For the moment my faith in our system of laws has been restored by, of all things, a non-profit tax case.
When scalawags grossly abused a public charity to enrich themselves, their legal defense included Borking and swiftboating the IRS--two depressingly effective techniques borrowed from politicians.
But the U.S. Court of Federal Claims would have none of it. When the miscreants misstated the facts and omitted and distorted others, and when their interpretation of settled law strained it beyond recognition, the court said in effect, "You can't get away with that stuff here." It was a refreshing departure from the daily news.
Decided in April, the case, New Dynamics Foundation v. U.S., involved a donor-advised fund's challenge to the Internal Revenue Service's refusal to grant it a tax exemption. In an elegantly written opinion that opened with a quotation from Charles Dickens' "Martin Chuzzlewit"--"charity begins at home, and justice begins next door"--and closed with another from John Adams--"facts are stubborn things"--the court agreed with the IRS. But in doing so it not only laid down the law of donor-advised funds, it also reminded us how the overall system of government is supposed to work.
When the dutiful public servants of the IRS first encountered the New Dynamics Foundation, they smelled a rat. The rogues behind the enterprise filled out paperwork to make their new charity sound like a Mother Teresa spin-off.
But at the same time, they were touting their new charity as a way for donors to warehouse wealth tax-free with tax-deductible contributions. The record was full of blatant distortions of the law, including the promise that donors could use donated funds to pay their children for volunteer work at a hospital. They bragged about one donor, a doctor, who got the charity to buy him a $147,000 motor home. The list goes on, and it's impressive for the mendacity it details.
When the IRS called them out, these guys didn't shrink back into the slime from whence they came. They took the offensive. They accused the IRS of having a vendetta against their founder. They demanded their right to an appeal. They admitted a few missteps, but claimed a "Road-to-Damascus" conversion that made everything right. Then they submitted evidence proving the contrary. Every step of the way they were allowed to make their claims and were even given ample opportunities to settle the dispute.
Finally, nearly 10 years after the IRS first smelled the rat, the dutiful public servants of the court did their jobs. In a 28-page decision, the court carefully reviewed the record and applied the law. Within those pages the court was able to do what is nearly impossible in most public discourse today--it took up every claim in order, assessed its validity and passed judgment on it without being shouted down by partisans using disingenuous and even malevolent argument to distract from truth.
Without having to deal with such background noise, the court was able to discount all of the New Dynamics Foundation's baloney. For example, in responding to the Foundation's claim of a "Road-to-Damascus" conversion to compliance with the law, the court blandly, but devastatingly, acknowledged that, "such radical conversions, of course, do occur in life--but not on this record."
And so it went. Each specious argument and outrageous distortion fell of its own weight before public servants with knowledge, training and respect for the law and their own jobs.
Now we will have to see whether another dutiful public servant, a U.S. attorney somewhere, will use the court's clear-eyed view of the facts to support a criminal indictment for tax fraud. And I will enjoy my restored faith in our system of laws, at least until I read tomorrow's paper.