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MSNBC "The Rachel Maddow Show" - Transcript - IRS Targeting Controversy


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MADDOW: Joining us now is Congressman Adam Schiff, Democrat of
California, who`s calling for an investigation into the IRS, to encompass
both the Obama administration and the previous administration.
Congressman Schiff, thank you very much for being with us tonight.

REP. ADAM SCHIFF (D), CALIFORNIA: Good to be with you, Rachel.

MADDOW: So, one of the reasons I wanted to talk to you tonight was
not just because what you`re calling for in response to this current
scandal, but also the way you`ve responded when a liberal church in your
district where an antiwar sermon had been given around the time of the `04
election, they got what they perceived to be a harassing letter from the

How did you view that at the time? And what happened when you
contacted the IRS on their behalf?

SCHIFF: Well, the concern I had at the time was here was a
progressive church that invited a former pastor in to give a sermon on war
issues and got more than a letter from the IRS, that got a full audit, very
expensive lengthy audit by the IRS. And this was at the same time, Rachel,
when other prominent churches were denying communion to the Democratic
candidates close to the election in a way to me telegraphed much more who
they thought ought to be the winners of the vote of their congregation much
more than anything was said in this progressive Pasadena congregation.
So, it made me wonder whether the IRS was selectively enforcing and
auditing churches based on the message during the Bush administration. I
raise this issue along with one of my Republican and libertarian colleagues
with the IRS. I sat down with the commissioner, we wrote to the GAO to
look at this to figure out were they being even handed? Were they
targeting just the progressive churches?

And basically, Rachel, I got nowhere. The IRS wasn`t willing to
divulge any information. Even in very generic form, how many churches were
they auditing? What were the results of those audits?

Even that things that wouldn`t give away information about particular
taxpayers, but they weren`t willing to be forthcoming. And it makes me
wonder whether this is a more systemic problem that was in the past
administration and also in the present administration.

MADDOW: How do you think that we should go about funding -- how do
you intend to go about finding, as a member of Congress, finding out if the
IRS is just screwing up or if they are grinding a political ax? What
thread do you pull to find that out?

SCHIFF: Well, it looks like the inspector general has done pretty
good work and may be we`ll want to ask the inspector general to broaden the
investigation that they`re doing. And certainly when the House Oversight
Committees look at the inspector general report, I think it may be
worthwhile for them to look more broadly at just the current allegations.
But I think you`re absolutely right. You know, this is a flawed system to
begin with.

Many of the social welfare organizations are a sham, but to the degree
that this is the current law, we have to make sure we have an IRS that
administers that law very even handedly in a politically neutral way. At
the same time, I`d love for us to see Congress take action in doing away
with this anonymous capability to donate to these organizations. I think
that would diminish the problem very considerably.

MADDOW: In terms of the social welfare groups and the even-handed
application of this sham part of the tax code, which is an awkward thing,
isn`t there a possibility that at the end of the day here, what we`re going
to end up with is an IRS that has been embarrassed by either screwing up or
making a very bad judgment call here? And they`re going to be more shy
than they already are from rightfully investigating groups that are abusing
the 501(c)(4) status? Should that just be changed? I mean, if Congress
can or by some other means so that there isn`t such a temptation with that
part of the tax code?

SCHIFF: Rachel, you`re absolutely right. The downside of all of this
is going to be that the IRS is going to be that much more reluctant to wade
into this to investigate any group for fear of claim of bias. But we
really need the IRS to be aggressive here because these provisions are
being distorted beyond any recognition of what they used to be about.
I mean, social welfare organizations used to actually be about social
welfare and not just for people in swing states or swing districts around
election time. So, we`ve gotten very far afield of the original purpose of
this code section, and I think Congress ought to move to either repeal it
or at least require disclosure to take away the incentive for these massive
organizations to be funneling anonymous contributions.

The worst thing that would come out of this, though, I think is
exactly what you`re saying. And that is even more freedom for abuse for
these 501(c)(4)s.

MADDOW: Congressman Adam Schiff, Democrat of California, thank you
for helping us through this tonight, sir. Appreciate you being here.

SCHIFF: You bet. Thank you.


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