NC congressman wants to strip IRS of ‘guns and badges’

Two North Carolina congressmen are going to the front lines of an ongoing fight between the IRS and some Republicans in the House of Representatives, many of whom still want accountability for alleged IRS scrutiny specifically targeting conservative nonprofit groups.

A bill introduced Thursday by U.S. Rep. George Holding, R-Raleigh, would “take the guns and badges away from the IRS,” he said. Holding’s bill proposes reassigning the IRS’ criminal investigation agents to the U.S. Treasury.

“These are the IRS agents that carry guns and badges, and they’re very skilled. . . . But the IRS itself is a failed bureaucracy,” Holding said in an interview with McClatchy on Tuesday.

IRS “CI” agents serve a niche role in law enforcement. The criminal investigators have jurisdiction over crimes such as money laundering, terrorism financing and U.S. tax-evasion schemes often done through offshore foreign accounts.

The Internal Revenue Service says it took on more than 3,850 criminal investigations between October 2014 and October 2015. More than 80 percent of the people charged with tax-related crimes were sent to prison during that period, according to a recent annual IRS-CI report.

That report also includes details about several high-profile IRS criminal cases prosecuted in North Carolina over the past year. In one case, a court in Winston-Salem in September convicted a North Carolina businessman of tax-related crimes, ordering him to pay $7.6 million in restitution and sentencing him 32 months in prison.

Other cases from North Carolina in 2015 include a conviction of former Bank of America executive on investment contract fraud charges, a Harnett County man convicted on money laundering and drug trafficking charges, and a land developer ordered to pay $18.3 million in restitution after he was convicted with five other people in a bank loan scheme. In those cases and others, tax-related convictions sent those people to federal prison.

Holding says it’s not the work of IRS criminal investigation agents he’s worried about but rather the IRS’ overall operations. He mentioned one of the cases that sparked outrage from Republicans about two years ago.

A former U.S. attorney in North Carolina, Holding said this week the work of IRS-CI agents is valuable. When he served as a prosecutor, he said, he always wanted one of the specialized agents working the case.

His suggestion to move the agents from the IRS to the Treasury department would create a new entity called the “Bureau of Criminal Investigation.” The IRS is already under the fold of the Treasury, as are other agencies like the U.S. Mint, which makes coins.

Western North Carolina U.S. Rep. Mark Meadows – member of the staunchly conservatively right-wing House Freedom Caucus – has also joined the fray, pushing for impeachment-style hearings in Washington to grill IRS Commissioner John Koskinen, according to news reports this week from The Hill and Politico.

Meadows and fellow Freedom Caucus founder U.S. Rep. Jim Jordan, R-Ohio, reportedly gave Republican House Speaker Paul Ryan an ultimatum in recent weeks to push the issue with Koskinen. Meadows’ office could not be reached Thursday by McClatchy.

Meadows’ efforts and Holding’s IRS bill are two of the latest shows of Republican animosity toward the government’s tax collection bureau.

Other political moves have included bills to block the IRS from rehiring employees previously fired for misconduct and to freeze employee bonuses at the IRS until the agency meets new proposed customer service standards. North Carolina’s senior U.S. Sen. Richard Burr has also introduced legislation recently to address what he’s called “unfair” IRS practices.

A Treasury inspector general report made public last year showed that more than one in 10 rehired IRS employees had previously left the agency with performance or conduct issues on their record.

Democrats have criticized Republicans’ motivations against the IRS and Koskinen, saying there was no intentional wrongdoing at the agency related to scrutiny of tax exempt organizations. Democratic leaders also have blamed steep budget cuts under a Republican-controlled Congress for the IRS’ trouble with customer service.

Still, Holding says the IRS needs major reform.

“They shouldn’t be entrusted with a law enforcement agency within them,” Holding said. “This is the first substantive step toward dismantling the IRS.”

This story was originally published May 19, 2016 at 12:51 PM with the headline "NC congressman wants to strip IRS of ‘guns and badges’."