Time for the IRS to come clean

A congressional oversight committee recently renewed its request for documents from an ethically suspect Internal Revenue Service, which ignores such requests with impunity. But this time, the Supreme Court has taken away the agency’s excuse for not cooperating. 

In 2014, the IRS began imposing the individual and employer mandates on 70 million Americans even though the Affordable Care Act expressly exempts them from those taxes. The IRS may impose the disputed taxes, the ACA explains, only “through an Exchange established by the State.” The IRS ignored that plain language and imposed those taxes on 70 million taxpayers in the 38 states that did not establish a health insurance Exchange.  

{mosads}This past June, the Supreme Court issued one of its worst decisions in recent memory. In King v. Burwell, the Court rewrote and expanded the ACA in order to save the IRS’s extra-legal taxes, and hundreds of billions of dollars of related spending.  

As Chief Justice John Roberts explained, “the context and structure of the Act compel us to depart from” what all nine justices agreed is “the most natural reading of the pertinent statutory phrase.” Ironically, after invoking the ACA’s broader context to justify ignoring its operative text, Roberts then ignored the many elements of the act’s context that flatly contradict his interpretation.  

Just as the IRS imposed never-legislated taxes and spending by regulation, the Court did so via judicial opinion. The result is that Americans are living under an illegitimate law, paying taxes and underwriting government spending that no Congress ever authorized.  

An important question remains, however. Congressional investigators found evidence suggesting that IRS officials imposed those taxes even though they understood that the ACA flatly denies them any authority to do so. Yet for four years, the IRS has been stonewalling Congress’ efforts to determine what agency officials knew.  

In 2012, the House’s oversight committee requested documents related to the IRS’s decision to expand the reach of these taxes. IRS officials provided no substantive documents.  

Under continued pressure, IRS officials allowed investigators to view certain documents “in camera.” Ironically, that means the investigators could read the documents, but take no notes and make no copies. It was in these documents that investigators nonetheless found evidence that IRS officials knew the ACA prohibited them from imposing the disputed taxes.  

The committee again asked the IRS to release the documents. IRS officials again refused.  

The committee invited IRS and Treasury officials to testify before Congress. The officials appeared, but failed to answer the committee’s questions.

The chairman subpoenaed the documents. The IRS ignored the subpoena. 

Earlier this year, an oversight subcommittee of the Senate Judiciary Committee requested those documents. IRS officials again refused.  

The subcommittee asked three IRS and Treasury officials to testify at an oversight hearing. They refused, leaving three empty chairs at the witness table.  

IRS and Treasury officials claimed they could not testify because the disputed taxes were the subject of ongoing litigation in King, which was then before the Supreme Court. Yet IRS and Treasury officials had previously appeared before Congress, and corresponded with Congress on this issue, while the litigation was ongoing.  

What changed? Perhaps, as King moved toward the highest court, the Obama administration feared that embarrassing revelations might influence the outcome. Sen. Richard Blumenthal (D-Conn.), noting the empty chairs, said it would have been “foolhardy” for IRS officials to appear. 

Now that the Court has ruled in the IRS’s favor, however, the agency no longer has any excuse for not honoring these requests.  

Indeed, the chairman of that Senate subcommittee, presidential candidate Ted Cruz (R-Texas), renewed that request on Sept. 21. In a letter to Treasury Secretary Jacob Lew, Cruz asked the administration to deliver those documents to Congress no later than Tuesday, September 29.  

Whether the IRS thinks Cruz’s request is a waste of time makes no difference. The IRS is a creature of Congress, and is responsible to it. The chairman of a congressional oversight committee with jurisdiction over the IRS has demanded that the agency produce documents. And since the Supreme Court ruled this was never a question the executive branch could resolve, the administration cannot claim executive privilege on this question. The agency should comply. 

Indeed, Congress should take a cue from the subcommittee’s Democratic Senators. At the empty-chair hearing, Blumenthal said, “I would strongly urge that this committee revisit the potential testimony from these witnesses on another occasion.” Sen. Sheldon Whitehouse (D-R.I.) agreed, “The chairman should consider having the [missing] witnesses return. I think it could be a constructive hearing.”

Cannon is director of health policy studies at the Cato Institute and “the intellectual father” of King v. Burwell (Modern Healthcare).