Former IRS chief heads to Congress amid scandal

In this Aug. 2, 2012, Associated Press file photo, then-Internal Revenue Service Commissioner Douglas Shulman testifies on Capitol Hill in Washington. Shulman heads to Capitol Hill on May 21, 2013, giving lawmakers their first opportunity to question the man who ran the agency when agents were improperly targeting tea party groups.

WASHINGTON — Lawmakers are getting their first chance to question the former head of the Internal Revenue Service, the man who ran the agency when agents were improperly targeting conservative groups.

Some of the questions on Tuesday will be direct: What did you know, and when did you know it?

They also want to know why former IRS Commissioner Douglas Shulman didn’t tell Congress that agents had been singling out conservative political groups for additional scrutiny when they applied for tax-exempt status — even after he was briefed.

Shulman, who was appointed by President George W. Bush, left the IRS in November when his five-year term ended. He could prove to be a significant player in a scandal that has driven the Obama administration to distraction. Shulman is testifying before the Senate Finance Committee, which has launched a bipartisan investigation into the matter.

On Monday, the White House revealed that chief of staff Denis McDonough and other senior presidential advisers knew in late April that an upcoming report by a Treasury Department inspector general was likely to find that IRS employees had inappropriately targeted conservative political groups.

The White House says McDonough and the other advisers did not tell President Barack Obama about the impending report, leaving him to learn the results from news reports on May 10. White House press secretary Jay Carney said Obama was comfortable with the fact that “some matters are not appropriate to convey to him, and this is one of them.”

A Treasury official also disclosed Monday that the department told the White House twice in late April about IRS plans to address the targeting publicly, including during congressional testimony and a possible speech by Lois Lerner, the head of the IRS division that oversees tax-exempt groups. White House deputy chief of staff Mark Childress and Treasury chief of staff Mark Patterson were in communication on the matter, as were lawyers at the White House and Treasury.

However, the official said Treasury did not tell the White House about Lerner’s eventual decision to apologize for the targeting at a conference on May 10. The official was not authorized to discuss the matter publicly and insisted on anonymity.

Opposition Republicans have seized on the audit by a Treasury Department inspector general, which found that Internal Revenue Service employees singled out groups with names like “tea party” and “patriots” for special scrutiny that delayed their applications for tax exempt status — including during last year’s presidential election.

Key words such as “tea party” and “patriots” are often used by conservative groups critical of Obama and his fellow Democrats.

Republicans are using the news to criticize Obama ahead of next year’s elections for Congress. The controversy also has reignited the small-government tea party movement, whose influence in last year’s election had waned compared to its muscular role in 2010.

The IRS is an independent agency within the Treasury Department. Because of that independent status, the official said Treasury deferred to the IRS in its decision about how to make the targeting public.

A new poll by the Pew Research Center says 42 percent of adults think the Obama administration was involved in targeting conservative groups. Thirty-one percent said the decision was made by IRS employees, while the rest said they didn’t know.

On Monday, the panel’s top two members raised questions about the agency’s rationale for why agents targeted conservative groups in the first place. IRS officials have said the agency was facing a large increase in the number of applications for tax-exempt status, so agents adopted inappropriate shortcuts to identify groups that may be involved in political activity.

But at the time when agents started targeting conservative groups, the number of applications was relatively flat, according to a report by the agency’s inspector general.

Committee Chairman Max Baucus and Utah Sen. Orrin Hatch, the ranking Republican, sent a letter to the agency Monday, asking for an explanation. The letter included 41 separate requests for information. They gave the IRS until May 31 to respond.

The two senators said the IRS had not been forthcoming about the issue in the past.

“Targeting applicants for tax-exempt status using political labels threatens to undermine the public’s trust in the IRS,” Baucus and Hatch wrote. “Lack of candor in advising the Senate of this practice is equally troubling.”

For more than a year, from 2011 through the 2012 election, members of Congress repeatedly asked Shulman about complaints from conservative tea party groups that they were being harassed by the IRS.

Shulman’s responses, usually relayed by a deputy, did not acknowledge that agents had ever targeted tea party groups for special scrutiny. At a congressional hearing March 22, 2012, Shulman was adamant in his denials.

“There’s absolutely no targeting. This is the kind of back and forth that happens to people” who apply for tax-exempt status, Shulman said at the House Ways and Means subcommittee hearing.

The IRS has said Shulman did not know about the targeting at the time of the hearing.

The agency’s inspector general says he told Shulman on May 30, 2012, that his office was auditing the way applications for tax-exempt status were being handled, in part because of complaints from conservative groups. However, the inspector general, J. Russell George, said he did not reveal the results of his investigation.

George was also testifying at Tuesday’s hearing. So was Steven Miller, who took over as acting commissioner in November, when Shulman’s term expired. Last week, Obama forced Miller to resign.

George issued a report last week blaming ineffective management for allowing agents to inappropriately target conservative groups for more than 18 months during the 2010 and 2012 election campaigns.

The agents were trying to determine whether the groups were engaged in political activity. Certain tax-exempt groups are allowed to engage in politics, but politics cannot be their primary mission. It is up to the IRS to make the determination, so agents are supposed to look for clues when reviewing applications for tax-exempt status.

In March 2010, agents starting singling out groups with “Tea Party” or “Patriots” on their applications. By August 2010, it was part of the written criteria for identifying groups that required more scrutiny, according to George’s report.

Agents did not flag similar progressive or liberal labels, though some liberal groups received additional scrutiny because their applications were singled out for other reasons, the report said.