May 15 (Bloomberg) -- President Barack Obama announced the resignation of acting Internal Revenue Service Commissioner Steven Miller amid an escalating scandal over the agency’s selective scrutiny of nonprofit organizations.
“It’s inexcusable, and Americans are right to be angry about it, and I am angry about it,” Obama said today at the White House in announcing Miller’s departure. “It’s important to institute new leadership that can help restore confidence.”
Miller was forced out after the IRS acknowledged on May 10 that employees had selectively screened groups’ applications for tax-exempt status based in part on whether their names included the phrases “tea party” or “patriot.”
Obama didn’t say who will run the IRS in the interim. He hasn’t nominated a permanent commissioner since the term of Douglas Shulman, a George W. Bush appointee, ended in November.
“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. “And there is a strong and immediate need to restore public trust in the nation’s tax agency.”
Miller wrote that he will leave the IRS in June, completing a 25-year career, after working on an “orderly transition” to a new acting commissioner.
Republicans have complained since early 2012 about delays in approving anti-tax Tea Party groups’ applications and the extensive questionnaires sent to the organizations. The targeting of groups started in 2010, and some IRS managers knew by June 2011.
“More than two years after the problem began, and a year after the IRS told us there was no problem, the president is beginning to take action,” Senator Mitch McConnell of Kentucky, the chamber’s Republican leader, said in a statement today after Obama’s remarks.
“If the president is as concerned about this issue as he claims,” McConnell said, “he’ll work openly and transparently with Congress to get to the bottom of the scandal -- no stonewalling, no half-answers, no withholding of witnesses.”
Shulman told lawmakers in March 2012 that the agency wasn’t targeting groups based on their ideology. Miller said in July 2012 that the IRS had grouped applications together without explaining how it was done.
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 done to avoid interfering with an inspector general’s report.
Lawmakers have been focusing on the officials’ silence amid intense congressional interest in the issue.
The issue exploded into a scandal on May 10, when Lois Lerner, a mid-level IRS official, acknowledged the practice and apologized. She spoke four days before the release of the inspector general’s report.
Attorney General Eric Holder has opened a criminal probe and four separate congressional committees are investigating.
“My question isn’t about who’s going to resign,” House Speaker John Boehner said earlier today. “My question is: Who is going to jail over the scandal?”
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 if the evidence points that way.
“The facts will take us wherever they take us,” Holder told the House Judiciary Committee today as he pledged to lawmakers that the investigation would be “dispassionate” and nonpartisan. “Anybody that has broken the law will be held accountable.”
The House Ways and Means Committee will hold the first hearing on the controversy on May 17. Miller and Russell George, the IRS inspector general, will testify.
The Senate Finance Committee will hold a hearing May 21 and the House Oversight and Government Reform Committee will follow on May 22.
The oversight committee requested transcribed interviews with five mid-level and lower-ranking IRS employees: Holly Paz, John Shafer, Gary Muthert, Liz Hofacre and Joseph Herr.
Also today, the IRS gave a clearer explanation for why employees started using “tea party” to screen applications for tax-exempt status. Some employees had noticed applications from tea party groups that had presented concerns that they were too political to qualify as a social welfare group, the agency said in a questions-and-answers document.
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