Obama administration knew IRS was targeting conservative groups since June 2012

Obama administration knew since June 2012 about an investigation into complaints from conservative tea party groups that they were being harassed by IRS, and the probe was ongoing at the height of the presidential race, a Treasury inspector general revealed Friday.

J. Russell George, the Treasury inspector general for tax administration, testified alongside ousted IRS head Steven T. Miller, who did little to subdue Republican outrage during hours of intense congressional questioning.

Both defiant and apologetic, Steven T. Miller acknowledged agency mistakes in targeting tea party groups for special scrutiny when they applied for tax-exempt status, but he insisted that agents broke no laws and that there was no effort to cover up their actions.

Steven T. Miller only stoked the criticism of many Republicans, who are assailing the administration on a sudden spate of other controversies, as well, even as some Democrats tried to contain the political damage.

“I don’t know that I got any answers from you today,” Rep. Mike Kelly, R-Pa., told Steven T. Miller.

“I am more concerned today than I was before.”

At one point in the day’s hearing, Treasury Inspector General Russell George said he had told the department’s general counsel about his investigation on June 4, 2012, and Deputy Treasury Secretary Neal Wolin “shortly thereafter”.

But, I.G. Russell George cautioned, those discussions were “not to inform them of the results of the audit. It was to inform them of the fact that we were conducting the audit”.

After the hearing, inspector general spokeswoman Karen Kraushaar said Russell George “informed Department of Treasury officials that we were looking into the IRS’ handling of applications for tax-exempt status, partly due to allegations raised by conservative organizations”.

Karen Kraushaar said the disclosure was part of a routine briefing about the office’s activities.

The Treasury Department issued a statement Friday saying officials first became aware of the actual results of the investigation in March of this year, when they were provided a draft of Russell George’s report, a standard practice.

Russell George’s disclosure came before the House Ways and Means Committee in the first of several congressional hearings on the matter. He was joined by Steven T. Miller, who spoke publicly about the controversy for the first time.

Steven T. Miller apologized for the actions of agents who singled out conservative political groups for additional, often burdensome scrutiny.

“First and foremost, as acting commissioner, I want to apologize on behalf of the Internal Revenue Service for the mistakes that we made and the poor service we provided,” he told the committee.

“The affected organizations and the American public deserve better.”

But members on both sides of the aisle were furious, and castigated him for the mismanagement and political gamesmanship the IRS engaged in on his watch.

Texas Republican congressman Kevin Brady had the harshest criticism for Steven T. Miller.

“Is this still America?” he asked him.

“Is this government so drunk on power that it would turn its full force, its full might, to harass, and intimidate, and threaten an average American who only wants her voice, their voices heard?”

“The American public deserves better,” Steven T. Miller agreed. But both he and Russell George insisted that no IRS employees engaged in political witch-hunting.

Russell George oversaw the year-long internal probe that ended in a report released Wednesday. It concluded that the agency used “inappropriate criteria” in selecting tax-exemption applications for closer scrutiny, but did not find any wrongdoing on the part of senior-level IRS officials.

Steven T. Miller concurred with that finding, blaming the problem instead on “foolish mistakes” while affirming that partisanship “has no place at the IRS”. He also insisted he did not deceive Congress, though he repeatedly failed to reveal the controversy last year when he was asked about it by lawmakers – even after he had been briefed.

“I did not mislead Congress or the American people,” Steven T. Miller said.

President Barack Obama announced his removal on Wednesday, as a scandal unfolded involving the IRS targeting hundreds of right-wing organizations for intense scrutiny based on keywords like “tea party” or “patriots” in their names.

He told committee members that before the episode became public, he had no contact with the Treasury Department, the White House or Barack Obama’s re-election campaign about targeting conservative groups.

“Absolutely not,” Steven T. Miller said.

He surprised committee members when he said “it is absolutely not illegal” for IRS agents to single out conservative groups for additional scrutiny.

“Please don’t get me wrong,” he added.

“It should not happen.”

Russell George, the inspector general, backed up Steven T. Miller’s assertion when he said the yearlong investigation did not uncover illegal activity.

“It is not illegal, but it was inappropriate,” Russell George said of targeting conservative groups.

Russell George’s report concluded that an IRS office in Cincinnati, which screened applications for the tax exemptions, improperly singled out tea party and other conservative groups for tougher treatment. The report says the practice began in March 2010 and lasted in various forms until May 2012.

Agents did not flag similar progressive or liberal labels, though some liberal groups did receive additional scrutiny because their applications were singled out for other reasons, the report said.

Steven T. Miller wrote to IRS employees, however, that he was leaving at the end of his scheduled term in early June.

Ultimately, he conceded on Friday, he agreed to step down because responsibility for the IRS’s activities “stops at my desk”.

Committee chair Dave Camp, a Michigan Republican, stared down Steven T. Miller, saying that “this systemic abuse cannot be fixed with just one resignation”.

“And as much as I expect more people need to go, the reality is this is not a personnel problem,” Dave Camp maintained.

“This is a problem of the IRS being too large, too powerful, too intrusive and too abusive of honest, hardworking taxpayers.”

Sander Levin, the panel’s ranking Democrat, said the IRS and its employees “have completely failed the American people” by “singling out organizations for review based on their name or political views, rather than their activity”.

“All of us are angry about this on behalf of the nation,” the left-leaning Michigan congressman said.

Lois Lerner is the civil servant who heads up the IRS division in charge of evaluating charitable and other nonprofit organizations. Sander Levin called for her head.

“Ms. Lerner should be relieved of her duties,” he said.

“We must seek the truth, not political gain.”

In what Steven T. Miller called “a prepared Q-and-A” on May 10, Lois Lerner told an American Bar Association conference about a pending IRS Inspector General report examining the targeting of conservative groups inside the IRS’s Exempt Organizations section.

That admission started the media feeding frenzy that has spiraled into a full-blown scandal. The acknowledgement that Lois Lerner went to the event with the intention of publicly disclosing the IG report’s existence raised eyebrows on the congressional panel.

Illinois Republican Rep. Peter Roskam quizzed Steven T. Miller about a phone conversation he said he had with Lois Lerner about the planned disclosure, which Miller said was intended to coincide with a disclosure to Congress.

He agreed with Peter Roskam, however, that Congress wasn’t told at the same time a question was “planted” at the bar association conference.

“We called to try to get on the calendar of the Ways and Means Committee,” Steven T. Miller said.

“You called to try to get on the calendar?” Peter Roskam asked, incredulous.

“Is that all you’ve got?”

“It’s the truth,” Steven T. Miller responded.

Under questioning from California Republican Rep. Devin Nunes, Steven T. Miller said he would not commit to giving Congress his notes, phone records, and other evidence of conversations with Lois Lerner.

Devin Nunes reminded him that Congress could, and might, subpoena them.

Lois Lerner’s superior, Sarah Hall Ingram, was the most senior political appointee in charge of exempt organizations reviews during the years when the IRS was targeting right-wing groups. This year the Obama administration has elevated her to a position of authority over the tax implementation of the Affordable Care Act, the president’s signature health care overhaul.

Steven T. Miller called her “a superb civil servant”, and said he promoted her to her current position.

In a flurry of press releases, broadcast statements and tweets, conservatives have lashed out at Ingram, suggesting a level of corruption on her part that could compromise the fair and impartial implementation of Obamacare.

Sarah Hall Ingram “allowed and possibly encouraged the outrageous and discriminatory tactics toward Tea Party Patriots based on political ideology, clearly violating her supposedly unbiased office”, said Jenny Beth Martin, the group’s national coordinator.

“We … do not trust anyone who was involved in targeting tea party groups to administer the Affordable Health Care Act in a fair and equal manner,” Jenny Beth Martin added.

“We certainly do not trust Sarah Hall Ingram to be anywhere near our incredibly sensitive health care decisions. It appears the administration has rewarded her for allowing the discriminatory actions rather than disciplining her. She must be terminated or resign immediately for her disgraceful actions.”

In a stunning flashback moment, Louisiana Republican Rep. Charles Boustany played a video clip showing former IRS Commissioner Douglas Shulman testifying before the House Ways and Means Subcommittee on Oversight in March 2012.

“Can you give us assurances that the IRS is not targeting particular groups based on political leanings?” Charles Boustany, the subcommittee’s chairman, asked Douglas Shulman then.

“There’s absolutely no targeting,” the then-commissioner responded in 2012.

 “This is the kind of back-and-forth that happens when people apply for 501(c)(4) status.”

Asked Friday if this was a lie, Steven T. Miller said: “It was incorrect.”

“But whether or not it was untruthful,” he continued, without reaching a conclusion.

“Why did you mislead Congress and the American people on this?” Charles Boustany asked.

“Congressman, I did not mislead Congress or the American people,” Steven T. Miller responded.

Washington Democrat Jim McDermott, a reliable liberal partisan, acknowledged that “the IRS stiff-armed us, basically, at best”, in past testimony, but defended the agency’s behavior.

Tax “examiners took a shortcut”, in the face of a flood of new applications for tax-exempt status, he said, “which they deeply regret”.

Still, he conceded that it was wrong to treat groups differently because of their political positions.

“As much as I dislike the right,” he said, “I think it’s wrong to be un-evenhanded in government application” of laws and regulations.

Paul Ryan, the Republicans’ vice presidential nominee in 2012, slammed Steven T. Miller for what he said was less-than-truthful testimony when he appeared before a subcommittee last year. Although he had been briefed by then about the problems with tax-exempt applications from tea party groups, he said nothing.

Steven T. Miller hid material facts from Congress, Paul Ryan said.

“How can we conclude that you did not mislead this committee?”

Steven T. Miller fired back: “I stand by my answers,” he said, adding that the word “<<harassment>> implies political motivation” on the part of IRS employees.

“There was no political motivation,” he insisted.

Washington Republican Rep. Dave Reichert picked up that thread when it was his turn to ask questions.

“Do you not believe it’s your job to provide us with the information that you knew?” he demanded.

“You’re a law-enforcement agency, for crying out loud.”

“I answered all questions truthfully,” Steven T. Miller responded.

“You’re not going to cooperate,” said Dave Reichert, dismissing him and moving on to question Russell George.

The hearing is the first in what will likely be a series of inquisitions from Congress about the IRS scandal, just one of the three hanging over the Obama administration.

The House Oversight and Government Reform Committee will hold its own hearing on May 22, taking testimony from Lois Lerner, former IRS Commissioner Douglas Shulman, and Treasury Deputy Secretary Neal Wolin.

New York Democrat Charles Rangel took issue with the Supreme Court’s 2010 “Citizens United v. Federal Election Commission” ruling, which he said created an environment that resulted in the IRS’s malfeasance.

The underlying problem, he said, was a resulting law “almost written for abuse”, as it prohibits Congress from interfering with 501(c)(4) groups’ political spending.

The Citizens United Ruling is generally credited with creating a flood of applications for tax-exempt status with the IRS, including hundreds from conservative groups hoping to capitalize on their newfound power to influence national politics with untraceable dollars.

“This is not <<Democrat or Republican>>,” Charles Rangel said.

“It relates to the integrity of the government.”

“We’re on the same side as far as determining how this happened.”

Charles Rangel told Steven T. Miller that he wanted the “tens of thousands of IRS employees [to] have the stigma of corruption taken away from them”.

“Whether this is criminal activity or a mistake,” the New York Democrat said.

“I don’t know.”

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