IRS’s Reputation Taxed by Scandal

 IRSs Reputation Taxed by Scandal

The PR Verdict: “F” (Full Fiasco) for the IRS.

The United States Internal Revenue Service has never been the most popular government entity, but lately its reputation has taken a severe shellacking. The first problem came to light a few months ago, when it was revealed that the IRS had been targeting the Tea Party and other conservative political groups, putting their finances under close scrutiny. But on the PR embarrassment scale, that was nothing compared to the Star Trek video.

As the IRS finds itself under close scrutiny, a series of mortifying gaffes are now on public display. An astounding $50 million, all taxpayer money, was spent during 2010 and 2012 on 225 IRS conferences. The expenditures included training – or, rather, a rah-rah ha-ha training video with a Star Trek theme. And line dancing classes at the conferences. And baseball tickets, and stays in presidential suites for conference attendees, and a “happiness expert” who cost over $11,000. The list goes on and, unfortunately, on.

The congressional hearings investigating the conservative targeting are the equivalent of an audit for the IRS, and as with anyone else, the unpleasant receipts are being discovered. Daniel Werfel, the new IRS head, said he took the job because he thought he could be helpful. “The IRS is an agency in need right now,” he said in an understatement, in between apologies and explanations that can’t begin to defray the damage.

THE PR VERDICT: “F” (Full Fiasco) for the IRS. The government entity will have a long road of recovery after shooting itself in the foot.

THE PR TAKEAWAY: Think before you line dance – or make a video of it. The scrutiny of conservative groups is now being blamed on orders “from Washington”; if true, the resulting issues were unavoidable. But the silly, expensive training videos, the line dancing, the happiness expert? Someone along the way must have asked what this would look like to the outside world, or should have. In PR, an ounce of prevention is far more effective than ten pounds of damage control. At this point, confession and sincere apologies won’t make a dent in the IRS’s accounts.

To see the IRS Star Trek video, click here.

The IRS Scandal: A Nixonian Approach?

Screen Shot 2013 05 22 at 8.03.19 AM The IRS Scandal: A Nixonian Approach? The Obama administration continues to do itself no favors in the controversy involving the Internal Revenue Service. The scandal has already prompted the resignation of Acting IRS Chief Steven Miller and spawned both Congressional hearings and a Justice Department criminal inquiry.

In this week’s installment, administration officials offered contradictory information about when they found out the IRS was targeting politically conservative groups for additional scrutiny. On Sunday, a White House representative told the Sunday talk shows the issue hit the presidential radar the previous week.  A day later, however, White House spokesman Jay Carney revealed that several senior aides, including President Obama’s chief of staff and a senior White House attorney, knew about the matter more than a month ago, but chose not to tell the president.  Certain senior U.S. Treasury officials knew about IRS activities last year. IRS official Lois Lerner shed no additional light in her testimony before Congress: she pleaded the Fifth Amendment, invoking her right against self-incrimination.

Fair or not, the progression of events has begun to draw comparisons to another political era: that of Richard “Tricky Dick” Nixon. Prior to the Watergate scandal that ultimately swamped his presidency, Nixon wielded the IRS as a bludgeon against those on his “enemies list”. It was also during the congressional inquiry into Watergate that Senator Howard Baker, a Tennessee Republican, posed the now famous political question: What did the President know, and when did he know it? When it comes to the current scandal, the answer to that question seems far from clear.

THE PR VERDICT:  “F” (Full Fiasco) for the Obama administration. At best, the administration looks confused and inept; at worst, bullying and devious.

THE PR TAKEAWAY:  The buck always stops at the top. A school of thought exists wherein keeping bad news from senior management is believed to provide protection from fallout. That’s the wrong approach. Whether president or CEO, an organization’s leader is always held accountable for its behavior. When things go awry, the best plan is to move quickly to apprise leadership, sort out the facts, take remedial action if necessary and be prepared to speak knowledgeably about the matter if needed. Anything less is asking for trouble.

The PRV Report Card: Winners & Losers

Screen Shot 2013 05 16 at 7.16.52 PM 150x150 The PRV Report Card: Winners & LosersPR Winner: “A” (PR Perfect) for the Republicans who have turned up the heat on the Obama’s second term. If true that life comes at you in threes, then this week was the triumvirate of PR gifts. Obama found himself on the back foot regarding the IRS/ Tea Party scandal, the Justice Department/AP phone record snooping, and finally the ongoing thorn in the side of the Administration that is Benghazi. No matter the merits, the concerted drum beating has been an effective PR attack. Objective one: change the news agenda and place the Administration on the defensive, unable to talk about what it wants to talk about. For this week at least, mission accomplished.

Screen Shot 2013 05 16 at 7.17.58 PM 150x150 The PRV Report Card: Winners & LosersPR Loser: “F” (Full Fiasco) to Barbara Walters and the media reaction to her announcement that she is stepping down. In what will be her long goodbye to broadcasting, America’s famous interviewer announced that she would be phasing herself out during a series of programmed appearances and TV specials over the next twelve months. Online and columnist reactions to her career were astonishingly scathing. Slammed as lightweight, fawning and inconsequential the reaction could have only made unhappy bedtime reading for Babs’ PR team. A couple more glowing endorsements from journalists who think Babs paved the way for other women might have given the coverage some more balance. For Babs and her team, this might be a tough twelve months.

Screen Shot 2013 05 16 at 7.19.58 PM 150x150 The PRV Report Card: Winners & LosersTHE PRV “THERE’S NO ‘THERE’ THERE” AWARD TO Kylie Busutti, a former Victoria’s Secret model currently touting her book I’m No Angel. In her sad tale, Ms. Busutti recounts being shocked – shocked! – to find out that models are required to be absurdly thin and that Victoria’s Secret apparel is sexy, apparently too sexy for Busutti’s Christian faith. We’re not sure what deserted island this young woman grew up on, but these are hardly revelations. There is something rank, too, about claiming a moral high ground that wouldn’t let her continue in such a tawdry profession but does, apparently, permit trying to capitalize on it.

Crime and Punishment – and Payment

 Crime and Punishment   and Payment

The PR Verdict: “B” (Good Show) for the US Government. (Pictured: Bank fraud whistle blower Brad Birkenfeld)

Who knew that whistle blowing could be so profitable? Bradley Birkenfeld, a former private banker for one of the leading Swiss banks, just landed a cool $104 million as his reward for ratting on his former employer. Big headlines yesterday, but as the news broke, Bradley wasn’t photographed in a glamourous nightspot celebrating his new win. He was in New Hampshire finishing his 40-month jail term in home confinement.

His evidence relating to tax evasion and non-declaration of foreign accounts has netted the US government over $5 billion, but that wasn’t enough to protect him from criminal charges. Prosecutors were unhappy with his previously withholding information about his own clients at the bank, which earned him 40 months in jail.

On the face of it, this seems a perverse result. But under existing legislation the Internal Revenue Service can pay whistleblower awards of up to 30 percent of the collected proceeds. Birkenfeld’s payment is being touted as proof that the US government is committed to rewarding courageous whistle blowers. The PR sting in the message is that ratting on others doesn’t give you immunity; not such a lottery win after all. The US government sent a clear signal that Brad is no angel, yet they’re no welchers.

The PR Verdict: “B” (Good Show) for the US Government. Sending mixed signals is sometimes the only way to accomplish goals. Complicated, yes; confusing, no.

The PR Takeaway: Bitter and sweet can live together, even if it seems sometimes counterintuitive. Birkenfeld’s payment sends a clear signal that the government takes the issue of fraud, and reward for whistle blowing, seriously, and is willing to share the upside of newfound gains. Yet Birkenfeld paid a personal price for wrongdoing. Birkenfeld, more than anyone, knows this, as he ponders his newfound fortune – and his ankle brace.

Should government entities send mixed messages of punishment and reward? Should Birkenfeld have received his whistle-blower payment even though he was sentenced? Give us your PR Verdict!