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George Knapp: Let’s hear it for the IRS

<p>George Knapp</p>

George Knapp

Last week, an IRS agent I know joked that he and his tax-collecting colleagues are hiding in basements and wearing fake glasses and mustaches these days because of the outpouring of anger directed at his employer. My suggestion was that maybe he and other IRS agents should start telling people they work for the ATF, which is slightly less despised. He didn’t laugh.

OK, someone really screwed up. The IRS should never have decided to primarily target conservative-sounding organizations for extra scrutiny. It is flat-out unfair and might even be illegal. But it is a mistake to blow this out of proportion or to disregard the other important work the IRS has done, especially in Las Vegas. I know it sounds ridiculous to defend the IRS since, face it, no one likes paying taxes, and absolutely no one enjoys being queried by IRS agents about anything.

To start with, though, the IRS is supposed to ask questions about organizations that are applying for tax-exempt status. I wish they would do more of it. Most of the organizations that received extra scrutiny deserved it, in my opinion. In fact, why are blatantly partisan groups of any political persuasion allowed to act as if their work is somehow in the public interest and should therefore be tax-exempt? The 501(c)4 groups are convenient tools for fat cats and corporate big shots to funnel money that is used to affect the outcome of elections, both local and national, and to leave no fingerprints on the donations.

Why is this tax-exempt at all?

Some of the groups that were targeted made no secret of their intentions, and a few of them even lied to the IRS about what they planned to do — or did — with the anonymously donated money, which was to try their best to beat the crap out of some political candidate they didn’t like. This is somehow a noble and beneficial process that shouldn’t be taxed? Why?

Second, the IRS has not exclusively targeted conservative groups. It has also gone after liberal groups in the same way, though it is clear from recent revelations that its zeal was focused primarily on Tea Party types. This focus is clearly unfair, but if it had been applied in an evenhanded way, regardless of political leanings, then I would say it is not only appropriate but should be mandatory.

When I think of the IRS in Las Vegas, one image comes to mind — that of slick-haired, bejewelled bankruptcy lawyer Randolph Goldberg, his gold cuff links flashing out of the TV screen as yet another of his ubiquitous commercials appears on the local airwaves. Goldberg is a disgrace for the legal profession, and every lawyer in town knows it. Complaints about his assembly-line bankruptcy factory have been piling up for years, but no one did anything about them. I found an article from the Las Vegas Sun that mentioned serious complaints fielded against Goldberg’s sleazy operation back in 2005, but the Nevada Bar declined to take action. The clients who lost everything due to Goldberg’s shoddy work could not get other attorneys to help them sue because no local lawyers had the stomach to take him on, even though we now know he was forging his clients’ signatures, commingling his money with theirs and that many of the clients lost everything.

If not for complaints forwarded to federal authorities by U.S. bankruptcy judges Mike Nakagawa and Bruce Markell, Goldberg might still be in business. Those complaints led to an investigation by IRS agents, and last week the case culminated with Goldberg being sentenced to two years in prison and being ordered to pay $740,000 in restitution. Nevada sees twice as many complaints about lawyers as the national average, and yet very few attorneys are ever disciplined here. It took the IRS to finally shut this guy down because Goldberg was cocky enough to think he could hide huge piles of the income he earned by destroying the lives of his clients. Chances are, when he gets out of prison, he will have no problem getting his license reinstated so he can restart his practice.

And any vice cop in town will tell you that it is very tough to make a case against high-rolling pimps, the kind who beat the crap out of the girls who work for them, or who peddle the flesh of underage teens on the streets, or the ones who operate escort services. The Las Vegas IRS has been working hand-in-hand with local police to nail some of the most egregious panderers in town. The same is true for major drug dealers who have managed to escape being caught with contraband but have been nabbed by the IRS because they could not resist spending some of their illicit dough.

The case against Leon Benzer and others accused in the massive HOA political-corruption scandal has been strengthened because the IRS was able to follow a lot of the money. The Medical Mafia scandal fell far short of what the FBI had in mind, in that some of the major targets were never charged, but three of the men who were involved in the multimillion dollar rip-off were nailed with help from the IRS, and others who escaped charges at least stopped pulling the same scam. Another IRS case with local connections is still pending but has already paid off for the public. An online businessman in Utah is accused of stealing hundreds of millions of dollars from unsuspecting folks — most of them senior citizens — and while he has not yet been convicted, his scheme is mostly shut down.

Lest we forget, local IRS agents were among those who put their lives on the line helping to run the mob out of Las Vegas casinos and put away some of the most feared Mafia bosses in the country. Eliminating mob control of the Las Vegas casino industry made it possible for legitimate companies to invest and expand here.

The decision by some in the IRS to ask tougher questions of conservative groups who were seeking tax-exempt status was clearly wrong — not because such questions are illegal, but because they were not asked of all groups looking for tax breaks. Frankly, I don’t see how any of them deserve it. Nor do I believe that it was merely a few rogue agents working in one office who were part of this policy. But this is no reason to bash the entire agency or for local IRS agents to hide their faces or to back off from any of the important cases they are pursuing at this very moment.

I suspect that the furor over the IRS will continue throughout the summer, or maybe forever, because conservatives hate President Obama more than they hate Satan himself, and they will not rest until someone uncovers the secret videotape which shows Obama personally ordering IRS honchos to target conservative groups. Maybe the same tape will show him laughing about his phony birth certificate while ordering the Defense Department and CIA to let everyone die in Benghazi.

GEORGE KNAPP is a Peabody Award-winning investigative reporter for KLAS Channel 8.