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Obama Chief of Staff Got Early Word of Improper IRS Scrutiny

May 20 (Bloomberg) -- President Barack Obama’s chief of staff was told that an investigation found IRS employees improperly scrutinized Tea Party and small-government advocacy groups seeking tax-exempt status before the report was made public, White House press secretary Jay Carney said.

Obama wasn’t informed of the probe at the time, Carney said. Chief of staff Denis McDonough was told by White House Counsel Kathryn Ruemmler about the inspector general’s audit and the probable findings after Ruemmler was briefed on it on April 24, he said. The president has said he learned of the audit when the likely findings were first made public May 10.

“We knew of the subject of the investigation, and we knew the nature of some of the potential findings,” Carney said. “But we did not have a copy of the draft report, we did not know the details, the scope, or the motivation surrounding misconduct and we did not know who was responsible.”

The information given to Ruemmler was “very top line” and it was she who decided not to notify Obama, Carney said. It’s a “cardinal rule” that the White House or Treasury Department not intervene or appear to intervene in an independent investigation, he said.

Improperly Scrutinized

Carney said Ruemmler was informed by the Treasury Department’s General Counsel’s office April 24 that the Inspector General for Tax Administration was completing a report that found that IRS employees improperly scrutinized political organizations seeking tax exempt status by searching their applications for words including “Tea Party” and “patriot.”

The previous week, on April 16, Ruemmler had learned more generally that there were a number of Inspector General reports being finalized and an IRS investigation was among those investigations, Carney said.

Carney’s comments today are at odds with what he told reporters last week, when he said the White House counsel “only found out about the review being conducted and coming to conclusion by the inspector general.”

Carney insisted the two statements aren’t in conflict and today he just provided additional information.

‘No Specificity’

The White House counsel “was told, broadly, that there’s an inspector general audit reaching its conclusion,” he said. “The potential findings are that some people improperly targeted conservative organizations in their applications for tax-exempt status, but there was no specificity about who, about motivation, certainly no names of involvement, and it was not concluded.”

Four congressional committees and the Justice Department are investigating the inspector general’s findings that the Internal Revenue Service beginning in 2010 targeted for extra review anti-tax Tea Party groups seeking tax-exempt status.

Obama forced out the acting IRS commissioner, and U.S. Treasury Secretary Jacob J. Lew has ordered agency officials to deliver within 30 days a plan to correct any “systemic” shortcomings.

Hearings are scheduled this week, including one by the House Oversight and Government Reform Committee with testimony from Douglas Shulman, an appointee by President George W. Bush and the IRS commissioner from March 2008 to November 2012.

Bipartisan Criticism

The IRS actions have drawn criticism from Democrats as well as Republicans. The Senate Finance Committee directed the IRS to identify the agency employees and managers who devised or approved the guidelines for identifying “potential political cases” by targeting groups seeking tax-exempt status.

The panel asked for a list of “all words or phrases” that were used to flag organizations for special scrutiny, according to a letter from the panel’s chairman, Montana Democrat Max Baucus and its top Republican, Utah Senator Orrin Hatch, that was released by the committee.

It also asked whether the IRS audited donors or other individual taxpayers associated with those organizations.

Carney said that Ruemmler told senior staff about the IG report’s findings, though he declined to say who the officials were, other than McDonough. He said there was communication between the counsel’s office, McDonough’s office and the Treasury Department about the potential findings.

To contact the reporters on this story: Julianna Goldman in Washington at; Roger Runningen in Washington at

To contact the editor responsible for this story: Steven Komarow at

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