The Internal Revenue System (IRS) will be transformed in the coming months and years to become one of the most powerful branches of government. The so-called Inflation Reduction Act, which commits $740 billion in spending, will allocate a substantial portion ($79.6 billion) to expand the IRS payroll by 87,000 employees. Ted Cruz said of this measure:
Those IRS agents are designed to come after you. They’re not designed to come after the billionaires and the big corporations. They’re designed to come after small businesses and working families across this country. The Democrats are making the IRS bigger than the Pentagon, plus the Department of State, plus the FBI, plus the Border Patrol combined. The IRS is going to be bigger. This is a massive power grab.
IRS Commissioner Charles Rettig has written an e-mail to all IRS employees stating that "This is a historic time for the IRS, and we are working to move quickly to begin work on the Inflation Reduction Act signed into law earlier this week".
In that e-mail, to which Daily Signal has had access, Rettig explained:
A key part of our efforts will be the creation of a new, centralized office for implementation of all IRS-related provisions. Building off our successes implementing other major legislative bills, the IRA 2022 Transformation & Implementation Office will work across the IRS and oversee our implementation efforts.
Rettig announces that the director of this centralized office will be Nikole Flax. It is not a politically neutral name, within the IRS. Flax was chief of staff to IRS Director Lois Lerner when the Obama Administration's tax arm was found to be targeting conservative organizations.
Origin of the IRS scandal
In March 2010, the IRS began increasing its scrutiny of organizations that obtain tax exemptions under Sections 501(c)(3) and 501(c)(4). Then, some officials developed a spreadsheet called Be On the Look Out (BOLO), which tracked organizations that included certain terms, such as 'Tea Party', 'Patriots', 'Take back the country' or 'We the people', amongst others.
They also singled out organizations that questioned Obamacare, the then-President Barack Obama's main policy gamble, or were in favor of teaching the Constitution in schools.
A long investigation
For two years, until April 2012, the IRS was dragging its feet on granting tax-exempt status to conservative organizations. In May 2013, a report prepared by the Treasury Inspector General concluded that the IRS had conducted inappropriate searches based on political criteria, such as 'Tea Party', etc. According to the report:
The IRS used improper criteria that identified for review the Tea Party and other organizations applying for tax-exempt status based on their names or political positions, rather than on indications of possible involvement in political campaigns. Ineffective management: 1) allowed inadequate criteria to be developed and maintained for more than 18 months, 2) caused considerable delays in the processing of certain requests and 3) allowed unnecessary requests for information to be issued. Although processing of some applications with potential for intervention in major political campaigns began shortly after receipt, work on most of these applications was not completed for 13 months.
The Treasury Inspector General prepared a second report, the main conclusion of which is that this type of finger-pointing had been going on since 2004, and that some progressive organizations were also being singled out.
Congress then (May 2013) initiated an investigation into the institution's partisanship. Lois Lerner testified before Congress, "I have not broken any laws. I have not violated any IRS rules or regulations. And I have not provided false information to this or any other congressional committee." And he also invoked the Fifth Amendment.
On the other hand, FBI launched an investigation of its own in January 2014, and concluded that there was no political "enemy hunting" by the administration of then-President Barack Obama.
The situation changes with the arrival of the new president, Donald Trump. Your Administration agreed to settle two lawsuits. One, filed by more than 400 conservative nonprofit organizations that had been discriminated against, and a second by 41 conservative associations, which the IRS acknowledged had subjected them to "heightened scrutiny and inordinate delays."
The role of Luis Lerner and Nikole Flax
The head of the IRS when the scandal was uncovered was Luis Lerner, and his chief of staff, Nikole Flax. In 2014, the House Oversight Committee issued a subpoena to obtain all of Lerner's emails for the past 28 years. But then the IRS said it did not have access to the e-mails because somehow the hard drive where they were located had crashed. They tried to recover its contents, but without success.
Then, the IRS inspector general said there were backup tapes that might contain that information. IRS management said they would collect them, but it was later learned that the request never happened. In June 2015, the IRS deputy inspector clarified that those tapes had been erased in March 2014, a month after the institution said it could not access the hard drive with the information.
Flax was one of the staff members who stated that his information was lost with the crashed hard drive. In total, in addition to the information on Luis Lerner and Nikole Flax, the information on five other public employees who were identified for their possible involvement in the scandal was lost.
The IRS, a new NSA?
Nikole Flax is going to be in charge of the centralized office for the enforcement of the Inflation Reduction Act related to the IRS. She is the person who will lead the transformation of the tax agency.
But a transformation into what? At the moment, what we know is the number of new IRS employees (87,000), the budget allocated to it, and that a portion of the new employees must know how to "carry a firearm and be willing to use deadly force, if necessary."
Kristin Tate, an analyst with Young Americans for Liberty, has written an analysis in The Hill that warns what the future role of the IRS may be with its new powers. Tate considered that laws and institutions that were created for a particular purpose can later serve any new interest of the state at that time. According to Tate, "Combine the expansion of National Security Agency-style collection of data with a supercharged, super-staffed IRS and you get the worst of both worlds."
While a strengthened IRS will disproportionately burden middle and working class people, this represents only the tip of the iceberg. The massive expansion of the agency will also give it the ability to potentially target political "enemies."