IRS No Stranger to High-Profile Scandals Involving Presidents, Civil Rights Leaders, Religious Groups

IRS has scandals touching presidents, civil rights leaders, religious groups.

May 14, 2013, 4:17 PM

May 15, 2013 -- intro: President Obama said he didn't find out about the Internal Revenue Service targeting the tax-exempt status of conservative political groups until media outlets started reporting it on May 10. He demanded accountability and said he wanted to see an internal IRS investigation.

Obama may have had nothing to do with this latest IRS fire storm, but the IRS is no stranger to high-profile scandals involving presidents, civil rights activists and religious organizations.

quicklist:1title: FDR Imposes Audits on Andrew Mellontext:Although many presidents have used the IRS to ease the fulfillment of their political agendas, President Franklin D. Roosevelt may have been the trailblazer of strategic IRS investigations.

FDR focused his efforts on derailing a slew of perceived opponents, including Andrew Mellon, who was the secretary of Treasury under President Hoover. In the Roosevelt administration, Mellon was subjected to intense income tax audits, and endured a two-year civil action lawsuit, which was referred to at the time as the "Mellon Tax Trial."

Mellon claimed a $139,000 refund on his 1931 income tax and insisted that he had properly paid all of the taxes he legally owed the government. The IRS insisted Mellon owed the government $3,089,000 in taxes for the 1931 fiscal year, and called for a detailed overview of Mellon's financial assets.

Mellon was eventually exonerated several months after his death.

quicklist:2title: IRS Audits Martin Luther King Jr.text: Few would peg civil rights leader Martin Luther King Jr. as a felon. But in February 1960, the Alabama grand jury issued an arrest warrant for King on two counts of felony perjury for fraudulent tax returns in 1956 and 1960.

The state of Alabama audited King's tax returns in January, claiming that he owed more than $1,700 in state taxes and had received unreported funds from the Montgomery Improvement Association and the Southern Christian Leadership Conference.

A group of King's supporters rallied together to create the Committee to Defend Martin Luther King and the Struggle for Freedom in the South. This committee issued a press release rebuking the charges, and denying the state's estimation of King's supposed $45,000 income.

"The officials of Alabama reached their fantastic figure by the shoddy device of adding to King's income sums spent on transportation, hotels and other expenses in connection with his extensive travels on behalf of civil rights," the press release stated.

King testified in his own defense when the case went to trial in May 1960, revealing that the tax auditor had told King he was under pressure from higher-ranking officials to find some kind of problem with the tax returns. The all-white jury found King not guilty.

quicklist:3title: John F. Kennedy's Ideological Organizations Projecttext:One of the Kennedy administration's better-kept secrets was the Ideological Organizations Project, which used the IRS to target conservative groups' tax exemption status in order to halt their funding.

Labor organizer Victor Reuther urged Robert F. Kennedy, who was attorney general at the time, to suppress the rise of conservative groups around the country in a memorandum addressed to the entire Kennedy administration and "certain sympathetic senators and congressmen." The 24-page memo contained various plans, including stifling the flow of funds to conservative organizations by way of IRS investigations in hopes of finding a reason to remove the groups' tax exemption status.

One of the major targets was the John Birch Society as described by the late historian John A. Andrew III in his book "Power to Destroy: The Political Uses of the IRS from Kennedy to Nixon." This conservative group was known for supporting limited government and anti-communist advocacy, and was described in the Reuther memo as having "millions of dollars at its disposal."

These investigations were largely unsuccessful, as many of the conservative groups continued to operate and continue to exist today.

quicklist:4title: IRS Sued With Catholic Churchtext:The Catholic Church and the IRS may serve different purposes, but a 1988 lawsuit brought the two groups together in defense of their operations.

In United States Catholic Conference v. Abortion Rights Mobilization, a group of anti-abortion activist groups served the Catholic Church, the IRS and the Treasury Department with a lawsuit in an attempt to revoke the church's tax-exempt status. The groups claimed that the church's tax-exempt status gave it an unconstitutional advantage to support one side of the political debate on abortion.

These organizations maintained that the church "engaged in a persistent and regular pattern of intervening in elections nationwide in favor of candidates who support the church's position on abortion and in opposition to candidates with opposing views," which they argued put abortion rights organizations at a competitive disadvantage

The secretary of the Treasury and the commissioner of the IRS were left as the sole defendants for the case when it reached the Supreme Court. The IRS code that came under scrutiny exempted organizations from paying income tax if they were organized and operated exclusively for religious purposes.

Ultimately, the court ruled in favor of the church and the rest of the defendants by ruling that the abortion rights activists could not be considered competitors of the church, because their activities did not directly compete with the church.

quicklist:5title:Nixon and the IRS Come Full Circletext:The Nixon administration had its share of high-profile scandals, the IRS was along for the ride.

During the Senate's Watergate Hearing, White House Counsel at the time John Dean mentioned "Nixon's Enemies List." The list included various public officials and journalists who President Nixon believed stood in the way of his administration. According to Dean, Nixon planned to target these individuals with IRS audits.

Dean explained the purpose of the list in more detail in a memo he issued to Assistant to White House Chief of Staff Lawrence Higby:

"This memorandum addresses the matter of how we can maximize the fact of our incumbency in dealing with persons known to be active in their opposition to our administration; stated a bit more bluntly -- how we can use the available federal machinery to screw our political enemies."

Unfortunately for Nixon, his plans came full circle when the House of Representatives pointed out his own tax evasion, citing his tax violations as one of the articles for his impeachment.

"He has, acting personally and through his subordinates and agents, endeavored to obtain from the Internal Revenue Service, in violation of the constitutional rights of citizens, confidential information contained in income tax returns for the purpose not authorized by law, and to cause, in violation of the constitutional rights of citizens, income tax audits or other income tax investigations to be initiated or conducted in a discriminatory manner."