General Eric Holder has announced that he has ordered an FBI investigation into the matter. Specifically, the criminal inquiry will focus on “potential violations” of the federal tax code and the federal criminal code, according to Holder, who made the announcement during a press conference earlier today. He did not offer further details.

To be clear, there have been no specific allegations of criminal activity made public. And Holder was as vague as vague could be about the investigation, saying that “The FBI is coordinating with the Justice Department to see if any laws were broken in connection with those matters. We are examining the facts to see if there were criminal violations.” You have to love those kinds of statements; to quote Ken White over at Popehat: vagueness in legal threats is the hallmark of meritless thuggery.

So, a few things could be happening:

  • One, there actually is some evidence that indicates that there might have been criminal wrongdoing. This would be quite remarkable considering how many people – all the way up to former IRS Commissioner Doug Shulman and acting IRS Commissioner Steve Miller – were said to have known about what was going on.
  • Two, there is considerable political pressure to find someone to blame. Clearly, the administration doesn’t want to admit if there’s a systemic problem. And talking in nebulous terms about breakdowns in the system won’t make anybody happy. What would make someone happy? A scapegoat.
  • Three, this isn’t the best moment for the Obama administration or the Holder AG tenure and it could be politically advantageous to distract citizens from other matters by bringing up – ooh, look, shiny things!

For its part, the IRS has apologized for its actions. It has, however, maintained that the behavior was not politically motivated but was rather a way (albeit a terrible way) to sort through an increase in applications of organizations attempting to use tax-exempt status for political purposes.

Stay tuned.

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Kelly Phillips Erb
Kelly Phillips Erb is a tax attorney, tax writer, and podcaster.
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