A plot device in Charles Dickens’s “Bleak House†follows the interminable case of Jarndyce v. Jarndyce through the English Court of Chancery. The litigation winds on for years until, finally, the costs of litigating the case have consumed the entire estate, leaving nothing for the heirs.
A report released on Tuesday by the Treasury Inspector General for Tax Administration on a scandal at the Internal Revenue Service surrounding the processing of tax-exempt applications from conservative groups, while decidedly less enthralling than Dickens, shows that the agency has inherited the mantle of indefinite detention from those English courts.
As I suggested on Monday, the main story here is one of incompetence, not conspiracy.
Government investigative reports are most damning in the detail, not the sound bite. Some 80 percent of the sample of applications studied in the report were not resolved within a year. Of the 296 cases reviewed, 160 were still open as of December 2012, with delays running 206 to 1,138 days. Some of those open cases are nearly as old as my 4-year-old daughter, Penelope, who has learned to speak, read, write, count, walk, run, skip, jump and swim in that time. When it comes to dawdling, however, even she cannot match the I.R.S.
The causes of delay are soul-crushingly mundane. The I.R.S. unit in Cincinnati responsible for making determinations of tax-exempt status had trouble getting guidance from the unit in Washington that is supposed to give technical advice on how to apply the law.
In October 2010, Cincinnati asked Washington if it could use a template letter for requests for information from groups. Washington decided that because different cases had different issues, a template was not appropriate. Cincinnati decided not to work on any cases until it received further guidance from Washington. Washington did not realize this, and at the end of March 2011, told Cincinnati to continue processing cases instead of waiting for guidance.
It goes on. In June 2011, Cincinnati again asked Washington for guidance to ensure consistency in how the cases were handled. In September 2011, Washington began the world’s slowest “triage†of the cases. Washington eventually provided more guidance, which Cincinnati explained was “too lawyerly†to be useful. In December 2011, Cincinnati finally assigned the cases to a team of specialists.
Delay was then coupled with overreaching. Those employees sent requests for additional information to applicants in January 2012. These overbroad requests led to complaints from Tea Party groups, and work ceased again.
Not until May 2012, when the headquarters in Washington stepped in and flew people to Cincinnati to work on the cases with Cincinnati staff members, did efforts to process the cases begin in earnest.
The report places significant blame for the delays on an absence of guidance and supervision from above. It is true that the task was a challenging one, given the ambiguity of the relevant statutory language and regulations. But two years is simply too long for our legal system to take in processing urgent questions about how political campaigns are financed.
Long delays are evidence of ineptitude and a reluctance to tackle difficult issues, not evidence of a political conspiracy. It may be the case that a couple of I.R.S. employees went rogue, as the acting I.R.S. commissioner, Steven T. Miller, suggested on Wednesday before he was ousted from the job.
Aggressive investigation of those individuals may be appropriate. But firing Mr. Miller, as President Obama did on Wednesday, is mere tokenism. The witch hunt obscures the institutional failures that Congress could actually correct.
The publication of “Bleak House†helped spur legal changes in England. Perhaps this I.R.S. scandal will do the same.
Victor Fleischer is a professor at the University of Colorado Law School, where he teaches partnership tax, tax policy and deals. Twitter: @vicfleischer
