Former IRS Head Testifies              05/21 13:09

   The man who led the Internal Revenue Service when it was giving extra 
scrutiny to tea party and other conservative groups seeking tax-exempt status 
told Congress on Tuesday that he knew little about what was happening while he 
was still commissioner.

   WASHINGTON (AP) -- The man who led the Internal Revenue Service when it was 
giving extra scrutiny to tea party and other conservative groups seeking 
tax-exempt status told Congress on Tuesday that he knew little about what was 
happening while he was still commissioner.

   Douglas Shulman, who vacated his position last November when his five-year 
term expired, told the Senate Finance Committee he didn't learn all the facts 
until he read last week's report by a Treasury inspector general confirming the 
targeting strategy.

   In his first public remarks since the story broke, Shulman said: "I agree 
this is an issue that when someone spotted it, they should have brought it up 
the chain. And they didn't. I don't know why."

   Shulman testified at Congress' second hearing on an episode that has largely 
consumed Washington since an IRS official acknowledged the targeting and 
apologized for it in remarks to a legal group on May 10. Shulman and the two 
officials who testified at Tuesday's three-and-a-half hour session --- the 
outgoing acting commissioner, Steven Miller, and J. Russell George, the 
Treasury Department inspector general who issued the report --- were all sworn 
in as witnesses, an unusual step for the Finance panel.

   Shulman said he first learned about the targeting and about the inspector 
general's investigation in the spring of 2012, during the presidential 
election. He said that in a meeting with Miller, he was told that IRS workers 
were using a list to help decide which groups seeking tax-exempt status should 
get special attention, that the term "tea party" was on that list and that the 
problem was being addressed. But he said he didn't know what other words were 
on that list or the scope and severity of the activity.

   Pressed by committee Chairman Max Baucus, D-Mont., on how the improper 
screening system could have occurred in the first place, Shulman said, "Mr. 
Chairman, I can't say. I can't say that I know that answer."

   Shulman said he took what he thought were the proper steps --- making sure 
the inspector general was looking into the situation. He said he did not tell 
Treasury officials about the improper activity.

   "I don't recall talking to anyone about it," Shulman told the committee. 
"This is not the kind of information" that, with an inspector general's probe 
underway, "should leave the IRS."

   Asked by Sen. John Cornyn, R-Texas, whether he owed conservative groups an 
apology, Shulman said, "I'm certainly not personally responsible for creating a 
list that had inappropriate criteria on it."

   That was a reference to a list of words IRS workers looked for in deciding 
which groups to screen, a list that included the terms including "tea party" 
and "patriot."

   "I very much regret that it happened and that it happened on my watch," 
Shulman said.

   The testimony by Shulman and Miller drew skepticism from lawmakers of both 
parties, including critical remarks from people who have been unhesitant to say 
anything negative about the IRS since its activities were revealed nearly two 
weeks ago. Republicans openly rejected George's assertion that he has no 
evidence that the decision to target conservative groups was politically 
motivated.

   A lack of political motivation "is almost beyond belief," said Sen. Mike 
Crapo, R-Idaho.

   George's report blamed ineffective management for allowing agents to 
inappropriately target conservative groups for more than 18 months during the 
2010 and 2012 elections. Shulman was appointed by President George W. Bush and 
served from March 2008 until last November.

   At a separate hearing, Treasury Secretary Jacob Lew said the IRS's actions 
against conservative groups were "unacceptable and inexcusable."

   Lew told the Senate Banking Committee that he has directed the agency's 
incoming acting director, Daniel Werfel, to hold people accountable and to fix 
any flaws in IRS management to make sure there is no recurrence of the problems.

   Lew said he first learned about the inspector general's investigation in 
March but that he was unaware of the findings until they became public this 
month. Lew became Treasury secretary in February, and was White House chief of 
staff before that.

   For more than a year, from 2011 through the 2012 election, members of 
Congress repeatedly asked Shulman about complaints from tea party groups that 
they were being harassed by the IRS. Shulman's responses, usually relayed by a 
deputy, did not acknowledge that agents had ever targeted tea party groups for 
special scrutiny.

   At one House hearing on March 22, 2012, Shulman was adamant in his denials, 
saying, "There's absolutely no targeting."

   On Tuesday, Republicans expressed anger that Shulman and Miller didn't 
reveal the screening of conservative groups to Congress, despite lawmakers' 
repeated inquiries. Miller learned of the situation in early May 2012.

   "Mr. Miller, that's a lie by omission," said Sen. Orrin Hatch of Utah, top 
Republican on the Finance committee. "There's no question about that in my 
mind. It's a lie by omission and you kept it from people who have the 
obligation to oversee this matter."

   President Barack Obama has forced Miller to resign, and he is leaving office 
this week.

   Shulman said he didn't later tell lawmakers about the targeting because he 
didn't have full information about the situation.

   "I had a partial set of facts," Shulman said. "Sitting there then, sitting 
here today, I think I made the right decision" to let George, the inspector 
general, conduct his audit of the targeting.

   Shulman said that when he did finally read about the details of the 
targeting in the inspector general's report, "I was dismayed and I was 
saddened."

   Hatch and Baucus both criticized the agency and said they would investigate 
how and why the improper screening occurred.

   "I intend to get to the bottom of what happened," Baucus said.

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

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

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

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

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


(KA)