The current controversy involving the Internal Revenue Service merely scratches the surface of the problems with that agency and exposes some of the effects that these problems have on the American people. I have personal experience to support this assertion.
In 1996, I was the co-founder of a nonprofit organization the American Civil Rights Institute whose mission is to eliminate the consideration of race and ethnicity in public education, public employment and public contracting. Given the sensitivity of race in America, I am well aware that this objective places our organization and me personally at the center of much abuse and scrutiny.
No one could have anticipated, however, the grief that confronted us starting in 2006 and which lasted until just a few days ago.
In the summer of 2006, our ACRI office was visited by a representative of the Coalition to Defend Affirmative Action, Integration, and Immigrant Rights and Fight for Equality by Any Means Necessary (yes, that's their name).
The purpose of this visit was to request a copy of our form IRS 990, which we provided. Less than 10 days later, Congressman John Conyers of Michigan (who was then chairman of the House Judiciary Committee) and Congressman Charles Rangel of New York (who was chairman of the House Ways and Means Committee) sent a letter to the IRS urging the Service to investigate ACRI and me.
According to the news accounts that they distributed, they were complaining about executive compensation and a host of other issues. They were also contending that ACRI and I were using ACRI funds to benefit the initiative campaign in Michigan. ACRI is a 501(c)(3) organization and ACRC (the American Civil Rights Coalition) is a 501(c)(4). The former was educating the voters and the latter was actively advocating on behalf of the initiative (Proposal 2) and supplying the financing.
The agent assigned to our case is a strong advocate for and beneficiary of affirmative action. At the first meeting with our accountants, the agent declined a request that she meet with me so that I could explain our operation to her. During that first meeting, she informed our accountant that she was going to recommend that our tax-exempt status be revoked. It was at that point that our accountant recommended that we retain a tax attorney because the IRS agent (whom I had never met) didn't like me and was determined to shut us down.
According to our attorney, personal bias rather than the law was clearly guiding the agent. This view was conveyed to the agent and to her supervisor. As a result of our attorney's complaint, the case was not reassigned, but it was given additional oversight by the agent's supervisor. The relationship between the agent and our attorneys and accountant worsened, with the agent at one stage yelling at the attorneys because they challenged several of her interpretations of the law.
Finally, in 2012, we requested that the case be bumped up to the Tax Appeals Office, because of the personal bias and lack of knowledge of the agent. The history of the case was documented by our attorneys and included in the request for relocation. The request was granted.
I am happy to report that the Tax Appeals Office just a few days ago ruled in our favor and is closing the case.
There are several lessons that we have learned from this experience:
1. Don't presume the competence of the agent with whom you are interacting. The tax code is very complex, and specific IRS agents may not be properly trained. They are subject to the same "diversity" nonsense as other sectors of our society, and may have agents, as we did, who were not hired on the basis of merit.
2. The IRS is political. When the chairmen of the House Judiciary and Ways and Means Committees submit a request that the IRS look into a certain taxpayer's case, which they should not do, it is naïve to think that the agency will not be responsive to such requests.
3. No nonprofit organization can defend itself when dealing with the IRS without very competent accountants and attorneys; and such individuals are very costly. Many nonprofits devote a considerable portion of their budgets to compliance with the rules and regulations of IRS and state regulatory agencies. This fact cries out for attention, although I am certain that our agent was aware of the financial consequences on us of her actions.
4. The mere knowledge or rumor that an organization and its executive are being "investigated" by the IRS or some other regulatory agency carries with it, unfortunately, the presumption of guilt. In my case, many headlines were written that alleged "unethical" behavior without a shred of evidence or examination of the motives of the accuser.
5. Despite their personnel problems, the IRS also has some dedicated employees who seek to be fair and impartial.
The IRS did not target our organization because we were perceived as "conservative." We were singled out for intense, unfair and costly scrutiny because two powerful politicians requested an investigation and an ideological agent with a personal bias was assigned the case. In the end, justice was served by an appeals process that enabled fair and impartial agents to dictate the outcome.
Ward Connerly, a former regent of the University of California, is president of the American Civil Rights Institute.