A new report from the House Committee on Oversight and Government Reform is recommending drastic changes for the Internal Revenue Service as part of its ongoing investigation into targeting of groups for political reasons.
The report, Making Sure Targeting Never Happens: Getting Politics Out of the IRS and Other Solutions, says that the IRS is a “broken agency” and that it is “no longer a neutral administrator of federal tax law.” The report notes that the Committee’s investigation is not yet complete but that it has reviewed roughly 800,000 pages of documents and interviewed over 35 IRS employees in its ongoing investigation.
The report suggests numerous reforms for the IRS. Below are some of its proposed reforms and explanations for proposing them. The full report is included at the end of this post.
Make the IRS a multi-member, bipartisan commission
The IRS needs internal controls – such as the checks and balances generated by a multi-member, bipartisan structure – to help thwart future transgressions and ensure timely awareness and response to any misconduct. Congress ought to consider legislation to reform the structure of the IRS from an agency led by a single commissioner to a multi-member, bipartisan commission.
Remove the IRS as a regulator of political speech for social-welfare groups
Congress ought to consider legislation that removes the IRS as a regulator of the political speech by section 501(c)(4) groups by recognizing that political speech can be part of efforts to advance the social welfare. This idea would not only help to prevent politically oriented IRS misconduct from occurring in the future, but would also recognize the constitutional rights of applicants to free speech and free association.
Establish personnel reforms for dismissed federal workers
The federal workforce should work better for the American taxpayers. Congress should consider proposals to improve accountability in the federal workforce and make the government work better for the American taxpayers. Among these proposals, Congress should examine changes to civil serve protections and pay for federal workers removed for misconduct.
Increase political activity restrictions for certain IRS employees
The Committee’s investigation has shown that the IRS has become an increasingly politicized agency. Congress should consider proposals to increase political activity restrictions for IRS Exempt Organizations Division personnel. Congress could consider including IRS Exempt Organizations employees as “further restricted” under the Hatch Act.
Implement rigorous training on the use of personal e-mail and penalties for misuse
Given the apparent frequency of federal employees using non-official e-mail accounts to conduct official business, the IRS and other federal agencies ought to develop and implement more rigorous training on the appropriate use of non-official e-mail accounts and the protection of sensitive records. In addition, Congress should consider legislation to implement penalties for federal employees who misuse non-official e-mail accounts for official government business.
Allow taxpayers, and not the IRS, to control access to their confidential taxpayer information
Congress ought to consider legislation to revise section 6103 of the Internal Revenue Code. The revision should allow the American taxpayers to control the access to their confidential taxpayer information and provide the opportunity for taxpayers to request all of their confidential taxpayer information from the agency or authorize other entities to access it. Taxpayers should also be allowed to waive, opt out, and change access to their confidential taxpayer information as they wish.
Limit the time for IRS review of a tax-exempt application
The IRS should not be able allowed to review a tax-exempt application indefinitely. Congress ought to consider legislative proposals to implement an appropriate limit – for example, 60 days – for the IRS internal evaluation of applications for tax- exemption, after which the applicant automatically receives exemption if the IRS has not made a determination.
Prohibit political and policy communications between the IRS and Executive Office of the President
The investigation demonstrates how the IRS has become increasingly close with the Executive Office of the President. Although there is a role for coordination with the Office of Tax Policy in the Treasury Department, Congress ought to consider legislative steps to prevent IRS employees from engaging in political or policy discussions directly with the White House.
Remove the IRS from implementation of the Affordable Care Act
The Affordable Care Act endowed the IRS with a tremendous responsibility over a highly partisan law. This responsibility has resulted in a close relationship between the IRS and political elements of the Administration. To return the IRS to its traditional role as an impartial administrator of the tax code, Congress ought to consider legislation to remove the IRS from the implementation and administration of the Affordable Care Act.