attention at the COINTELPRO target, resulting in an IRS investigation if no return was found for a particular year. The FBI documents suggest that the requests for Key Activists returns were not selective, and were not predicated upon any specific information suggesting the individual Key Activitists were delinquent in their tax obligations. The IRS response was also all inclusive, and constituted unknowing IRS cooperation in the COINTELPRO effort.42 2. An Example of the Use of Tax Information in a COINTELPRO Operation. One of the Key Activists who was the subject of a May 24, 1968, FBI request to IRS for 1966-1967 tax returns was a professor at a midwestern university who the Bureau anticipated would be a leader in demonstrations at the forthcoming Democratic National Convention in Chicago.43 A detailed analysis of the means by which the FBI obtained his returns and the CŎINTELPRO use the FBI was able to make of them demonstrates a key weakness of present disclosure statutes and regulations. The FBI presented to J. Walter Yeagley, Assistant Attorney General in the Internal Security Division, a form letter addressed to the Commissioner of the Internal Revenue Service" listing six Key Activists whose returns were "necessary in connection with an official 42 According to a June 30, 1969, IRS memorandum, there were then in progress 21 investigations or other administrative action involving individuals connected with "ideological organizations." Virtually all of these actions had resulted from FBI-originated requests for tax returns. See June 30, 1969, memorandum from Collection Division to Assistant Commissioner (Compliance); June 27, 1969, memo from Collection Division to Assistant Commissioner (Compliance); June 25, 1969, memo from Assistant Commissioner (Compliance) to all IRS Divisions; deposition of Donald Virdin at pp. 15-16; deposition of Leon Green, pp. 16-17. 43 The Committee is aware of the professor's identity but has withheld his name for privacy reasons. "Commissioner of Internal Revenue, Washington, D.C. MAY 31, 1968. necessary to DEAR MR. COMMISSIONER: In connection with an official matter before this office involving the internal security of the United States it is obtain the following described income tax returns and related data: This request is made pursuant to section 301.6103 (a), Title of CFR. Documents furnished in response to this request will be limited in use to the purpose for which they are requested and will under no condition be made public except to the extent that publicity necessarily results if they are used in litigation. Access to these documents, on a need-to-know basis, will be limited to those attorneys or employees who are actively engaged in the investigation or subsequent litigation. Persons having access to these documents will be cautioned as to the confidentiality of the information contained therein and of the penalty provisions of section 7213 of the Internal Revenue Code and section 1905, Title 18, U.S.C., regarding the unauthorized disclosure of such information. Sincerely, J. WALTER YEAGLEY, Assistant Attorney General. matter before this office (ie., the Internal Security Division) involving the internal security of the United States." Assistant Attorney General Yeagley signed the letter. Yeagley has stated that the FBI did not advise him that a purpose of the request was to use the tax information as a tool for taking disruptive action against the subjects, and that he was unaware that COINTELPRO any existed.4 program The FBI does not claim the contrary. Yeagley apparently did not inquire into the purpose of obtaining the return, stating that he generally assumed the purpose of such a request was to develop investigative leads.47 46 45 This letter was forwarded to the IRS, where it was determined that the regulatory criteria were satisfied since the letter recited that the returns were "necessary in connection with the official duties" of the Assistant Attorney General. IRS inquired no further into the specific purpose for which the returns were to be used, but relied upon the Assistant Attorney General's statement that the purpose met the regulatory criteria.48 The Assistant Attorney General, in turn, relied upon the FBI. The IRS furnished the returns. Upon receiving the returns of Professor X, the FBI forwarded them to its local office in the city where the professor taught, for examination for COINTELPRO potential." In examining the returns, the local office was acting pursuant to the memorandum establishing the Key Activist COINTELPRO program: The purpose of this program is to expose, disrupt, and other- The local office examined Professor X's returns and found some questionable deductions which "at the very least, provide a basis for questioning by IRS," and requested the authority of the FBI Director to call these questionable deductions to the attention of the local office of the IRS. The express purposes of doing so, according to the Airtel by which the request was made, were: 1. Due to the burden upon the taxpayer of proving deductions claimed, [Professor X] could be required to produce documentary evidence supporting his claims. This could prove to be both difficult and embarrassing particularly with respect to validating the claim for home maintenance deduc 45 The signed statement of Judge Yeagley is in the Committee files. 46 'Robert Shackleford and Bernard Rachner testimony, 9/15/75, pp. 12–30. 47 Statement of J. Walter Yeagley, September, 1975. 48 Donald O. Virdin testimony, 9/16/75, pp. 88-91. 49 50 Memorandum from FBI Headquarters to a Midwest City Field Office, 7/18/68. Memorandum from FBI Headquarters to various Field Offices, 5/10/68. tions when, in fact, he doubtless has only the usual type of 2. If [Professor X] is unable to substantiate his claims in 3. Most importantly, if IRS contact with [Professor X] can be arranged within the next two weeks their demands upon him may be a source of distraction during the critical period when he is engaged in meetings and plans for disruption of the Democratic National Convention. Any drain upon the time and concentration which [Professor X], a leading figure in Demcon planning, can bring to bear upon this activity can only accrue to the benefit of the Government and general public. [Emphasis added.] 51 The recommendation was approved, and the local office supplied the information to the local IRS office, but did not advise the IRS contact that the information came from a tax return the FBI had previously obtained from IRS.52 The FBI merely stated it "had reason to believe that Professor X had claimed deductions for contributions" to certain organizations which would not normally be deductible.53 As a result of the information the FBI furnished, IRS initiated an audit of Professor X's return. Because of IRS liberality in granting delays in audits to suit taxpayers' convenience, the audit of Professor X did not achieve the desired purpose of disrupting his planning for demonstrations at the Convention. The audit did result in the imposition of an additional $500 in tax liability for the two years in question, as a result the local FBI office deemed it a COINTELPRO success. While taxpayers should pay taxes which are due, the fact that taxes are due does not justify use of the tax laws to harrass demonstrators. B. Use of Tax Returns in the FBI Key Black Extremist Program The Key Black Extremist (KBE) Program was established on December 23, 1970, because of the perceived success of the Key Activist Program. The documentary history of the establishment of the Key Black Extremist Program and inclusion of requests for tax returns as a standard technique are contained in the Committee files and described briefly in the report on COINTELPRO. 51 Memorandum from Midwest City Field Office to FBI Headquarters, 8/1/68. 52 A signed statement dated 8/13/75 of the IRS Inspector who received Bureau information is in the Committee files. 53 Memorandum from FBI headquarters to Midwest City field office, 8/6/68. One apparent reason for not disclosing the source of the information was the injunction in the memorandum initiating the Key Activist COINTELPRO: "you are cautioned that the nature of this new endeavor is such that under no circumstances should the existence of the program be made known outside the Bureau. . . .” 54 Memoranum from Midwest City Field Office to FBI headquarters undated. According to the Committee staff's review of FBI files, the FBI requested the returns of at least 72 of the 90 designated Key Black Extremists. As in the case of the requests for Key Activists' returns, one of the FBI's purposes in obtaining returns of Key Black Extremists was to use the returns as weapons in its campaign to "neutralize" them. All the Key Black Extremist requests were made on the same forms as the Key Activist requests. There is no evidence the IRS inquired into the specific purpose of any of the requests. All were honored.55 C. Disclosure of Identity of Contributors to Ideological Organizations The IRS routinely receives from tax exempt organizations lists of their contributors either on tax returns or on exemption applications. The information is given to IRS in order to enable it to enforce the tax laws with respect to those organizations. The IRS also develops contributor lists of non-exempt organizations during audits, especially if there is reason to believe the contributors may be improperly deducting the contributions. These contributor lists are available to the FBI and other federal investigative agencies by simple request to the Internal Revenue Service, even in cases where those agencies could not legally obtain the information directly. 1. Dr. Martin Luther King and the Southern Christian Leadership Conference. One of the organizations the FBI designated a "Black Nationalist-Hate Type Organization" was the Southern Christian Leadership Conference.56 As part of an earlier intensive investigation of this organization and of its leader, Dr. Martin Luther King, the FBI, in 1964, obtained from the Internal Revenue Service "all available information" concerning Dr. King and the SCLC.57 This information included tax returns of both Dr. King and the SCLC as well as certain IRS investigative files. The FBI studied IRS audits and investigations of both Dr. King and the SCLC, and discussed with certain IRS employees future IRS action to check on Dr. King's and SCLC's compliance with the tax laws. The information received regarding Dr. King and SCLC was forwarded to the FBI Atlanta office "for further review and coordination with the investigation relating to Dr. King himself." 58 On April 14, 1964, the Atlanta office responded with a suggestion for disruptive action against SCLC.59 After noting that SCLC was tax exempt in the sense that it was not subject to income taxation (though contributions to it were not deductible on the returns of the donors), and that its enjoyment of this status required it to file a petition disclosing the names of contributors, 65 Donald D. Virdin testimony, 9/16/75, p. 89. 5 Memorandum from FBI Headquarters to various Field Offices, 8/25/67. 57 The returns and other information were obtained during the period prior to 1968 when the FBI was obtaining information directly from the IRS Intelligence Division. See memorandum from Baumgardner to W. C. Sullivan, 5/6/64. 58 Memorandum from Baumgardner to W. C. Sullivan, 3/25/64; memorandum from FBI Headquarters to Atlanta Field Office, 4/1/64. 'Memorandum from Atlanta Field Office to FBI Headquarters, 4/14/64. Although the suggestion (and other suggestions contained in the same letter) was a COINTELPRO-type suggestion, it was not so denominated by the FBI. the Atlanta office recommended that the following action be taken with respect to the contributors so disclosed: 60 It is believed that donors and creditors of SCLC present two important areas for counterintelligence activities. In regard to the donors it is suggested that official SCLC stationary bearing King's signature, copies of which are available to the Atlanta Office and will be furnished by separate communication to the Bureau Laboratory for reproduction purposes, be utilized in advising the donors that Internal Revenue Service is currently checking tax records of SCLC and that King through this phony correspondence wants to advise the donor insuring that he reported his gifts in accordance with Internal Revenue requirements so that he will not become involved in a tax investigation. It is believed such a letter of this type from SCLC may cause considerable concern and eliminate future contributions. From available information it is apparent that many of these contributors to SCLC are doing so in order to claim tax deductions and in order to be eligible for such deductions, the contribution is being made to the (privacy deletion-name of a church), which in turn is forwarded to King or the Southern Christian Leadership Conference.61 The suggestion was considered by FBI Headquarters and was categorized, along with some other suggestions as not appearing desirable and/or feasible for direct action 2. The Students for a Democratic Society. In the course of auditing would-be exempt organizations, the IRS will often seek to identify contributors to the organization in order to determine whether the contributors are deducting contributions. Under current disclosure regulations, the results of such audits, including the contributor lists generated in the course of the audit, are available to other federal agencies upon request. Thus, the potential use of IRS as a source of contributor lists is not limited to exempt organizations, such as SCLC. Moreover, such lists have in fact been obtained from the IRS. In 1968, the IRS was conducting an audit of the Students for a Democratic Society. The audit was initiated in New York, and was subsequently referred to the Chicago District of IRS. An FBI letter from Director, FBI, to SAC, Chicago, dated June 10, 1968, states: It is noted IRS is presently conducting an audit of SDS The IRS files do not reflect a specific request from the FBI for such an audit, but do reflect considerable input from the FBI in the form 60 It is not entirely clear from the Atlanta Office's letter whether it already had the contributor list or was recommending that it be obtained. The point is clarified by an internal memorandum of FBI Headquarters (Baumgardner to W. C. Sullivan, 5/6/64) in response to the Atlanta suggestion which notes: "We have already obtained all available information from IRS concerning King and the SCLC." 61 Memorandum from Atlanta Field Office to FBI Headquarters, 4/14/64, p. 8. 62 Memorandum from Baumgardner to W. C. Sullivan, 5/6/64, p. 3. 3 Contributions to non-exempt organizations are generally not deductible. |