IRS IG: Audit never labeled groups "conservative" or "liberal"

The chief watchdog who discovered the extra IRS scrutiny of conservative groups on Thursday rejected Democratic efforts to portray his investigation as partisan, saying Internal Revenue Service officials withheld key information about a lookout list for some liberal groups until last week.

Treasury Inspector General for Tax Administration J. Russell George testified that it was Lois Lerner, the former head of the division that handled tax-exempt applications, who said the agency targeted conservatives.

"It is imperative for me to emphasize that our audit never labeled groups as 'conservative' or 'liberal,'" he said.

Still, Mr. George's numbers indicate that far more of the 298 political groups seeking tax-exempt status during the 2010 and 2012 elections singled out for intrusive scrutiny had "tea party" or other conservative labels in their names. None of the cases used "occupy" in the name, while just seven had "progress" or "progressive."

Amid the confusion, Republicans and Democrats traded barbs over the direction of the investigation into the IRS.

But it was Mr. George who was on the defensive during much the hearing — a stark contrast from when the lawmakers' ire was directed at the IRS during Mr. George's testimony in May. Then, Mr. George, had just issued a report saying IRS agents in a Cincinnati office improperly singled out the conservative groups. He blamed ineffective management for allowing the practice to continue for more than 18 months, delaying hundreds of applications for more than a year.

Democrats are upset that his initial report did not flag terms such as "progressive," "progress" or "occupy" Wall Street that also were used on "be on the lookout" (BOLO) lists for additional scrutiny.

"If all of the groups are on the table, one concludes targeting only after comparing the groups, and I don't see evidence of that kind of rigorous comparison, Mr. George, in your work," said Delegate Eleanor Holmes Norton, a Democrat who represents the District of Columbia.

Mr. George replied by saying that "occupy" groups, for example, were on a watch list but not on the political advocacy tab his team was provided by IRS officials and charged with looking at in the audit.

Mr. George, an appointee of President George W. Bush, also pointed out that he was a page at the 1980 Democratic National Convention and a founder of the Howard University College Democrats before he "saw the light" and joined the Senate staff of Republican Bob Dole in college.

"But I think anyone who has worked with me on either side of the political spectrum will agree that I call it as I see it. I have never allowed personal or political views to affect decisions," he said.

Rep. Trey Gowdy, South Carolina Republican, chided others for trying to find tangential political connections in Mr. George's work.

"Keep going. Keep at it, and don't let the detractors get you down," Mr. Gowdy said.

Chairman Darrell E. Issa, California Republican, pointed out that if politics were a factor for Mr. George, he could have leaked information while he was in the process of compiling the report.

Rep. Michael R. Turner, Ohio Republican, agreed.

"Frankly, I would have loved to have had that information in May of 2012 that dozens and dozens and dozens of conservative groups were being targeted and you chose not to give it to the very committee who asked for the audit," he said. "And that's fine. That's your role. But this idea that you're somehow favoring the Republicans — I just don't get it."

Mr. George said his investigators are reviewing the new information on liberal groups provided by the IRS, but do not have full audit findings on the use of the other criteria.

During the hearing, IRS employees also shot down the idea that the Cincinnati field office acted independently, publicly linking for the first time the extra scrutiny of conservative groups to political appointees in Washington.

Carter Hull, a tax law specialist with 48 years of experience at the IRS, told investigators that Ms. Lerner, who famously pleaded the Fifth Amendment in a hearing, demanded that he send some of the reviews of tea party groups he was prepared to complete to the IRS chief counsel's office in Washington. The chief counsel is one of two political appointees in the IRS.

Mr. Hull said during his testimony that extra review was "unusual." He said he wasn't told to hold up applications, but they were delayed by the extra review.

Mr. George rejected assertions from Democrats that he failed to disclose that his team found no political motivation in the cases it examined and that he may have improperly prevented disclosure of that information.

"It is important that I be clear on this point: none of this information has been withheld from Congress," he said. The inspector general's office "provided it in an unredacted form to the tax committees entitled to receive this information weeks ago."

The Internal Revenue Service has come under fire during the past several months after Mr. George first revealed that the agency was targeting conservative groups for intrusive scrutiny. This week, The Washington Times reported that government employees also improperly accessed IRS information to look at data on selected political candidates and donors. In one case, the investigator said the violation was willful, and referred it to the Justice Department, which declined to pursue the case.

Mr. Issa said in his opening statement that the committee will continue to seek answers, but that it's clear the fiasco was not limited to a few employees from the Cincinnati office of the IRS, which had initially been claimed.

"As we look for the truth, let us bear in mind that we can debunk many things along the way. We will probably never debunk all accusations. Nor should we make accusations unless testimony and evidence takes us there," Mr. Issa said.

Mr. Issa and Rep. Elijah E. Cummings of Maryland, the panel's ranking Democrat, later had a testy exchange after Mr. Cummings accused the chairman of trying to link the scandal to the White House.

"Our chairman led the charge, saying this was the 'targeting of the president's political enemies,'" Mr. Cummings said, adding that other Republicans followed suit. "The fact is that there is no evidence before this committee to support these claims — none."

Mr. Issa shot back that he is always shocked that Mr. Cummings "seems to want to say like a little boy whose hand is caught in the cookie jar, 'What hand, what cookie?' I've never said that it leads to the White House."

Since Mr. George issued his report, three congressional committees and the Justice Department launched investigations and much of the top leadership was replaced, including the acting commissioner.


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