Lew Says IRS Actions Were ‘Unacceptable and Inexcusable’

U.S. Treasury Secretary Jacob J. Lew called IRS screening of Tea Party groups unacceptable, saying the administration of the nation’s tax system should stay free of political preferences.

“As the inspector general’s report indicates, while this conduct was not politically motivated, it was unacceptable and inexcusable,” Lew told the Senate Banking Committee today. “Administering the tax code without any hint of bias is a solemn obligation that must be carried out with the highest of standards.”

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

President Barack Obama forced out the acting IRS commissioner, and Lew has ordered agency officials to deliver within 30 days a plan to correct any “systemic” shortcomings.

The scandal erupted May 10 when Lois Lerner, the IRS’s director of exempt organizations, apologized at a tax conference for singling out certain groups for further examination of their tax-exempt applications. The IRS wrote and planted the question that led to Lerner’s disclosure, Washington lawyer Celia Roady, who asked the question, said in a statement May 17.

IRS’s Decision

Lew, in response to a question from Idaho Republican Mike Crapo, the committee’s ranking Republican, said he “would have advised against” planting the question. “But it was a decision for the IRS to make.”

Senator Bob Corker, a Tennessee Republican, called Lew’s “indignation” over the IRS scandal “kind of laughable.” He said the Obama administration has demonized Tea Party groups and may have created a culture that made IRS bureaucrats feel empowered.

Lew responded that Obama has never done anything “to condone this kind of behavior” and both he and the president were “outraged.”

In an interview after he questioned Lew at the hearing, Senator Richard Shelby, an Alabama Republican, called for “a real searching probe” that would determine whether IRS employees received “some type of a wink or a nod or perhaps more, from higher-ups.”

The Treasury Department said in a statement May 17 that the IRS inspector general’s report described “outrageous and inappropriate conduct by IRS personnel between 2010 and 2012,” and said the Treasury was unaware of it “during that time period.”

Lew Transition

Lew took office in February after serving as Obama’s chief of staff since January 2012.

The department first became aware of the inspector general’s draft audit findings in March this year, the Treasury said May 17. The IRS inspector general, Russell George, had a “short introductory meeting” with Lew on March 15 during which he told the secretary of the upcoming audit report.

George didn’t describe the audit’s contents and both Lew and Deputy Treasury Secretary Neal Wolin learned about the findings when they were reported publicly this month, according to the Treasury’s statement.

Before it's here, it's on the Bloomberg Terminal.