Republicans Unsatisfied by IRS Answers Press for More

May 17 (Bloomberg) -- Bloomberg’s Peter Cook reports on the first part of the House Ways and Means Committee IRS hearing and exchanges between committee members and Outgoing IRS Commissioner Steven Miller. He speaks on Bloomberg Television’s “Market Makers.”

House lawmakers say ousted Internal Revenue Service chief Steven Miller failed to fully explain why he didn’t inform them for more than a year that small-government groups seeking tax-exempt status were subject to extra scrutiny.

Miller, forced out May 15 as acting IRS commissioner, left a “disturbing lack of detail and information” in his testimony about the controversy yesterday before the House Ways and Means Committee, said Representative Dave Camp, the panel’s chairman.

Camp is vowing to investigate the matter further.

“We’re going to pursue this as a committee to find out who knew what, when, where and how these decisions were made and how they were carried out,” Camp, a Michigan Republican, said after the almost four-hour hearing.

The hearing marked the first public confrontation between the IRS and House Republicans since the scandal erupted May 10. The controversy over the agency’s selective screening of anti-tax groups has stirred Republican attacks on President Barack Obama and emerged as a distraction to his second-term goals of revising U.S. immigration law and reaching a long-term debt-reduction deal.

The IRS scandal is the “latest example of a culture of cover-ups” at the agency and in the Obama administration, Camp said at the hearing.

Photographer: Andrew Harrer/Bloomberg

Steven Miller, who was forced out as acting commissioner of the Internal Revenue Service (IRS), right, speaks during a House Ways and Means Committee hearing with J. Russell George, U.S. Treasury inspector general for tax administration, left, in Washington, D.C., on May 17, 2013. Close

Steven Miller, who was forced out as acting commissioner of the Internal Revenue... Read More

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Photographer: Andrew Harrer/Bloomberg

Steven Miller, who was forced out as acting commissioner of the Internal Revenue Service (IRS), right, speaks during a House Ways and Means Committee hearing with J. Russell George, U.S. Treasury inspector general for tax administration, left, in Washington, D.C., on May 17, 2013.

Miller, a 25-year IRS employee, testified yesterday that he didn’t have an obligation to tell lawmakers everything he knew. He said that he answered the questions that were asked and that he didn’t want to impede an inspector general’s audit.

“There was never the intention or belief that these facts would not come out in full,” he told lawmakers.

‘Tea Party’

Members of Congress will continue to press the matter at hearings next week into the IRS’s actions, which have also prompted a criminal investigation by the Justice Department.

According to an inspector general’s report and Miller’s testimony yesterday, IRS employees in 2010 began using phrases such as “Tea Party” and “patriot” to determine which applications for tax-exempt status would receive more attention.

Lois Lerner, who oversees tax-exempt organizations for the IRS, found out about the scrutiny in June 2011 and apologized for the practice during an industry conference last week. She will testify before a House Oversight and Government Reform Committee hearing on May 22, according to a panel spokesman.

In March 2012, after press reports and congressional inquiries about extensive questions sent to groups, Miller said he asked a subordinate to find out what was going on. He was told the details on May 3, 2012, he said.

Lew Informed

Senior Treasury Department officials, including Deputy Treasury Secretary Neal Wolin, were informed starting in June of the inspector general’s inquiry, Russell George, the inspector general told lawmakers yesterday.

Wolin, who will testify at the oversight panel’s hearing, learned about the details when the issue became public, according to a Treasury Department statement. George listed in a public report last year that he was working on the issue.

Treasury Secretary Jacob J. Lew was informed on March 15 of this year that the inspector general was working on the issue, according to the department statement. George said he told Lew during their first meeting after Lew was confirmed as secretary in February.

Other Treasury officials were unaware of the details of what had happened at the IRS until mid-March, when it received an “initial draft report,” according to the statement.

“I didn’t know any of the details of it until last Friday,” Lew said in an interview on Bloomberg Television’s “Political Capital with Al Hunt” airing this weekend.

‘Offensive’ Testimony

During the hearing, Republicans expressed outrage at the IRS practices and broadened their inquiry to include disclosures of confidential information on Republican-leaning nonprofits. The questioning grew more critical as the hearing progressed.

“This is offensive to hear this testimony,” Representative Tom Reed, a New York Republican, told Miller.

Under persistent questioning from House Republicans, Miller insisted that IRS employees didn’t have partisan motivations and said they weren’t targeting anyone.

“What happened here is that foolish mistakes were made by people trying to be more efficient,” Miller told lawmakers.

Republicans expressed frustration with Miller’s answers, at times interrupting him. They said that an inspector general’s report mentioned the word “target” 16 times, though all of those were descriptions of Republican allegations, not findings.

“You’re arguing today that the IRS is not corrupt,” Representative Peter Roskam, an Illinois Republican, said to Miller. “But the subtext of that is you’re saying, ‘We’re just incompetent.’ And I think it’s a perilous pathway to go down.”

‘Oral Counseling’

Miller revealed new details about what has happened at the IRS. He said one employee was reassigned while another was given “oral counseling.” He said he didn’t know the name of the employee who created a list that subjected groups with “Tea Party” or “patriot” in their names to extra scrutiny.

At one point in his IRS career, Miller had overseen tax-exempt organizations. Most recently, he was deputy commissioner for services and enforcement, a position that gave him broad authority over individual and corporate tax returns.

Miller told lawmakers yesterday that IRS officials had talked in advance with a Washington lawyer, Celia Roady, who asked the question at a May 10 tax conference that brought the controversy into the public eye. Lerner, a mid-level official who oversees tax-exempt groups, answered Roady’s question, detailing what the IRS had done, and issued an apology.

Roady, a partner at Morgan, Lewis & Bockius LLP, said in a statement that Lerner had called her the day before and given her the question.

Ryan Questioning

Representative Paul Ryan of Wisconsin, the 2012 Republican vice presidential candidate and a panel member, focused on Miller’s July 25, 2012, testimony to a Ways and Means subcommittee in which he didn’t explain how the agency decided which groups to scrutinize.

“How can we not conclude that you misled this committee?” Ryan asked.

Miller said he answered the question truthfully.

“I did not mislead Congress or the American people,” Miller told the panel. “I answered questions as they were asked.”

Representative Sander Levin, the top Democrat on the Ways and Means panel, said he and other lawmakers are “angry” at the IRS for not being forthright. He is calling for Lerner’s departure.

Obama pledged this week to implement changes at the IRS. He announced on May 16 that had chosen Danny Werfel, controller of the White House budget office, to replace Miller as acting IRS commissioner effective May 22.

Disciplining Employees

Joseph Grant, who had been appointed to oversee tax-exempt groups and government entities on May 8, announced he would retire as of June 3. Miller said the IRS hasn’t finished disciplining employees.

Miller said the IRS will implement all the recommendations made by the inspector general after its review of the incident. In its response released May 14, the IRS had been resisting some of the recommendations.

George said the investigation raised “troubling” questions about whether the agency has effective management oversight and control, “at least” when dealing with exempt organizations.

Obama hasn’t nominated an IRS commissioner. Douglas Shulman, Miller’s predecessor, was appointed by President George W. Bush and announced in April 2012 that he wouldn’t seek a second term. Miller took over as acting commissioner in November.

IRS Nominee

The Senate Finance Committee will hold its first hearing on the matter on May 21, followed the next day by the House oversight panel. Shulman will testify at both hearings and make his first public statement on the scandal.

A nominee for IRS commissioner must be confirmed by the U.S. Senate. An acting commissioner doesn’t need confirmation.

Lew, the former White House chief of staff, sidestepped questions about why the administration hasn’t nominated anyone.

“We are working speedily to deal with this,” Lew said. “I think the fact that we brought in a new acting commissioner on such short notice and it’s a person of high quality and high character is demonstration of how important we think it is to have a leader there.”

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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