IRS hearing: Live updates

For the fourth time in two weeks, a congressional committee will hold a hearing on the IRS scandal.

Today, the Financial Services and General Government Subcommittee of the House Appropriations Committee will hold a hearing featuring newly minted acting IRS Commissioner Daniel Werfel and the inspector general who first reported on the agency's wrongdoing, J. Russell George.

The hearing begins at 3 p.m. Follow along below for live updates as the hearing progresses.

[liveblog]

IRS hearing is over: What we learned

After a little more than two hours, the subcommittee hearing has come to an end.

While there weren't too many fireworks -- relative to past IRS hearings, at least -- we did learn some new things. Particularly:

1. The inspector general, J. Russell George, said IRS employees wouldn't say who told them to target conservative groups and that learning that might require putting them under oath. He emphasized that, while he has found no evidence that the targeting was politically motivated, that wasn't the focus of his initial audit.

2. Republicans are considering making IRS funding contingent on its compliance with best practices.

3. New acting IRS Commissioner Danny Werfel isn't asking for more money -- not yet and maybe not ever.

4. Rep. Jose Serrano (D-N.Y.) thinks maybe he should.

Werfel suggests special prosecutor not necessary — yet

Republicans have been pushing (so far unsuccessfully) for a special prosecutor to look into the IRS scandal, but acting IRS Commissioner Danny Werfel suggested Monday that it's not necessary yet.

"Right now, there's four layers of investigation, and what I would suggest is let's monitor that -- some of it has just gotten underway -- let's monitor that and see if we're getting the progress that this committee's demanding," Werfel said.

So far, the Justice Department, the inspector general, congressional committees and the IRS's new leadership team are all investigating.

George says Werfel digging could interfere with IG, DOJ

Treasury IG Russell George cautioned that Werfel should not become too involved in determining which individuals might be at fault for the IRS targeting campaign.

“We, working with the Department of Justice, are looking into this matter, and if Mr. Werfel were to insert himself too much into the process, it might impact our ability and the Department of Justice's ability to conduct our review.”

 

Serrano: ‘Are you sure you don’t want any more money?’

Rep. Jose Serrano (D-N.Y.), who is no stranger to defending unpopular things -- read: Hugo Chavez -- has emerged as one of the biggest IRS backers in all four hearings held so far.

The House subcommittee chairman noted in his opening remarks that he has repeatedly pushed for more IRS funding and will continue to do so.

During his second round of questioning, Serrano hit GOP critics of the IRS for trying to implicate the Obama administration in the wrongdoing, and then turned to Werfel's suggestion that the IRS doesn't need more money. Serrano suggested he should clarify.

"I guess, as a liberal, I would say, are you sure you don't want any more money to go and do the work you're supposed to do?" Serrano said. "Please understand that there are consequences to the fact that we are cutting this budget -- your budget -- all the time."

Werfel then clarified that he's not asking for more money at this juncture, and that he doesn't want to throw money at the problem, but that the agency may ask for more money later on.

"My testimony is not that I'm not asking for any more money," Werfel said. "What I testified earlier was that, with respect to whether there's a need for more money in the determinations unit process to solve the (c)(4) issue, what I'm suggesting is ... let's determine what is the right approach is for (c)(4) reviews and then align our budget to that right process. It could be an increase, it could be level, or it could be less."

Serrano said that the IRS shouldn't not request more money if it does so to avoid more oversight. He said the Securities and Exchange Commission did the same thing, and cited it as a key factor in the lax oversight of the banks and the economic collapse.

Crenshaw suspects ‘culture of intimidation’ and ‘abuse of power’

Chairman Crenshaw said he suspects intentional wrongdoing and "abuse of power" instead of mere mismanagement by the IRS.

"When an entire branch of the IRS singles out conservative groups and bullies them and harasses them, that’s not bad management, that’s someone gone wrong," Crenshaw said.

The chairman said Werfel needs to get to the bottom of that matter.

"How did you all decide to do this?" Crenshaw said. "Did somebody stand up on their desk one day? Did someone send a memo? That's what we want to find out."

Crenshaw also said: "You have a lot of people watching this abuse, and no one speaks up and says 'this is not right'? That scares me. It’s like there’s this culture of intimidation.”

The lighter side of the IRS hearings

The ever-serious IRS hearings of the last two weeks had an uncharacteristic lighter moment when Rep. Mike Quigley (D-Ill.) offered his take on scandals, noting that his hometown is no stranger to political malfeasance.

"It's hard to shock and awe someone who's from Chicago, Illinois, when it comes to scandals," Quigley said. "The last two previous governors either went to jail or are in jail. Two of my last four predecessors sitting in my seat are in jail or went to jail. So I get it. But this is getting there."

The comment was met with some laughter.

Quigley sits in the seat once held by Rod Blagojevich, who later served as governor and is now in jail after being convicted of corruption.

Before Blagojevich, there was Rep. Dan Rostenkowski (D-Ill.), who pleaded guilty to wire fraud and was sentenced to 17 months in prison.

George: IRS employees would not say who gave the directive

Treasury IG Russell George said no IRS employees, during his audit, acknowledged who gave the directive to target conservative groups.

Rep. Graves (R-Ga.) demanded to know from Werfel whether he would find an answer to that question.

“We have to get to the bottom of that,” Werfel said. “We will uncover every fact.”

George's comments were significant because they clairfy that the audit did not definitively determine whether the inappropriate actions by the IRS were politically motivated or whether the issue rose higher than mid-level management and employees at the tax-exemption office in Cincinnati, as administration officials have insisted.

The report said investigators did not find conclusive evidence of political motivations behind the targeting campaign, but George's comments suggest that rank-and-file IRS employees refused to talk about who gave the directive.

Werfel: IRS doesn’t need more money

Acting IRS Commissioner Daniel Werfel downplayed the notion that extra funding could help fix the agency's problems, as many defenders of the IRS have insisted in recent weeks.

"The solution here is not more money," Werfel said, arguing that the IRS needs to figure out what needs to be done, and then determine what "resource footprint" is needed to enact it.

House Appropriations Committee Chairman Hal Rogers (R-Ky.) said he was glad to hear that.

"Mr. Werfel, I'm beginning to like you when you say you don't need more money," Rogers said. "That's music to my ears."

In his first round of questioning from subcommittee Chairman Ander Crenshaw (R-Fla.), Werfel was asked whether he thinks the IRS has betrayed the trust of the American people.

"I do, Mr. Chairman," Werfel assured, arguing that it was incumbent on the agency to regain its good name.

J. Russell George’s opening statement

J. Russell George is becoming a familiar sight at these hearings, and the inspector general's opening remarks have stayed relatively constant.

If you're interested in reading his prepared remarks from today, here's the link.

Werfel’s opening remarks

In his opening remarks, Rep. Ander Crenshaw (R-Fla.) issued a bit of a back-handed welcome to the new IRS acting commissioner, Daniel Werfel. "I want to congratulate you, if that's the word, for this appointment," the congressman said.

Werfel, during his own opening remarks, acknowledged the problems identified in the IG report and said the issues had damaged the public's trust in the agency, but he defended the IRS on the whole.

"I have only been with the IRS a few days, but it is clear to me that IRS employees take great pride in the work they do as nonpartisan civil servants dedicated to helping the nation," Werfel said, adding that the IRS community is "shocked and appalled" at the targeting campaign.

Werfel promised three things to restore public trust in the IRS: accountability for the problems that exist with the agency's tax-exemption operations, fixes for the existing problems, and a broader review of IRS operations.

Werfel also said the agency would report to the president and the public by the end of the month on the agency's progress in those areas.

The acting commissioner noted that he already has appointed a new acting head for the IRS's tax-exemption division, Ken Corbin.

Werfel said the IRS would need to immediately address the backlog of tax-exemption applications that were held up under the targeting campaign. He said some of those applications are now between 400 and 500 days old.

Werfel said he ordered the top tax-exemption officials to submit a plan to expedite the review process for affected groups. He added that the processing would be thorough, fair and impartial, despite moving along faster.

Rogers: IRS funding could be contingent on compliance

House Appropriations Committee Chairman Hal Rogers (R-Ky.), in his opening statement, suggested that the IRS's funding could be contingent on it performing its job properly.

"Mr. Chairman, we may want to consider putting conditions on your funding that allow us to monitor your agency's compliance with proper practices," Rogers said. "This committee has done this before, and we very well may be in that mode again."

Rogers called the IRS "allegedly an independent agency."

"If it takes legislation to stop these misguided endeavors, so be it," he said. "That's what we'll do."

GOP chairman says IRS ‘flagrantly’ wastes taxpayer money

Subcommittee Chairman Ander Crenshaw (R-Fla.) began the hearing by bashing the IRS's overspending on slickly produced videos and on more than 200 conferences it sponsored over a three-year period -- all of which we learned about in recent days.

Crenshaw noted that some have suggested the agency began targeting conservative groups due to an influx of new applications, and that it was merely a poorly thought-out shortcut. But he dismissed that idea, pointing out that the targeting started when the number of new applications was actually pretty stagnant.

He also noted that some of the money spent on conferences came from the agency's enforcement budget, which suggests it had the funds it needed to enforce the law properly.

"We cannot in good conscience provide hard-earned money from taxpayers and ... watch them so flagrantly waste those dollars," Crenshaw said.

The chairman said he wishes he didn't have to hold the hearing.

"It gives me no pleasure to convene this hearing," Crenshaw assured.

The ranking member on the committee, Rep. Jose Serrano (D-N.Y.), meanwhile, took a different tack. He argued that the IRS can't weed out wrongdoing unless its funding is increased.

"There is no clearer way to lead to more scandals than by cutting (funding) that could be used for oversight," Serrano said.

The IRS’s not-so-helpful video library

The latest big news in the IRS scandal was the revelation Friday that the agency spent $49 million on more than 200 conferences over a three-year span starting in 2010.

Compounding the agency's PR troubles were the release Saturday of some slick (and expensive) videos produced by the IRS spoofing "Star Trek" and "Gilligan's Island," along with a video featuring IRS employees dancing to the "Cupid Shuffle."

See the three videos below:

Previewing today’s hearing

My colleague Josh Hicks, who will be teaming with me on today's live blog, wrote up a short preview of the hearing earlier today.

The crux: Because IRS’s new acting commissioner Daniel Werfel wasn't at the IRS at the time of the wrongdoing, today's hearing is likely to be much more about the future than the past. And it's likely to be far less contentious than its predecessors.

Here are the highlights of Josh's piece:

Werfel’s presence could change the tenor of this hearing compared to the previous ones, since Werfel is new to the IRS and won’t be under scrutiny for any involvement in the targeting controversy.

...

Previous hearings on the scandal took place last month with the House Oversight and Ways and Means committees, as well as with the Senate Finance committee. Those panels grilled former IRS commissioner Steven Miller over how the wrongdoing occurred and who was ultimately responsible.

The House Oversight committee also directed intense questioning toward Douglas Shulman, who headed the IRS during the targeting campaign and testified to Congress in 2012 that the agency was not singling out groups based on political ideology.

Lois Lerner, who played a lead role in the IRS’s tax-exemption division during the scandal, invoked her Fifth Amendment right to avoid testimony after making a brief statement proclaiming her innocence during the House Oversight hearing.

At Monday’s hearing, the Ways and Means subcommittee is likely to focus on next steps since Werfel was not with the IRS while the agency used the controversial search criteria.

Treasury Secretary Jack Lew has ordered Werfel to implement all nine of the inspector general’s recommendations to prevent more inappropriate targeting and to hold accountable any individuals who are responsible. The congressional panel is likely to question Werfel about those efforts.

Aaron Blake covers national politics and writes regularly for The Fix, the Post’s top political blog.
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