[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
HEARING ON INTERNAL REVENUE
SERVICE TARGETING CONSERVATIVE GROUPS
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
MAY 17, 2013
__________
SERIAL 113-FC07
__________
Printed for the use of the Committee on Ways and Means
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COMMITTEE ON WAYS AND MEANS
DAVE CAMP, Michigan,Chairman
SAM JOHNSON, Texas SANDER M. LEVIN, Michigan
KEVIN BRADY, Texas CHARLES B. RANGEL, New York
PAUL RYAN, Wisconsin JIM McDERMOTT, Washington
DEVIN NUNES, California JOHN LEWIS, Georgia
PATRICK J. TIBERI, Ohio RICHARD E. NEAL, Massachusetts
DAVID G. REICHERT, Washington XAVIER BECERRA, California
CHARLES W. BOUSTANY, Jr., Louisiana LLOYD DOGGETT, Texas
PETER J. ROSKAM, Illinois MIKE THOMPSON, California
JIM GERLACH, Pennsylvania JOHN B. LARSON, Connecticut
TOM PRICE, Georgia EARL BLUMENAUER, Oregon
VERN BUCHANAN, Florida RON KIND, Wisconsin
ADRIAN SMITH, Nebraska BILL PASCRELL, Jr., New Jersey
AARON SCHOCK, Illinois JOSEPH CROWLEY, New York
LYNN JENKINS, Kansas ALLYSON SCHWARTZ, Pennsylvania
ERIK PAULSEN, Minnesota DANNY DAVIS, Illinois
KENNY MARCHANT, Texas LINDA SANCHEZ, California
DIANE BLACK, Tennessee
TOM REED, New York
TODD YOUNG, Indiana
MIKE KELLY, Pennsylvania
TIM GRIFFIN, Arkansas
JIM RENACCI, Ohio
Jennifer M. Safavian, Staff Director and General Counsel
Janice Mays, Minority Chief Counsel
C O N T E N T S
__________
Page
Advisory of May 17, 2013 announcing the hearing.................. 2
WITNESSES
Steve Miller, Acting Commissioner of the Internal Revenue Service 21
J. Russell George, Treasury Inspector General for Tax
Administration................................................. 9
HEARING ON INTERNAL REVENUE SERVICE TARGETING CONSERVATIVE GROUPS
----------
FRIDAY, MAY 17, 2013
U.S. House of Representatives,
Committee on Ways and Means,
Washington, D.C.
The committee met, pursuant to call, at 9:00 a.m., in Room
1100, Longworth House Office Building, the Honorable Dave Camp
[chairman of the committee] presiding.
[The advisory of the hearing follows:]
HEARING ADVISORY
Chairman Camp Announces Hearing on Internal Revenue Service Targeting
Conservative Groups
Washington, May 13, 2013
Congressman Dave Camp, (R-MI), Chairman of the Committee on Ways
and Means, and Congressman Sander Levin (D-MI), Ranking Member of the
Ways and Means Committee, today announced that the Committee will hold
a hearing on the Internal Revenue Service (``IRS'') practice of
targeting applicants for tax-exempt status based on political leanings.
The hearing will take place on Friday, May 17, 2013, in Room 1100 of
the Longworth House Office Building, beginning at 9:00 A.M.
Acting Commissioner of the Internal Revenue Service, Mr. Steve
Miller, and the Treasury Inspector General for Tax Administration, J.
Russell George, will be the only witnesses at the hearing. However, any
individual or organization not scheduled for an oral appearance may
submit a written statement for consideration by the Committee and for
inclusion in the printed record of the hearing.
BACKGROUND:
Since June 2011, the Committee on Ways and Means has been
investigating whether the Internal Revenue Service discriminated
against taxpayers based on political opinions. News reports indicate
that the agency is now admitting this past practice.
In announcing the hearing, Chairman Camp said, ``The American
public expects the Internal Revenue Service to be apolitical in its
enforcement of our tax laws. News that the agency admits it targeted
American taxpayers based on politics is both astounding and appalling.
The Committee on Ways and Means will get to the bottom of this practice
and ensure it never takes place again.''
In announcing the hearing, Ranking Member Sander Levin said, ``The
American people must have the fullest confidence that organizations
requesting tax exemption receive completely unbiased treatment from the
Internal Revenue Service and are never singled out by name or political
views. The nation deserves a complete understanding of this matter, and
as Chairman Camp and I discussed this morning, it is essential that
there be a thorough and bipartisan investigation and effective remedial
action.''
FOCUS OF THE HEARING:
The hearing will focus on the Internal Revenue Service's practice
of discriminating against applicants for tax-exempt status based on the
political leanings of the applicants.
DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:
Please Note: Any person(s) and/or organization(s) wishing to submit
written comments for the hearing record must follow the appropriate
link on the hearing page of the Committee website and complete the
informational forms. From the Committee homepage, http://
waysandmeans.house.gov, select ``Hearings'' Select the hearing for
which you would like to submit, and click on the link entitled, ``Click
here to provide a submission for the record.'' Once you have followed
the online instructions, submit all requested information. ATTACH your
submission as a Word document, in compliance with the formatting
requirements listed below, by the close of business on Thursday, May
30, 2013. Finally, please note that due to the change in House mail
policy, the U.S. Capitol Police will refuse sealed-package deliveries
to all House Office Buildings. For questions, or if you encounter
technical problems, please call (202) 225-3625 or (202) 225-5522.
FORMATTING REQUIREMENTS:
The Committee relies on electronic submissions for printing the
official hearing record. As always, submissions will be included in the
record according to the discretion of the Committee. The Committee will
not alter the content of your submission, but we reserve the right to
format it according to our guidelines. Any submission provided to the
Committee by a witness, any supplementary materials submitted for the
printed record, and any written comments in response to a request for
written comments must conform to the guidelines listed below. Any
submission or supplementary item not in compliance with these
guidelines will not be printed, but will be maintained in the Committee
files for review and use by the Committee.
1. All submissions and supplementary materials must be provided in
Word format and MUST NOT exceed a total of 10 pages, including
attachments. Witnesses and submitters are advised that the Committee
relies on electronic submissions for printing the official hearing
record.
2. Copies of whole documents submitted as exhibit material will not
be accepted for printing. Instead, exhibit material should be
referenced and quoted or paraphrased. All exhibit material not meeting
these specifications will be maintained in the Committee files for
review and use by the Committee.
3. All submissions must include a list of all clients, persons and/
or organizations on whose behalf the witness appears. A supplemental
sheet must accompany each submission listing the name, company,
address, telephone, and fax numbers of each witness.
The Committee seeks to make its facilities accessible to persons
with disabilities. If you are in need of special accommodations, please
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four
business days notice is requested). Questions with regard to special
accommodation needs in general (including availability of Committee
materials in alternative formats) may be directed to the Committee as
noted above.
Note: All Committee advisories and news releases are available on
the World Wide Web at http://www.waysandmeans.house.gov/.
_________
Chairman CAMP. The Committee on Ways and Means will come to
order.
On May 10th, Lois Lerner, Director of Exempt Organizations
for the Internal Revenue Service division that oversees tax
exempt groups, finally acknowledged that the agency had been
targeting conservative-leaning political organizations. Four
days later the Treasury Inspector General for Taxpayer
Administration confirmed that ``The IRS used inappropriate
criteria to identify organizations applying for tax exempt
status.'' The report also confirmed that this abuse of power
began as far back as 2010.
This revelation goes against the very principles of free
speech and liberty upon which this country was founded. The
blatant disregard with which the agency has treated Congress
and the American taxpayer raises serious concerns about
leadership at the IRS.
Let's establish the facts that we do know. Based on the
TIGTA report we know that for an 18-month period beginning in
spring 2010 IRS employees in the agency's Determinations Unit
employed key words such as ``tea party,'' ``Patriot'' and ``\9/
12\'' to target applications for tax exempt status. These
groups were then subjected to further IRS investigation and
document requests. IRS employees later expanded their search to
include groups concerned about government spending, debt,
taxes, the Constitution, the Bill of Rights, or trying to
``make America a better place to live.'' Let me repeat that.
People were targeted for trying to make America a better place
to live.
These Americans had their applications delayed for nearly 3
years and at least 98 applicants were asked for improper and
inappropriate information such as donor lists and whether
family members planned to run for political office. During that
delay and while applications of conservative groups sat
untouched for more than a year, other applications with names
like ``progress'' and ``progressive'' were approved in just a
matter of months. The headline in USA Today from earlier this
week really says it all. ``IRS gave liberals a pass; Tea Party
groups put on hold.''
TIGTA's audit found that some of those cases should have
been set aside because of concerns related to their potential
political activity, but no such review was done. Without
objection, I enter the USA Today news report into the record.
[The news article follows:]
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__________
Chairman CAMP. This week we learned that senior IRS
officials knew about this activity almost 2 years ago in June
of 2011 and IRS's leadership in Washington knew of it in May
2012, a year ago. Despite a 2-year long investigation by this
committee, the IRS never told the American people or their
representatives about this simple truth. In fact, we were
repeatedly told no such targeting was happening. That isn't
being misled, that is lying.
But now we know the truth, or at least some of it. We also
know that these revelations are just the tip of the iceberg. It
would be a mistake to treat this as just one scandal. This may
be the one generating headlines, but in total I count at least
five serious violations of taxpayer rights, the right to be
treated fairly, honestly and impartially by their government.
First, back in August of 2010 a White House official
discussed the status of a private company, the tax status of a
private company, a clear intimidation tactic.
Second, in June of 2010 the targeting of conservative
groups began.
Third, in May of 2011 the IRS started to threaten donors to
conservative-leaning nonprofits that they were liable for
certain taxes.
Fourth, in March of 2012 the Huffington Post published a
confidential 2008 donor list of the National Organization for
Marriage, a conservative tax exempt organization.
Fifth, but unlikely the final transgression, Pro Publica
announced that the IRS had leaked confidential applications for
tax exempt status from conservative groups.
Mr. Miller, with all due respect, this systematic abuse
cannot be fixed with just one resignation or two, and as much
as I expect more people need to go, the reality is this is not
a personnel problem. This is a problem of the IRS being too
large, too powerful, too intrusive and too abusive of honest,
hard-working taxpayers.
There isn't a person I come into contact with at home or
anyone in this country frankly who does not fear the IRS. They
fear getting something wrong on their tax filing and they fear
the IRS's ability to audit them and wreak havoc in their lives,
especially when all they are trying to do is improve their
lives, let alone, God forbid, trying to make America a better
place to live, which is what the IRS targeted them for.
Under that kind of thinking, every civic group in America
is at risk, the Knights of Columbus, the Rotary, the Jaycees,
the American Legion and VFW clubs. I am sure you are aware of
the saying that the power to tax is the power to destroy. Well,
under this administration the IRS has abused its power to tax
and it has destroyed what little faith and hope the American
people had in getting a fair shake in Washington.
This will not stand. Trimming a few branches will not solve
the problem when the roots of the tree have gone rotten. And
that is exactly what has happened with our entire tax system.
It is rotten at the core and it must be ripped out so we can
start fresh. Only then will the American people get a tax
system that treats them fairly and honestly as they deserve.
And while that is a larger discussion, it is directly tied to
the issue before us today, how and why our tax system has gone
so far off track.
Many questions still remain. Why did the IRS repeatedly
target the American people and then keep that fact covered up
for so long? Who started the targeting? Who knew? When did they
know and how high did it go? Who leaked the private taxpayer
information? Why were the names of donors asked for and what
was done with those lists before they were supposedly
discarded? And when did the administration know about each of
these and what was its reaction?
Listening to the nightly news, this appears to be just the
latest example of a culture of cover-up and political
intimidation in this administration. It seems like the truth is
hidden from the American people just long enough to make it
through an election.
The American people have a right to the truth, to a
government that delivers the facts, good or bad, no matter
what. President Obama promised to be different and to deliver a
better government, the most transparent in history. He was
right, America deserves better. It is time to end the
corruption at the IRS and fix a Tax Code that allows Washington
and the IRS to pick who wins and who loses in America.
I expect nothing less than total cooperation by the IRS and
this administration as we investigate what happened and what we
must do to fix it.
I now recognize Ranking Member Levin for the purpose of his
opening statement and thank him for his commitment to pursue
this issue.
Mr. LEVIN. Thank you, Mr. Chairman. I am going to read my
opening statement. I will expand on it a bit, now that I have
heard the opening statement of the chairman.
This committee on a bipartisan basis takes seriously its
oversight role and we are fully committed to ensuring an IRS
that serves the American people fairly and efficiently. What is
now completely clear is that the management and oversight of
the agency's handling of tax-exemption applications have
completely failed the American people. I emphasize that. As we
know from the Inspector General's audit, the agency used
totally inappropriate criteria in its review of tax-exemption
applications, singling out organizations for review based on
their name or political views rather than their actual
activities.
These criteria changed four times over 2 years with little
management review or oversight. Applications sat for years.
Work stopped for 13 months while one department waited to hear
back from another. Questions were asked that were not
necessary. Again, no oversight, no accountability. All of us
are angry at this on behalf of the Nation and we are determined
to get answers to our questions about how this happened to
ensure that it does not happen again.
Finally, throughout this time the IRS leadership has
demonstrated a total disregard for the oversight role of the
Congress and this committee. Former IRS Commissioner Shulman
testified in front of us in March 2012 and said that ``no
targeting'' was going on. Two months later he was briefed on
the IG's investigation and was fully informed that indeed
singling out by name had occurred on his watch. He had an
obligation to return to this committee and set the record
straight. So did Mr. Miller. Neither fulfilled their
obligations.
A little more than a week ago Lois Lerner was in front of
our Oversight Subcommittee. She serves as the Director of the
Exempt Organization Division and she has been directly involved
in this matter. Yet she failed to disclose what she knew to
this committee, choosing instead to do so at an ABA conference
2 days later. This is wholly unacceptable and one of the
reasons that we believe, and as I stated several days ago, Ms.
Lerner should be relieved of her duties.
Chairman Camp and I put together this hearing on a
bipartisan basis to get the facts. We must seek the truth, not
political gain.
I just want to add in that regard, Mr. Camp has said
listening to the nightly news this appears to be just the
latest example of a culture of cover-ups and political
intimidation in this Administration. It seems like the truth is
hidden from the American people just long enough to make it
through an election.
I totally, totally disagree. If this hearing becomes
essentially a bootstrap to continue the campaign of 2012 and to
prepare for 2014, we will be making a very, very serious
mistake and indeed not meeting our obligation of trust to the
American people.
You are here today, Mr. Miller, you are here today, the
Inspector General, to talk about what happened, how it
happened, where it happened and who knew what when. And if
instead this hearing essentially becomes an effort to score
political points, it will be a disregard of the duties of this
committee.
So I conclude with the sentence we must seek the truth, not
political gain. We look forward to full and forthcoming answers
to our questions today.
Chairman CAMP. Thank you. Before the witnesses are
recognized for their opening statements I will first swear them
in. While this is the prerogative of every committee chair, it
has not been the custom here at Ways and Means, but then it is
not customary for this committee to have been so repeatedly
misled by an agency under its purview. So while it is always
against the law to provide false statements to Congress, the
act of swearing in a witness impresses upon him or her the
gravity of the proceeding and the need to tell the full and
complete truth.
Please raise your right hands.
Do you solemnly swear or affirm that the testimony you are
about to give will be the truth, the whole truth and nothing
but the truth, so help you God?
Mr. MILLER. I do.
Mr. GEORGE. I do.
Chairman CAMP. Let the record reflect the witnesses
answered in the affirmative. Thank you.
I would like to welcome J. Russell George, who has been the
Treasury Inspector General for Tax Administration. I think we
will wait for the camera pool to leave at this point.
Thank you. I would like to welcome J. Russell George, who
has been the Treasury Inspector General for Tax Administration
since 2002, and Mr. Steven Miller, who is currently the Acting
Commissioner for the IRS. Thank you both for being with us
today. You will each have five minutes to present your
testimony, with your full written testimony submitted for the
record.
Mr. George, we will begin with you. You are recognized for
5 minutes.
TESTIMONY OF THE HONORABLE J. RUSSELL GEORGE, TREASURY
INSPECTOR GENERAL FOR TAX ADMINISTRATION
Mr. GEORGE. Chairman Camp, Ranking Member Levin, Members of
the Committee, thank you very much for the opportunity to
discuss our report concerning oversight by the Internal Revenue
Service of groups that apply for tax exempt status. As you are
aware, the organization that I lead, the Treasury Inspector
General for Tax Administration, protects the integrity of the
Federal tax system. Our audit was initiated based on concerns
expressed by Members of Congress because of taxpayer
allegations that they were subject to unfair treatment by the
IRS.
Our report issued earlier this week addresses three
allegations: First, that the IRS targeted specific groups
applying for tax exempt status; second, that they delayed the
processing of these groups' applications; and, third, that the
IRS requested unnecessary information from groups it subjected
to special scrutiny. All three allegations were substantiated.
The IRS used inappropriate criteria to target for review
Tea Party and other organizations based on their name and
policy positions. This practice started in 2010 and continued
to evolve until June of 2011. As the monitor shows, the IRS was
following inappropriate criteria. Let me read to you these
criteria from a briefing held by the IRS's exempt organizations
function in June of 2011.
The criteria included the words ``tea party,'' ``patriots''
or ``9/12 project.'' Another listed criterion was that the
groups' issues included government spending, government debt or
taxes. Yet another listing criteria appeared as education of
the public by advocacy or lobbying to ``make America a better
place to live.'' Finally, the criterion consisted of any
statements in the case file criticizing how the country is
being run.
The reason these criteria were inappropriate is that they
did not focus on tax exempt laws and Treasury regulations. For
example, 501(c)(3) organizations may not engage in political
campaign intervention. 501(c)(4) organizations can, but it must
not be their primary activity. Political campaign intervention
is action taken on behalf of or against a particular candidate
running for office.
Although these criteria appeared in the IRS's own
documentation as of June 2011, IRS employees actually began
selecting Tea Party and other organizations for review in early
2010. From May of 2010 through May of 2012, a team of IRS
specialists in Cincinnati, Ohio, referred to as the
Determinations Unit selected 298 cases for additional scrutiny.
According to our findings, the first time that executives from
Washington, D.C. became aware of the use of these criteria was
June 2011 with some executives not becoming aware of the
criteria until April or May of 2012.
The IRS's inappropriate criteria remained in effect for
approximately 18 months. After learning of the inappropriate
criteria, the Director of Exempt Organizations changed the
criteria in July of 2011 to remove references to organization
names and policy positions. However, Cincinnati staff changed
the criteria back to target organizations with specific policy
positions, but this time they did not include Tea Party or
other named organizations. Finally, in May of 2012, after
learning that the criteria had again been changed, the Exempt
Organizations Director of Rulings and Agreements changed the
criteria to be consistent with laws and regulations.
The organizations selected for review for significant
political campaign intervention, again 298 in all, experienced
substantial delays in the processing of their applications. The
organizations experiencing these delays included Tea Party
organizations, patriot organizations, 9/12 organizations among
other organizations.
As shown on the monitor, the status as of December 2012 for
296 cases that we reviewed was 108 cases had been approved, 28
cases were withdrawn, and 160 cases were still open. Zero cases
had been denied. Of the cases still open, some had been in
progress for over three years and crossed two election cycles
without resolution. Of the 108 cases approved, 31 were Tea
Party, 9/12 or patriot organizations.
My final point is that the IRS requested unnecessary
information for many political cases. In fact, 98 of 170 cases
that received follow-up requests for information from the IRS
had unnecessary questions. Our evidence indicates that staff at
the Determinations Unit in Cincinnati sent these letters out
with little or no supervisory review. The IRS later determined
these questions were unneeded, but not until after media
accounts and questions by Members of Congress arose in March of
2012.
Examples of the unnecessary information requested included
the names of past and future donors, listings of all issues
important to the organization and what the organizations'
positions were regarding such issues, and whether officers or
directors have run for public office or would be running for
public office in the future.
Months after receiving these questions, 12 of the 98
organizations either received a letter or a telephone call from
the IRS stating that their applications were approved and they
no longer needed to respond to the additional requests. The IRS
informed another 15 organizations that they did not need to
respond to previous requests for information and instead they
were sent a revised request for information. Regarding the
donor information received from applicants, the IRS informed us
that they destroyed that information.
In closing, our audit found clear evidence that each of the
three allegations were correct. Was the IRS using inappropriate
criteria in its review of organizations applying for tax exempt
status? Yes. Was the IRS delaying their applications? Yes. And,
finally, did the IRS ask inappropriate and unnecessary
questions of applicants? Again, yes.
These findings have raised troubling questions about
whether the IRS has effective management oversight and control,
at least in the Exempt Organizations function, so that the
public can be reassured that the IRS is impartial in
administering the Nation's tax laws fairly.
Chairman Camp, Ranking Member Levin, Members of the
Committee, thank you for the opportunity to present my views. I
look forward to your questions.
Chairman CAMP. Thank you, Mr. George.
[The prepared statement of Mr. George follows:]
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Chairman CAMP. Mr. Miller, you are now recognized for 5
minutes.
STATEMENT OF THE HONORABLE STEVEN T. MILLER, ACTING
COMMISSIONER, INTERNAL REVENUE SERVICE, AND DEPUTY COMMISSIONER
FOR SERVICES AND ENFORCEMENT
Mr. MILLER. Thank you, Mr. Chairman. Thanks for the
opportunity to be here today. Unfortunately, given time
considerations, we received the notice of hearing within the
last 2 days, the IRS was unable to prepare written testimony. I
would note that I have a very brief statement before I take
your questions.
First and foremost, as Acting Commissioner I want to
apologize on behalf of the Internal Revenue Service for the
mistakes that we made and the poor service we provided. The
affected organizations and the American public deserve better.
Partisanship or even the perception of partisanship has no
place at the IRS. It cannot even appear to be a consideration
in determining the tax exemption of an organization.
I do not believe that partisanship motivated the people who
engaged in the practices described in the Treasury Inspector
General's report. I have reviewed the Treasury Inspector
General's report and I believe its conclusions are consistent
with that. I think that what happened here was that foolish
mistakes were made by people trying to be more efficient in
their workload selection. The listings described in the report,
while intolerable, was a mistake and not an act of
partisanship.
The agency is moving forward. It has learned its lesson. We
have previously worked to correct issues in the processing of
the cases described in the report and we have implemented
changes to make sure that this type of thing never happens
again. Now that TIGTA has completed its fact finding and issued
its report, management will take appropriate action with
respect to those responsible.
I would be happy to answer your questions.
[The prepared statement of Mr. Miller follows:]
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Chairman CAMP. All right. Thank you, Mr. Miller. Are you
still Acting Commissioner of the IRS?
Mr. MILLER. I am, sir.
Chairman CAMP. And were you appointed by the President of
the United States to that position?
Mr. MILLER. Yes.
Chairman CAMP. And when was that?
Mr. MILLER. I was designated as acting in November of 2012.
Chairman CAMP. 2012. And if I am not mistaken, you hold
actually two titles, Acting Commissioner of the IRS and also
Deputy Commissioner for Services and Enforcement.
Mr. MILLER. I do, sir.
Chairman CAMP. And in your role as Deputy Commissioner for
Services and Enforcement, according to the IRS website in that
capacity you direct and oversee all major decisions with regard
to the Tax Exempt and Government Entities Division?
Mr. MILLER. That is a division that reports through--to me
through the Tax Exempt and Government Entities Office, yes.
Chairman CAMP. So the website is accurate?
Mr. MILLER. Yes.
Chairman CAMP. And then who do you report to in that
position, actually in both of your positions, first as Deputy
Commissioner for Services and Enforcement?
Mr. MILLER. In the Deputy Commissioner role I would report
to the Commissioner, if there was one. Without a Commissioner
and holding both hats, I would report to the Deputy Secretary.
Chairman CAMP. Of----
Mr. MILLER. Treasury.
Chairman CAMP. Treasury. And is it not a violation of IRC
6103 to disclose confidential America taxpayer information?
Mr. MILLER. It is.
Chairman CAMP. And that really applies to all taxpayer
information?
Mr. MILLER. I am not quite sure what that means, to be
honest.
Chairman CAMP. In practice, it is basically all tax--it is
not just the return, it is----
Mr. MILLER. 6103 obligates us not to disclose taxpayer
information.
Chairman CAMP. Were you ever made aware in August of 2010
that a White House official in a conference call with reporters
disclosed the confidential tax structure of a private company?
Mr. MILLER. I probably read it in the paper, sir.
Chairman CAMP. Okay. You were made aware through news
reports?
Mr. MILLER. I think that is probably it. It was a long time
ago.
Chairman CAMP. Did you take any steps when you learned of
that?
Mr. MILLER. I don't recall. I am not--I don't recall. I
will have to get back to you on that, sir.
Chairman CAMP. So you didn't inform the Inspector General
of that or your superiors that you recollect?
Mr. MILLER. I am not sure why I would have to notify the
superiors. It was in the papers. I don't remember whether we
made a referral or I made a referral at that time.
Chairman CAMP. All right. According to the Inspector
General audit, the targeting of conservative groups began in
March of 2010. When were you made aware?
Mr. MILLER. I was aware of that on May 3rd of 2012.
Chairman CAMP. And how were you made aware?
Mr. MILLER. I was made aware of not the targeting, but I
was made aware of the process that was described in the TIGTA
report when I asked some of our people to go out and take a
look at the cases subsequent to the public discussion of over
broad letters coming out.
Chairman CAMP. So that would have been in your role as
Acting Director as well as the Deputy Commissioner for Services
and Enforcement?
Mr. MILLER. No, I was deputy at that time.
Chairman CAMP. You were deputy at that time. And when you
say you asked some of our people, who would that have been?
Mr. MILLER. So I asked the senior technical adviser for Tax
Exempt and Government Entities to lead a team and take a look
and see what was going on in terms of cases that had gotten
those letters.
Chairman CAMP. Did you inform anyone of that action that
you took or those steps?
Mr. MILLER. So I did that. I mean, I asked the senior
technical adviser to do that in late March, March 23rd or 26th,
something like that, and she and her team came back to talk to
me in May, and subsequent to that I am sure I informed the
Commissioner. But the Commissioner was aware of the letters as
well.
Chairman CAMP. Did you inform anyone other than the
Commissioner at that time?
Mr. MILLER. You mean up the chain, sir?
Chairman CAMP. Yes.
Mr. MILLER. I don't believe so.
Chairman CAMP. Or the Inspector General?
Mr. MILLER. The Inspector General was aware of it and had
made it clear to us they were aware of it and were in looking
at it at that time.
Chairman CAMP. Okay. Was there a time when you became aware
of the IRS launching audits against conservative donors? That
would have been in about May of 2010.
Mr. MILLER. Yes. I don't remember the date, sir, but, yes,
in that time frame. Again, there were press accounts and
Congressionals coming in and talking about that.
Chairman CAMP. And did you learn that from the press or did
you learn that from inquiries from Congress?
Mr. MILLER. I don't know. It could have been either. It
came up in a meeting and then it hit the press, and so I don't
know.
Chairman CAMP. In any event, after learning of that
information of the audit, what steps did you take?
Mr. MILLER. We investigated what happened, we took a look,
and ultimately I issued a directive that said that the law in
the area was not that clear, that we had not been enforcing in
that area substantially since the period of I believe a 1982 or
something like that revenue ruling that talked about gift tax
and (c)(4) organizations, and I said let's not enforce right
now. Let's talk about it, let's study it, and we will put out
guidance, and that guidance will be prospective. I thought that
was the fair thing to do, Mr. Camp.
Chairman CAMP. When you say ``we investigated,'' who would
that have been?
Mr. MILLER. I don't remember, but we took a look at the
issue, we looked at how it happened, and I think you were
looking at it as well, your committee, sir.
Chairman CAMP. I mean when you say ``we,'' what does that
mean? Who in the agency----
Mr. MILLER. The IRS looked at the issue.
Chairman CAMP. I mean what department?
Mr. MILLER. It would have been counsel. I don't know that
it was Exempt Organizations. I am sorry, sir, I am not going to
be able to answer with particularity there.
Chairman CAMP. Were you ever made aware of the publication
of the confidential 2008 donor lists of the National
Organization for Marriage, a conservative tax exempt
organization?
Mr. MILLER. I was.
Chairman CAMP. And when was that?
Mr. MILLER. That date I will have to get back to you on,
sir, but I remember the issue.
Chairman CAMP. And how did you find out about that?
Mr. MILLER. I don't remember. It might have been press, it
might have been somebody coming to us with a congressional
complaint.
Chairman CAMP. And when you learned of that publication,
did you take any steps?
Mr. MILLER. I believe we made a referral to TIGTA, yes.
Chairman CAMP. At that time. And you are not sure when that
referral was made?
Mr. MILLER. It would have been in the same timeframe.
Chairman CAMP. All right. Shortly after you became aware of
it?
Mr. MILLER. It would have been.
Chairman CAMP. Were you ever made aware of the IRS leak of
confidential applications for the tax exempt status of the
conservative group ProPublica?
Mr. MILLER. I was.
Chairman CAMP. Again, when were you made aware of that?
Mr. MILLER. Again, sir, I am not going to be able to give
you a perfect timeline, but approximately the time that it
became public is when I became aware, so you would know that
from the timeline.
Chairman CAMP. Did you inform anyone else of that?
Mr. MILLER. I believe the service informed TIGTA at that
time, yes.
Chairman CAMP. In each of these instances I have asked you
about, did you ever come forward and inform the Congress?
Mr. MILLER. I don't believe so, unless it came up in
conversation or testimony. Can I suggest something Mr. Camp on
those two, just to let you know----
Chairman CAMP. This would be the National Organization of
Marriage and ProPublica?
Mr. MILLER. On those two situations we went to TIGTA, and I
think Mr. George can speak to what they find, what they found.
We made the referral, and I believe what they found was that
those disclosures were inadvertent and that there has been
discipline in one of those cases for somebody not following
procedures. But I will obviously let Mr. George speak to that.
Chairman CAMP. But you never informed the Congress of any
of these things that you are aware of, any of these items I
have asked you about this morning.
Mr. MILLER. They were in the press, sir.
Chairman CAMP. All right. Well, obviously the IRS mission
statement says that the role of the IRS is to help America's
taxpayers understand and meet their tax responsibilities and
enforce the law with integrity and in fairness to all, and I
think clearly your mission is not being met.
Mr. George--I guess I would just have one last question,
Mr. Miller. When asked the truth and you know the truth and you
have a legal responsibility to inform others of the truth but
you don't share that truth, what is that called?
Mr. MILLER. I always answer questions truthfully, Mr. Camp.
Chairman CAMP. All right. Mr. George, were you ever made
aware of the alleged disclosure of the confidential tax
structure of a private company?
Mr. GEORGE. We have been alerted to it.
Chairman CAMP. You personally were made aware of it?
Mr. GEORGE. To one in specific or in general?
Chairman CAMP. You specifically.
Mr. GEORGE. To a specific company or in general, sir?
Chairman CAMP. It was a specific company, but there was a
disclosure of taxpayer information. The confidential tax
structure, as you know, any information is considered
confidential, particularly the tax structure of a private
company. Were you made aware of that public disclosure?
Mr. GEORGE. We are made aware of public disclosure of
information that is protected by Title 26, Section 6103, yes.
Chairman CAMP. Are you aware of the instance I am referring
to?
Mr. GEORGE. The one that you referred to?
Chairman CAMP. Yes.
Mr. GEORGE. I am aware of that, yes, sir.
Chairman CAMP. And when were you made aware of that?
Mr. GEORGE. I don't have the exact date, sir.
Chairman CAMP. Okay. How were you made aware of that?
Mr. GEORGE. I believe it came through my Office of
Investigations or it could have been put through a hotline.
That I am not completely certain of.
Chairman CAMP. So you don't believe you learned of it from
an IRS employee?
Mr. GEORGE. I generally do not below the Commissioner or
Deputy Commissioner level interact with the average IRS
employee. It goes through a chain of command.
Chairman CAMP. That would include the Commissioner.
Mr. GEORGE. Yes.
Chairman CAMP. So no IRS employee informed of you this
information?
Mr. GEORGE. Most likely it would have come from one of my
principal deputies, and they may have received that information
from someone, I don't believe at the Commissioner level, but it
may have been at the Deputy Commissioner level.
Chairman CAMP. But you are not aware. You can't tell us for
sure?
Mr. GEORGE. At this time I cannot, sir.
Chairman CAMP. Were you ever made aware of the alleged
publication of a confidential 2008 donor list of the National
Organization for Marriage?
Mr. GEORGE. I both read in the newspapers allegations to
that effect. But I have to make it clear, Mr. Chairman, that
the Internal Revenue Code has very strict rules as it relates
to the way that confidential taxpayer information is revealed,
and we at TIGTA are the ones who enforce those rules, so I have
to be very careful as to exactly how I respond and whether or
not I can even acknowledge publicly some of these revelations
that you are inquiring about.
Chairman CAMP. Did you respond to that information?
Mr. GEORGE. A review has been taken.
Chairman CAMP. Is it ongoing?
Mr. GEORGE. I will have to confer with my colleague, if you
will give me a moment. Is it ongoing, yes or no?
It is not ongoing.
Chairman CAMP. All right. There are daily reports of new
allegations of IRS misconduct, political targeting, and it is
clear that more work needs to be done. Is your office
continuing to investigate these allegations?
Mr. GEORGE. Yes, we are, sir.
Chairman CAMP. All right. Thank you.
Mr. Levin is recognized.
Mr. LEVIN. Thank you very much. I wanted to go on to other
things, but the incidents that Mr. Camp has been talking about,
the disclosure, what years were those, Mr. Miller?
Mr. MILLER. Again, sir, I apologize for not having the date
at hand. They have been a couple of years now I believe.
Mr. LEVIN. A couple years. Who was the Commissioner at that
time?
Mr. MILLER. I believe it was Mr. Shulman.
Mr. LEVIN. Who appointed Mr. Shulman?
Mr. MILLER. Mr. Bush.
Mr. LEVIN. All right. Let me start with two key issues.
There is no question about the inappropriate criteria. I want
to focus on that. But let me first ask right up front if I
might, Mr. Russell, during the course of your audit, were you
allowed access to everyone you requested to interview--Mr.
George?
Mr. GEORGE. To my knowledge we were not denied access to
anyone.
Mr. LEVIN. Did you interview employees in both Cincinnati
and in D.C.?
Mr. GEORGE. Correct. Yes, we did, sir.
Mr. LEVIN. On page 7, Mr. George, of the IG report, it
states, ``All of these individuals stated that the criteria
were not influenced by any individual or organization outside
the IRS.'' Is that correct?
Mr. GEORGE. That is the information that we received.
Correct, sir.
Mr. LEVIN. Did you find any evidence of political
motivation in the selection of the tax exemption applications?
Mr. GEORGE. We did not, sir.
Mr. LEVIN. Mr. Miller, during your review of this matter,
you indicated when you started it, did you find any evidence of
political motivation on the part of employees involved in
processing the applications at issue?
Mr. MILLER. We did not, sir.
Mr. LEVIN. If we could put on the screen the organizational
chart, is that possible, from the report? Is someone going to
do that? It is called high level organizational report.
Mr. Miller, in 2010 the inappropriate criteria that singled
out applications for tax-exempt status by name was developed by
what office?
Mr. MILLER. It would be developed by an office that
actually is not on here, but is on page 2 of this, is under
Lois Lerner's jurisdiction.
Mr. LEVIN. And where are those employees located?
Mr. MILLER. For the most part they are located in
Cincinnati. There is about 140 folks who do this sort of work
in Cincinnati. There are a handful of people around the country
that report in to Cincinnati as well.
Mr. LEVIN. In 2011 the report finds that the Director of
Exempt Organizations, EO, on this chart, and I am afraid it is
not on the screen yet, this is Ms. Lerner's position, became
aware of the inappropriate criteria. She ordered the criteria
changed and it was changed in 2011 to no longer refer by name
Tea Party or Patriot.
Mr. George, is that correct?
Mr. GEORGE. That is correct, sir.
Mr. LEVIN. Mr. Miller, as then deputy, were you aware of
the problem with the criteria in June and July of 2011?
Mr. MILLER. I was not, sir.
Mr. LEVIN. In January 2012, the criteria was changed again
to ``organizations involved in limiting, expanding government,
educating on the Constitution and the Bill of Rights, and
socioeconomic reform movement.'' The IG's report indicates that
this change was again made in the Cincinnati Determinations
office without executive approval.
Mr. George, is that correct?
Mr. GEORGE. That is correct, sir.
Mr. LEVIN. It was changed without executive approval?
Mr. GEORGE. That is our understanding.
Mr. LEVIN. The May 2012 criteria that are in place today,
it states organizations with indicators of significant amounts
of political campaign intervention. The IG report states that
``It more clearly focuses on the activities permitted under the
Treasury regulations.''
Mr. George, is that correct?
Mr. GEORGE. That is correct, sir.
Mr. LEVIN. I have no further questions. My time is up.
Chairman CAMP. At this time I yield to the chairman of the
Oversight Subcommittee, Dr. Boustany.
Mr. BOUSTANY. Thank you, Mr. Chairman.
Mr. Miller, on March 22, 2012, the Oversight Subcommittee
held a hearing in this room and I specifically asked then
Commissioner Shulman about reports that the IRS had been
targeting Tea Party groups and other conservative groups, and I
would like to play the video of his response. Can we have the
video.
[Video: ``Mr. Shulman: There is absolutely no targeting.
This is the kind of back and forth that happens when people
apply for 501(c)(4)s.'']
Mr. BOUSTANY. This was in March, March 22nd of 2012.
Knowing what you know now, was Commissioner Shulman's response
truthful?
Mr. MILLER. It was incorrect, but whether it was untruthful
or not, look, when you talk about targeting, and we should
really get into this, Dr. Boustany, because when you talk about
targeting it is a pejorative term. What happened here was, and
I am not defending the list, but what happened here, and I
would like to go through the application process, what happened
here is that someone saw some Tea Party cases come through,
they were acknowledging that they were going to be engaged in
politics. This was the timeframe in 2010 when Citizens United
was out. There was a lot of discussion in the system about the
use of (c)(4)s. People in Cincinnati decided let's start
grouping these cases. Let's centralize these cases. The way
they centralized it, troublesome. The concept of
centralization, not. And we are not targeting these people in
that sense. What we are doing is making sure that we bring them
in and have people----
Mr. BOUSTANY. Let me ask you this. You said incorrect, but
not untruthful. Was he not informed of this process?
Mr. MILLER. To my knowledge, I don't believe he knew at the
time.
Mr. BOUSTANY. Because in March you sent a technical adviser
to Cincinnati, there were press reports, there were letters
from Chairman Camp and myself dating back to 2011. So clearly
there was congressional interest in this issue, press reports.
And you are saying he was not informed of this?
Mr. MILLER. So let's divide the world into a couple of
pieces here. There is the list that was used and there was the
processing of the cases. At that time we were aware that there
were issues in the processing of the cases. We were not aware
of the list. I asked in late March, actually after the hearing
I believe, for us to go in and take a look, because I thought
there were problems in processing of the cases. They came back
with both pieces, yes, there were problems with processing of
the cases and there were problems with the lists.
Mr. BOUSTANY. So you were given a complete briefing on this
improper selection based on political beliefs, and this
briefing was I think you said May 3rd of 2012, is that correct?
Mr. MILLER. So I would recharacterize your question, sir. I
was informed of what we had found out to date. TIGTA was in
there at the time. I was told that there was a use of the list.
The list seemed obnoxious to us, as it does to you, and we were
going to take actions on that. And, yes, that was in May.
Mr. BOUSTANY. And you say it was not targeting, but why was
only one side of the political spectrum signaled out in this?
Mr. MILLER. So I think what happened was, look, they get
70,000 applications in there for 150 or 200 people to do. They
triaged those. People look at them and they send them either
through the system because they are okay, into a mix of folks
so that they can get technically fixed up, and some go for
substantive questions. Politics is an area where we always ask
more questions. It is our obligation under law to do so. As Mr.
George indicated, 501(c)(3) organizations can't do it, (c)(4)
organizations can do some of it. Our obligation----
Mr. BOUSTANY. Mr. Miller, we have received letters
describing process, but we are trying to get to the heart of
this matter. At the briefing in May of 2012 you were told that
tax exempt applications were being targeted if they contained
terms such as ``tea party,'' ``we the people,'' ``patriots''
and so forth, many of the terms that Chairman Camp referenced.
And knowing these practices, knowing that, you sent letters to
Congress acknowledging our investigation of these allegations
but consistently omitted that such discriminatory practices
that are alleged were actually in fact taking place. Why did
you mislead Congress and the American people on this?
Mr. MILLER. Mr. Chairman, I did not mislead Congress nor
the American people. I answered the questions as they were
asked.
Mr. BOUSTANY. Why didn't you tell us about the terms?
Chairman CAMP. Time has expired. Mr. Crowley is recognized.
Mr. CROWLEY. Thank you, Mr. Chairman.
Mr. George, you are the Inspector General at the Treasury,
is that correct?
Mr. GEORGE. Actually, there are three Inspectors Generals
within the Department of the Treasury. I am the Inspector
General exclusively focused on the IRS or the system of tax
administration.
Mr. CROWLEY. Over the IRS. Very good. And you were
appointed by then President Bush, is that correct?
Mr. GEORGE. Yes, correct.
Mr. CROWLEY. And you state in your report that no one
outside the IRS was involved in this political targeting of
not-for-profit organizations, is that correct?
Mr. GEORGE. That is the finding of this particular audit,
sir.
Mr. CROWLEY. Your audit, your findings are that no outside
groups were involved, correct?
Mr. GEORGE. Yes. As of now, that is our opinion.
Mr. CROWLEY. Mr. George, who was the last presidentially
appointed IRS Commissioner?
Mr. GEORGE. It was Douglas Shulman.
Mr. CROWLEY. Douglas Shulman, correct?
Mr. GEORGE. Yes, that is correct.
Mr. CROWLEY. Appointed by President George W. Bush, is that
correct?
Mr. GEORGE. Yes, that is correct, sir.
Mr. CROWLEY. And Mr. Shulman was Commissioner when these
improper and outrageous activities that both sides of the aisle
recognize as being outrageous and improper, when they occurred,
is that correct?
Mr. GEORGE. Yes, it is.
Mr. CROWLEY. Mr. George, prior to Commissioner Shulman, the
last political head or political appointee of the IRS was Mr.
Mark Everson, is that correct?
Mr. GEORGE. That is correct, sir.
Mr. CROWLEY. He was also appointed by President George W.
Bush?
Mr. GEORGE. Yes, I believe so.
Mr. CROWLEY. And during his tenure, it is widely believed
that groups like the NAACP, progressive churches that were in
opposition to the war in Iraq and environmental groups were
targeted by the IRS.
Mr. Miller, while you were appointed Acting Commissioner at
the IRS, you are not a--you are career Civil Service, is that
not the case?
Mr. MILLER. It is, sir.
Mr. CROWLEY. And you are not a political appointee?
Mr. MILLER. I am not a political appointee.
Mr. CROWLEY. What I am trying to point out and basically to
debunk is the notion or idea of the political statements and I
believe nonfactual statements by Chairman Camp to link these
scandals to the White House or solely the targeting of
conservative groups. I was the person last week who asked the
question of Ms. Lerner as to whether or not the IRS were
investigating political not-for-profit organizations, and at
that hearing we were not given a proper--we were not given an
answer. I think Mr. Boustany would agree. Rather, the world
only learned after she was asked a planted question at a press
event, and that is simply unacceptable. But what I also think
is important is to keep this, at least in at this point in
time, I would hope in a nonpartisan or maybe a bipartisan
context, because we want to find the facts. We want to find out
who knew what when and why steps were or were not taken.
I was as outraged when I learned that when she was asked
the question why she did not tell Congress when she was before
Congress, her response was apparently no one ever asked her. I
asked her and she didn't answer the question. So we are all
outraged. We are all upset about this. I don't believe nor do
any of my colleagues believe that any organization, political
organization, should be targeted solely because of their
thought. That is on both sides of the spectrum. And I would
dare say during the prior administration by Mr. Shulman and Mr.
Everson that there was targeting of political entities as well.
That has to end. That has to end on both sides. And the
President has been very forthright and very strongly condemning
that type of action as the entire administration has, as has
Mr. Lew.
So I would really ask the chairman and my colleagues on the
other side, let's get the answers. Ask the questions, get the
facts, and then we can draw our own conclusions.
With that, I yield back the balance of my time.
Chairman CAMP. Thank you. Mr. Brady is recognized.
Mr. BRADY. Chairman, thank you for getting to the truth in
this scandal.
Let's look at one of the Tea Party groups in my community.
The founder, a small businesswoman, originally filed for tax
exempt status in July of 2010. Fully 20 months later, in
February 2012, she received a letter from the IRS with numerous
follow-up questions, a lot of them intrusive, but she answered
every one of them and returned it well within the 2-week time
limit. Now, almost 3 years to the day that she first filed her
application is still pending.
But let's look at what happened to her in the 3 years since
she applied. Beginning in December 2010 she was visited by the
FBI Domestic Terrorism Unit. Her personal returns and her
business returns were both audited by the IRS. She received
four FBI inquiries. And her business received unsolicited
audits, unscheduled audits by OSHA, the Commission on
Environmental Quality and the ATF twice.
Now, this is a citizen and a small businesswoman who had
never been audited by the IRS or any of these agencies until
she applied to you for tax exempt status for her Tea Party.
The broader question here, is this still America? Is this
government so drunk on power that it would turn its full force,
its full might, to harass and intimidate and threaten an
average American who only wants her voice and their voices
heard?
Mr. Miller, who in the IRS is responsible for targeting
conservative organizations?
Mr. MILLER. Sir, let me first say I cannot speak to a given
case. We have talked about 6103----
Mr. BRADY. This is not just one case. You know we are
talking about the whole list the Inspector General put up
there. Who is responsible for targeting these groups?
Mr. MILLER. So again I am going to take exception to the
concept of targeting because it is a loaded term. The listing
was done by individuals----
Mr. BRADY. This was not a listing. You created a be-on-the-
lookout list. That is not a centralized government mandated or
directed listing. You had a be-on-the-lookout list that you
acknowledge. You have the cases the Inspector General already
verified. So the question remains, who is responsible for
targeting these conservative organizations?
Mr. MILLER. So, again, and I think if you look at the TIGTA
report, it answers your question.
Mr. BRADY. There are no names in the Inspector General's
report. So I am asking you not only as the Acting Commissioner
but as the Deputy Commissioner over this organization, who is
responsible for targeting these individuals?
Mr. MILLER. So I don't have names for you, Mr. Brady, and I
am willing to try to find that out. I think TIGTA is looking at
that right now. I don't think--targeting, again, is wrong.
Mr. BRADY. You are telling us you have no knowledge of who
initiated or who approved this targeting of conservative
organizations?
Mr. MILLER. I will stand by what the TIGTA report has put
out there as the facts.
Mr. BRADY. Can you assure this committee that none of the
information provided to the IRS by these groups was shared or
given to any other Federal agency?
Mr. MILLER. That would be a violation of law and I do not
believe that happened.
Mr. BRADY. You can assure us there was absolutely no
sharing of this information to other government agencies?
Mr. MILLER. TIGTA and others will look at that, but I would
be shocked, Congressman, if that happened. Shocked.
Mr. BRADY. If your earlier answers are any indication, we
will all read about it in the media. We ought to be getting the
truth from you.
Mr. Chairman, I yield back.
Chairman CAMP. Thank you. Mr. Rangel is recognized.
Mr. RANGEL. Thank you, Mr. Chairman.
Is it safe to say that these things that we all are
outraged occurred under the Bush appointees as well as the
Obama appointees?
Mr. MILLER. There were no Obama appointees. So under Mr.
Shulman--I am not sure--I apologize, Mr. Rangel. I am not sure
what--are we talking about----
Mr. RANGEL. The people that were--once it was discovered
that people were put under a list, a lookout list, that type of
thing, regardless of what you call it, were the people
responsible in Treasury Department appointed by President Bush
as well as continued service under President Obama? It was
basically the question that Mr. Crowley was asking about.
Mr. MILLER. At the IRS, the Commissioner was appointed
under the Bush administration. Obviously, at Treasury those
would be--at main Treasury, those individuals would be Obama
appointees.
Mr. RANGEL. What I am trying to say, this outrage is not
Democrat and Republican, it involves the credibility of
government as relates to American citizens. Now, the President
has indicated outrage. You have indicated outrage. So I would
assume that we are on the same side in trying to determine how
did this happen, who was responsible for it, how far did this
cancer go, how quickly can we cut it out, so that tens of
thousands of IRS employees have the stigma of corruption taken
away from them. That you, Mr. Miller, who is a career employee,
don't have to explain to your kids and friends that you are not
involved in a scandal. That all of the people that serve the
government--it's too late for the Congress, but it's not too
late for the government to try to get its reputation cleaned up
for America.
So I don't want to see anger with you two, but I certainly
hope before this hearing is over that you share with us how you
intend to have your voices heard so that America would know
that, whether this was criminal activity or a mistake, I don't
know, but we have to get on with it.
Now, under 501(c)(4) we're supposed to allow political
activity to take place, meaning that you can make political
donations without saying how much and who made the donations.
Right?
Mr. MILLER. I think if I could restructure it, under
501(c)(4) organizations donors and their contributions are not
public information, if that was the question.
Mr. RANGEL. So you can make political contributions.
Mr. MILLER. You can make contributions to 501(c)(4) that
are used for political purposes.
Mr. RANGEL. Yes. And you can do this, as long as it is not
the prior primary purpose, you can do this for 49 percent of
whatever the activities are without technically violating the
law. Is that not correct?
Mr. MILLER. The test is whether your primary activities are
social welfare in nature.
Mr. RANGEL. And primary means that technically you could do
49 percent political.
Mr. MILLER. We have never been that precise.
Mr. RANGEL. I know, but I am asking, you could say that.
Mr. MILLER. Yes.
Mr. RANGEL. And after the Supreme Court decision in
Citizens Union, there was--what? United, whatever.
The applications for this type of corporations increased
dramatically, did it not?
Mr. MILLER. They did double, yes, sir.
Mr. RANGEL. So you don't have to be a political expert to
know that there was an increase in political donations given to
501(c)(4)s.
Mr. MILLER. And I think that if one looks at the reporting
on the forms 990 of political activities and the money spent,
it will show an explosion in that money as well, yes, sir.
Mr. RANGEL. And so, again, it's almost an invitation, as
the law is written, for abuse in terms of political activities
for corporations that primarily are supposed to be doing social
service work. Is that not correct?
Mr. MILLER. It is something that we have to look at
closely, yes, sir.
Mr. RANGEL. I mean you should have wanted to look at this
earlier, before this what my friends call a scandal. I mean,
this is wrong, to abuse the tax system. This screams out for
tax reform, does it not?
Mr. MILLER. I think it's an area ripe for redefinition and
reform, yes, sir.
Mr. RANGEL. Well, regardless of whether Democrats or
Republicans did something like this, the outrage should still
be there. Is that not correct?
Mr. MILLER. The outrage as to----
Mr. RANGEL. The abuse.
Mr. MILLER. Yes.
Mr. RANGEL. This section of the law has been abused by
government employees, not by all of them, but by some of them.
And our job is to find out who they are. And all I want to get
from you, Mr. Miller, and you, Mr. George, that it's your
integrity that is on the line, it's the President's, it's the
administration's, it is the IRS employees that work hard each
and every day, and unfortunately it's the Congress that's
involved in this. People are losing confidence in our
government. And I hope that you feel the same sense to find out
what caused this, how it could happen, and help us to restore
the confidence that Americans should have in their government.
I yield the balance of my time.
Chairman CAMP. All right. Thank you.
Mr. Ryan is recognized for 5 minutes.
Mr. RYAN. Thank you.
Mr. Miller, we have now established, and you have
acknowledged that you were briefed on May 3rd that there was
improper criteria used for tax-exempt applications. At the
briefing in May 3rd you were told that tax-exempt applications
were being targeted if they contained terms such as Tea Party,
we the people, patriots, Bill of Rights, Constitution,
government spending, taxes, and those that criticized how the
country was run.
After that, knowing of these practices, you sent letters to
Congress acknowledging our investigation of these allegations,
but omitted that the discriminatory practices were alleged in
fact taking place. Then, remember this briefing took place May
of 2012, then you came here to a subcommittee hearing on this
issue on July 25th, where we were investigating the
discriminatory filters used to hold up the 501(c)(4)
applications of groups. Specifically, you were told that these
conservative groups felt that they were being harassed, and you
were asked this question. Quote, ``What kind of letter or
action is taking place at this time that you are aware of?''
And then, knowing full well that these filters were being used
to target certain groups, you said, and I quote, ``I am aware
that some 200 501(c)(4) applications fell into this category,
the determination letter process. We did group these
organizations together to ensure consistency, to ensure
quality. We continued to work those cases,'' close quote. That
was your answer to this committee after you had received the
briefing that these targeting was occurring, which you just
earlier acknowledged was outrageous.
Now, the law governing how you must respond to
congressional inquiries requires you to tell not only the
truth, but to tell the whole truth. You, quote, ``cannot
conceal or cover up by any trick, scheme, or device a material
fact.'' How is that not misleading this committee? You knew the
targeting was taking place. You knew the terms Tea Party,
patriots were being used. You just acknowledged a minute ago
that they were outrageous. And then when you were asked about
this after you were briefed about this, that was the answer you
gave us? How can we not conclude that you misled this
committee?
Mr. MILLER. So that was a lot of questions, sir.
Mr. RYAN. It's one. How can we conclude that you did not
mislead this committee?
Mr. MILLER. I did not mislead the committee. I stand by my
answer then, I stand by my answer now. Harassment discussion
that was part of that question implies political motivation.
There is a discussion going on. There is no political
motivation.
Mr. RYAN. Let me ask it again.
Mr. MILLER. May I answer the question, sir?
Mr. RYAN. Let me--I am going to help give you some clarity
here. Here is the question you were asked. What kind of letter
or action is being taken place at this time that you are aware
of?
Mr. MILLER. So the discussion of the context of that--and
again, we need to go back and look at the context--there was
the listing, there was the treatment of the cases. My
understanding of that question was the treatment of the cases,
because all of the letters--and he was talking, I think it was
Mr. Marchant, was talking about: I'm hearing that people are
complaining about letters. My response was to that. We found
out about those letters, we dealt with them. As has been
explained, we gave more time, we went and talked to them about
expanding the way they could answer it, and we dealt I think
fairly and successfully with the donor list issue.
Mr. RYAN. You knew of our concern of this targeting. You
knew of the allegations that had been reported to this
committee. We brought you here to talk about it. You had
received a briefing that this targeting was taking place, but
you did not divulge that to this committee when we were asking
questions about this. You said in your answer that you were
aware some 200 501(c)(4) applications fell into this, quote,
``category.'' We did these groupings together to ensure
consistency, to ensure quality. We continue to work those
cases.
You didn't mention targeting based on ideology. You didn't
mention targeting based on buzz words like Tea Party or
patriots or 9/12. You knew that, but you didn't mention this to
the committee. Do you not think that that is a very incomplete
answer?
Mr. MILLER. I answered the question truthfully.
Mr. RYAN. All right. Let me ask you one more question. You
just gave us a list the other day of approved tax-exempt
applications for advocacy organizations through 2009 May. We
don't know how long these applications sat or how long it took
to process them. Just from Mr. Rangel's questioning and from
earlier testimony, the IRS was doing this because they were
concerned about political activities by nonprofits. That's the
debate that seems to be taking place here.
Some of these that were approved were Chattanooga Organize
for Action, the Progressive Leadership Alliance, and the
Progressive USA. If you were concerned about political
activity, did you have targeting lists that contained words
like progressive or organizing in their names?
Mr. MILLER. So let me--let's step back again, and let me
walk you through the process. We centralize cases based on
political activity evidenced in the file. We took a shortcut on
some of it, but we collected, to be blunt, more than Tea Party
cases. Mr. George's own report says 70----
Mr. RYAN. There were no progressive or organizing words
that were used for targeting. Is that correct?
Mr. MILLER. That's correct. But we collected more people
because any time it was seen that political activity was part
of the file it went into this grouping.
Chairman CAMP. All right. Thank you. Time has expired.
Mr. McDermott's recognized.
Mr. MCDERMOTT. Thank you, Mr. Chairman. These days Congress
can't seem to agree on whether the sun is shining, but this
issue has brought us together in a way unlike anything we have
seen here. We all agree these applications were poorly handled
and that the IRS stiff-armed us, basically, at best, when we
asked about it. Our public servants ought to be held to a
higher standard, and none more so than the agency that oversees
and enforces the tax collection.
The IRS is an easy target, and everybody wants to get a
pitchfork when the tax man comes. But with our 24-hour media
cycle passing around lighter fluid, it's getting harder and
harder to get to the facts and fix what really has gone on
here. There is a difference, in my mind, between stupid
mistakes and malicious mistakes. The overwhelming majority of
applications for tax-free status for political activities were
from far right groups. And examiners took a shortcut, which
they clearly regret, deeply regret. The report says in black
and white on page 7, quote, ``The Determination Unit employees
stated that they considered the Tea Party criterion as a
shorthand term for all potential political cases,'' close
quote. These applications were singled out for their names and
policy positions, not for the activities, which is really what
they should have been singled out for.
Some of these political groups were delayed in getting
their taxpayer status, and that was wrong. Much as I dislike
the right, I think it's wrong to be unevenhanded in government
application. The Inspector General report says that no one
acted out of malice or political motivation.
Mr. George, I want to know, do you still stand by that?
Mr. GEORGE. We have no evidence at this time to contradict
that assertion, sir.
Mr. MCDERMOTT. If we really want to root out the causes of
this we need to talk about campaign finance laws, and Citizens
United decision in 2010, which is when this all started. It all
started right after Citizens United. People saw the door open.
We can get in, we can do political advertising, and we won't
have to report anybody's name. Applications for secret money
political organizations increased by fourfold after that
Supreme Court.
This small group of people in the Cincinnati office screwed
up. Nobody's going to deny that. They simply screwed up. But
the Congress, this committee messed up by not giving any clear
criteria for what a real charitable organization is. The law is
not clear, and people have to make judgments, and that means
they got to collect a lot of data to try and figure out what
people are actually up to.
Mr. Miller, clearly there is a problem with our current way
of determining what an organization's primary purpose is, and I
want to ask you in a minute about that. I want you to think
about it while I am talking. But as I watch this conversation
shift from find out what's right and wrong and fix it to the
IRS is broken and let's repeal it--imagine a country without--
we could have repealed that along with the Obamacare yesterday.
I am reminded that it's only part right, part wrong. It's also
about Republicans' story line in this agenda. We need to find
some truth here, and I have heard members of this committee now
talk about it. The IRS can't access your medical file. Is that
true, Mr. Miller?
Mr. MILLER. Correct, sir.
Mr. MCDERMOTT. They cannot find out your private medical
information.
Mr. MILLER. That's correct, sir.
Mr. MCDERMOTT. Their job in Obamacare is simply to collect
paid financial information on which a determination is made as
to whether somebody can get a subsidy for their premium. Is
that correct?
Mr. MILLER. Were you covered and over what period is what
we would be getting.
Mr. MCDERMOTT. It is not a fascist takeover that's going on
here of the healthcare system. And let's not forget that the
IRS has one of the hardest and most hated jobs, and there are
thousands and thousands of good, solid, hard-working Americans
who work every day to run the system. And a couple of people
make a problem, that does not damage the organization, in my
view. You get rid of the people who made the problem.
But I would really like to hear from you, Mr. Miller, what
do you need that would make it so that this wouldn't have
happened before?
Mr. MILLER. So there are two things, sir. And I appreciate
the kind words for our people, because we are an incredibly
hard-working and honest group, frankly, and that seems to be
forgotten in all this.
With respect to political activity, it would be a wonderful
thing to get better rules, to get more clear rules. And in
terms of our ability to get to this work, it would be--it would
be good to have a little budget that would allow us to get more
than the number of people we have to do 70,000 applications and
to do our job in looking at whether an organization is tax
exempt or not.
Chairman CAMP. All right. Time has expired.
Mr. Nunes is recognized.
Mr. NUNES. Thank you, Mr. Chairman.
Mr. Miller, do you know the director of the IRS' Exempt
Organizations Division, Lois Lerner?
Mr. MILLER. I do, sir.
Mr. NUNES. Are you aware that she testified before this
committee last Wednesday, on May 8th?
Mr. MILLER. I believe I was.
Mr. NUNES. Are you aware that she did not acknowledge this
investigation at the time?
Mr. MILLER. Actually, I do not know that. But I was engaged
in other testimony that day.
Mr. NUNES. Were you aware that the IRS was preparing a
statement to put out during this time last week?
Mr. MILLER. Yeah. I don't know whether we knew at that time
or not.
Mr. NUNES. Wouldn't have Ms. Lerner known that at the time
last week when she testified before this committee?
Mr. MILLER. Don't know that.
Mr. NUNES. Did you know that Ms. Lerner was going to appear
last Friday, May 10th, on a panel called ``News From the IRS
and Treasury'' at the American Bar Association conference?
Mr. MILLER. I knew she was appearing. I did not know the
topic.
Mr. NUNES. Did you or any of your subordinates direct Lois
Lerner to make the public statement at the panel discussion
acknowledging the targeting of tax-exempt groups?
Mr. MILLER. It was a prepared Q&A.
Mr. NUNES. Do you know Ms. Celia Roady, a member of IRS's
Advisory Council on Tax-Exempt and Government Entities?
Mr. MILLER. I do.
Mr. NUNES. Was Ms. Roady's question to Ms. Lerner about
targeting conservative groups planned in advance?
Mr. MILLER. I believe that we talked about that, yes.
Mr. NUNES. Did you ever have any contact, either by email,
phone, or in person with the White House regarding the
targeting of tax-exempt groups from 2010 until today?
Mr. MILLER. Absolutely not.
Mr. NUNES. How about the Department of Treasury?
Mr. MILLER. I certainly would have had some conversations
with Treasury in my role as Acting Commissioner, because I
reported to them. On this topic it was very--it would have
been, I believe, I have to go back and look, but very recent
that that conversation would have taken place.
Mr. NUNES. How about President Obama's reelection campaign?
Mr. MILLER. No.
Mr. NUNES. Did you ever have any contact with anyone
associated with Organizing for America or its nonprofit
successor Organizing for Action?
Mr. MILLER. No.
Mr. NUNES. Did you ever have any contact with anyone
associated with ProPublica?
Mr. MILLER. I don't believe so, but there was, when this
whole thing came out, that was previously referenced, I think
the IRS might have talked to them, yes.
Mr. NUNES. Something that would probably clarify your
involvement in any of this, Mr. Miller, would be if you
submitted to this committee your emails, phone records, and
personal schedule from 2010 until you resigned. Would you be
willing to do that?
Mr. MILLER. I'll have to see what's legally appropriate.
Mr. NUNES. You know we could subpoena those records.
Mr. MILLER. I understand. And I will have to talk to my--
the lawyers in the agency. I am just saying I don't know.
You're asking me and, you know, we'll talk.
Mr. NUNES. Mr. Chairman, I would suggest that we work hard
to get those records. I would also encourage you to contact Ms.
Roady and Ms. Lerner to testify before this committee at our
earliest possible time.
I just have one last question, Mr. Miller. You really are
not taking any acknowledgment that you knew anything, that you
didn't do anything wrong. You have said that numerous times on
the record today, that you did nothing wrong. So I find it hard
to believe--why did you resign or why are you resigning?
Mr. MILLER. I never said I didn't do anything wrong, Mr.
Nunes. What I said is contained in the questions. I resigned
because as the Acting Commissioner what happens in the IRS,
whether I was personally involved or not, stopped at my desk.
And so I should be held accountable for what happens. Whether I
was personally involved or not, a very different question, sir.
Mr. NUNES. Well, I hope that you would be willing to submit
all your emails, phone records, any personal meetings that you
had in the last 4 years. And I think that would really, I
think, keep your reputation in good standing with this
committee and the American people.
Mr. MILLER. Obviously, we'll have to talk about that. But
I'm not saying no. I'm not. I just don't know.
Mr. NUNES. Thank you, Mr. Miller.
I yield back my time, Mr. Chairman.
Chairman CAMP. Mr. Neal is recognized.
Mr. NEAL. Thank you, Mr. Chairman. Mr. Chairman, earlier
you referenced an article from USA Today. And I would like, for
the purpose of this hearing, to insert an article from
Bloomberg News that appeared on May 14th, indicating that there
were Democratic-leaning organizations that were the focus of
the IRS as well.
Chairman CAMP. Without objection.
[The information follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
______________
Mr. NEAL. Thank you. Mr. Chairman, when I woke up this
morning, as I do just about every morning now, I went to my
phone, and I was curious about what the word of the day would
be. And the word of the day, because Merriam-Webster is located
in my hometown--and, Mr. Miller, you have rejected the term
targeted. Is that correct?
Mr. MILLER. I think it's a term that implies something that
didn't exist here.
Mr. NEAL. Okay. Let me draw you into the weeds based upon
what Merriam-Webster, by sheer irony this morning, suggested,
and that is they used the term litmus test, which they define
as a single factor--as an attitude, event, or a fact--that is
decisive in choosing these organizations. Would you say that
there was a litmus test?
Mr. MILLER. No, sir. The litmus test, if any, was political
activity.
Mr. NEAL. Political. Okay. I have one of my constituents
who contacted my office yesterday outlining a pretty egregious
situation. He is treasurer of a small nonprofit in
Massachusetts, a volunteer organization, I should note, and
their association was told by the IRS employees that they were
not required to file a form 990 because of their small size, so
they didn't file one. This past November, they received a
letter from the IRS saying that their tax-exempt status had
been revoked for failure to file the necessary forms, without
any advanced notice.
So the IRS told them they no longer needed to file the
forms, but instead of notifying them first about the problem,
and allowing them to fix it, especially in light of the advice
they were given by IRS, the IRS just went ahead and revoked
their tax-exempt status. They now have to reapply and pay. This
is a nonprofit that's been around for 60 years.
Now, taxpayers should not be intimidated by the IRS. There
is broad agreement on that today. The American people should
not be afraid of the IRS. There is broad agreement on that
today. But we should be able to rely on advice that they
provide and not be punished for it. So I hope that we are going
to have an opportunity to work on this specific constituent
issue.
But I want to turn to a topic of recent focus by the IRS,
and that's obviously the question today, and it's the
allegation that it's their political views that have caused
them to become that focus. We all know that's outrageous and
not acceptable, and a thorough review will get us to the bottom
of this and ensure that it never happens again. But let's not
forget something this morning. Even with the egregious actions
that have been acknowledged by the IRS, there is still an
underlying problem here, and that's 501(c)(4)s being engaged in
politics. After Citizens United, the IRS was flooded with
applications, as you've indicated, seeking 501(c)(4) status.
And why was that? It's in large part because Super PACs must
disclose their donors while 501(c)(4)s do not.
As policymakers, we have many disagreements on this
committee and between the parties. However, I think that we
should be able to agree on that whole notion of disclosure.
Now, the case that unleashed the torrent of money in public
life was Buckley v. Valeo in 1976, which the Court held that
money enabled speech. But the caveat included in that opinion,
which, while never fully acknowledged, probably was written by
Justice Brennan, quote, ``The suggestion that sunlight is said
to be the best of disinfectants, electric light the most
efficient policeman.''
So as part of our scrutiny I think that we all ought to be
able to agree, based upon this problem here today, that the
simple act of transparency and disclosure would alleviate much
of what has happened here. There wasn't this rush because they
wanted to join the Sisters of Mercy and Common Cause for the
purpose of engaging politics. It was in many instances to hide
the donors.
Now, I'm hoping that we can get to the bottom of this in
fuller context. But I want to ask you specifically,
Commissioner, has anyone been disciplined directly related to
this development, review, approval, and use of inappropriate
criteria? And have any actions, corrective actions been put in
place to ensure that this does not happen again?
Mr. MILLER. So let me walk through, and the answer to that
is yes. What happened in May, when I was told this, I asked the
management there to reassign an individual who had been
involved in these letters that were objectionable. I also asked
for oral counseling to be given to the person who we thought at
the time was responsible for the listing. I also was aware that
TIGTA was looking at this. And as I mentioned in my statement,
now that they are out with the facts, we will be able to look
again.
I should note, just because, Mr. Camp, this is--I got to be
very careful here--the oral counseling that was provided, it
turned out that that person may not have been involved. So what
was done in lieu of that was all the managers in that group
were brought in and walked through the new processes and
explained that this was no way to behave as the IRS.
The last thing is, sir, is that in terms of the future, the
listing cannot be done and cannot be changed absent a very high
level of approval at the executive level.
Chairman CAMP. All right. Thank you.
Mr. Tiberi is recognized.
Mr. TIBERI. Thank you, Mr. Chairman.
Mr. Miller, in January of 2010 an organization called
Liberty Township Tea Party in Ohio applied for tax-exempt
status. There is no resolution of their application to this
day. Liberty Township Tea Party received 35 questions, I have
got them in front of me, in March of 2011, but really there
were 94 questions when you look at all the subquestions. The
letter directs the applicant to provide, under penalty of
perjury, some of the following information: copies of all
activity on Facebook and Twitter, resumes of all past and
present employees, whether a past or present employee or their
family members plans to run for office in the future.
Mr. Chairman, I would like to submit a copy of a Dispatch,
Columbus Dispatch article from yesterday that references this.
And in fact, Mr. Chairman, in the Article I quote a board
member from Liberty Township Tea Party who is actually in the
audience today, Tim Savaglio. Quote, `` `We're an educational
group,' Savaglio said. `We don't have a paid staff. We don't
take stands. We don't endorse candidates. We don't man phone
banks. We don't do any of those kinds of political activities.'
''
Mr. Miller, a question----
Chairman CAMP. Without objection, the article will be
placed in the record.
[The information follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
______________
Mr. TIBERI. Thank you, Mr. Chairman.
Mr. Miller, question 26 of the IRS questionnaire to the tea
party group is as follows: ``Provide details regarding your
relationship with Justin Binik-Thomas,'' an American citizen
who is in the audience today, who still doesn't know why he was
question number 26. The Dispatch article goes on to say,
``Binik-Thomas said he was shocked when he found out that the
IRS was asking questions about him of a group he barely knew.
He had been involved in a Cincinnati tea party. He'd even
served as a spokesman. But he said he had not worked with the
Liberty Township Tea Party.''
Quote, ``The obvious question that comes to mind are, why
am I being targeted amongst all the others? Where does this
information go in the end? Clearly, it's housed in the IRS, but
does it get shared with other government agencies? Do I get an
audit? If I do, is it against my business? All of those things
go through your mind.''
Now, to this day he doesn't know why his name is question
number 26 for an organization who still hasn't received
approval since January of 2010. Now, the article goes on to
say, Democratic Governor Ted Strickland, former governor of
Ohio, his top aides, who I know, very political, filed for tax-
exempt status as a 501(c)(3) organization in August of 2011.
They were approved 9 months later.
Mr. Miller, another organization in Ohio, the Ohio Liberty
Coalition, this is their--part of their documents in response
to IRS requests. This is only part of it. And this, all these
documents weren't enough for the IRS to approve their
application. And in fact, Tom Z., who is a former president of
the organization who is here today, said that they applied in
June 2010. They finally received approval--this wasn't enough
by the way--in December of 2012, 1 month after the November
election.
There is another lady I met in the audience from Ohio,
Fremont, Ohio, who indicated that her group had a book club,
and the IRS demanded a list of all the books that they had read
and a book report from the group explaining what was in the
books that they read. You can't make this stuff up. This is
unbelievable.
Now, Mr. Miller, I don't know how you can defend any of
this, and I don't know how you can say that it's not political
when the liberal group got an exempt status and three that I
just mentioned didn't for over 2 years. Mr. Nunes mentioned Ms.
Lerner. Who was her boss in 2011 and 2012? Who did she report
to?
Mr. MILLER. I believe it would have been----
Mr. TIBERI. Sarah Ingram maybe?
Mr. MILLER. Part of that time, and part of that time
another gentleman.
Mr. TIBERI. Okay. And that other gentleman has since
submitted his resignation?
Mr. MILLER. I believe so.
Mr. TIBERI. And what is Ms. Ingram doing today? What's her
job title?
Mr. MILLER. She works on our--on implementing the
Affordable Care Act.
Mr. TIBERI. Okay. Who promoted her to that position?
Mr. MILLER. I would have moved her into that position.
Mr. TIBERI. Why would you promote somebody to that position
who was in charge of the Exempt Organization Division, which
certainly has had some controversy over the last couple years
under an investigation?
Mr. MILLER. Because she is a superb civil servant, sir.
Mr. TIBERI. So she had nothing do with this?
Mr. MILLER. I wouldn't imagine so. By the way, I can't
speak to individual cases. I can say generally we provided
horrible customer service here. I will admit that. We did.
Horrible customer service. Whether it was politically motivated
or not is a very different question.
Mr. TIBERI. You targeted an individual. You targeted an
individual, an American who still doesn't know to this day why
he was question number 26.
Chairman CAMP. All right. Time is expired.
Mr. Becerra is recognized.
Mr. BECERRA. Thank you, Mr. Chairman.
Gentlemen, thank you very much for your testimony. And let
me key off of something, Mr. Miller, you said. You said foolish
mistakes were made. I think the President actually said it
better. He said that the handling of those tax-exempt
applications in that process at the IRS was outrageous and
intolerable. No excuse. And as much as we know that the folks
at IRS have a thankless job because they have to go and tell
their fellow Americans that they may be audited, or they have
to do this work understaffed, we have to maintain the
confidence in the system, because it's a voluntary system of
payment of our taxes.
Mr. MILLER. Agreed.
Mr. BECERRA. And so you are right, it was a foolish
mistake. But the President is even more correct that it was
outrageous and intolerable.
Now, let me also focus on something, Mr. George, you said.
When you were asked was there any finding or evidence of
political motivation here, you said no.
Mr. GEORGE. That's correct, sir.
Mr. BECERRA. Okay. And so what we find is a situation where
inexcusable activity took place, because it erodes the
confidence of the American people in a system where they
participate voluntarily. And if there is a place in public
service where you have to have the highest level of conduct and
standards, it's at the IRS.
And so, Mr. Miller, I think it's unfortunate for those who
are in positions of authority, but the buck has to stop
somewhere, and I think that's exactly what we are saying. That
should not diminish the good work that has been done by anyone
within the IRS over the years. And so I hope you understand
that you are here today talking to us because we need to get to
the bottom of this. We need to clean up and clear out so we can
go back to the business of making sure that people respect the
fact that we have a voluntary system of paying our taxes.
Having said that, let me ask a question of Mr. George. In
your report you indicate that, and I think I am quoting
correctly here, ``There appeared to be some confusion by the
Determinations Unit specialists and applicants on what
activities are allowed by Internal Revenue Code section 501''--
or ``allowed by I.R.C. 501(c)4 organizations. We believe this
could be due to the lack of specific guidance on how to
determine the, quote, `primary activity,' end quote, of a (c)4
organization. Treasury regulations state that (c)4
organizations should have social welfare as the `primary
activity' of their mission. However, the regulations do not
define how to measure whether social welfare is an
organization's `primary activity.' ''
So, Mr. George, a question. Could some of these delays in
processing some of these applications have been avoided if
there were clearer guidance on section 501(c)(4) organizations
and what their primary activity constitutes?
Mr. GEORGE. A direct answer is, yes, sir. But I should also
note that that Determinations Unit did seek clarity from
Washington headquarters, and it took months before they
received a response.
Mr. BECERRA. And that's a great way then to lead to Mr.
Miller. I think what we have been saying for quite some time,
many of us, is that there is not clarity in what is social
welfare. So you have many (c)4 organizations, these nonprofit
organizations, the good guys I'll call them, who are trying to
do good work, and they're being tainted by some of these
organizations that are out there doing nothing more than
political activity because the Supreme Court gave them license
now to go ahead and use a nonprofit status to go out there and
do politics.
Is the law clear, Mr. Miller, in your mind on what is
political campaign activity?
Mr. MILLER. No, it's very difficult, sir.
Mr. BECERRA. Can you distinguish between section 501(c)(4)
organizations and, say, a Section 527 political organization?
Mr. MILLER. That's difficult, but presumably the level of
political activities and expenditures needs to be less in the
501(c)(4) area.
Mr. BECERRA. Let me then suggest to you, Mr. Miller, to go
back in your opportunity with your fellow employees at the IRS,
and, Mr. George, you in your capacity as our Inspector General,
and thank you for your service, to please communicate that we
need to get you all to give us your sense of what is the best
guidance so we don't have this proliferation of organizations
that are abusing of the nonprofit status at taxpayer expense,
because they get all these writeoffs, so that we won't run into
this situation again and the American people can have
confidence in their system and in their government. I thank
you.
And, Mr. Chairman, I yield back the balance of my time.
Chairman CAMP. Thank you.
Mr. Reichert's recognized.
Mr. REICHERT. Thank you, Mr. Chairman.
Mr. Miller, I have of course like about 15 minutes to
question you, but I only have 5. I'm disappointed I'm hearing:
I don't know, I don't remember, I don't recall, I don't
believe. Who knew? You don't even know who investigated the
case, but yet you say it was investigated. But you don't even
know who investigated it. I am puzzled by that. You're not
instilling a lot of confidence in this panel and the people
across this country.
But I want to go back to your version to the word target or
targeted. And you said there was no targeting because there was
no intent. Notwithstanding the intent of IRS personnel, would
you not agree that certain groups were treated differently
because of their name or policy position?
Mr. MILLER. So I believe, sir, that the----
Mr. REICHERT. Were groups treated differently--that's the
question--because of their belief, policy position, or their
name?
Mr. MILLER. No.
Mr. REICHERT. That's a yes-or-no question.
Mr. MILLER. I said no, sir.
Mr. REICHERT. No?
Mr. MILLER. No.
Mr. REICHERT. No one was treated differently?
Mr. MILLER. May I answer? I would like to be a little
broader than a yes/no. I understand your view, sir.
My understanding of the cases that went into this queue is
that it included elements from throughout the political
spectrum, that of the 300 cases that were looked at by the
Treasury Inspector General, 70 of the 300 had Tea Party in the
name.
Mr. REICHERT. Okay.
Mr. MILLER. My understanding is that the organizations----
Mr. REICHERT. Excuse me. Mr. Miller?
Mr. MILLER. Yes, sir?
Mr. REICHERT. Mr. Miller, it's my time, and I'm going to
take it back for now. I'm not going to be delayed here. So your
answer was no, no one was treated differently. But to take you
back to Mr. Ryan's question, you knew that groups with the term
Tea Party had been automatically subjected to extra scrutiny.
You've admitted that today. You acknowledged your investigation
into whether certain groups were being treated differently.
Whether there was intent or not, didn't this committee have the
right to know?
Mr. MILLER. I answered all questions truthfully, sir.
Mr. REICHERT. Didn't this committee have the right to know
that groups were being treated differently? That you have this
group of 200, 300, whatever the number was, did not this
committee have the right to know?
Mr. MILLER. I answered all the questions I was asked.
Mr. REICHERT. So your answer is a non-answer once again.
It's an easy question. Do you not think that Congress has the
right to know all the information that you knew?
Mr. MILLER. So look, Congress was going to find out.
Mr. REICHERT. Does this committee--Mr. Miller, does this
committee have the right to know the information that you knew?
Yes or no?
Mr. MILLER. This committee----
Mr. REICHERT. Yes or no?
Mr. MILLER.--was always going to get that information.
TIGTA was looking at it.
Mr. REICHERT. But you testified before this committee, Mr.
Miller, and did not----
Mr. MILLER. This concept that we were not going----
Mr. REICHERT. Please, Mr. Miller.
Mr. MILLER. Yes, sir?
Mr. REICHERT. You testified before this committee, and you
did not provide the information, you did not share the
information you knew. So my question is, do you not believe
that--this is the United States Congress here that you are
accountable to, which is accountable to the people, the
American citizens across this country. Do you not believe that
it's your job to provide us with the information that you knew
so that, as you said, the people of this country can be
properly served honestly?
You're a law enforcement agency for crying out loud. I was
a cop for 33 years. Now, you raised your right hand today. Did
this committee have the right to know what you knew? Yes or no?
Mr. MILLER. I answered all questions truthfully. I also
will tell you that it was----
Mr. REICHERT. Let me ask----
Mr. MILLER. I didn't have all the facts.
Mr. REICHERT. I'm going to go to Mr. George because my time
is--you are not going to cooperate with me, Mr. Miller, and
you've been uncooperative during this hearing.
Mr. George, we've heard that an early draft of your report
indicates that you were unable to determine who initially
directed the IRS employees to target groups based on their
political beliefs. Is that true?
Mr. GEORGE. That we were unable to, correct.
Mr. REICHERT. Yes.
Mr. GEORGE. Yes.
Mr. REICHERT. Mr. Miller, you're the Commissioner. Who is
responsible? You conducted the investigation. Who was
responsible?
Mr. MILLER. I don't have that name, sir.
Mr. REICHERT. Why don't you have the name?
Mr. MILLER. I tell you the name that I was originally----
Mr. REICHERT. Have you asked anybody?
Mr. MILLER. Yes. I asked----
Mr. REICHERT. Who did you ask? You don't have that name
either.
Mr. MILLER. I'll be glad to provide those names.
Mr. LEVIN. Let him answer the question.
Mr. REICHERT. Mr. Levin, it's my time.
Chairman CAMP. It's the gentleman from Washington State's
time.
Mr. REICHERT. Who did you ask?
Mr. MILLER. I asked the senior technical adviser.
Mr. REICHERT. And what's the senior technical adviser's
name?
Mr. MILLER. Nancy Marks.
Mr. REICHERT. And what did Nancy tell you? Who is
responsible?
Mr. MILLER. That I don't remember, to be honest with you.
Mr. REICHERT. You don't remember again.
Chairman CAMP. All right. Time has expired. The committee
will--there are votes on the floor of the House of
Representatives. So the committee will recess for 15 minutes.
[Recess.]
Chairman CAMP. The committee will come to order. If
everyone can take their seats.
Mr. Doggett is recognized for 5 minutes.
Mr. DOGGETT. Thank you, Mr. Chairman.
What happened here is outrageous and inexcusable and unless
those of us who strongly disagree with the Tea Party on many
issues defend it from any impairment and allow it to be as
wrong as it wants to be, we impair our democracy.
Mr. George, many charges have been made here this morning.
You as Inspector General under Title V, Section 2 have a
statutory responsibility as Inspector General to prevent and
detect fraud and abuse in the programs and operations of the
IRS, do you not?
Mr. GEORGE. That is correct, sir.
Mr. DOGGETT. And as best I can determine, sir, you have
fulfilled that responsibility faithfully and forthrightly. Let
me ask you if using the extensive audit and investigation
powers you have as Inspector General you have found any
evidence of corruption at the IRS?
Mr. GEORGE. No, not at this time, sir.
Mr. DOGGETT. Yes, sir. And let me ask you, sir, with your
extensive powers if you have found that our tax system is
rotten at the core?
Mr. GEORGE. No, definitely not rotten at the core, sir.
Mr. DOGGETT. Yes, sir. And let me ask you, sir, if you have
using your statutory powers and fulfilling your responsibility
determined that the IRS picks who wins and who loses in
America?
Mr. GEORGE. I don't believe that is the case.
Mr. DOGGETT. No, sir, you have not. And the statements that
were made and very inflammatory charges at the beginning of
this hearing it is obvious have no basis in fact, at least any
fact that has yet been demonstrated this morning. It is
important that in addressing and fully correcting one wrong we
not complete and be involved in other wrongs such as
encouraging the proliferation of secret corporate money, not
just the proliferation and pollution of our democracy by that
money, but that it be tax subsidized secret corporate money;
that we not permit those who have a fundamental disagreement
with the progressive tax system using this incident as a basis
for shifting even more of the burden of financing our defense
and our essential government services on to working people;
that we not permit those who have an agenda that has now been
voted 37 times to try to undermine the full and effective
implementation of the Affordable Health Care Act so that the
health care crisis is ended for families across this country.
That is what is at stake here. That is what has been discussed
here. It is not based on any fact associated with this
investigation to this date, as indicated by the Republican-
appointed Inspector General whose job it was to determine
whether any of these charges had merit.
Let me move to an area where I disagree with some of my
Democratic colleagues and their comments this morning. I don't
believe there is any lack of clarity in the statute here. The
statute that is in effect has been in effect for decades, and
it requires that before there is tax exempt status, as Mr.
Lawrence O'Donnell, as the CREW Group, the Citizens for
Responsibility and Ethics in Washington, has pointed out in a
petition, you are to be denied this status if you are not
exclusively engaged in social welfare, according to the
statute. Is that not correct? The statute is explicit. It uses
the word ``exclusively.'' The regulation the IRS adopted 30 or
40 years ago uses different language.
Mr. GEORGE. If this is addressed to me, Mr. Doggett, I have
to demur to the Secretary. That is a tax policy question and I
am not in a position----
Mr. DOGGETT. I am not asking you for tax policy, I am just
asking for a clear reading of the statute, and a clear reading
of the statute that has been in place for decades and is in
place today says that there should be a denial of tax exempt
status to any group that is not exclusively engaged in social
welfare operations, and it was only after a regulation adopted
long ago, long before any of you were at the IRS, that changed
``exclusively'' to ``primarily,'' that there was even any
discretion for this section to be involved in this operation.
Mr. GEORGE. Mr. Doggett, I do know that we have indicated
that some clarification from those in the policy area of the
Department of the Treasury might be needed in this area to help
clarify again.
Mr. DOGGETT. In April, Citizens for Responsibility and
Ethics in Washington filed a petition with the Treasury
Department and the IRS to address that. If the statute, the
clear wording of the statute had been followed, we would not be
having to deal today with selective enforcement, we wouldn't
have any problems with enforcement in this area at all. And I
hope that that petition is honored and responded to promptly as
I believe you have fulfilled your responsibilities, Mr. George,
as Inspector General.
Thank you for your testimony, and, Mr. Miller, thank you
for yours and for stepping aside.
Chairman CAMP. Thank you. The time has expired.
Mr. Roskam is recognized.
Mr. ROSKAM. Thank you, Mr. Chairman.
Mr. Miller, you may object to the word ``targeting,'' but
it is used in the IG report 16 times. So it is a common
understanding of the word, and so I would just suggest that it
is a well settled doctrine and we not weighs a lot of time
parsing on it.
You admit that you spoke with Ms. Lerner and Celia Roady
about the planted question beforehand. Can you tell us more
about that conversation?
Mr. MILLER. I did not speak to Celia Roady, and I believe I
did talk to Lois about the possibility of now that the TIGTA
report was finalized, now that we knew all the facts, now that
we had responded in writing and everything was done, did it
make sense for us to start talking about this in public.
Mr. ROSKAM. Can you walk me through the logic that animated
in your mind at the time where you thought it would be a good
idea to make a public disclosure to the American Bar
Association rather than coming and following up on your duty to
disclose that to the House?
Mr. MILLER. So we were going to do it at the same time, I
believe. Our intent was to talk to you all at the same time.
Mr. ROSKAM. But that did not happen, did it?
Mr. MILLER. It did not happen, I don't believe.
Mr. ROSKAM. What other recollection do you have or what
other experience did you have when you were talking with Ms.
Lerner about this scheme to have the planted question at the
ABA?
Mr. MILLER. I am not sure what you are asking, sir.
Mr. ROSKAM. I am asking what is your recollection of that
conversation?
Mr. MILLER. We talked about what would be said and how we
might do it.
Mr. ROSKAM. Where did the conversation take place?
Mr. MILLER. I believe it was over the phone.
Mr. ROSKAM. What day did the conversation take place?
Mr. MILLER. I would have to look back at my notes on that,
sir.
Mr. ROSKAM. You have got notes on that?
Mr. MILLER. I would have to try to find them. I am not sure
I do.
Mr. ROSKAM. Why did you say you have notes if you don't
think you have notes?
Mr. MILLER. Sir, please.
Mr. ROSKAM. Please. Do you have notes or don't you have
notes?
Mr. MILLER. I don't know.
Mr. ROSKAM. Okay. Let's shift gears. A little while ago you
were engaged with Mr. Reichert on the question as to whether
you knew that this committee, this whole idea of does the
committee have the right to know this information, and then you
sort of sheltered yourself in this idea of well, I have always
told the truth. Let's set that aside for a moment.
Now, you are a lawyer and I am a lawyer. You know that in
the process of discovery Mr. Miller that when you find
subsequent information counsel has a duty to disclose that to
the opposite party. There is no Perry Mason moment. There is no
gotcha moment. There is no litigious situation where somebody
comes in and says, oh, we are just showing up, your honor, with
this information and we haven't disclosed it to the other side.
Don't you acknowledge that you had a duty based on your
testimony before this committee of what your actual knowledge
was, didn't you have a duty, Mr. Miller, to come forward and
disclose that to the committee based on all the cascading
inquiries that had happened from the Ways and Means Committee
directed to you?
Mr. MILLER. I don't believe so, sir. What was happening was
I was in possession of some facts. I was not in possession of
all facts. We had done an internal review to see what we needed
to do to get these cases moving because again the processing
was bad, the listing was bad, those are two different pieces we
were dealing with. TIGTA was in at exactly the same time. They
were getting all the facts. We were going to wait for them to
get the facts so that I didn't come in and either mess up their
investigation or otherwise give you facts that were not
correct, sir.
Mr. ROSKAM. So you weren't concerned about the timing of
the TIGTA investigation when you and Ms. Lerner made the
decision to move forward and do the planted question, is that
right?
Mr. MILLER. It was done.
Mr. ROSKAM. It was done.
Mr. MILLER. We had all the facts and we had made our
written response.
Mr. ROSKAM. Right. I understand that. So in other words you
had the actual information. The totality of the information
that you are describing today, you had it all in your
possession at the time at which you were under a scheme with
Ms. Lerner to go and do a planted question, is that right?
Mr. MILLER. I sort of object to the term ``scheme.'' We had
the information. We were reaching out to the committee at the
same time.
Mr. ROSKAM. An understanding, a written or not written down
contemplated play, a manipulation, call it what you will, you
had all of the information, isn't that right?
Mr. MILLER. We were reaching out to the committee at the
same time.
Mr. ROSKAM. What form did that outreach take?
Mr. MILLER. We called to try to get on the calendar.
Mr. ROSKAM. You called to try and get on the calendar. Is
that all you got?
Mr. MILLER. It is the truth.
Mr. ROSKAM. Okay. You know, I find it incredibly ironic,
you know, on the one hand you are arguing today that the IRS is
not corrupt, but the subtext of that is you are saying, look,
we are just incompetent. And I think it is a perilous pathway
to go down. There is sort of this notion that hasn't been
satisfactorily answered and that is if the targeting wasn't
targeting, if the targeting wasn't based on philosophy, how
come only conservatives got snagged?
Mr. MILLER. They didn't, sir. Organizations from all walks
and all persuasions were pulled in. That is shown by the fact
that only 70 of the 300 organizations were Tea Party
organizations of the ones that were looked at by TIGTA.
Mr. ROSKAM. Your testimony is in contradiction to the IG
testimony.
I yield back.
Chairman CAMP. The time has expired. Mr. Thompson is
recognized.
Mr. THOMPSON. Thank you, Mr. Chairman. I appreciate the
fact we are having this hearing and want very much to be able
to get to the bottom of this. More important, I want to make
sure or as important I want to make sure that we are able to do
all that we can to prevent it from ever happening again for all
of the same reasons that many of my colleagues on both sides of
the aisle mentioned today. And I want to associate myself with
the outrageous and intolerable group as to where I think this
ranks.
What I would like to know, General George first, in your
testimony you had a section that is titled Results of Review
where you say the IRS used inappropriate criteria for
identifying these organizations. Is that legal?
Mr. GEORGE. Is it legal?
Mr. THOMPSON. I am trying to get a sense of what is
appropriate criteria.
Mr. GEORGE. It is not illegal, sir, but it was unusual.
Mr. THOMPSON. So then you enumerate them, inappropriate
criteria were developed and stayed in place for a total of more
than 18 months. Is that illegal?
Mr. GEORGE. It is not illegal, but it was inappropriate.
Mr. THOMPSON. I understand that. I am just trying to get a
sense of----
Mr. GEORGE. If I may, it is contrary to Treasury
regulations and other policies then in place by the Department.
Mr. THOMPSON. I understand. The substantial delays, is that
illegal or inappropriate?
Mr. GEORGE. Inappropriate.
Mr. THOMPSON. And then the third, the unnecessary
information, illegal or inappropriate?
Mr. GEORGE. Inappropriate.
Mr. THOMPSON. Okay. Thank you very much.
You also outline recommendations that you think are most
critical and explain whether if they are enacted they are
enough to prevent this from happening again. Are they?
Mr. GEORGE. The vast majority are, and the IRS agreed to
the vast majority of them.
Mr. THOMPSON. And do you have some mechanism, some matrix,
for making sure that they are put in place and is there a plan
to go back and review these and to continue your good work of
review to ensure that your recommendations are being followed
out and that your recommendations are enough to protect the
citizens of our great country?
Mr. GEORGE. Mr. Thompson, you anticipated almost our entire
future plan. We are both going to take a look to see whether
the IRS has successfully implemented, and as I believe you
indicated or someone did, the President indicated that he was
going to ensure that the IRS complies with those
recommendations, and it would definitely be our intention to
follow up to guarantee that that has occurred.
Mr. THOMPSON. One of the responsibilities that we have is
also an oversight responsibility. Is there something in your
recommendations and in your subsequent plans that will keep us
in that loop, or are we going to have to find out about this
outrageous and intolerable behavior through some other means?
Mr. GEORGE. Mr. Thompson, we publish an audit plan each
year laying out which audits that we are going to engage in. We
request information or we solicit ideas from Congress, from the
administration and from anyone who has a tangible role in the
system of tax administration. And it is our intention to once
again do that, and there is no doubt in my mind that we will
follow up with Congress on this matter on a regular basis.
Mr. THOMPSON. Thank you.
Mr. Miller, what are your obligations in regard to
reporting this type of behavior to Congress?
Mr. MILLER. I would have to go back and take a look. I
don't believe there is an obligation. What happened here, sir,
is we knew TIGTA was in. I knew TIGTA was in in May, almost
immediately when we were involved. We had had a meeting with
Mr. George and company in May where there was an indication
they would be done this summer. Our understanding is they were
going to get the facts, they were going to get them out there.
There was never the intention or belief that these facts would
not come out in full.
Mr. THOMPSON. General George, is there a need to pass
specific legislation that would make it more difficult or
hopefully impossible for this to happen again and to strengthen
the requirements for reporting when something this outrageous
and intolerable takes place?
Mr. GEORGE. Mr. Thompson, I will answer your question in
full, but I have to again preface that the Secretary has
delegated tax policy questions to the Assistant Secretary----
Mr. THOMPSON. This is a process question.
Chairman CAMP. Time has expired so you can supplement that
answer in writing if you wish.
Mr. Gerlach is recognized for 5 minutes.
Mr. GERLACH. Thank you, Mr. Chairman.
According to the Inspector General's report, the IRS
started its inappropriate handling of certain tax exempt
organization applications in early 2010, and to swing back to
some of your prior testimony, Mr. Miller, you indicated that
you never spoke--excuse me, before I ask that question let me
highlight two pieces of media articles that appeared also, one
in 2010 as well as one more recently in September 2010. There
was an article in the Weekly Standard concerning the concerns
of the coke industry's attorney that there had been
confidential taxpayer information potentially in the hands of
senior administration officials that were part of an August 27,
2010, on-the-record background briefing.
Subsequently just a few days ago there in the USA Today
there was a column and op-ed by a gentleman connected with the
National Organization of Marriage who indicates in that op-ed
that the release of this organization's confidential tax return
to the Human Rights Campaign is a canary in the coal mine of
IRS corruption. Contrary to assertions that the targeting of
Tea Party groups was an error in judgment by low level IRS
bureaucrats, the release of this confidential data to a group
of this nature suggests the possibility of complicity at the
highest levels of politics and government.
So back to the question of whether there was any
information sharing of taxpayer records, taxpayer returns, with
anybody outside of the IRS, Mr. Miller, you indicated in
testimony some moments ago that you never spoke personally or
communicated personally with anyone in the White House about
the sharing of confidential taxpayer information, is that
correct?
Mr. MILLER. I believe so.
Mr. GERLACH. Do you have any reason to believe that at some
point you did from say January 2010 speak to somebody in the
White House or communicate in another way with somebody in the
White House about the sharing of confidential taxpayer
information?
Mr. MILLER. I don't think that would happen.
Mr. GERLACH. So the answer is no, you did not?
Mr. MILLER. I don't believe I did.
Mr. GERLACH. Are you aware of any other IRS official from
that time period to present that communicated with anybody in
the White House concerning the sharing of confidential taxpayer
information to somebody outside of the IRS?
Mr. MILLER. Can I ask, are you asking whether I am aware--
--
Mr. GERLACH. I am asking whether you are aware of anybody
else in the IRS that ever from January 2010 to present
communicated or spoke with anybody in the White House about the
sharing of confidential taxpayer information?
Mr. MILLER. So I don't believe so, but what I am confused
about, sir, I will apologize, but just so I am clear of what I
am answering, are you talking about whether I believe we shared
information?
Mr. GERLACH. Whether you have information or belief that
any confidential taxpayer information, taxpayer being
individuals, being organizations, being businesses, all of that
information being shared with somebody outside of the IRS in
violation of Section 6103?
Mr. MILLER. I have no knowledge of that. That is a question
I understand. Thank you, sir.
Mr. GERLACH. You did indicate previously, however, in
questioning you did speak yourself with Treasury Department
officials regarding the sharing of information. I am not saying
the White House now, I am saying the Treasury Department. If I
wrote that correctly, you did speak to somebody in Treasury
about that at some point, is that correct?
Mr. MILLER. I don't think so.
Mr. GERLACH. Again----
Mr. MILLER. Let's be clear----
Mr. GERLACH. I will ask the question more clearly and more
directly. Did you ever speak or communicate with anybody in
Treasury Department who was not within the IRS about the
sharing of confidential taxpayer information in violation of
6103?
Mr. MILLER. Can I rephrase it and you tell me----
Mr. GERLACH. No, I phrase the questions and you phrase the
answers.
Mr. MILLER. If you are asking me whether did I ever share
6103----
Mr. GERLACH. I didn't ask that. Did you ever communicate or
speak with anybody in the Treasury Department, not within the
IRS, about the sharing of confidential information, taxpayer
information?
Mr. MILLER. I don't believe so. But I don't know whether
you are talking about the subject, which would be absolutely
fine to talk to them about----
Mr. GERLACH. That is what I am trying to inquire about, Mr.
Miller. I am trying to find out what you did, what you knew and
when you knew that and who you spoke with. So you are saying
today that at no time from January 2010 to present did you
speak to somebody in the Treasury Department about the sharing
of confidential taxpayer information?
Mr. MILLER. No. What I am saying, sir, is the following----
Mr. GERLACH. I would like an answer to my question, sir.
Did you ever do that?
Mr. MILLER. Did I ever talk to them about the sharing----
Mr. GERLACH. Talk or communicate. It might have been by
email. It might have been by fax. It might have been by sign
language.
Mr. MILLER. I don't believe so. I can tell you
categorically I never shared information. Did I ever talk to
them about the rules around it? I don't think so, but that
would be permissible.
Mr. GERLACH. Were you aware, I think to Chairman Camp's
questions you were aware of news reporting about the National
Organization of Marriage and the concern they had about the
sharing of their confidential information. You indicated on the
record that you were aware of that news story. So on that story
or any other story did you talk or communicate with anybody
outside of the IRS in Treasury about that issue?
Mr. MILLER. I don't know. I don't believe so though.
Mr. GERLACH. Okay. Will you check all of your records, all
of your notes, all of your emails and get back to this
committee about whether your answer is different than what you
are providing right now.
Mr. MILLER. Yes. But what I can say again is----
Mr. GERLACH. I have a limited time.
Chairman CAMP. Time has expired at this point, so why don't
we move on to Mr. Kind.
Mr. KIND. Thank you, Mr. Chairman, and thank you,
gentlemen, for your testimony here today. I think it has been
illuminating and very helpful.
Mr. Miller, let me start with you. I assume you agree with
the premise that if there is an agency in the Federal
Government that just needs to be above approach, no hint of
bias, partisanship, ill-treatment, mistreatment, unequal
treatment to any individual or any organization, it is the IRS,
is that right?
Mr. MILLER. I agree, sir, and that is what is so sad about
this.
Mr. KIND. And obviously the optics of what happened there
in the Cincinnati office in reviewing the applications, this is
what comes from it, is that right?
Mr. MILLER. The perception is bad.
Mr. KIND. It is my understanding, too, that based on the
Inspector General's report and the recommendations, the IRS has
taken that up and is trying to do their best to implement that
to ensure that this does not happen in the future again?
Mr. MILLER. We will implement all recommendations and it
will not happen again.
Mr. KIND. Mr. Neal asked you previously in his line of
questioning about the accountability, who is being held
accountable and why. Obviously you have rendered your
resignation to the President and he has accepted that as
Commissioner of IRS, is that right?
Mr. MILLER. I have done so to the Secretary.
Mr. KIND. Okay. And any other instances of accountability
as far as those at the Cincinnati office, those in charge of
the Cincinnati office in the development and use of this
criteria?
Mr. MILLER. So I think I mentioned there were two instances
in which there was counseling suggested and there was a
reassignment of someone. But what I should say and what I said
in my opening statement is we now have possession of the facts
with respect to the TIGTA report. Now is the time we should be
looking at that, once we have the facts.
Mr. KIND. Any pushback in the IRS with the Inspector
General's report and some of the recommendations they are
making? Any difference of opinion?
Mr. MILLER. There is no air between us on the
recommendations.
Mr. KIND. Okay. Is there a rule for the Congress to be
working with the IRS to ensure that something like this does
not happen in the future? I am thinking specifically of post-
Citizens United and 70,000 applications that was submitted and
a doubling I understand of (c)(4) applications too. Do you feel
there is sufficient personnel in order to expedite the review
of these applications?
Mr. MILLER. There are not sufficient personnel.
Mr. KIND. Of course, I don't think we will have many
recommendations on the other side as far as allocating more
resources to the IRS so you are sufficiently staffed in order
to deal with the huge influx that the IRS is experiencing right
now. I think there is a role for the Congress and we have got
to share some responsibility as well.
But Mr. George, let me ask you, I think part of the problem
is the definition of the criteria of primarily engaged in
social welfare seems to be an inherently subjective criteria
with no clear bright lines or clear rules. I think the IRS is
trying to further define that for the division in Cincinnati.
But is there further tightening of that definition which would
be helpful to IRS personnel when it comes time to review the
applications?
Mr. GEORGE. The answer is yes.
Mr. KIND. Is that something that has to be done internally
with IRS or is there a role for Congress to intervene and try
to help further define and present some more objective and
bright line rules when it comes to reviewing social welfare
applications?
Mr. GEORGE. It is my understanding that the IRS has the
authority to do this on its own without legislative fixing.
Mr. KIND. I think obviously this committee will need to be
working with IRS too to ensure that that gets done, because
otherwise it is going to be an inherently flawed human process
of subjectively applying this criteria, I feel, especially with
the huge influx of applications.
Now, some of this has been delved into but I think it is so
important that it needs to be reiterated. Mr. George, I
apologize if you think you made yourself clear on it, but
according to your report you found no bias or partisanship
behind the development and the use of the criteria for
selecting applications from the Cincinnati office, is that
right?
Mr. GEORGE. That is correct, sir. But we did find gross
mismanagement in the overall----
Mr. KIND. That is clear in your report too. Did you find
any evidence that anyone outside the IRS was involved in the
development and review?
Mr. MILLER. Not at this time, sir.
Mr. NAME. Not the White House or Treasury?
Mr. GEORGE. That is correct, sir.
Mr. KIND. Thank you. Thank you, Mr. Chairman.
Chairman CAMP. Thank you. I will recognize Dr. Price for 5
minutes.
Mr. PRICE. Thank you, Mr. Chairman.
I think if I am sitting at home trying to figure out what
is going on here and listening to the testimony and the
remarkable revelations some of these questions, you get some
snickers after some of them, but you have the Federal
Government asking what books you read, you have the Federal
Government asking whether or not you know anybody in your
organization that is going to run for political office. This is
chilling stuff. This is very, very serious.
Mr. Miller, do you accept the findings of the IG report?
Mr. MILLER. We do, sir.
Mr. PRICE. One of those findings is that groups were
targeted. Do you accept that finding?
Mr. MILLER. I would not characterize it as targeting, but--
--
Mr. PRICE. You can understand why others would believe,
including the Inspector General, would believe that groups were
targeted?
Mr. MILLER. I think the groups that were put into the
centralized grouping would have gone in--they would have gone
in whether we had done the correct thing----
Mr. PRICE. You described the list of criteria being used to
identify these groups as obnoxious, correct?
Mr. MILLER. Correct.
Mr. PRICE. And it is not just Tea Party groups, right? It
is not just conservative groups. In fact there are religious
organizations, are there not?
Mr. MILLER. I don't know that, sir.
Mr. PRICE. Are you not aware that there are religious
organizations that were identified by the list of criteria that
were formulated?
Mr. MILLER. I am actually unaware that there were. And I
say that as though I don't know. I have looked at the list, but
very quickly.
Mr. PRICE. Are you aware that there were some Baptist
church organizations that were identified for greater scrutiny?
Mr. MILLER. I was not aware of that, sir.
Mr. PRICE. Who is Sarah Hall Ingram?
Mr. MILLER. She is an executive at the Internal Revenue
Service who does the Affordable Care Act work for them.
Mr. PRICE. That is where she works now?
Mr. MILLER. Yes, sir.
Mr. PRICE. Where did she work during the period of time
under question here, 2010 to 2012?
Mr. MILLER. Someone has corrected my prior comment, I
think. So 2011 and 2012 I think she was already working on
Affordable Care Act. I don't know when in 2010 we made that.
Mr. PRICE. Did she ever hold the title of Director of Tax
Exempt Organizations for the IRS?
Mr. MILLER. She held the division commissioner title.
Mr. PRICE. So she had responsibility over much of the
concerns and discussion that we are having today, is that
correct?
Mr. MILLER. At the time she was division commissioner, yes.
Mr. PRICE. Would she have known about this list of criteria
that has been formulated, had been formulated?
Mr. MILLER. I have no reason to believe that she would.
Mr. PRICE. That she would?
Mr. MILLER. Yes. I have no reason to believe that she
would. I am sorry if I wasn't clear. I don't think so.
Mr. PRICE. You don't think she knew about the criteria of
the folks under her responsibility?
Mr. MILLER. There are a couple of thousand folks.
Mr. PRICE. Have you ever had that conversation with her?
Mr. MILLER. No.
Mr. PRICE. You have never asked her whether she knew?
Mr. MILLER. So, I am not sure she was in that time at the
time, sir.
Mr. PRICE. I know you have identified her current position
with one with the IRS oversight over the ACA and regulations
related to the ACA, is that correct?
Mr. MILLER. Correct.
Mr. PRICE. Who appointed her?
Mr. MILLER. I moved her into that job.
Mr. PRICE. You have also said that in the context of the
criteria list and what we are talking about today that the IRS
``provided horrible service.'' Correct?
Mr. MILLER. I think that is correct.
Mr. PRICE. That is what you said earlier today. And the
individual who was overseeing a portion of this and had
responsibility for the provision of this ``horrible service''
now sits over the entity at the IRS that will determine whether
or not people are complying with the rules of the ACA, is that
not correct?
Mr. MILLER. No, I don't think it is, sir.
Mr. PRICE. So Sarah Ingram is not at the IRS over control
of the regulatory----
Mr. MILLER. She was for at most a period of the time, but
we would have to go back. I don't think your timeline works
perfectly, sir. I would have to go back and check. There may be
a period of time when she was still in that job, but she had
transferred over----
Mr. PRICE. Mr. McDermott in questioning you said the IRS
wouldn't have any access to medical records, is that correct?
Mr. MILLER. I believe that is correct.
Mr. PRICE. So it would be unnecessary for them to gain
access to medical records, correct?
Mr. MILLER. I can't----
Mr. PRICE. It would be unnecessary?
Mr. MILLER. I think so.
Mr. PRICE. Isn't that how you described the questions and
the information that the IRS folks were gaining through the
criteria list, unnecessary?
Mr. MILLER. I think--are you talking about the letters that
came out?
Mr. PRICE. I am saying that there is a parallel here in the
expansive nature of what the IRS has done. Would you care to
recharacterize the ``unnecessary'' word? Is it illegal what
they have done?
Mr. MILLER. It is absolutely not illegal.
Mr. PRICE. It is not illegal what the IRS has done?
Mr. MILLER. Sir, let me understand the question. What is
your statement as to what is illegal?
Mr. PRICE. Do you believe it is illegal for employees of
the IRS to create lists to target individual groups and
citizens in this country?
Mr. MILLER. I think the Treasury Inspector General
indicated that it might not be, but others will be able to tell
that.
Mr. PRICE. What do you believe?
Mr. MILLER. I don't believe it is. I don't believe it
should happen. Please don't get me wrong. It should not happen.
Mr. PRICE. Thank you, Mr. Chairman.
Chairman CAMP. Thank you. Mr. Blumenauer is recognized for
5 minutes.
Mr. BLUMENAUER. Thank you, Mr. Chairman, and I appreciate
the opportunity for our being able to listen to the witnesses
and try and develop the record and people putting forth their
own ideas, their own questions, clarification. I think, Mr.
Inspector General, that you have provided a tremendous service
with the report, straightforward, identifying mismanagement,
inappropriate activity, and I hope that people will be able to
actually read the report, to reflect on it.
I appreciate your being here, Mr. Miller. It is not the
most comfortable. I appreciate that you as a career civil
servant accepted responsibility even though you hadn't done
these things directly and resigned. It is an air of
responsibility you don't often see in the political arena, I
will say. But I am hopeful that we can continue to probe, to
direct, to make sure that no political entity is subjected to
inappropriate activity on behalf of the IRS.
I appreciate some of my colleagues talking about efforts
that we can do to clarify laws and regulations together to be
able to make sure that there is less ambiguity and there are
better standards, but I also think at some point it will be
interesting to reflect on Congress' role in what the chairman
referred to in pretty strong terms about a Tax Code.
When I came here in the 104th Congress there were 114,000
employees in the IRS. Since I have been here, Congress in its
wisdom has expanded the Code, made it more complex, and cut
dramatically the men and women who are on the front lines to
deal with it. There is an inadequate training budget. We have
had this testimony just across the Capitol before the Senate
this last week. And I really hope that there is an opportunity
to think about how we support the integrity of the Internal
Revenue Service, not just by making sure there isn't
inappropriate or gross mismanagement, there is accountability,
there is clarification, but we rely on it to be able to
function. And Congress has slowly been starving the budget of
the IRS at a time when each of those employees, each dollar
spent on those employees, gives the Federal Government about
$214 in revenue. And for us to not make sure that it is
adequately staffed, adequately trained, adequately equipped
invites shortcuts, makes it harder to have the oversight and
the accountability and harder for overall performance.
I think it is inexcusable to cross the line. I think it is
important that we bear down, we understand, we make sure it
doesn't happen again. But I also think as the Congress has made
the Code more and more complex, given the IRS fewer and fewer
resources to administer it, made it difficult to train, I think
it undermines the ability to take a complex entity that relies
on self-reporting and people having confidence in it. And I am
hopeful that this isn't something that we slide past.
I appreciate, Mr. Chairman, your interest in simplifying
and reforming the Code, but I also hope that we look at the
tasks they have been given, the budget they have been given,
and think a little bit about maybe a rate of return that would
more than pay for itself if we invested in training, in
management, and having more than 150 people to deal with the
avalanche of these applications.
I guess that wasn't so much a question, but it is something
that occurred to me, and I know, Mr. Miller, you had referenced
the stress that that group is on and how hard it is to keep
track. And at some point if you would provide to the committee,
I am not putting you on the spot now, but some reflections on
what it would take to do this right, I think it would be a
valuable part of the committee's record going forward, because
we all want it to have integrity, we want it done right, we
want to treat our employees and the taxpayers properly.
Thank you.
Chairman CAMP. Thank you. Mr. Buchanan is recognized.
Mr. BUCHANAN. Thank you, Mr. Chairman.
Mr. Miller, I want to talk a little bit about the culture
of the organization, looking at the note, your bio, 90,000
employees, $12 billion budget. You have been there 25 years. I
am concerned.
I guess to start off, we have got a mission statement
there. I am very concerned about the breadth and the depth of
maybe what is going on. I think a lot of employees probably do
a good job, but I have been a person who has been in business
30 years and run larger organizations. So you have a mission
statement in terms of talking about working for the American
people, doing what is right, playing by the rules.
Is that something that is internalized at the IRS or is
that just something on a website?
Mr. MILLER. I believe, Congressman, it is internalized, and
the vast majority of our folk are hard-working, incredibly
honest people. I am going to tell you, and you guys should
hear, that as these discussions occur, it is damaging to the
morale of those people and it is probably ultimately damaging
to the sense of voluntary compliance which underlies our entire
tax system.
Mr. BUCHANAN. Let me say obviously I think there is
probably a lot of good people, but at the same time we have a
massive PR problem at minimum.
Mr. MILLER. We do.
Mr. BUCHANAN. And this has got to be dealt with quickly. It
can't just drag on for 6 months to a year. So I think we need
to get to the bottom of it. The other thing, let me just ask,
in terms of that size organization, who is in charge? Who is
the boss? How is that hierarchy, how does it work? I ran a very
decentralized business where I had a corporate structure, but I
had managers and partners in different operations. How is the
IRS, you know, in terms of being an Acting Commissioner, you
have been there 25 years, who do you report to or the
Commissioner ideally in the past, who do they report to and at
what point when something like this comes up, who is involved
at the next level up?
Mr. MILLER. So the reporting chain and the organization,
there are two deputies reporting to the Commissioner and the
Commissioner reports to the Deputy Secretary of Treasury.
Mr. BUCHANAN. Who is ultimately responsible?
Mr. MILLER. The Commissioner, Acting Commissioner. Not
Treasury. The Treasury relationship is such that they would not
be involved.
Mr. BUCHANAN. So who would be responsible for you? Who
basically asked you to resign or fired you?
Mr. MILLER. It would be Secretary Lew.
Mr. BUCHANAN. The Secretary of the Treasury. The other
thing is, let me ask you, there has been two people that have
been--were you terminated or fired? What happened there? Or are
you getting ready to retire?
Mr. MILLER. I was asked to resign and I will retire under
the Civil Service rules.
Mr. BUCHANAN. On what basis do you feel like you are
getting asked, and maybe one other person I guess got asked,
but it seems like there is a lot of other people ideally in
Cincinnati and Washington and other parts that haven't been
held accountable.
Mr. MILLER. I'm not sure what the question is, sir. If I
could answer it and then tell me if I am answering the wrong
question.
Mr. BUCHANAN. Go ahead.
Mr. MILLER. We are not done yet. We are not. We now have
the Treasury Inspector General's report. We now have the sense
of the facts. Now is the time for those that remain, including
the incoming Acting Commissioner, Mr. Warfel, to take those
actions.
Mr. BUCHANAN. Let me mention as it has been brought up with
a couple of the ladies that work with you, Lois Lerner and
Sarah Ingram, what is being done about those two? Because they
have been in the press, there is a lot of concern about that.
They ran a large operation and it seems to be at the heart of
the issues today. I think that has got to get dealt with in a
very aggressive clear way in the next week or two.
Mr. MILLER. I don't know whether it will be or not. That
will be up to the new Acting Commissioner.
Mr. BUCHANAN. Let me just ask you in terms of the new
Acting Commissioner, are we looking to get a permanent
Commissioner, or is this going to be, you know, for a period of
time?
Mr. MILLER. I don't have that information. I would assume,
however, that we ought to have a nomination----
Mr. BUCHANAN. I hope, because I think at the end of the day
that leadership matters and getting the right culture, the
right environment within the organization, the IRS, it needs
incredible leadership and incredible integrity and we need to
make sure that that person, not so much the acting one, but the
permanent one, is the right person going forward.
I yield back.
Mr. MILLER. I very much agree, sir.
Chairman CAMP. Ms. Schwartz is recognized for 5 minutes.
Ms. SCHWARTZ. Thank you. I appreciate the opportunity to
ask questions. Let me just say a couple of things and then ask
a question, and I will attempt to be brief. This is not an easy
hearing for you or for us.
We are outraged on behalf of the American people. That is
number one. The American people deserve to be able to trust
their government for fairness and lack of bias, and that was
violated. And that violation is outrageous and unacceptable to
us and I hope to you.
And the fact that, number two, there need to be changes. It
is already happening. Some changes you are making. But we need
to be assured that those changes will be made. Things happen,
investigations have to be done, and then changes have to be
made to ensure the American people that we know that and we
will not accept bias or discrimination in any way. I think that
is clear to all of us.
The second thing I will say is that this committee and
Congress also has a responsibility to do this in our own
questioning and our demand for accountability and transparency
from you, from the administration, from everything that
happened, to do it in a way that is not political either. I
think we have to be very careful about that, and I would compel
all of my colleagues to make sure that we also engage in this
in a way that is clear and fair and nonpolitical. We all agree
that something has to be done and we should do it.
So my question though is really about sort of more broadly
what is going on in the divisions that handle the applications
for nonprofit status. I have heard in my own office that groups
come to us that have applied for nonprofit status, mostly
501(c)(3), not (c)(4), which is the issue here, but the backlog
is a year. They don't understand why it takes so long. They
don't understand why--they are not clear about what is wrong
with their application. They are not hearing back. And given
some of the cuts that we have made, nonprofit groups in
particular, the ones--the 501(c)(3) in particular, but really
are looking to try and make up some of the gaps that are here,
you know, to be able to raise money and charitable
contributions and to make a difference in our communities.
And I for one need to have better clarification about what
the criteria is, why don't they hear back, why those
applications are taking longer than a year, if there are
problems with them what kind of questions you legitimately can
ask and ones you can't and how we can move this process
forward. And I think that we have every reason to ask those
questions and get those kinds of answer also on behalf of our
constituents.
Again, it goes for all of the nonprofit organizations. If
there are reasons to review an application in greater depth,
and there may well be, certainly we have to understand that
better and so do the people making those applications. They
should not be in the dark about the criteria. They should not
be in the dark about why it is sitting on somebody's desk or
receiving more review.
So if you could clarify for us now, Mr. Miller, or give us
some more information as we go forward about what that criteria
is and what we can expect and what we can explain and how we
can help you make sure that you are doing this right, and when
they mess up, Mr. George, you are in there doing that
investigation and getting those answers and correcting those
and we can ensure the American people of the right process, the
fairness of that process, the criteria that is being used, and
a timely, appropriate responsive process to American taxpayers
and certainly to nonprofit, hopeful nonprofit organizations.
So I will give you a chance to answer that. It would be
appreciated.
Mr. MILLER. I think probably it is a big enough question
that we will follow up in writing. But the process right now
is, as I have mentioned, is that we have a limited number of
people, 140 to 200, that work on the 70,000 applications that
come in for tax exempt status. Most of those are 501(c)(3)
organizations.
Now, 501(c)(3) organizations get a number of tax benefits.
They get deductibility of contributions. They get the ability
in some instances to issue bonds. They get State tax
exemptions, property tax exemptions, postal rate reductions.
These are significant benefits in addition to just tax
exemption and we have to look at them. We do. And many of them
are small organizations that should go through very quickly,
and some of them are large organizations that we need to take a
look at, the largest hospital systems, the largest
universities. There are some large organizations.
Then you look at particular issues within them. And we will
look for, is there inurement, is there private benefit, is
there political activity going on. Because, again, (c)(3)s, no
political activity is permissible. (C)(4)s, some, but not a
primary amount of activities can be political in nature. Those
are things that take time. We try to look. We try to move them
along as fast as we can. We do not have enough people right
now.
Ms. SCHWARTZ. So you feel you don't have enough staff but
you are clear about the criteria. This will be a continuing
conversation.
Chairman CAMP. I am afraid time has expired.
Mr. Smith is recognized for 5 minutes.
Mr. SMITH. Thank you, Mr. Chairman.
Mr. Miller, could you define political activity as it would
relate to the agency and the applications?
Mr. MILLER. Under the Internal Revenue Code political
campaign activity has some definitional limits. You need a
candidate. You need a candidate for public office. And that is
sort of what you need for it to be a political campaign
activity under 501(c)(3) and 501(c)(4). A little different
under 527 rules.
Mr. SMITH. And was it the concern about political activity
that led to the centralization organization of reviewing the
applications?
Mr. MILLER. I believe it was. It was the fact that we were
seeing more applications indicating that they might be doing
political activity. And it is an area that is very difficult
for us. Is it education? Is it an issue ad? Is it actual
campaign intervention? Those are very difficult for us to parse
out.
The decision was made to try to get them into one group and
educate their people. How they started that process was one of
the problems here. The other probable here, as I have
mentioned, is the method of processing these cases was flawed,
and I think that the TIGTA report and Mr. Russell's report goes
into great detail on the problems that we saw in terms of the
lack of communication between pieces of the service, the
letters that were going out that were overly broad and the
complaints that we were getting rightfully from those who were
given a remarkably little amount of time to explain an awful
lot of stuff.
Mr. SMITH. And how many employees at the IRS would you say
would have been associated before the centralization and then
after the centralization?
Mr. MILLER. I am not sure of the question, sir.
Mr. SMITH. The number of employees associated with the
applications were greater in number before the centralization,
is that accurate?
Mr. MILLER. It might be. I don't really know the answer to
that. It might have been the same X number of people, but they
were centralized versus spread out.
Mr. SMITH. Now, it was mentioned earlier in testimony, in
questions, that donor lists were requested by the IRS, is that
accurate?
Mr. MILLER. That is accurate. In some cases.
Mr. SMITH. In some cases.
Mr. MILLER. Not all these cases by any stretch of the
imagination, sir.
Mr. SMITH. And did the acquisition of those lists ever lead
to additional--or did those lists trigger any further inquiries
or new inquiries?
Mr. MILLER. No. I believe what happened is when they hit
the paper, we discussed it. We told people that--I will go back
for a moment. Donors can be relevant, but they certainly
shouldn't be in every case. They shouldn't be asked in every
case. They can be relevant if a donor has a contract with the
organization, if the donor is doing it for a political purpose,
but to just ask for donors without a rationale shouldn't be
done.
When we saw that it happened we asked that, you know, if
they hadn't sent then in, we reached out and said don't send
them in. If they had sent them in, we said we are not going to
use these, and we didn't. You will not find them used in any of
these cases. There was something, I don't know how many of
these cases there were, maybe 30 or something like that is my
understanding, I could be wrong on that, more than half of
those were not Tea Party cases that got these donor list
requests, by the way. But going back, it was overly broad. It
was not necessary.
Mr. SMITH. Thank you, Mr. Miller.
Mr. George, I will ask you the same question. In the cases
where donor lists were requested, was it your finding that
those lists perhaps triggered further inquiries?
Mr. GEORGE. Well, I don't have an answer to that aspect of
your question, Mr. Smith. I do know that 27 donor lists were
requested.
Mr. SMITH. Twenty-seven donor lists were requested.
Mr. GEORGE. Correct.
Mr. SMITH. Mr. Miller, on the safeguards against bias I
think the underlying concern of this entire situation is that
bias was applied. Can you share whether there were safeguards
in place that were not honored to try to prevent the bias
before this situation came about?
Mr. MILLER. So, obviously I don't think, and, again whether
it was bias or perception of bias will play out over time. Let
me tell you that we have something on the exam side of the
house that has worked remarkably well, and that is before
anybody gets selected for examination by reason of political
activity it goes through a committee. So no one person can do
this. And that cuts down on the bias. We do a better job of
precisely explaining why we are doing it. On the determ side,
less so. So what we have done is elevated the issuance of the
criteria to a higher level in the organization.
Mr. SMITH. Thank you. Mr. George?
Mr. GEORGE. I would just point out, sir, of the 27, 13 were
from Tea Party groups of the donor lists.
Mr. SMITH. All right.
Chairman CAMP. Thank you. Time has expired.
Mr. Davis is recognized.
Mr. DAVIS. Thank you very much, Mr. Chairman, and I want to
thank both of you gentleman for being here.
Everybody that I have heard make a statement or comment,
every reviewing body that has had an opinion, have suggested
that obviously there was some behavior on the part of senior
level IRS staff that was unwarranted, unacceptable,
intolerable, and, of course, should never happen again. It is
also clear that there have been management challenges such as
such as who has the authority to do what relative to policy as
well as operational procedures.
Mr. George, let me ask you, when did you start the audit?
Mr. GEORGE. Our audit, sir, began with a request from a
congressional staff member in--I want to give you the exact
date, sir, and I do have that here. March 1st of 2012 was when
we were initially contacted by a Government Reform staff
member, and our audit began in roughly May, or March rather, of
2012. We had meetings prior to that, but I would point to March
of 2012.
Mr. DAVIS. Mr. Miller, when did you first learn of the
audit or know about the audit?
Mr. MILLER. Sometime in that same timeframe. It would have
been in March when we certainly were aware that TIGTA was
taking a look at this at some juncture at that time.
Mr. DAVIS. So you knew that this was underway pretty much
from the beginning?
Mr. MILLER. I did.
Mr. DAVIS. And did it ever occur perhaps to have certain
kinds of conversations, interactions with whoever would be
determined as your superiors?
Mr. MILLER. I mean, I'm sure Mr. Shulman knew. I'm not sure
that anybody above Mr. Shulman knew.
Mr. DAVIS. Let me ask you, Mr. George, during your
investigation we've heard all kinds of allegations. As a matter
of fact, some people have even been suggesting that a good
thing to know is who's going to be the next person to go to
jail, who's going to be indicted.
During your investigation did you or was it reported to you
by any of your investigators that there was any apparent
criminal intent or activity on the part of these employees?
Mr. GEORGE. Nothing out of the initial review of the audit
to that effect, Mr. Davis, but there will be subsequent review
on our part on this matter.
Mr. DAVIS. You know, after listening to all of the
discussion and reading all of the information that I've read, I
am not convinced that this is a great big political conspiracy.
I would certainly admit that there has been some ineptitude,
there has been some lack of serious management procedures used
and adhered to.
Let me ask both of you, since you've had considerable
experience with the Internal Revenue Service, what would be
your recommendations to the new Commissioner coming in?
Mr. Miller.
Mr. MILLER. There is no question that this has damaged the
reputation of this organization and the new Commissioner needs
to take steps to ensure that we have restored that trust that's
so essential. And that's where he or she should take action.
Mr. DAVIS. Mr. George.
Mr. GEORGE. And I would point out, sir--and this is one of
the recommendations that we make--training is necessary at all
levels on a repeated basis of IRS staff, and especially in
terms of the political season. You have a lot of turnover,
especially at lower levels at the IRS, and people simply need
to know and to be kept up informed--up to date rather--of the
new regulations and requirements.
Mr. DAVIS. Thank you very much, Mr. Chairman, and I yield
back.
Chairman CAMP. Thank you.
Mr. Schock is recognized.
Mr. SCHOCK. Thank you, Mr. Chairman.
Let me begin by saying that I am most concerned that the
IRS attempt a week ago to clean up and apologize for abusing
conservative organizations seeking tax-exempt status is really
the proverbial tip of the iceberg. The IRS' stellar reputation
of being above partisan politics has been shattered by these
revelations, and these revelations now seem to be far from
complete. The IRS at first revealed that the words Tea Party,
patriots, and a few other phrases triggered extra scrutiny.
Since then, more and more revelations have come to light.
Mr. Chairman, I have with me a 150-page document given to
me by the Thomas More Society detailing a number of pro-life
organizations throughout the country which in application to
501(c)3 status were given horrible instances of IRS abuse of
power, political and religious bias, and a repression of their
constitutional rights.
I'm going to submit these documents detailing what these
organizations went through to the Treasury Inspector General
for Tax Administration, asking for a reply to this committee
about the degree of abuse these organizations received during
their application for tax-exempt status.
[The information follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
______________
Mr. SCHOCK. I would like to just highlight a few of those
purported abuses and ask for your opinion on them. In a letter
from the IRS Office of Exempt Organizations specialists in El
Monte, California, specifically the Pacific Coast division--I
would note this is not in the Cincinnati division--to the
Christian Voices for Life of Fort Bend County in Sugar Land,
Texas, dated March 31, 2011, that I have here with me today,
they were asked specifically--again, this is a pro-life group--
``In your educational program do you do education on both sides
of the issues in your programs?''
Mr. Miller, your knowledge of the 501(c)3 application, is
that an appropriate question to ask?
Mr. MILLER. So I'm going to be honest and I'm not going to
be able to speak to a specific development letter in a specific
case. I don't know that I can do that under 6103.
Mr. SCHOCK. Okay. Let me ask you about another letter that
was received by a pro-life group, this one in Iowa. Their
question specifically asks from the IRS to the Coalition for
Life of Iowa, quote, ``Please detail the content of the members
of your organization's prayers.''
Would that be an appropriate question to a 501(c)3
applicant, the content of one's prayers?
Mr. MILLER. It pains me to say I can't speak to that one
either. But that's----
Mr. SCHOCK. You don't know whether or not that would be an
appropriate question to ask?
Mr. MILLER. Speaking outside of this case, which I don't
know anything about, it would surprise me that that question
was asked.
Mr. SCHOCK. And finally, during another applicant's
conversation or back and forth, they were asked specifically,
quote, ``Please detail certain signs that may or may not be
held up outside of a Planned Parenthood facility,'' end quote.
Would that be an appropriate follow-up to an applicant for
501(c)3 application?
Mr. MILLER. Again, I don't know what the context would be.
But, again, that doesn't sound like the usual question.
Mr. SCHOCK. Thank you. Well, hopefully, Mr. George and the
Inspector General's office can enlighten us.
Mr. George, during your investigations are you aware of the
three letters submitted by Senators Baucus, Schumer, and Durbin
written to the IRS, specifically Mr. Shulman, asking them to
give extra scrutiny to 501(c)4 applications?
Mr. GEORGE. I am aware of it, but I don't know the details,
sir.
Mr. SCHOCK. So in your investigation so far, in questioning
employees of the IRS, did you ask them specifically whether or
not these letters from sitting United States Senators
influenced or impacted their decisions around these cases?
Mr. GEORGE. I do not believe that was part of the inquiry,
sir.
Mr. SCHOCK. Will you ask those questions in the future?
Mr. GEORGE. I will ask that, if appropriate. We will
certainly do so, if appropriate.
Mr. SCHOCK. Thank you.
Mr. Chairman, I'm particularly troubled by some on this
committee who seem to want to rationalize or justify the
inappropriate behavior by the IRS in these cases by their
disagreement with the Citizen United ruling of our Supreme
Court. I think we all know that our Nation is a Nation of laws
and we either abide by those laws or not, to our peril. And
whether we agree with the Citizens United ruling or not should
not be justification for this agency, which is charged with
upholding the rule of law equitably for all people in all
groups, regardless of party affiliation or motive.
Specifically, Mr. Miller, I was troubled by your comment
that you found this grouping--Mr. George, with the Inspector
General's office calls it targeting--to be inappropriate but
not illegal. I'm wondering if you can give me examples of other
targeting within the IRS that you're aware of that would be
inappropriate but not illegal.
Mr. MILLER. So I probably, Congressman, should tell you
that I don't know--it's my belief that what happened here
wasn't illegal, but I suppose there are some facts that might
come out that would indicate otherwise. But it's not my area. I
don't know. But it certainly was inappropriate, no question
about that. I'm unaware--we have used listings elsewhere----
Mr. SCHOCK. Can you give me a few examples?
Mr. MILLER. A credit counseling organization would be one
of those that were used a name to pull those cases together to
work in a consistent and fair manner.
Chairman CAMP. All right. Time is expired.
Ms. Jenkins is recognized.
Ms. JENKINS. Thank you, Mr. Chairman.
You know, we've heard a lot of outrage, a lot of anger and
disappointment. But I have to tell you, after sitting here for
a couple hours, I'm sad and I'm sick to my stomach that
Americans could be targeted by a government agency based on
their political beliefs.
Mr. Miller, in response to Congressman Nunes you mentioned
that you had a discussion with Treasury--someone at Treasury--
regarding the TIGTA report. I was just wondering if you could
give us more details about when that conversation occurred and
with whom.
Mr. MILLER. So I don't--I don't know the precise date, but
it would have been very recently after the report was done. And
I think I think Mr. George can speak to when he indicated to
some parts of Treasury as well. It might have been in the same
timeframe.
Ms. JENKINS. So would that have been the first time you had
a discussion with someone from Treasury about this situation?
Mr. MILLER. This situation being the listing and the
treatment of these cases?
Ms. JENKINS. Correct.
Mr. MILLER. I think so.
Ms. JENKINS. So out of all of the news reports that have
come out in the last couple years there was never a discussion
at IRS with Treasury about the situation until just recently?
Mr. MILLER. You asked the question, was the TIGTA report?
Yeah, the TIGTA report was described and discussed with them
recently. I don't believe the specifics were described or
discussed with them earlier, but I don't know that. They
weren't by me, I don't think.
Ms. JENKINS. Okay. Who was your conversation with?
Mr. MILLER. I would have talked at some point to Mr.
Patterson, the chief of staff, and subsequent to Mr. George's
discussion with Mr. Wolin, I spoke to Mr. Wolin.
Ms. JENKINS. You spoke with whom?
Mr. MILLER. Mr Wolin.
Mr. JENKINS. Mr. Wolin?
Mr. MILLER. Wolin.
Ms. JENKINS. And how did that conversation go? What did
Treasury have to say?
Mr. MILLER. We just talked through the troubling nature of
the reports. I indicated that we had worked on fixing the
problem. And that's what we talked about.
Ms. JENKINS. They didn't give you any advice and counsel on
how to move forward?
Mr. MILLER. No.
Ms. JENKINS. Okay.
Mr. George, how often do you meet with Treasury leadership
and IRS leadership regarding open audits?
Mr. GEORGE. With IRS leadership, we meet monthly with the
Commissioner or Acting Commissioner on a standing basis and
then we'll have communications as necessary. The Secretary
holds a monthly meeting with bureau heads. And in conjunction
with those meetings I meet monthly with the General Counsel of
the Department of the Treasury, and then on an as-needed with
the Deputy Secretary, Mr. Wolin.
Ms. JENKINS. Okay. When did you first alert Treasury
leadership and IRS leadership about this specific audit?
Mr. GEORGE. I alerted Commissioner--then-Commissioner
Shulman on May 30, 2012. I subsequently alerted the General
Counsel of the Department of the Treasury on June 4. And
subsequently--and I do not have the exact date--alerted the
Deputy Secretary, Neal Wolin, about this matter. And then upon
his assumption into the position, I mentioned it to Secretary
Lew.
Ms. JENKINS. Okay. So May 30 would have been the first time
that Mr. Shulman would have known about the troubling
allegation.
Mr. GEORGE. From my perspective. I would assume that people
within the Internal Revenue Service would have given him a
heads-up about this troubling matter, but I can't say that for
certain.
Ms. JENKINS. Okay. In your report you indicate that the
decisions to target Americans based on political beliefs were
made only within the IRS. How did you determine that?
Mr. GEORGE. These were through interviews with IRS staffers
both in Cincinnati, Ohio, as well as in Washington, D.C., at
the headquarters of the Determinations Unit and the Exempt
Organizations Unit.
Ms. JENKINS. So did you interview Mr. Miller?
Mr. GEORGE. We did not interview Mr. Miller.
Ms. JENKINS. So how would you know--did you interview
anyone at Treasury?
Mr. GEORGE. We did not. And the reason for that is because
at the time of our interviews we had no indication, because
this was an ongoing matter, and we didn't have any indication
from those initial interviews that they were implicated in this
matter.
Ms. JENKINS. So had anyone given you any indication that
you needed to visit with someone higher, you would have had the
authority----
Mr. GEORGE. Most definitely.
Chairman CAMP. All right. Time has expired.
Mr. Paulsen's recognized.
Mr. PAULSEN. Thank you, Mr. Chairman.
There have been a lot of news reports this week that this
has been a bad week for the President or a bad week for the
administration. But I will just tell you, after hearing
additional testimony this morning myself, that this is a bad
week for America. That's the bottom line. And when supposedly
neutral actors in our government choose sides and the results
end up being highly corrosive to our democracy, this is a
violation, clearly, of the trust of the American people.
Mr. George, your report indicated and you've testified that
the IRS improperly requested donor lists from targeted
organizations. Obviously, that's a concern from the perspective
of the pattern of behavior at the IRS based on the report from
delays of applications and targeting and also the dissemination
of confidential information.
But let me ask you this. How long did the IRS, because you
acknowledged this just earlier from 27 different organizations,
how long did the IRS have in its possession these lists, these
improper lists that they shouldn't have had in their possession
from 27 different organizations?
Mr. GEORGE. Congressman, they did not indicate, and we did
inquire the length of time that they maintained that
information. But, again, they did acknowledge that once they
realized they should not have collected it, they destroyed it.
But I do not have a direct answer as to how long they held on
to it.
Mr. PAULSEN. Mr. Miller, do you know how long the
improperly obtained lists were in the IRS' possession?
Mr. MILLER. I don't know. And, look, they were--the letters
were bad. They were just way too broad. Should they have asked
for them? Probably not. Was it bad intent or bad management? My
guess and my understanding, bad management. When we found out
about it we reached out to people who hadn't sent them yet and
we told them, don't send them. We went to people had sent them
and told them we are not going to use them unless we need to,
and we didn't. And at that point my understanding is that we
did not use them in any of those cases and they are not being
retained. They would have been destroyed in the ordinary course
of our records retention rules.
Mr. PAULSEN. Mr. George, were you able to confirm that the
lists were actually destroyed, and if so, how were you able to
confirm that?
Mr. GEORGE. It's through the testimony--the interviews that
were conducted by our auditors. Now, I have to admit that that
was not done under oath, but we have to go by what we were told
by the employees.
Mr. PAULSEN. Mr. George, do you have any idea how many
donors were involved as a part of those lists?
Mr. GEORGE. Again, 27 is my understanding of the lists of
donors requested. So within the list, I'm not sure. But as I
pointed out, 13 of the 27 were from Tea Party groups.
Mr. PAULSEN. Okay. Mr. Miller, let me ask, is it an IRS
practice to ask about a group's relationship with a specific
person who's not a part of an organization that is applying for
nonprofit status as a part of an application process?
Mr. MILLER. So it can be, depending on the facts, based on
is there a contractual relationship that could be an issue, is
there undue influence going on in some fashion. For example, we
would be looking at--we would be looking at private benefit.
The one other thing, I want you to know that the donor
lists, because I want to just make it clear, 13 were Tea Party,
but I believe--my numbers are just a little different, two one
way or another--but the Tea Party ones include 9/12 patriots.
The listing folks were the minority of the people who got the
donor questions. I just want to clarify the record there.
Mr. PAULSEN. Sure. Mr. Miller, has the IRS ever asked a
question of an individual, have they ever asked what's your
relationship with John Doe when they ask an organization that's
applying status? Is that a common practice? Have you asked that
question?
Mr. MILLER. I'm sorry. Can you rephrase that, sir?
Mr. PAULSEN. Well, Mr. Tiberi was going down a line of
questioning earlier about lengthy process of a questionnaire
that was filed with an organization and the IRS had asked the
question on number 26 of an individual: Provide details
regarding your relationship with this individual.
Is that a common practice? Does the IRS normally do that?
Mr. MILLER. I don't know what we're talking about there,
and it's on an individual case, and I really should not and
cannot speak to an individual case, sir. I'm sorry.
Mr. PAULSEN. Would it be safe to say that knowing that
that's probably inappropriate, would there be repercussions or
some sort of discipline that might be followed up if that was
determined to be appropriate on that type of a questionnaire--
question?
Mr. MILLER. It would depend on the context, again, and I
don't have the context, and why it was asked and was it a lack
of controls and was it a mistake or was it something different
than that.
Mr. PAULSEN. Thank you, Mr. Chairman. I yield back.
Chairman CAMP. Thank you.
Mr. Marchant is recognized.
Mr. MARCHANT. Mr. Miller, let's go back to the IRS planted
question issue. When was Celia Roady told to ask the question?
Mr. MILLER. I don't have, you know, exact knowledge on
that. I did not do that.
Mr. MARCHANT. Who told her to ask the question?
Mr. MILLER. I don't know, actually. I'm not sure. It might
have been Lois Lerner, but I really am not sure.
Mr. MARCHANT. What did you tell her about the background of
the issue?
Mr. MILLER. What did I tell who?
Mr. MARCHANT. Roady.
Mr. MILLER. I did not have any conversations with Celia.
Mr. MARCHANT. Did anyone give her a copy, an advanced copy
of the IG's report?
Mr. MILLER. I don't believe so. But, again--again, I did
not have those conversations. But I would be shocked if that
happened.
Mr. MARCHANT. And how long did she know about the report
before the committee knew?
Mr. MILLER. Again, you'd have to ask the people who had the
conversation. But, again, it would shock me if she knew
anything before she had the conversation with whomever she had
it with.
Mr. MARCHANT. On March the 28th I wrote the Commissioner a
letter that basically asked him whether local Tea Party groups
in my district were being harassed or given lengthy
questionnaires and were being discouraged from seeking tax-
exempt status. That was March 28. On June the 22th I got a
letter from Mr. Grant that basically gave me a lot of
assurances that nothing like that was taking place and that
nothing out of the ordinary was going on and that they were
following just regular order.
Then, following the timeline, shortly after my first
letter--shortly before my first letter, Mr. Boustany asked in a
hearing, an oversight hearing, if there was anything going on
over at IRS about these applications. And he was told by
Commissioner Shulman: I can give you assurances there is
absolutely no targeting going on.
Following that same timeline, on July the 25th, we had
another Oversight Committee hearing in which Commissioner
Miller and I had an extended conversation about this very
subject. And that conversation is in this transcript. Anyone
can get this on the Internet and can read the questions. But
the questions were very specifically about Tea Party groups and
their difficulties in getting their tax-exempt status, the
lengthy conversations that they were having, the questionnaires
that they were having to answer.
Again, Mr. Miller, in that exchange that you and I had, I
came away from that with I felt the assurances by you and your
office that there were no extraordinary circumstances taking
place and that this was just a backlog and there was nothing
going on.
Mr. Miller, was that your impression of the hearing that
day?
Mr. MILLER. No, sir. What I said there and what I
understood your question to be was, again, we divide this world
in two; there's a question of the selection process and there's
a question of what was going on at the time of your question.
At the time of your question what was out in the public domain
and what I thought we were discussing was the letters, as you
called the questionnaires. Those were the overbroad letters
that have been referred to continuously here.
Again, I stand by my answer there. There was not--I did
talk about the fact that we had centralized, I believe--I have
to take a look at it--but I was talking about the fact that we
had fixed that problem.
Mr. MARCHANT. But at that time--you knew by that time that
there were lists being made, there were delineations, there was
discrimination going on, and that there were steps being taken
to try to correct it. But you knew that it was going on at that
time.
Mr. MILLER. We had corrected it. TIGTA was taking a look.
At that time my assumption is TIGTA was going to be done with
their report that summer. I was not going to go there because I
did not have full possession of all the facts, sir.
Mr. MARCHANT. Well, this is a list of questions that, in my
case, my local Northeast Tarrant County Tea Party was sent, and
it's a list that most taxpayers would not answer and most
taxpayers should not have to answer. But it asks some questions
that should have never been asked: a printed copy of every page
of your Web site, every tweet from your Twitter account,
every--personal resumes from all your board members, copies of
every flier you ever made and every flier any guest speaker
ever handed out, explain your relationship with True the Vote,
a copy of every single email ever sent by our group.
This is a list that is overly burdensome, and, in my case,
it has led to deep discouragement on these parties and has
limited their ability to education the public.
Can I find out, as a Member of Congress, the groups in my
district that have applied for and either been denied or their
application continues to be in suspension?
Mr. MILLER. With Mr. Camp's help you could, granting 6103
authorities. But the application process, until it's done, is
6103 information. And if it's denied then there's redacted
versions going out. If it's approved then everything becomes
public. So within the constraints of 6103, which Mr. Camp can
grant you the ability to see, that could happen.
Mr. MARCHANT. Yield back.
Chairman CAMP. The time has expired.
Yes, I think there would be restrictions on my sharing that
with Mr. Marchant, however.
So Ms. Black is recognized for 5 minutes.
Mrs. BLACK. Thank you, Mr. Chairman. And I want to go back
to what Mr. Paulsen said a few minutes ago, because as I sit
here and listen to this testimony, having read the report and
multiple sources of information that are now coming out, I'm
going to tell you that the trust for the IRS, to begin with,
was already shaky by the American people. I know whenever
someone gets any piece of information from the IRS, it doesn't
feel very good and they're not very confident, even before this
happened, that they're going to be treated fairly. But what has
happened here in this testimony that we're getting today is
very disturbing. And I want to say what Mr. Price said. If I
was sitting at home watching this on C-SPAN, I would probably
be questioning again, there doesn't seem to be clarity here,
how can I trust.
Let me go back to, as I'm listening to your testimony in
your opening remarks, you referred to this as foolish mistakes.
And then you acknowledged in the response to Mr. Rangel that
there was abuse. So this is just more than foolish mistakes.
This was abuse. And then you said to Mr. Ryan's response that
you felt that the applicants were dealt with fairly. And then
you turned around and said, answering to Mr. Neal, that there
was a litmus test that was a political activity. And you then
said, Politics is always where we ask questions in these kinds
of applications.
I want to go to page number 6 on the report that does talk
about the words that were used like Tea Party and patriots.
Then, another point in time, issues including government
spending, debt, taxes, public advocacy and lobbying to make
America better. And I want to know, if you say that yes, there
is a litmus test and that politics is always where we ask
questions anytime there's an application that seems to go
there, can you give me some other words that would have been
used beside what appears to me to be all conservative
questions? Was there a progressive--that we should look for
anything in the application, then, that says progressive? Was
that anywhere?
Mr. MILLER. So I think what--and I'll refer to Mr. George's
statement, I believe his statement indicated what my
understanding is, which is this was not the only thing that our
folks were looking at as they scanned----
Mrs. BLACK. But you're not answering my question. Was there
anything in any of this criteria that was outside of what I'm
seeing in this report that would have indicated to me that
other than conservative groups who were applying for this
status, that you had a word in there anywhere to say okay, the
litmus test is this seems to be political, so we always look at
political. Where's the word ``progressive''?
Mr. MILLER. I'm not arguing that the list was bad and that
the list was conservative-based.
Mrs. BLACK. Excuse me, I'm going to reclaim my time on
this, because then I would say it's targeted. You can't have
that both ways. That's targeting. And there's 16 times in this
report that says that there was targeting. So I believe that as
you're giving this testimony that you can't have that both
ways.
Now there's also ineffective management that is talked
about in this report. Even if you get outside of this and say
okay, there was no targeting, I want to know how a couple of
employees that are considered low level could have done what
was done here. Because this says to the American people that
out of thousands of employees that you have at the IRS, there's
ineffective management there. Nobody's watching this. If this
was noted in 2010 and in 2013 we're just now finding out about
this, that certainly is ineffective management. Because there
should have been somebody that was overlooking this that said
this must stop and I'm going to come back in 30 days to make
sure it is stopped. But it continued and it continued and now
we've got 400 applications, some of them over 3 years.
This is more than ineptitude. This is more than just
mismanagement. And I know my time is going to run out here. So
Mr. George, I want to come to you, because you told Ms. Jenkins
that you told the General Counsel of the Treasury on June 4.
Mr. GEORGE. Correct.
Mrs. BLACK. You cannot recall the exact date that you told
the Deputy Secretary, Neal Wolin. Do you recall if it was soon
after informing the General Counsel? Was it like a week, a
month?
Mr. GEORGE. I cannot give a timeframe but I can say that it
was shortly thereafter.
Mrs. BLACK. Could we get that date? Is that possible to get
that date?
Mr. GEORGE. You know, unfortunately, I don't keep a date
planner. But I'll do my best, Ms. Black. If I have it, I'll
supply it to the committee.
Mrs. BLACK. Thank you very much.
Chairman CAMP. All right. Mr. Read is recognized.
Sorry, time is expired.
Mrs. BLACK. Thank you, Mr. Chairman.
Mr. REED. Thank you, Mr. Chairman.
Mr. Miller, Mr. George, we've sat here for quite some time
and I will tell you that this is offensive. This is offensive
to hear this testimony. What I'd like to do is--I know you're
disagreeing with the word ``targeting,'' Mr. Miller. I suggest
the American people will make that determination. I'll give
this whole situation a name. It's the IRS targeting-gate. I'll
put it right out there. And we're going to get to the bottom of
it. We're going to keep on this until we're done.
As you sit here today, you were not fired from your job.
And I can tell you, in my private experience you would've been
fired on the spot. And all you were allowed to do is resign and
retire. And now you come here and somehow try to say I did the
honorable thing by falling on my sword. Nothing bad is going to
happen to you. You're going to get your full benefits. You're
going to get everything that is associated with your retirement
as an IRS employee.
Mr. MILLER. Nothing bad is happening to me, Congressman?
Mr. REED. Financially. You're allowed to retire. That's the
level of accountability in Washington, D.C. now. You came here
on the taxpayer dollar today. You're getting a paycheck for
being here today, correct?
Correct?
Mr. MILLER. Correct.
Mr. REED. I want to know who, what, where. And you know
when my good colleague, my good friend from Michigan, Mr.
Levin, started this, he said, We need to ask to who, what,
where, and how. One question he didn't put in his opening
comment was why. And we have dodged and weaved this whole time
for this entire hearing as to why this happened. And I don't
think we're going to get an answer to it today.
But Mr. George, I want to get to the bottom of your report.
And I appreciate the work you have done. You referenced that
there was gross mismanagement in regards to this situation. I
want to know who you identified that had the responsibility to
manage this situation. I want names, I want to know where they
worked, when they worked, and what they did.
Mr. GEORGE. Lois Lerner is the primary individual, who is
located in Washington. Joseph Grant was her supervisor. He,
too, was located in Washington. And located in Cincinnati there
were a number of people; a director named Holly Paz, P-A-Z. She
was the Acting Director for a significant period of time that
this was occurring. And then there were various management
technical unit managers and the like. I can supply a full
listing of those names at your request.
Mr. REED. That is my request, and I would formally request
that.
Mr. GEORGE. Mr. Reed, may I please beg your indulgence? I
need to make something clear in response to both Mrs. Black and
Mr. Paulsen. When I had my discussions with the Commissioner
and with the Secretary and the General Counsel, it was not to
inform them of the results of the audit. It was to inform them
of the fact that we were conducting the audit. And I just want
to make sure I was clear on that.
Mr. REED. Let's follow up on that. When you had the
conversation with the Secretary, when exactly did that occur?
Mr. GEORGE. That happened shortly after he took office. So
it was after the policy had already been stopped and the issues
had been, we hoped, resolved.
Mr. REED. Mr. George, as a country lawyer from western New
York, you made some comments in your testimony about the
partisanship determination. You kept referencing something that
I've seen many times in my legal career: at this time. That
implies to me that there are additional investigations coming
down the pipeline that potentially could uncover such
information. Isn't that correct?
Mr. GEORGE. That is an accurate statement, sir.
Mr. REED. I will be eagerly awaiting those future
investigations. And I applaud your work and I ask you to
continue to do that work.
Mr. Miller, I just want to understand exactly. As we just
had identified by Mr. George numerous people in your
organization that you had ultimate oversight for, his ability
to identify those individuals, you didn't identify those
individuals in any type of management oversight when you became
aware of this situation in May of 2012 and reached out to those
individuals?
Mr. MILLER. I certainly was aware of my own management
chain, yes, sir.
Mr. REED. Okay. And so who in your management chain
specifically did you talk to about this situation?
Mr. MILLER. After May, you mean, of 2012?
Mr. REED. After you became aware of it you said you talked
to two people in your management chain.
Mr. MILLER. I'm sure I talked to Joseph Grant. I probably
talked to Lois as well.
Mr. REED. Those two, that's all you talked to.
Mr. MILLER. I talked to the folks who went out and worked
on the case. And I mentioned Nan Marks in that regard.
Mr. REED. That was Nancy Marks who was in Cincinnati that
you orally disciplined?
Mr. MILLER. No, no, no. Nancy Marks is a senior technical
adviser who led a team to take a look at this in Cincinnati.
Mr. REED. And who was the employee again that you orally
disciplined that you thought may have something to do with it?
Mr. MILLER. I apologize. I don't remember the name. We can
give it to you. I'll just have to give it to you after the
hearing.
Mr. REED. You said that person that was orally disciplined
probably wasn't involved in it but there was a potential other
employee. Who was that other employee?
Mr. MILLER. Let me go back because there were two
employees, one of whom was reassigned, one of whom I asked to
be orally counseled. The one that was to be orally counseled,
they have even informed me may not have been the right person.
They pulled all the managers in to talk to them in lieu of an
individual that they didn't know which one was which.
Mr. REED. Do you have those names?
Mr. MILLER. I'll have to send them to you, sir.
Mr. REED. I formally request for the record those names.
Chairman CAMP. Thank you. Mr. Young is recognized.
Mr. YOUNG. Mr. Miller, I want to know why all of this
happened. You and Ms. Lerner have said over the past week that
IRS officials started targeting Americans for their political
beliefs in March of 2010. That was after observing a surge in
applications for status as 501(c)4. So it's your rationale. To
support this claim, you both cited an increase from about 1,500
applications in 2010 to nearly 3,500 in 2012. But data
contained in the IG audit says the targeting began in March
2010, before this uptick. In fact, the audit also says on page
3 that the number of 501(c)4 applications for all of 2010 was
actually less than in 2009.
Mr. Miller, you've said here today that you accept the IG
report's finding of fact.
Mr. MILLER. Uh-huh.
Mr. YOUNG. How do you reconcile the facts I've just laid
out showing no uptick in 501(c)4 applications with your stated
motivation for targeting conservative groups?
Mr. MILLER. So I'll have to go back and look at the
numbers, sir, but I think there was an uptick. And whether it
was 2008----
Mr. YOUNG. You've already indicated here, sir, that you
agreed with the findings of fact in the IG report. It says
there was no uptick. How do you reconcile the two?
Mr. MILLER. I've got to look at the numbers, sir. I can't
speak to that.
Mr. YOUNG. So you don't agree with the IG report?
Mr. MILLER. I would have to look at the IG report on that.
Mr. YOUNG. Mr. Miller, in June of 2011 Ms. Lerner learned
about the practice of targeting conservative groups for
compelled disclosure of donor lists and other information. She
learned that was going on for more than a year, whereupon she
claims she attempted to put a stop to it. Yet I have a letter
here bearing Ms. Lerner's name. It's dated March 16, 2012. In
that letter she directs a conservative Indiana group to comply
with a previously sent inappropriate information request under
penalty of perjury. I have that request here.
So one year after she said she stopped this practice, Ms.
Lerner sent a letter demanding the group fulfill a request she
had already determined to be inappropriate, a request that
included a demand for donor information.
This strikes me as peculiar, to say the least. And it seems
to contradict claims that somebody at the IRS tried to stop the
harassment in 2011.
Further, this Indiana group had their 501(c)(4) status
denied on February 18, 2013. But 4 days later, on February 22,
2013, their 501(c)(4) request was granted, even though they
never provided the required information.
So after seeing these actions and an approval of an
application that looks a lot to me like someone was covering
their tracks over that 4-day period, how can I assure my
constituents that employees of the IRS aren't targeting
conservative groups they disagree with?
Mr. MILLER. Let me put this in sort of time order because,
again, there's some fundamental mashing of issues. There are
two issues here. One is the list issue, which began about the
time you say it did, I believe, and one is how we processed the
cases. The donor list letter--and I'm not speaking because I
don't know that case--but the donor list letter issue occurred
much later in time. It actually occurred I believe--and I will
have to go back and check this--but I believe it occurred after
Lois had stepped in and stopped the listing, the first issue.
The development of those cases was still problematic. We
had not gotten to the bottom of that. And that's why that
would've been the case. I don't have an answer for you on the
last piece of that.
Mr. YOUNG. Wait a second here. She said she had resolved
this situation. She said she had stopped the targeting of
conservative groups. A year later, she demands a group fulfill
a request for the inappropriate information. I don't believe
you've addressed that issue, sir. You've got 30 seconds left to
do so.
Mr. MILLER. I apologize. First, you should know while her
signature is on there, her signature is on 70,000 applications.
So let's not personalize this one to Ms. Lerner. Secondly, and
probably more importantly--I mean, I think that, again, my
understanding and what I think Mr. George has said is that in
2011, June or July, whatever it was, she handled and fixed the
list issue. The cases were still in development. The cases
needed to be in development. There were issues. We just did a
remarkably bad time of it.
Mr. YOUNG. All right, sir. It's just curious, I'll
reiterate, a denial on February 18, 2013 and then a granting 4
days later. It does look a bit fishy there. We have to clarify
that.
Chairman CAMP. The time has expired. You'll have to respond
in writing.
Mr. Kelly.
Mr. KELLY. Thank you, Mr. Chairman. Mr. George, you have
been on the job since November of 2004, is that correct, in
your current position?
Mr. GEORGE. Yes, 2004.
Mr. KELLY. Anything rise to this level before?
Mr. GEORGE. No, nothing.
Mr. KELLY. Can I ask you, why did it take so long from the
first time we knew that this was happening until you got the
report done? The President said just the other day--I think it
was yesterday--that he just got a look at the report and that's
the first time he knew anything about it, other than reading it
in the papers, I guess.
Mr. GEORGE. Are you asking----
Mr. KELLY. Have you ever seen anything of that magnitude
before. It's never come up before.
Mr. GEORGE. No, it has not.
Mr. KELLY. Thank you. Mr. Miller, now you've been on the
job for quite some years. But the current job you're in is from
November 9, 2012. Is that right? So you just took over as
Acting Commissioner.
Mr. MILLER. In November of '12, yes. I have both jobs.
Mr. KELLY. But before that, one of your jobs, you were the
Commissioner of Tax Exempt and Government Entities Division. So
you actually were in the job that we're questioning now that
group of what was happening there. So would you have been in
Cincinnati?
Mr. MILLER. No.
Mr. KELLY. You were never in Cincinnati.
Mr. MILLER. No.
Mr. KELLY. So is Cincinnati some outpost?
Mr. MILLER. So, obviously, the IRS is a nationwide
organization.
Mr. KELLY. No, I understand that. And I want to tell you,
listen, believe me, if you think it's uncomfortable sitting
over there, you ought to be a private individual when the IRS
is across from you questioning. So I've got to tell you, it's
uncomfortable for everybody.
But my question more specifically is: So how did Cincinnati
get to where they are? How did they develop that strategy and
how did they know to go after these certain groups? How did
they target those folks? A couple of rookies just showed up and
didn't really know what they were doing?
Mr. MILLER. Again, I would point to the TIGTA report on
what happened.
Mr. KELLY. No, I understand that. I understand that. But
I'm hearing--it's always these are low-level people that pushed
the wrong button.
Now when Cincinnati can't figure out, who do they confer
with? Who's their counsel when they're looking at these tax
exempt entities. Does it come back here to D.C.? Yes or no,
does it come back to D.C.?
Mr. MILLER. Yeah.
Mr. KELLY. Okay. All right. So D.C. and Cincinnati would be
pretty well connected in understanding what's going on. So this
doesn't come as a great shock to anybody. In fact, I would say
it doesn't come as a shock. You know what it does to the
American people? It really establishes what they've feared so
often. I have a grandson who's afraid to get out of bed at
night because he thinks somebody under the bed is going to grab
him. And I think most Americans feel that way about the IRS.
You get a letter from you folks, or a phone call, it's with
terror that you look at it. And now this kind of reconfirms
that, You know what? They can do almost anything they want to
anybody they want any time they want.
This is very chilling for the American people. I know that
you're resigning. You're walking away from it. But this is not
going to go away. This is a Pandora's Box that has been open.
And I don't think we can get the lid back on it. And I don't
believe that the White House just found out about this in the
news report because he happened to grab a TV shot or just read
Mr. George's report and said, You know what? Anybody hear about
this before? I'm just getting a first look at this. Shouldn't
somebody be responsible? I'm thinking maybe Treasury falls in
there. I'm not sure how we understand how that organizational
chart works.
But I am really concerned. Now I've got to tell you, where
you're sitting, you should be outraged. But you're not. The
American people should be outraged. And they are. And this
committee, this has nothing to do with political parties. This
has to do with highly targeted groups. This reconfirms
everything that the American public believes. This is a huge
blow to the faith and trust that the American people have in
their government. Is there any limit to the scope of where you
folks can go? Is there anything at all? Is there anywhere that
we can ask you? Is there any question that you shouldn't have
asked? My goodness, how much money do you have in your wallet,
who do you get emails from, whose sign do you put up in your
front yard? This is a tax question? And you don't think that's
intimidating? It's sure as hell intimidating. And I don't know
that I got any answers from you today and I don't know that--
what Mr. George has done is great work, but you know what?
There's a heck of a lot more that has to come out in this. And
anybody to sit here today and listen to what you have to say, I
am more concerned today than I was before. And the fact that
you all can do just about anything you want to anybody. You
know, you can put anybody out of business that you want any
time you want. And I got to tell you, you talked about you're a
horribly run organization. If you're on the other side of the
fence, you're not given that excuse. And when the IRS comes in
to you, you're not allowed to be shoddy, you're not allowed to
be run horribly, you're not allowed to make mistakes. You're
not allowed to do one damn thing that doesn't come in
compliance. If you do, you're held responsible right then. I
just think the American people have seen what's going on right
now in their government. This is absolutely an overreach and
this is outrage for all America.
I yield back.
Chairman CAMP. Mr. Griffin is recognized for 5 minutes.
The committee will come to order.
We will have order in the committee. Mr. Griffin is
recognized for 5 minutes.
Mr. GRIFFIN. Thank you, Mr. Chairman. I want to make a
couple of comments first. The surge in these groups that are
the subject of this hearing is not related to a Supreme Court
case, if there was a surge at all. It's related to the nonsense
in Washington. That's why people were getting engaged. In fact,
the Supreme Court case that has been so much discussed here has
no bearing on these groups, ultimately. That's ridiculous. What
this hearing has demonstrated for me is that our most expansive
Federal powers are given to our most intrusive agency. And then
you add on top of that incompetence or whatever else we have
and it's a disaster.
My colleague here talks about asking people how much money
they've got in their wallet. I got a text last night at dinner
from a friend of mine who's a supporter in Arkansas, in Little
Rock. He's being audited. Yesterday morning he had to meet with
the IRS. He was outraged. He sent me a text. He said, They
asked me how much cash do you carry in your wallet? How much
cash does your wife carry in her wallet? Do you use the
Internet?
You know, I don't care what rules are written down or not
written down. These people ought to have enough common sense to
know that this is just stupid to ask this kind of stuff. And if
they don't know that on their own, without something written in
a regulation, they ought to quit or be fired. It is craziness.
Now I've known you for a long time, Joe, and I've looked at
your investigation. I appreciate the work you've done. It is
really an audit, let's be clear to the press. This is not an
investigation. You did not request emails, you did not do what
you would do in an investigation. There's a reason you don't
know who came up with this. You didn't investigate that. You
might be now. Are you?
Mr. GEORGE. I'm not in a position, sir, to discuss whether
or not----
Mr. GRIFFIN. That means you are. Okay. So the bottom line
is for those looking, this is an audit. And it's helpful. But
it's the tip of the iceberg. It's the tip of the iceberg. It's
looking at metrics at interviewing some folks.
We worked together years ago up here on the Hill, right in
the building next to us, and we know how important emails are.
And I trust that you're going to get to the bottom of the
emails.
Let me just mention real quickly, if you want to know where
a lot of this comes from, look at Senator Levin's letter.
Senator Levin specifically mentioned a bunch of the groups that
you all targeted. The other Senators made the points, but they
didn't mention specific groups. It was Senator Levin's letter,
to some extent. You all were doing what Democrat Senators were
asking. A lot of the press here ought to go to the Senate when
you're done and ask them some questions.
Now with regard to Sarah Hall Ingram, you may have been
confused as to when she worked there, but she was there from
2009 to 2012. You said you had horrendous customer service. And
what happened to her? She got $100,000 in bonuses and she was
promoted. Wow. Incredible.
You said the buck stops with you. Well, it stopped with her
before that. She was directly in charge of these rules of this
targeting. What did she get? Bonuses and moved to a job. You
know what her job is now? She's coordinating Section 1414 of
ObamaCare? What is that? That's the provision that says that
there's an exemption or an exception to disclosure of tax
information. What is that? That means the Treasury can share
your tax information with HHS for the purposes of implementing
ObamaCare to see whether you have got a really expensive health
care plan or what have you. It's right there in Section 1414.
So she provided horrendous customer service under her watch
and now she's going to do the same implementing ObamaCare.
Swell. This is a perfect example of why we need tax reform. If
you want to diminish and limit the power of the IRS, you've got
to reduce the complexity of the Tax Code and take them out of
it.
Thank you, Mr. Chairman.
Chairman CAMP. Thank you. Mr. Renacci is recognized for 5
minutes.
Mr. RENACCI. Thank you, Mr. Chairman. Gentleman, as a CPA
who's represented many taxpayers in the last three decades, I'm
really appalled. I'm really appalled that the agency was able
to take these actions.
Mr. George, you made a comment, you said that these
actions, even though they were contrary to the Treasury policy
at the IRS, it was not illegal but inappropriate.
Mr. Miller, if a taxpayer was in front of your agency and
they did something that was contrary to Treasury policy, would
that be illegal or inappropriate?
Mr. MILLER. If they did something contrary, no.
Mr. RENACCI. Treasury policy on their tax return.
Mr. MILLER. No. We'd be auditing them.
Mr. RENACCI. I know you'd be auditing them. But I've seen
your agency bring people to tears because you say it's
inappropriate. It's just amazing the way you're answering some
of these questions. You answered a question to Mr. Roskam, and
you said, I don't know. If an American taxpayer said to you in
an audit, I don't know the answer, what would your agency do to
that person?
Mr. MILLER. We would work with them.
Mr. RENACCI. I've seen what you've done to them when they
say they don't know. That's the problem. That's what the
problem here is.
Mr. Miller, you talked about at some point in time you said
these were serious infractions. You said you were outraged.
When were you outraged? When did you first learn of this and
when did you become outraged?
Mr. MILLER. May 3 of 2012.
Mr. RENACCI. So May 3 of 2012 you became outraged. You
testified in front of this committee on July of 2012. Why
weren't you outraged then?
Mr. MILLER. I was answering the questions that I was asked,
sir, and I knew that TIGTA had this under its viewing and that
this was going to come out.
Mr. RENACCI. But you were outraged a couple months before.
You didn't let Congress know of your outrage at that point in
time.
Mr. MILLER. At that point in time I fixed the problem.
Mr. RENACCI. You fixed the problem.
Mr. Chairman, I want to offer in the record a statement
from one of my constituents, the Ohio Christian Alliance.
Chairman CAMP. Without objection.
[The prepared statement of the Ohio Christian Alliance
follows:]
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Mr. RENACCI. The Ohio Christian Alliance is one of those
organizations. They were applying for a (c)3, an educational
trust. They are advocating life, faith, and freedom. What was
the IRS concerned about? What were they scared about when it
comes to life, faith and freedom?
Mr. MILLER. Sir, I can't speak to an individual case. I
have no knowledge of it.
Mr. RENACCI. I'm just using an example. Life, faith, and
freedom, that's something that the IRS would pull an
application for? Actually, it took over 13 months. The timeline
on this, they filed in February of 2011. In March they were
told they would have an answer in 90 days. In December, they
got a letter that said they had 2 weeks to respond to it or
their application would be denied. And then they responded.
By the way, some of the questions--you talked about what
are some of the questions. They list here: Is your
organization--were the actions of the organization against
anti-Christian bigotry more accurately classified as education
in nature? Is your organization engaged in such activity?
Are some of those questions appropriate?
Mr. MILLER. I don't know because it is a specific case. But
I will say one of our difficult areas is determining what's
politics and what's education. It's a very difficult line.
Mr. RENACCI. I don't think anything in this application
leaned toward politics. It leaned toward, as I said, life,
faith and freedom.
Mr. Miller, I understand that after the Presidential
election the IRS approved dozens of applications from
conservative groups. Why was there such a large approval after
the election?
Mr. MILLER. I don't have that information. My information
is that in May I asked that the cases be grouped in a fashion
that we move them quickly through and try to fix the process
problems we had. There were a number of applications from tea
parties and others that were approved at that time. And we
pushed hard.
Mr. RENACCI. Was the process changed post-election?
Mr. MILLER. Not that I'm aware of.
Mr. RENACCI. Mr. Chairman, I yield back.
Chairman CAMP. Thank you, Mr. Renacci.
That brings this hearing to an end. But I promise the
American people this investigation has just begun.
Hearing adjourned.
[Whereupon, at 12:50 p.m., the committee was adjourned.]
[Submissions for the Record follow:]
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