The first high-profile hearing on the IRS scandal is being held today before the House Ways and Means Committee, which oversees the IRS. Lawmakers in both chambers are seeking answers about why they weren’t told that the IRS had singled out conservative groups for scrutiny despite multiple inquiries in recent years.The hearing is the first of several sessions in coming weeks in which lawmakers will grill current and former officials about the IRS’s screening practices.
"I would like to assure the American people that this investigation has just begun," House Ways and Means Committee Chairman Dave Camp (R-Mich.) said as he drew the hearing to a close shortly before 1 p.m.
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Republicans on the committee have focused on Miller's repeated contention that the targeting that took place was wrong but doesn't rise to the level of being illegal.
Miller said at first:
Miller – "it is absolutely not illegal what they have done"
— Jon Ward (@jonward11) May 17, 2013
He then clarified a little: "I don't believe it is. Don't get me wrong. It should not happen."
And then a little more: "It's my belief that what happened here wasn't illegal, but I suppose there are some facts that might come out that might indicate otherwise. But that's not my area."
Law experts have suggested that IRS officials might have broken the law by committing perjury while discussing the potential targeting at congressional hearings. They say it's less clear that merely targeting certain groups for scrutiny is, in and of itself, illegal.
Rep. Danny Davis (D-Ill.) asked former IRS Acting Commissioner Steve Miller and Inspector General J. Russell George what advice they have for the next IRS commissioner.
"This has damaged the reputation of this organization and the new commissioner needs to take steps to ensure that they restore that trust," Miller told the committee. "That’s where he or she should take action."
George said that his reports have called for training "at all levels on a repeated basis of IRS staff. And especially in terms of political season, you have a lot of turnover especially in the lower levels of the IRS. And people simply need to be kept up to date on the new regulations."
President Obama on Thursday appointed Daniel Werfel, a senior official at the Office of Management and Budget, to be acting IRS commissioner.
A notable revelation came during today's hearing: Former IRS Acting Commissioner Steven Miller admitted that he discussed with Lois Lerner how she would publicly reveal and apologize for the tax-exempt office's targeting of conservative-leaning groups.
Under questioning by Rep. Devin Nunes (R-Calif.), Miller said he knew that Lerner was going to appear last Friday at a conference hosted by the American Bar Association called, "News From the IRS and Treasury."
Here's the key exchange:
REP. NUNES: Did you or any of your subordinates direct Lois Lerner to make the public statement at the panel discussion acknowledging the targeting of tax-exempt groups?
MR. MILLER: It was a prepared Q-and-A.
REP. NUNES: Do you know Ms. Celia Roady, a member of IRS' Advisory Council on Tax-Exempt and Government Entities?
MR. MILLER: I do.
REP. NUNES: Was Ms. Roady's question to Ms. Lerner about targeting conservative groups planned in advance?
MR. MILLER: I believe that we talked about that, yes.
REP. NUNES: Did you ever have any contact either by email, phone or in person with the White House regarding the targeting of tax- exempt groups from 2010 until today?
MR. MILLER: Absolutely not.
REP. NUNES: How about the Department of Treasury?
MR. MILLER: I certainly would have had some conversations with Treasury in my role as acting commissioner because I reported to them. On this topic, it was very -- it would have been, I believe -- I have to go back and look, but very recent that that conversation would have taken place.
Later, Rep. Peter Roskam (R-Ill.) pressed Miller for more details on Lerner's public disclosure. Here's the exchange:
ROSKAM: You admit that you spoke with Ms. Lerner and Celia Roady about the planted question beforehand. Can you tell us more about that conversation?
MR. MILLER: I did not speak to Celia Roady, and I believe I did talk to Lois about the possibility of, now that the TIGTA report was finalized, now that we knew all the facts, now that we had responded in writing and everything was done, did it make sense for us to start talking about this in public.
REP. ROSKAM: Can you walk me through the logic that animated in your mind at that time, where you thought it would be a good idea to make a public disclosure to the American Bar Association rather than coming and following up on your duty to disclose that to the House?
MR. MILLER: So we were going to do it at the same time, I believe; that our intent was to talk to you all at the same time.
REP. ROSKAM: But that didn't happen, did it?
MR. MILLER: It did not happen, I don't believe.
REP. ROSKAM: What other recollection do you have or what other experience did you have when you were talking with Ms. Lerner about this scheme to have the planted question at the ABA?
MR. MILLER: I'm not sure what you're asking, sir.
REP. ROSKAM: I'm asking what's your recollection of that conversation.
MR. MILLER: We talked about what would be said and how we might do it.
REP. ROSKAM: Where did the conversation take place?
MR. MILLER: I believe it was over the phone
REP. ROSKAM: What day did the conversation take place?
MR. MILLER: I'd have to look back at my notes on that, sir.
REP. ROSKAM: You've got notes on that?
MR. MILLER: I'd have to try to find them. I'm not sure (I do ?).
REP. ROSKAM: Why did you say you had notes if you don't think you have notes?
MR. MILLER: Sir, please.
REP. ROSKAM: Please. Do you have notes or don't you have notes?
MR. MILLER: I don't know.
Bottom line: We now know why it was that Lerner made the revelation at a legal conference and not to Congress or in a more public statement. This appears to be a line of inquiry that lawmakers will pursue further during this hearing and at hearings held next week by the Senate Finance Committee and the House Oversight and Government Reform Committee.
Rep. Richard Neal (D-Mass.) asked Miller what corrective actions the IRS had taken to ensure improper targeting of tax-exempt applicants does not happen again.
Miller responded that the agency provided verbal counseling for "the person we thought, at the time, to be responsible for the listing." Earlier, he told committee chairman Dave Camp (R-Mich.) that he did not know who was responsible for establishing the inappropriate search criteria.
Addressing discrepancies in his statements and a look of disbelief from Camp, Miller explained that IRS officials eventually determined that the person in question might not be the one responsible for the targeting, and that the agency eventually held a meeting with all managers in the determinations division to walk them through the appropriate processes for reviewing tax-exemption applications.
After almost two hours, the House Ways and Means Committee will recess briefly while members go vote on legislation under consideration by the full House.
Members have occupied their seats along the dais for most of the morning, suggesting that virtually everyone intends to spend at least a few moments probing Steven Miller and J. Russell George.
Our updates will resume when the panel returns.
Rep. Jim McDermott (D-Wash.) said there's a difference between "stupid mistakes" and "malicious mistakes." He said IRS examiners took a shortcut that "they deeply regret" by singling out groups for their policy positions instead of their activities.
McDermott noted that the Inspector General's report found no political motivation behind the establishment of search criteria that targeted "tea party" and other conservative groups. He asked the IG, J. Russell George, to confirm.
"We have no evidence at this time to contradict that assertion, sir," George said.
Rep. Devin Nunes (R-Calif.) pushed Steven Miller to explain why he resigned as acting head of the IRS if, as he's said repeatedly during the hearing, he didn't know details of the scandal enveloping his former employer, or didn't do anything wrong.
"I never said I didn't do anything wrong, Mr. Nunes," Miller replied.
"I resigned, because … what happens at the IRS, whether it was involved or not, stops at my desk. I should be held accountable," he said.
Rep. Charles Boustany (R-La.) attempted to get former IRS Acting Commissioner Steven Miller to admit that his former boss, former IRS Commissioner Douglas Shulman, knowingly lied to Congress.
Boustany played video of Shulman telling lawmakers that the IRS hadn't targeted conservative-leaning groups.
Under questioning, Miller said that Shulman's statement was "incorrect, but not untruthful."
"When you talk about targeting, it’s a pejorative term," Miller told the committee. He noted that during the time in question, the Supreme Court had just considered the Citizens United case that granted more freedoms to political groups and that there was general concern that some groups might be seeking social welfare tax-exempt status despite conducting political activities.
But Boustany seized on what Miller said about Shulman being "incorrect, but not untruthful."
"To my knowledge, I don’t believe he knew at the time," about targeting, Miller said of Shulman.
Shulman was appointed to lead the IRS in March 2008 by George W. Bush and stepped down in November.
Miller said the reviews of tax-exemption applicants were mainly handled by staff at the "determinations" unit in Cincinnati, but also by "a hundred or so people who report into Cincinnati" as well.
A previous Washington Post article showed that the reviews extended beyond Cincinnati, to offices in D.C. and California. Miller's comment confirms what Juliet Eilperin reported.
President Obama moved Thursday to install new leadership atop the Internal Revenue Service, tapping Danny Werfel to lead the scandal-plagued agency.
So who is Werfel? Where did he work before? Make sure to read our profile of him published in Friday's Washington Post:
Werfel, 42, rose through the ranks at the Office of Management and Budget and the Justice Department as a budget analyst and lawyer before Obama tapped him to serve as OMB controller in 2009. As controller he was responsible for the government’s financial management, contracting, information technology and personnel policy.
Now he has the unenviable task of overhauling the IRS, which is reeling after admitting that employees aggressively targeted certain groups applying for tax-exempt status. Werfel will serve as acting director through Sept. 30, the end of the fiscal year, the White House said.
Werfel may be well liked by colleagues at the OMB and the White House, but some lawmakers seemed skeptical or said they didn’t know much about him.
Read our full profile here.
The Treasury Department's Inspector General for Tax Administration J. Russell George tells the committee the IRS asked for donor information from the groups it targeted for extra scrutiny.
He said the IRS reported to his office that it had destroyed the donor information after realizing it wasn't supposed to collect such information from tax-exemption applicants.
Former IRS Acting Commissioner Steven Miller apologized to lawmakers Friday for the scandal that led to his ouster.
"First and foremost, as acting commissioner, I want to apologize on behalf of the Internal Revenue Service," he told the panel.
"The affected organizations and the American public deserve better," Miller said later, adding that "Partisanship has no place at the IRS."
"I do not believe that partisanship motivated the people that engaged in the practices described in the inspector general's report," he said.
So then why did they do it?
"Foolish mistakes were made by people who were trying to be more efficient in their work," he concluded.
Top IRS officials in Washington first learned of the tax-exempt office's targeting of conservative-leaning groups in June 2011, while others didn't learn about it until April or May of last year, according to a federal watchdog.
Treasury Inspector General for Tax Administration J. Russell George verbally laid out for the committee his office's findings, saying that IRS officials used "inappropriate criteria" to probe these groups.
"The criteria included the words 'tea party,' 'Patriot,” or '9/12 Project,'" George said. "Another listed criterion was that the group’s issues included government spending, government debt or taxes. Yet another listed criterion appeared as education of the public by advocacy or lobbying to, quote, 'Make America a better place to live.' Finally, the criterion consisted of any statements in the case file criticizing how the country is being run," George said.
"The reason that these criteria were inappropriate is that they did not focus on tax-exempt laws and Treasury Regulations," he added. "For example, 501(C)(3) organizations may not engage in political campaign intervention. 501(C)(4) organizations can, but it must not be their primary activity. Political campaign intervention is action taken on behalf of, or against, a particular candidate running for office."
"According to our findings, the first time that executives from Washington, D.C. became aware of the use of these criteria was June 2011, with some executives not becoming aware of the criteria until April or May 2012," he said later.
Read George's full oral statement below, as provided by TIGTA:
Rep. Sander Levin (D-Mich.), the top Democrat on the House Ways and Means Committee, delivered a stinging rebuke of the IRS and the Obama administration more broadly in his opening remarks.
"All of us are angry on behalf of the nation and we are determined to get answers," Levin said.
Levin said he was especially upset that "the IRS leadership has demonstrated a total disregard of the Congress and this committee" by withholding information about the activities of the IRS's tax-exempt office and its targeting of conservative-leaning groups.
Turning to the political nature of the scandal, Levin warned that if the hearing becomes a "bootstrap" to finish the 2012 election and prepare for the 2014 midterm elections, then the panel is making a very big mistake and disregarding its duties.
More revelations about political targeting inside the Internal Revenue Service are coming, the Senate Finance Committee Chairman Max Baucus (D-Mont.) predicted.
“I have a hunch that a lot more is going to come out, frankly,” the retiring senator said in a Bloomberg News interview airing Sunday. “It’s broader than the current focus.”
His committee will investigate the extra IRS scrutiny given to groups applying for tax-exempt status with the words “patriot” or “tea party” in their names.
House Ways and Means Committee Chairman Dave Camp (R-Mich.) gaveled the hearing to order just after 9 a.m. and launched right into it:
Revelations by IRS officials that its tax-exempt office targeted conservative-leaning political organizations "goes against the very principles of free speech and liberty upon which this country was founded. The blatant disregard with which the agency has treated Congress and the American taxpayers raises serious concerns about leadership at the IRS."
Camp noted later that IRS officials used keywords such as "tea party," "patriot," and "9/12," and looked for groups concerned about government spending, debt, taxes, the Constitution, the Bill of Rights, or trying to "make America a better place to live."
"Let me repeat that," Camp said. "People were targeted for trying to 'make America a better place to live.'"
Addressing former IRS Acting Commissioner Steven Miller, Camp said: "This systemic abuse cannot be fixed with just one resignation."
"The reality is this is not a personnel problem," Camp added. "This is a problem of the IRS being too large, too powerful, too intrusive and too abusive of honest, hardworking taxpayers."
The chairman noted that his constituents often say how fearful they are of committing tax mistakes and of IRS audits.
"Under this administration, the IRS has abused its power to tax, and it has destroyed what little faith and hope the American people had in getting a fair shake in Washington," Camp said. "This will not stand. Trimming a few branches will not solve the problem when the roots of the tree have gone rotten."
Camp said he has several key questions:
-- Why did the IRS repeatedly target the American people and then keep that fact covered up for so long?
-- Who started the targeting, who knew, when did they know and how high did it go?
-- Who leaked private taxpayer information?
-- Why were the names of donors asked for, and what was done with those lists before they were supposedly discarded?
-- When did the administration know about each of these, and what was its reaction?
The House Ways and Means Committee is chiefly responsible for establishing U.S. tax policy and is one of the assignments most coveted by members of the House of Representatives. Given the panel's prestige, it is populated primarily by more senior members of both parties.
The committee is chaired by Rep. Dave Camp (R-Mich.) and the most senior Democrat is Rep. Sander Levin (D-Mich.), whose brother is Sen. Carl Levin (D-Mich.).
Other GOP members include Reps. Paul Ryan (R-Wis.), Charles Boustany (R-La.), Peter J. Roskam (R-Ill.) and Mike Kelly (R-Pa.), while Democrats include Reps. Charles Rangel (D-N.Y.), John Lewis (D-Ga.), Joseph Crowley (D-N.Y.) and Allyson Schwartz (D-Pa.).
A full list of committee members can be found here.
George, a New York City native, graduated from Harvard University, where he later earned a law degree. He served as a prosecutor in the Queens County District Attorney's Office before coming to Washington, where he held positions with the Office of Management and Budget, House Oversight and Government Reform Committee and the Corporation for National and Community Service. He was tapped to lead TIGTA by George W. Bush in 2002.
Here is a full link to the report that forms the focus of today's hearing. TIGTA has published several other reports on IRS's tax-exempt office in recent years. Here are links to the reports: