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Republicans Summon IRS Chief for More Queries on Agency

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July 11 (Bloomberg) -- House Republicans, as part of their multi-pronged focus on the Internal Revenue Service, are calling the agency’s interim leader to testify next week to explain how the IRS selects small businesses for audits.

Danny Werfel will appear before the House Small Business Committee on July 17, a day before other IRS employees appear before the Oversight and Government Reform panel to talk about the selective scrutiny they applied to small-government groups.

“Our intention is to make sure small businesses aren’t being unfairly audited or scrutinized for inappropriate purposes, as has occurred with some conservative leaning nonprofit groups,” Representative Sam Graves, a Missouri Republican and chairman of the Small Business Committee, said in a statement.

In addition to the two hearings, House Republicans are proposing a 24 percent budget cut to the IRS, imposing new restrictions on agency bonuses, videos and conferences, and preparing legislation to remove it from enforcement duties for the 2010 health-care law.

Republicans have seized on the controversies surrounding the agency and the unpopularity of tax enforcement to make the anti-IRS push a centerpiece of their agenda.

At the July 18 oversight hearing, IRS employees from Washington and Cincinnati will be asked about the delays experienced by groups applying for nonprofit status, Representative Darrell Issa said.

Delayed Process

Issa, the chairman of the House Oversight and Government Reform Committee, said in announcing his hearing that interference from IRS officials in Washington delayed anti-tax Tea Party groups’ applications for nonprofit status.

“This hearing will examine why decisions to elevate cases to more senior levels of the IRS led to unjust delays and unfair treatment of Tea Party applications,” Issa, a California Republican, said in a statement. “Had Washington IRS officials simply kept their hands off these cases and allowed employees in the Cincinnati office to process applications independently, instead of facing excessive delays, these cases would have been processed just like other advocacy cases.”

The IRS said May 10 that it had given extra scrutiny to Tea Party groups, some of which experienced delays in their dealings with the agency exceeding three years. The disclosure has prompted six congressional inquiries, a Justice Department criminal probe and the resignation of the acting IRS commissioner.

Single Application

Interviews conducted by the oversight committee have shown that a Cincinnati-based employee started the scrutiny of Tea Party cases in 2010 by flagging a single application. Cincinnati employees quickly brought the issue to Washington-based lawyers for guidance, starting the process that led to delays and what the IRS later said were inappropriate questions.

The investigation so far hasn’t revealed any involvement from IRS officials outside of the exempt organizations division or from outside the agency. It also hasn’t revealed evidence of politically motivated targeting.

The oversight committee has yet to announce the witness list for its hearing.

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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