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Is Following the Law the Same as Being Ethical?

IRS Official Invokes Ethical Legalism as a Defense

A question I got from my students all the time is if I follow all the laws doesn’t that mean I have acted ethically? I explain there is a difference between following the laws and making ethical decisions because the laws can’t cover every situation we encounter in life. If we limit the guidance for our actions to legalities, we are likely to miss the ethical signs that impropriety awaits us when the rules do not address a particular matter.

A perfect case in point is Lois Lerner, the IRS official whose unit is at the center of the investigation into alleged Tea Party targeting and other discriminatory treatment against certain groups and individuals with respect to the application of IRS regulations including nonprofit conservative groups applying for 501 (c) (4) tax exempt status.

Recently, Lerner was placed on administrative leave and Ken Corbin was named acting director of exempt organizations during Lerner's leave. He is currently deputy director of submission processing in the wage and investment division.  The reason for Lerner’s removal can be seen in how she responded to a Congressional investigation.

On April 30, 2013, Lerner and seven IRS colleagues spent six-hours being interviewed, on a bipartisan basis, by House Oversight & Government Reform Committee Subcommittee staff. That interview covered, among other topics, how the IRS determines which groups to review, what actions are taken in connection with the IRS reviews, and how the laws and regulations are used to examine those groups. Lerner failed to disclose the internal controversy over the search terms used by the Cincinnati office to identify 501(c) (4) groups for further review, the actions taken by that office in reviewing the identified groups, the investigation and imminent findings by the Treasury Department Inspector General for Tax Administration (TIGTA); and TIGTA’s conclusion that the IRS had used inappropriate criteria to target Tea Party and other conservative groups. Ms. Lerner also failed to disclose that she was fully aware of these issues as early as June 2011, and, according to TIGTA, had been personally involved in reviewing questionable actions taken by the Cincinnati office.

Given the serious failure by Lerner to disclose to Subcommittee members key information on topics that the Subcommittee was investigating, the House lost confidence in her ability to fulfill her duties as Director of Exempt Organizations at the IRS. No doubt Lerner, who was responsible for overseeing 1.6 million tax-exempt organizations, made decisions and failed in her oversight in a way that erodes public trust and confidence in the IRS and its professional integrity.

In a hearing in May on the matter, Lerner invoked ethical legalism as a defense for her actions. Ethical legalism holds that as long as I follow the rules, I have acted ethically. "I have not done anything wrong. I have not broken any laws," she said. "I have not violated any IRS rules or regulations and I have not provided any false information to this or any other committee."

Other than this self-serving statement, Lerner invoked her Fifth Amendment right to not testify before Congress.

Lerner doesn’t get it that treating one group of people differently than another violates basic fairness standards. Groups that apply for exempt tax status should be treated the same and decisions whether to grant it should be based solely on whether each group meets the federal guidelines to be granted exempt status. To decide otherwise leads to failing the ethics test of treating equals, equally and unequals, unequally, a basic tenet of justice.

Blog posted by Steven Mintz, aka Ethics Sage, on June 12, 2013