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Attorney Asks IRS to Address Classification of Exempt Orgs as 'Subversive'

MAY 6, 2009

Attorney Asks IRS to Address Classification of Exempt Orgs as 'Subversive'

DATED MAY 6, 2009
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[Editor's Note: For Owens's letter to the IRS, including excerpts from the Internal Revenue Manual, see Doc 2009-10289 .]

 

May 6, 2009

 

 

The Honorable Douglas Shulman

 

Commissioner

 

Internal Revenue Service

 

1111 Constitution Ave NW

 

Washington, DC 20224

 

 

Re: Internal Revenue Manual Section 4.75.14.2.4

Dear Commissioner Shulman:

I am writing to bring to your attention a troubling provision in the Internal Revenue Manual (the "Manual"). Specifically, from 2006 until recently, section 4.75.14.2.4 of the Manual (copy enclosed) provided directions on how the Internal Revenue Service (the "IRS" or "Service") should handle examinations of tax-exempt organizations determined by the revenue agent to be "subversive organizations" -- including a provision requiring the secret referral of the case to Washington, DC and a prohibition on the revenue agent from informing the organization about its classification and the actions being taken. I am concerned because this categorization of organizations as "subversive" and the singling out of them for disparate and secretive treatment undermines public confidence in the impartial administration of the federal tax laws. Within the last few weeks, after this provision was brought to light, we noticed that it was removed from the Manual. In light of the unusual nature of the provision, we respectfully request confirmation that it has indeed been deleted from the Manual, has not been moved to the Law Enforcement Manual, and does not represent current IRS policy and procedure.

The implications of the Manual provision are profound. If I recall correctly, the Service has not designated so-called "subversive organizations" since the Nixon administration used the secretive Special Service Staff of the IRS to target individuals and organizations that the administration considered to be political "enemies" and "extremist organizations."1 For over thirty years, the IRS policy has been to treat exempt organizations uniformly, regardless of their ideological leanings. Because of the preceding history and the implications of the Manual provision, we have been asked to file a Freedom of Information Act ("FOIA") request for documents that might shed light on the provision. A copy of our FOIA request is attached for your reference. However, given the significance of the Service having special procedures for "subversive" organizations, we believe that a more candid and detailed response is necessary to clarify the IRS approach to tax administration in the exempt organizations context. At a minimum, it is important for the tax-exempt sector to know (i) the criteria that were used to determine whether an organization was subversive, (ii) the number of organizations so designated, (iii) whether they were ever informed of that status, and, (iv) perhaps most importantly, what the IRS did or intended to do with them after they had been determined to be subversive and their files transferred to Washington, DC. This sort of information may not appear in a particular document that would be subject to FOIA, but nothing in the privacy rules in the Internal Revenue Code prevents you from making a specific and candid response provided identifying information regarding a specific taxpayer is not disclosed.

A substantive response to these questions would help allay the concerns expressed in this letter and, hopefully, instill in the exempt organizations sector confidence that the preceding administration has not injected political partisanship into its administration of the tax laws through the Manual.

We appreciate your assistance in this matter.

Sincerely,

 

 

Marcus S. Owens

 

Caplin & Drysdale, Chartered

 

Washington, D.C.

 

Enclosures

 

* * * * *

 

 

May 6, 2009

 

 

Disclosure Officer

 

Internal Revenue Service

 

1111 Constitution Avenue, NW

 

Washington, D.C. 20224

 

 

Re: Freedom of Information Act Request

Dear Sir or Madam:

This is a request pursuant to the Freedom of Information Act, 5 U.S.C. § 552 ("FOIA") and the Privacy Act, 5 U.S.C. § 552a.

Pursuant to these statutes, we hereby request any and all documents reflecting the development, promulgation, interpretation, and removal of section 4.75.14.2.4 of the Internal Revenue Manual, referencing the identification and handling of cases involving "subversive organizations," including, but not limited to:

 

1. Records reflecting the development and promulgation of section 4.75.14.2.4 of the Internal Revenue Manual;

2. Records and reports regarding the number of organizations classified as "subversive";

3. Any reports to management regarding the types of organizations classified as "subversive";

4. The criteria and procedures for classifying an organization as "subversive"; and

5. Any records regarding the removal of section 4.75.14.2.4 from the Internal Revenue, including whether it was removed to the Law Enforcement Manual.

 

Please note that the term "document" in this request is intended to include the full panoply of documents that meet that definition under the FOIA (e.g., memoranda, electronic messages, internal working documents, etc.).

Please mail copies of the requested documents to me at the address shown above. The IRS is authorized to charge Caplin & Drysdale for the costs, up to $1,000.00, of searching for the documents described above, making any necessary deletions or redactions from them, and making the requested copies. If such costs are estimated to exceed $1,000.00, please contact me at (202) 862-5020 with the estimate and for further authorization.

Should it be asserted that any portion of the requested documents is exempt from disclosure under the FOIA or Privacy Act, please provide us with a copy of the portion(s) considered not exempt. Further, with respect to each document (or any portion thereof) that you believe is exempt from disclosure, please provide us with the following information:

 

1. The title of the document;

2. The date (if any) of the document;

3. The author(s) of the document;

4. The recipient(s) of the document, including both the addressee and any individuals to whom copies were directed;

5. A factual description of the document;

6. A statement of the specific exemption(s) claimed under the statutory provisions;

7. The justification for claiming the exemption(s).

 

Any correspondence concerning this request should be sent to me at the address shown above. Please note in advance, however, that the taxpayer does not intend to agree to any extensions of the statutory deadlines for responding to this request that are set forth in the FOIA and accompanying regulations.

Thank you very much for your attention to this matter.

Very truly yours,

 

 

Marcus S. Owens

 

Caplin & Drysdale, Chartered

 

Washington, D.C.

 

FOOTNOTE

 

 

1 S. REP. No. 94-755 (1976); JCS REP. No. 9-75 (1975); JCS REP. No. 37-73 (1973).

 

END OF FOOTNOTE
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