WASHINGTON - Acting Internal Revenue Service Commissioner Steven T. Miller failed to tell Congress that tea party groups were being inappropriately targeted, even after he had been briefed on the matter.
The IRS said Monday that Miller was first informed on May, 3, 2012, that applications for tax-exempt status by tea party groups were inappropriately singled out for extra, sometimes burdensome scrutiny.
On June 15, 2012, Miller wrote a member of Congress to explain the process of reviewing applications for tax-exempt status without mentioning the controversy.
In this file photo, Internal Revenue Service (IRS) Commissioner Douglas Shulman testifies on Capitol Hill in Washington, before the House Oversight Committee. The Internal Revenue Service inappropriately flagged conservative political groups for additional reviews during the 2012 election to see if they were violating their tax-exempt status, a top IRS official said Friday.
Rep. Charles Boustany, R-La., had raised concerns with the IRS about complaints that tea party groups were being harassed. Boustany specifically mentioned tea party groups in his inquiry.
But Miller gave a generic response.
He said that when the IRS saw an increase in applications from groups that were involved in political activity, the agency "took steps to coordinate the handling of the case to ensure consistency."
He added that agents worked with tax law experts "to develop approaches and materials that could be helpful to the agents working the cases."
Miller did not mention that in 2011, those materials included a list of words to watch for, such as "tea party" and "patriot." He also didn't disclose that in January 2012, the criteria for additional screening was updated to include references to the Constitution or the Bill of Rights.
"They repeatedly failed to disclose and be truthful about what they were doing," said Rep. Dave Camp, R-Mich., chairman of the House Ways and Means Committee.
Camp's committee is holding a hearing on the issue Friday and Miller is scheduled to testify.
"We are going to need to find out how much he knew," Camp said of Miller.
The Senate Finance Committee announced Monday that it will join a growing list of congressional committees investigating the matter.
"We need to know who knew what, and exactly what mistakes were made," said Sen. Max Baucus, D-Mont., chairman of the finance committee. "The American people have questions for the IRS and I intend to get answers."
The IRS apologized Friday for what it acknowledged was "inappropriate" targeting of conservative political groups during the 2012 election to see whether they were violating their tax-exempt status. In some cases, the IRS acknowledged, agents inappropriately asked for lists of donors.
The agency blamed low-level employees in a Cincinnati office, saying no high-level officials were aware.
When members of Congress repeatedly raised concerns with the IRS about complaints that tea party groups were being harassed last year, a deputy IRS commissioner took the lead in assuring lawmakers that the additional scrutiny was a legitimate part of the screening process.
That deputy commissioner was Miller, who is now the acting head of the agency.
In several letters to members of Congress, Miller went into painstaking detail about how applications for tax-exempt status were screened. But he never mentioned that conservative groups were being targeted.
Only one of Miller's letters obtained by The AP came after his May 2012 briefing. However, many people working under him knew as early as June 2011 that tea party groups were being targeted, according to an upcoming report by the agency's inspector general.
In one 10-page response to Congress in April 2012, Miller said a revenue agent uses "sound reasoning based on tax law training" to determine which applications for tax-exempt status need additional scrutiny.
Camp and other members of the Ways and Means Committee sent at least four inquiries to the IRS, starting in June 2011. Utah Sen. Orrin Hatch, the top Republican on the Senate Finance Committee, sent three inquiries. And Rep. Darrell Issa, R-Calif., chairman of the House oversight committee, sent at least one.
None of the responses they received from the IRS acknowledged that conservative groups had ever been targeted.
"They really failed to disclose to us what they were up to, even though we obviously had a concern that they were targeting taxpayers for their political beliefs," Camp said. "Given all of that attention, they had an obligation and duty to come forward with this information."
The IRS issued a statement Monday saying that Miller had been briefed on May 3, 2012 "that some specific applications were improperly identified by name and sent to the (exempt organizations) centralized processing unit for further review." That was the unit in Cincinnati that handled the tea party applications.
On June 29, 2011, Lois G. Lerner, who heads the IRS division that oversees tax-exempt organizations, learned at a meeting that groups were being targeted, according to a draft of the report by the Treasury inspector general for tax administration.
At the meeting, Lerner was told that groups with "Tea Party," ''Patriot" or "9/12 Project" in their names were being flagged for additional and often burdensome scrutiny, the report says. Lerner instructed agents to change the criteria for flagging groups "immediately."
However, when Lerner responded to inquiries from the House oversight committee, she didn't mention the fact that tea party groups had ever been targeted. Her responses included 45-page letters in May 2012 to Rep. Darrell Issa, R-Calif., who chairs the committee, and Rep. Jim Jordan, R-Ohio, who chairs a subcommittee.
Lerner also met twice with staff from the House Ways and Means oversight subcommittee to discuss the issue, in March and in May 2012, according to a timeline constructed by committee staff. She didn't mention at either meeting that conservative groups had been targeted, according to the timeline.
At the IRS, Lerner reports to Joseph Grant, commissioner of the Tax Exempt and Government Entities Division. Grant responded to two congressional inquiries, both without mentioning the targeting of conservative groups.
Grant reported to Miller, when Miller was the deputy commissioner.
"Knowing what we know now, the IRS was at best being far from forth coming, or at worst, being deliberately dishonest with Congress," Hatch said Monday.
Miller became acting commissioner in November, after Commissioner Douglas Shulman completed his five-year term. Shulman had been appointed by President George W. Bush.
Shulman was adamant that conservative groups were not targeted when he testified before a Ways and Means subcommittee in March 2012.
"There's absolutely no targeting," Shulman testified. "This is the kind of back and forth that happens when people apply for (tax-exempt) status."
On Monday, President Barack Obama said he first learned about the issue from news reports on Friday. White House spokesman Jay Carney said the White House counsel's office was alerted the week of April 22 that the inspector general was finishing a report concerning the IRS office in Cincinnati. But, he said, the counsel's office did not get the report and the president did not learn the focus until Friday.
"If, in fact, IRS personnel engaged in the kind of practices that had been reported on and were intentionally targeting conservative groups, then that's outrageous and there's no place for it," Obama said Monday at a press conference. "And they have to be held fully accountable, because the IRS as an independent agency requires absolute integrity, and people have to have confidence that they're applying it in a non-partisan way, applying the laws in a non-partisan way."
There has been a surge of politically active groups claiming tax-exempt status in recent elections - conservative and liberal. These groups claim tax-exempt status under section 501 (c) (4) of the federal tax code, which is for social welfare groups. Unlike other charitable groups, these organizations are allowed to participate in political activities, but their primary activity must be social welfare.
That determination is up to the IRS.
In all, about 300 groups were singled out for additional review, the IRS said. Of those, about a quarter were singled out because they had "tea party" or "patriot" somewhere in their applications.
About 150 of the cases have been closed and no group had its tax-exempt status revoked, though some withdrew their applications, Lerner said Friday.