Acting IRS Commissioner Daniel Werfel testifies June 3 in Washington. (Saul Loeb / AFP)
WASHINGTON — The House Ways and Means Committee questioned the acting Internal Revenue Service chief Thursday about the agency’s internal investigation of the targeting scandal, battling over fresh revelations that IRS screeners flagged liberal groups as well as conservative ones for extra scrutiny.
The hearing comes after IRS Principal Deputy Commissioner Danny Werfel — the sole witness testifying at the hearing — told reporters Monday that the agency’s investigation has turned up additional watch lists with “inappropriate” criteria used by workers in the Cincinnati field office to review tax-exempt applications. At the same time, Democrats in Congress released a new IRS document, from November 2010, showing that agents targeted groups with “progressive” in their names, and a letter from the inspector general acknowledging these groups were reviewed.
The new information has the potential to shift the direction of congressional probes into the IRS targeting, which until now had focused mostly on the IRS’s handling of tax-exempt applications from Tea Party-affiliated groups.
Democrats on the Ways and Means Committee are likely to use Thursday’s forum to push for a broader inquiry into how left-leaning groups’ applications were handled. The top Democrat on the committee, Rep. Sander Levin of Michigan, has already chastised the inspector general who examined the targeting for failing to include the information about progressive groups in his initial audit.
Even before the hearing began, Democrats said they wanted to call the inspector general back before the panel to talk about an audit they said was “flawed” and “incomplete.”
Levin said the IG, Russell George, was not “forthright” in his previous testimony to the panel and he would ask him to widen the scope of his audit and report on targeting of progressive groups.
“We want the IG to look at all the facts and come forth with all the facts,” Levin said.
In a letter to Levin on Wednesday night, George acknowledged that some of the 298 applications his office reviewed had the words “progress” or “progressive” in their names.
“In total, 30 percent of the organizations we identified with the words ‘progress’ or ‘progressive’ in their names were processed as potential political cases,” George wrote. “In comparison, our audit found that 100 percent of the tax-exempt applications with Tea Party, Patriots, or 9/12 in their names were processed as potential political cases” during the audit’s time frame.
Republicans have said there’s no evidence that liberal groups were subjected to the same lengthy, burdensome review process as conservative groups.
In his opening remarks, Chairman Dave Camp, R-Mich., said, “so far the evidence only shows conservatives being systematically targeted ... not just flagged” on a list of terms suggesting improper political activity but subjected to “intrusive inappropriate questions.”
Camp also scolded Werfel, saying the interim report showed no serious overhaul of the IRS to prevent such abuses from happening again.
“The report fails to address some of the most egregious actions by the IRS,” he said, such as the leaking of confidential taxpayer information.
“You have not identified any structural changes within the IRS to prevent these abuses from happening again.”
Werfel reiterated that his internal review had not yet turned up “any evidence of intentional wrongdoing” inside the agency and no involvement by parties outside the IRS. Nevertheless, he said, “The IRS is committed to correcting its mistakes” and “holding people accountable as appropriate.”
But under questioning from Camp, Werfel said he had not spoken with Lois Lerner, the head of the exempt organizations division; ousted IRS chief Steven Miller, or former IRS chief Douglas Shulman as part of the inquiry.
“I would say your initial conclusion that the IRS found no wrongdoing, given the number of key players you did not talk to ... is not an initial conclusion but an incomplete one,” Camp said.
The IRS controversy erupted last month, after the Inspector General’s audit found that Cincinnati-based IRS employees developed a “be on the lookout” list — or BOLO list — that included words such as “tea party” and “patriot” to determine which groups should be subject to heightened scrutiny. The Cincinnati IRS office is charged with reviewing tax-exempt applications from across the country.
On Monday, Werfel released an interim report detailing the IRS’s review so far. That report says the IRS has not turned up any “evidence of intentional wrongdoing” inside the agency, nor any involvement by “anyone outside” the agency. Werfel noted that the agency’s review and other investigations are ongoing.
In the Monday call with reporters, Werfel said the review had unearthed additional BOLO lists in use by tax-exempt screeners, and he suggested they cast a wide net. He said it would “be premature to get into specifics,” but “there was a wide-ranging set of categories and cases that spanned a broad spectrum.”
Since the targeting revelations became public in mid-May, the Justice Department has launched a criminal investigation. Three congressional committees, including the Ways and Means panel, have also opened probes of the IRS targeting, interviewing Washington and Cincinnati employees.
Deirdre Shesgreen writers for the Gannett Washington Bureau.