As besieged IRS faces another hearing on Capitol Hill, new leader Werfel points forward

Video: In a hearing before the House Appropriations Committee, acting IRS Commissioner Daniel Werfel played down the notion that extra funding could help fix the agency’s problems.

Congress on Monday held its fourth hearing on the Internal Revenue Service’s targeting of conservative groups, this time with questions coming from the House lawmakers who control funding for the agency.

The Treasury Department’s inspector general released a report last month detailing an IRS effort that involved the use of inappropriate search criteria to single out certain types of tax-exemption applicants for special scrutiny.

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Adding to the recent IRS woes is an upcoming inspector general’s report expected to show that the agency spent an estimated $49 million on at least 220 conferences over a three-year span beginning in fiscal 2010. The House oversight committee is scheduled to hold a hearing on that matter Thursday.

Testimony at Monday’s hearing, before a House Appropriations subcommittee, came from the Treasury inspector general, J. Russell George, and new acting IRS commissioner Daniel Werfel, who served as controller of the Office of Management and Budget before taking on his new role with the embattled federal tax-enforcement agency.

Werfel’s presence changed the tenor of the questioning compared with previous rounds of inquiry, during which lawmakers prodded two former two IRS commissioners to apologize and suggested they had misled Congress about the agency’s problems.

This time, lawmakers focused on what Werfel would do to help the agency avoid future mistakes and hold those responsible for the targeting campaign accountable.

“We need to find out what happened,” said Rep. Ander Crenshaw (R-Fla.), chairman of the subcommittee. “Who came up with this plan and why? How widespread were these abuses?”

Werfel acknowledged the problems identified in the inspector general’s report and said the issues had damaged public trust in the IRS. But he also defended the agency.

“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,” he said, adding that the agency’s employees are “shocked and appalled” at the targeting campaign.

Werfel said the IRS would report by the end of the month on its progress in three areas: accountability for the problems, solutions to those problems, and a broader review of agency operations. These goals align with directives President Obama and Treasury Secretary Jack Lew gave Werfel when he took the job. The new acting commissioner also said the IRS needs to immediately address the backlog of tax-exemption applications that were held up under the targeting campaign. He said he has ordered the top tax-exemption officials to submit a plan for expediting that process without compromising fairness and impartiality.

George said again that his audit did not definitively determine whether the IRS’s inappropriate behavior was politically motivated, something administration officials have insisted was not the case. He said IRS employees would not acknowledge during the auditing process who gave the directive to target conservative groups. He has said in previous testimony that questioning IRS personnel under oath may yield more information on that subject.

George cautioned that Werfel should not become too involved in trying to determine who is at fault for the IRS targeting campaign.

“We, working with the Department of Justice, are looking into this matter,” he said, “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.”

Werfel at several points during the hearing played down the notion that extra funding could help the agency fix its problems, as many defenders of the IRS have insisted in recent weeks.

“If you start with more money, it’s the wrong starting point,” Werfel said, adding that the more appropriate approach would be to identify the “framework for doing this right.”

Rep. Harold Rogers (R-Ky.), chairman of the House Appropriations Committee, applauded those comments, saying to Werfel, “I’m beginning to like you when you say you don’t want more money.”

Rep. JoséE. Serrano (D-N.Y.), who criticized GOP lawmakers for trying to implicate the Obama administration in the IRS wrongdoing, questioned Werfel’s suggestion.

“I guess, as a liberal, I would say, are you sure you don’t want any more money?” Serrano said. “Please understand that there are consequences to the fact that we are cutting your budget all the time.”

Werfel said the IRS may ask for more money later if the agency determines that its problems stem in part from a lack of resources.“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,” he said. “It could be an increase, it could be level, or it could be less.”

Good-government groups have warned that the IRS may become too risk-averse in the wake of its recent troubles, causing corrective measures to backfire. Max Stier, president of the Partnership for Public Service, said:

“You can only tighten down so much before those efforts cost more than the bad things you’re trying to avoid,” said Max Stier, president of the Partnership for Public Service.

Monday’s hearing did not mark the end of congressional questioning for the IRS. A House Ways and Means subcommittee plans to hold a hearing Tuesday with testimony from groups subjected to delays and extra scrutiny during the targeting campaign.

Additionally, the House Oversight and Government Reform Committee is scheduled to hold a hearing Thursday to discuss the report on IRS conferences.

 
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