DOJ Urged to Probe IRS's California Audit Scandal

WASHINGTON – The IRS, having released a "smoking gun” on accusations that it conducted political audits of Bill Clinton's adversaries, is now snared in a tax case hurting California's Republican nominee for governor. But with Clinton long gone, the California case is happening right under the nose of the administration of Republican President Bush. Furthermore, a Justice Department bureaucrat who is also a Democrat party activist is accused of improperly releasing the information under suspiciously partisan circumstances.

Landmark Legal Foundation (LLF) has filed a complaint with the Justice Department’s Office of Professional Responsibility. Foundation President Mark Levin believes there is good reason to suspect that that Justice was involved in a "dirty trick” resulting in publicly naming the taxpayers who, presumably on the advice of financial consultants, might have benefited from a tax break offered by the accounting firm KPMG LLP. The IRS says the tax shelter might be illegal.

One of those taxpayers listed was Bill Simon, the GOP candidate for governor of California. The government’s lead counsel in its court case against KPMG is Stuart D. Gibson, who just happens to be a Democrat party activist in Washington’s Virginia suburbs.

In an interview with NewsMax.com, Landmark’s Levin said, "We are asserting that this does violate Section 6103 of the internal Revenue Code.” The point at issue is why it was thought necessary or legal to reveal the names of individual taxpayers.

"William Simon Jr. is not a party to this complaint,” Levin said. "William Simon Jr. and his tax filings are not an issue in this complaint. And in fact, it is not even clear that William Simon entered into the tax shelter arrangement that the IRS is questioning with respect to KPMG.”

Simon, running close in opinion polls with the unpopular incumbent Democrat Gov. Gray Davis, was blindsided by the government’s publicizing his name in the tax case.

The court case resulted from a government motion to compel the production of information that KPMG did not want to give up. The accounting firm asserted privilege over the tax return information of several hundred of its clients "whether or not they’d entered into these tax shelters,” explained Levin.

The company provided a "privilege log” – the list – to the government, typical in cases of this kind. The government attached the list of about 300 names of individual taxpayers.

That information is supposed to be provided to the court under seal. Those names "of the taxpayers should have been redacted – blacked out – or aliases should have been provided instead of the actual names of the taxpayers,” Levin told NewsMax. "That’s how the IRS and the tax division usually litigates its cases.”

Is it coincidence that this rule apparently was broken in a case involving a serious Republican challenger for the governor’s chair in the nation’s most populous state? And is it coincidence that the lead counsel in the government’s case against KPMG just happens to be a Democrat activist?

These are questions to which Levin is demanding answers. He cites the head of the Justice Department’s tax division and the chief counsel at the IRS, who have said that this should not have been done.

However, given the suspicious political circumstances surrounding the breaking of this precedent, Levin believes the public is entitled to something more than an "Oops! Sorry!”

"To us, saying it shouldn’t have been done and that we’re going to take steps to make sure it doesn’t happen – you know, I have little faith.” Some have compared the mea culpa to saying, "I didn’t know the gun was loaded.”

"To me it’s the most outrageous breach of taxpayer confidentiality in my adult lifetime,” the LLF president told NewsMax. He is asking Justice's Office of Professional Responsibility to investigate attorney Stuart’s conduct in this case.

Parenthetically, the fact that Democrat activist Gibson is able to do something like this in GOP Attorney General John Ashcroft’s Justice Department recalls a point made recently by Conservative Caucus President Howard Phillips. He opined the civil service system, which protects career federal employees no matter which party is in power, flies in the face of accountability as envisioned by the nation’s Founding Fathers.

"All I’m allowed to tell you is that we have received the request,” OPR spokeswoman Dana Perino responded. She said she was not permitted to tell the media about any investigation or even whether any investigation would be undertaken.

NewsMax also attempted to interview Gibson. We got his answering machine and left our name and contact number. He promptly reported our call to Perino, who told us, "We don’t permit our attorneys who are under investigation to talk to the media.”

However, it appears someone did talk to a reporter at some point in this matter. Reporters don’t fall into stories of this kind by accident. Levin views "coincidences” in the matter with a jaundiced eye.

"What would cause a reporter to go to the courthouse to look at what is a mundane filing and to go to an attachment to the filing in search of the names of taxpayers?” he asked rhetorically.

"And I don’t know who was involved, who pointed the finger at this filing or whatever. But I can tell you these things just don’t happen.

"There aren’t reporters for these big newspapers just sitting over there on the civil side of the courthouse waiting for what are hundreds and hundreds of filings every day that have very little to do with newsworthy issues.”

Gov. Davis pounced on the information as soon as it was came out and has been pounding Simon for it, even though release of the names involved hapless taxpayers merely consulting investment advisers who manage their accounts. Nothing in the court documents accuses Simon with any intent to pull a fast one. Taxpayers trust their advisers all the time to steer them through the market thicket.

The California press has joined Davis in harassing Simon over this issue. But what Levin finds especially troubling is that "none of the big papers in California have raised any questions about what looks to us to be a very dirty trick. And we don’t know who was involved or what.

"And that’s one of the things we’ve asked OPR to look into. How did this happen? How did this information become public apart from the filing. And what’s the motivation behind all of this?”

Los Angeles Times columnist George Skelton is one of the few journalists to point out Davis' hypocrisy. The governor, after all, received $86,500 from KPMG, the accounting firm that recommended the tax shelters.

Levin adds that he doesn’t know Bill Simon, has never met him, doesn’t know the people around him, has never talked to his campaign people and doesn’t know who they are.

"But what’s amazing is there’s not a single investigative reporter in the state of California who has shown any interest in looking into how this occurred and the timing of it."

The Simon case follows hot on the heels of revelations of a smoking gun in IRS audits of former President Clinton’s critics.

A Bob Novak column Monday discussed a 1,500-page "document dump” answering years of Freedom of Information requests by the law firm Judicial Watch. The information showed that the IRS audited Judicial Watch (JW) after it had received complaining e-mails from the White House regarding JW’s lawsuits against corruption in the Clinton administration.

The uproar over information about Simon’s tax returns, however, is happening in a Republican administration, where a Democrat activist within the government allegedly has skirted the rules to the detriment of a Republican candidate.

After the Bush Administration's been in office over a year, there's still been no house cleaning at the IRS. Its still infested with holdover Clintonistas.

After assessing things in the Executive Branch shortly after taking the Oath of Office, President Bush was overheard saying,

"So many piles, so little time."

This is just another of a long string of things that is moving Bush closer to being a one term president. How much support can he get when he completely ignores issues that his most loyal voters hold to be important.

I recall some IRS peons were dismissed because they had become overly curious and had browsed through the tax returns of celebrities.

But they did *not* disclose that information to others, which is much worse and is what was done to the tax shelter investors. But these government malefactors were not peons, so:
nothing to see here folks, move along.

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