Review & Outlook
IRS Email Jeopardy
The agency had a legal obligation to retain the records it lost.
The IRS is spinning a tale of bureaucratic
incompetence to explain the vanishing emails from former Tax Exempt
Organizations doyenne
Lois Lerner
and six other IRS employees. We have less faith by the minute
that there is an innocent explanation for this failure to cooperate with
Congress, but even if true it doesn't matter. The IRS was under a legal
obligation to retain the information because of a litigation hold.
In
2009 a pro-Israel group called Z Street applied to the IRS for
tax-exempt status. When the process was delayed, an IRS agent told the
group that its application was undergoing special review because "these
cases are being sent to a special unit in the D.C. office to determine
whether the organization's activities contradict the Administration's
public policies." In August 2010 Z Street sued the IRS on grounds that
this selective processing of its application amounted to viewpoint
discrimination.
Associated Press
Under the Federal Rules of Civil
Procedure and legal precedent, once the suit was filed the IRS was
required to preserve all evidence relevant to the
viewpoint-discrimination charge. That means that no matter what dog ate
Lois Lerner's hard drive or what the IRS habit was of recycling the
tapes used to back up its email records of taxpayer information, it had a
legal duty not to destroy the evidence in ongoing litigation.
In
private white-collar cases, companies facing a lawsuit routinely
operate under what is known as a "litigation hold," instructing
employees to affirmatively retain all documents related to the potential
litigation. A failure to do that and any resulting document loss
amounts to what is called "willful spoliation," or deliberate
destruction of evidence if any of the destroyed documents were
potentially relevant to the litigation.
At
the IRS, that requirement applied to all correspondence regarding Z
Street, as well as to information related to the vetting of conservative
groups whose applications for tax-exempt status were delayed during an
election season. Instead, and incredibly, the IRS cancelled its contract
with email-archiving firm Sonasoft shortly after Ms. Lerner's computer
"crash" in June 2011.
In the federal
District of Columbia circuit where Z Street's case is now pending, the
operating legal obligation is that "negligent or reckless spoliation of
evidence is an independent and actionable tort." In a 2011 case a D.C.
district court also noted that "Once a party reasonably anticipates
litigation, it must suspend its routine document retention/destruction
policy and put in place a 'litigation hold' to ensure the preservation
of relevant documents."
The
government's duty is equally pressing. "When the United States comes
into court as a party in a civil suit, it is subject to the Federal
Rules of Civil Procedure as any other litigant," the Court of Federal
Claims ruled in 2007. The responsibility to preserve evidence should
have been a topic of conversation between the IRS chief counsel's office
and the Justice Department lawyers assigned to handle the Z Street
case.
As it happens, the IRS also had a
duty to notify Congress if it learned that discoverable evidence had
been lost or destroyed. We now know that the IRS has been aware of Lois
Lerner's lost emails since at least February, but IRS Commissioner
John Koskinen
failed to mention this in his congressional testimony on March
26, saying instead that the IRS was fully cooperating with congressional
requests.
Since the email destruction
story broke, the IRS has pushed the narrative that losing or recycling
emails was no big deal for the agency that wields the government's
fearsome taxing power. The agency isn't nearly as cavalier about the
responsibilities of groups whose tax status it handles.
One
tax-exempt group represented by Washington lawyer
Cleta Mitchell
had a policy of retaining documents for one year. But under a
deal insisted upon by the IRS, the group had to retain correspondence
such as email for three years and permanently for "legal or important
matters," or it risked losing its tax-exempt status.
So
much for the IRS living by its own rules, and on Tuesday at a House
Oversight and Government Reform hearing we learned of another IRS legal
failure. Archivist of the United States
David Ferriero
said the IRS "did not follow the law" when it failed to report
the loss of Lois Lerner's emails. All federal agencies are "required to
notify us when they realize they have a problem that could be
destruction or disposal, unauthorized disposal" of federal records, he
said.
Attorney General
Eric Holder
won't name a special prosecutor, but there's still plenty of room
for the judge in the Z Street case to force the IRS to explain and
answer for its "willful spoliation" of email evidence.
--
Lori Lowenthal Marcus
U.S. correspondent
and content editor
Jewishpress.com
and content editor
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