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Hearing on Internal Revenue Service Targeting Conservative Groups

May 17, 2013

Hearing on Internal Revenue Service Targeting Conservative Groups








May 17, 2013


Printed for the use of the Committee on Ways and Means


DAVE CAMP, Michigan,Chairman

PAUL RYAN, Wisconsin
DEVIN NUNES, California
JIM GERLACH, Pennsylvania
TOM PRICE, Georgia
DIANE BLACK, Tennessee
TOM REED, New York
MIKE KELLY, Pennsylvania

RICHARD E. NEAL, Massachusetts
JOHN B. LARSON, Connecticut
RON KIND, Wisconsin

JENNIFER M. SAFAVIAN,Staff Director and General Counsel
JANICE MAYS,Minority Chief Counsel


C O N T E N T S 



Steve Miller
Acting Commissioner of the Internal Revenue Service

J. Russell George
Treasury Inspector General for Tax Administration


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, Hon. Dave Camp [chairman of the committee] presiding.

[The  advisory of the hearing follows:]


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:]

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, ProPublica 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. 


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 statement of Mr. George follows:]

Chairman Camp.  Mr. Miller, you are now recognized for 5 minutes. 


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 statement of Mr. Miller follows:]

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:]

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:]

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 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. 


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. Name.  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:]

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?


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, 20122.  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, 20123.  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 guest 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 statement of the Ohio Christian Alliance follows:]

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 is 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

The Honorable Sam Johnson
The Honorable Richard Hudson
National Organization for Marriage
Bruce Jones
Constitution Project
Alvin Brown
Kenneth H. Ryesky
Common Cause
Richmond Tea Party
Mike Duda
Center for Competitive Politics
Romeo Area Tea Party
ActRight Legal Foundation
Cape 912