Obama Said to Choose Acting IRS Chief as Hearings Start

President Barack Obama plans to choose a new acting commissioner of the Internal Revenue Service this week as the first congressional hearings begin into the agency’s selective scrutiny of small-government groups, according to an administration official.

Obama, who forced out acting commissioner Steven Miller yesterday, won’t nominate a permanent head for the agency soon, said the official, who asked for anonymity to discuss personnel matters.

Asked if anyone at the White House knew about the IRS matter before the counsel’s office was informed April 22, Obama said today at a news conference that he wasn’t aware of it.

“The minute I found out about it, then my main focus is making sure that we get the thing fixed,” he said in the White House Rose Garden today.

Obama also said the IRS inspector general would be seeking a further investigation.

The House Ways and Means Committee tomorrow will be the first panel to hold hearings on the matter. Miller is set to testify alongside Russell George, the inspector general whose May 14 report showed that IRS employees used terms such as “tea party” and “patriot” to select which applications for tax-exempt status would receive tougher questioning.

‘Wants’ Facts

“This committee wants the facts, and the American people deserve answers to why they were targeted on the basis of their political beliefs,” Committee Chairman Dave Camp, a Michigan Republican, said in a statement. “The IRS has demonstrated a culture of cover-up and has failed time and time again to be completely open and honest with the American people.”

Lawmakers’ questions will focus on at least three separate areas: Why the targeting started, why it wasn’t stopped sooner and why senior IRS officials didn’t tell Congress after they learned what had happened.

Senator Mitch McConnell of Kentucky, the Republican leader, today called on the IRS inspector general to investigate other potential agency matters, such as the disclosure of information from the National Organization for Marriage. The group, which opposes same-sex marriages, said that the IRS released some of its confidential records.

The Senate Finance Committee will hold a hearing May 21 and the House Oversight and Government Reform Committee will meet May 22.

IRS Apology

The IRS scandal burst into public view May 10, when Lois Lerner, the mid-level official who oversees tax-exempt organizations, acknowledged the selective scrutiny and apologized for it.

Her comments confirmed what tea party groups and Republican lawmakers had been saying for more than a year and what IRS officials, including Miller and former commissioner Douglas Shulman, had denied.

“It’s inexcusable, and Americans are right to be angry about it, and I am angry about it,” Obama said as he described Miller’s departure in televised remarks at the White House yesterday. “It’s important to institute new leadership that can help restore confidence.”

Miller had been running the IRS since November 2012, when Shulman’s term expired. Shulman, who was appointed by President George W. Bush, announced in April 2012 that he wouldn’t stay, meaning that Obama has had 13 months to choose a nominee.

‘Incredibly Difficult’

“This has been an incredibly difficult time for the IRS given the events of the past few days,” Miller wrote in a letter to IRS employees yesterday. “And there is a strong and immediate need to restore public trust in the nation’s tax agency.”

The IRS said Shulman and Miller were informed of the targeting of small-government groups in May 2012. They didn’t inform Congress, a decision the agency said was made to avoid interfering with an inspector general’s report.

Miller told lawmakers in July 2012 that the IRS had grouped together tax-exempt applications of politically oriented groups to ensure consistency. He didn’t say how the grouping was done. Miller’s term as acting commissioner was nearing its end.

The IRS is required to determine whether groups applying for tax-exempt status as social welfare organizations are going to be primarily political, which would disqualify them.

Holder’s Investigation

Attorney General Eric Holder has opened a criminal probe, and four separate congressional committees are investigating the IRS. Holder said the Federal Bureau of Investigation inquiry wouldn’t be limited to IRS employees in Cincinnati, where the applications were handled, and may include Washington employees.

Federal prosecutors may consider civil rights violations, false statements to Congress and a law prohibiting political activity by federal employees, Holder told the House Judiciary Committee yesterday. Proving some of those crimes would require prosecutors to show willful lawbreaking.

“You would want some direct evidence of intent, that people knew what they were doing was wrong and they decided to do it anyway,” said Nathan Hochman, who led the Department of Justice’s Tax Division under President George W. Bush.

Hochman, now a partner at Bingham McCutchen LLP, said proving to Congress that statements were false would probably require evidence that officials knew they were false and that they provided incorrect responses to clear questions.

Possible Prosecution

House Speaker John Boehner said today that it was “very clear” that IRS employees could be prosecuted under a federal law that makes it a crime to commit “extortion or willful oppression under the color of law.”

Justice Department prosecutors may be able to get more information than the inspector general, Hochman said, because they can convene grand juries and offer immunity.

The Washington-based American Center for Law and Justice, which says it seeks to protect religious and constitutional freedoms, will file civil lawsuits next week on behalf of affected tea party groups, said Executive Director Jordan Sekulow.

The IRS targeting of tea party groups shows “it cannot be trusted” to enforce the 2010 health-care law, Representative Michele Bachmann of Minnesota, a former IRS attorney, said today.

She said it is fair to wonder whether the IRS would use “intimate information” to delay or deny health care or use those details to blackmail or embarrass opponents of the administration. Such questions, she said at a news conference, “would have been considered unreasonable a week ago.”

To contact the reporter on this story: Richard Rubin in Washington at rrubin12@bloomberg.net

To contact the editor responsible for this story: Jodi Schneider at jschneider50@bloomberg.net

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