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Thứ Tư, 15 tháng 5, 2013

IRS commissioner ousted over tea party targeting

WASHINGTON (AP) — Hurrying to check a growing controversy, President Barack Obama ousted the acting commissioner of the Internal Revenue Service late Wednesday amid an outcry over revelations that the agency had improperly targeted tea party groups for scrutiny when they filed for tax-exempt status.

Obama said Treasury Secretary Jacob Lew had asked for and accepted Steven T. Miller's resignation. Obama made no public criticism of Miller but spoke of inexcusable "misconduct" by IRS employees and said new leadership at the agency was critical.

"Americans are right to be angry about it, and I am angry about it," Obama said in a televised statement from the White House. "I will not tolerate this kind of behavior in any agency but especially in the IRS, given the power that it has and the reach that it has into all of our lives."

Meanwhile, the FBI is investigating potential civil rights violations at the IRS, Attorney General Eric Holder said earlier Wednesday. Other potential crimes include making false statements to authorities and violating the Hatch Act, which prohibits federal employees from engaging in some partisan political activities, Holder said.

Miller, a 25-year IRS veteran, took over the agency in November, when the five-year term of Commissioner Douglas Shulman ended.

In an email to employees, Miller said, "This has been an incredibly difficult time for the IRS given the events of the past few days, and there is a strong and immediate need to restore public trust in the nation's tax agency. I believe the Service will benefit from having a new acting commissioner in place during this challenging period."

At the time when tea party groups were targeted, Miller was a deputy commissioner who oversaw the division that dealt with tax-exempt organizations.

An inspector general's report does not indicate that Miller knew conservative groups were being targeted until after the practice ended. But documents show that Miller repeatedly failed to tell Congress that tea party groups were being targeted, even after he had been briefed on the matter.

The IRS said Miller was first informed on May, 3, 2012, that applications for tax-exempt status by tea party groups were inappropriately singled out for extra, sometimes burdensome scrutiny.

At least twice after the briefing, Miller wrote letters to members of Congress to explain the process of reviewing applications for tax-exempt status without revealing that tea party groups had been targeted. On July 25, 2012, Miller testified before the House Ways and Means oversight subcommittee but again was not forthcoming on the issue — despite being asked about it.

Miller was scheduled to testify Friday at a Ways and Means hearing. It was not immediately clear whether he would still testify.

Holder announced Tuesday that the Justice department had opened a criminal investigation, joining three committees in Congress that are looking into the matter.

"I can assure you and the American people that we will take a dispassionate view of this," Holder told the House Judiciary Committee at a hearing Wednesday. "This will not be about parties, this will not be about ideological persuasions. Anybody who has broken the law will be held accountable."

But, Holder said, it will take time to determine if there was criminal wrongdoing.

Legal experts, however, said it could be difficult to prove that IRS officials or employees knowingly violated the civil rights of conservative groups. If there is a violation, the experts said, investigators can sometimes prove more easily that officials made false statements or obstructed justice in some other way.

"I think it's doubtful that any of these knuckleheads who engaged in the conduct that gave rise to this controversy knowingly believed that they were violating the law," said David H. Laufman, a former Justice Department lawyer. "But that remains to be seen. That's what investigations are for."

"It's more likely than not that," he said, "the conduct at issue here may constitute violations of IRS rules or standards or protocols or procedures but may fall short of what is necessary to constitute a criminal offense."

Even if IRS agents broke criminal laws in targeting conservative groups, investigators may have to prove they knowingly did it, a high standard, said Brian Galle, a former Justice Department lawyer who teaches law at Boston College.

"If the reason they were pursuing them was in order to punish them for their political activity, there might be a First Amendment concern there," Galle said. "On the other hand, if the reason that they were looking for tea party groups is because there had been press reports about this new group, the tea party, who was aimed primarily at getting more conservative people elected to office, then they were just responding to the evidence. It really depends on what their motives were."

Wednesday's hearing was the first of several in Congress that will focus on the issue.

The House Oversight Committee announced Wednesday that it would hold a hearing May 22, featuring Lois Lerner, the head of the IRS division that oversees tax exempt organizations, and former IRS Commissioner Douglas Shulman, whose five-year term ended in November.

The Senate Finance Committee announced a hearing for next Tuesday.

At Wednesday's hearing, Rep. Jim Jordan, R-Ohio, said Lerner misled him and his staff when they asked her about complaints from conservative groups that they were being harassed by the IRS.

"I know for a fact, Lois Lerner lied to me, she lied to our personal staff, she lied to committee staff, she lied in correspondence," Jordan said.

Lerner learned about the targeting on June 29, 2011, according to a report Tuesday by the inspector general.

The report said ineffective management at the IRS allowed agents to improperly target tea party and other conservative groups for more than 18 months.

The report said that while their applications for tax exempt status languished, tea party groups were asked a host of inappropriate questions, including: Who are your donors? What are the political affiliations of officers? What issues are important to the organization, and what are your positions on those issues? Will any officers in the group run for public office? Where do you work?

The IRS started targeting groups with "Tea Party," ''Patriots" or "9/12 Project" in their applications for tax exempt status in March 2010, the inspector general's report said. By August 2010, it was part of the written criteria used to flag groups for additional scrutiny.

Colleen M. Kelley, president of the National Treasury Employees Union, said Wednesday that no union employees had been disciplined, as far as she knew. She noted that the IG's report said agents were not motivated by political bias.

Kelley told The Associated Press that low-level workers could not have specifically targeted conservative groups for long without the approval of supervisors. However, she noted, there are many levels of supervisors at the IRS.

"No processes or procedures or anything like that would ever be done just by front-line employees without any management involvement," Kelley said. "That's just not how it operates."

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Associated Press reporter Andrew Miga contributed to this report.

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Follow Stephen Ohlemacher on Twitter: http://twitter.com/stephenatap

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‘Angry’ Obama says acting IRS chief fired over conservative targeting

President Barack Obama will make previously unannounced remarks on the IRS scandal at 6 p.m. Wednesday, his press office said. The president's statement from the East Room of the White House will come a little more than an hour after a meeting with senior Treasury Department officials to discuss the controversy, which centers on the IRS' acknowledgement that it improperly targeted conservative groups for scrutiny.

In a written statement late Tuesday, Obama called the IRS' behavior "intolerable and inexcusable," and said that he had directed Treasury Secretary Jack Lew "to hold those responsible for these failures accountable."

On Wednesday, Attorney General Eric Holder promised angry lawmakers that the Justice Department will undertake a national investigation into the IRS wrongdoing.

"We will take a dispassionate view of this," said Holder, who faced tough questioning from the House Judiciary Committee. "This will not be about parties ... anyone who has broken the law will be held accountable."

Holder said he had launched an investigation last Friday into why the IRS subjected conservative groups to more review when they applied for tax-exempt status. The IRS inspector general's report said that a group of low-level staffers in an Ohio office were responsible, and a top IRS official has apologized on their behalf.

But Holder promised that the investigation will look well beyond Ohio, and suggested that civil rights laws could have been violated.

Rep. Bobby Scott, D-Va., asked Holder at the hearing whether an "apology" from the IRS protected them from criminal prosecution. Holder answered, "No."

The Obama Administration is under fire over the IRS, the president's handling of the Sept. 11, 2012 terrorist attack in Benghazi, Libya, and the Department of Justice's secret collection of telephone records of Associated Press reporters and editors.

Republicans have been hammering Obama on all three matters. While Democrats have largely defended him—and former Secretary of State Hillary Clinton—on Benghazi, they have joined their GOP colleagues in denouncing the IRS and in expressing deep concerns about the AP phone records.

On Monday, Obama dismissed Republican charges of a cover-up in the Benghazi situation as a "sideshow" lacking any merit. He has yet to comment directly on the AP issue.

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Holder promises ‘nationwide’ investigation into IRS targeting

Attorney General Eric Holder will face tough questioning from a House committee Wednesday afternoon over twin scandals that have dogged the Obama administration this week: the seizure of phone records of Associated Press reporters and editors and the revelation that IRS employees singled out conservative nonprofits for extra scrutiny.

On Tuesday, Holder said at a news conference that the national security leak that prompted the department to seize AP phone records was among the most serious he had ever seen.

“I have to say this is ... among the top two or three most serious leaks I have ever seen. It put the American people at risk. That is not hyperbole,” he said. The leak led to an AP story last year about the government foiling a Yemeni-based terror plot to bomb American airliners.

Holder said he recused himself from the investigation, but that he believes the Justice Department acted appropriately.

Meanwhile, Holder told reporters that he has launched an investigation into reports that the IRS singled out conservative groups and subjected them to more review and scrutiny when they applied for tax exempt status. The IRS' inspector general report said that a group of low-level staffers in an Ohio office were responsible.

Holder's appearance at the Republican-led House Judiciary Committee hearing was scheduled before the IRS and AP news broke, but will most likely now be focused on those issues. Rep. Bob Goodlatte, the Republican chair of the committee, said in a statement that he plans to ask "pointed questions" about the Justice Department's decision to subpoena two months' of AP telephone records, as well as question Holder about the IRS and whether there were any intelligence failures in the lead-up to the Boston bombings.

Holder has long faced criticism from Republicans, some of whom called for his resignation in 2011 over the failed gun-walking Fast and Furious operation on the U.S.-Mexico border. The Justice Department's inspector general cleared him of wrongdoing in that scandal last year, blaming the botched operation on Arizona federal prosecutors and ATF agents.

Watch Holder's testimony above, at 1 p.m. ET.

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‘Angry’ Obama says acting IRS chief fired over conservative targeting

On Wednesday, Attorney General Eric Holder promised angry lawmakers that the Justice Department will undertake a national investigation into the IRS wrongdoing.

But Holder promised that the investigation will look well beyond Ohio, and suggested that civil rights laws could have been violated.

Rep. Bobby Scott, D-Va., asked Holder at the hearing whether an "apology" from the IRS protected them from criminal prosecution. Holder answered, "No."

On Monday, Obama dismissed Republican charges of a cover-up in the Benghazi situation as a "sideshow" lacking any merit. He has yet to comment directly on the AP issue.

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Thứ Ba, 14 tháng 5, 2013

Watchdog blasts U.S. IRS over 'Tea Party' targeting

By Kim Dixon and Richard Cowan

WASHINGTON (Reuters) - A government watchdog sharply criticized the U.S. Internal Revenue Service on Tuesday for singling out conservative groups for extra scrutiny and warned that the agency's actions gave the appearance that it was not politically impartial.

Citing poor management and substantial delays in processing of applications from groups for tax-exempt status, the Treasury Inspector General for Tax Administration (TIGTA) said the IRS used "inappropriate criteria" for screening applications.

IRS employees are supposed to remain impartial and handle "tax matters in a manner that will promote public confidence," the TIGTA report said.

The criteria used to target the conservative groups "gives the appearance that the IRS is not impartial in conducting its mission," the report said.

Lois Lerner, a senior IRS official, has apologized for the use by IRS agents of key words such as "Tea Party" and "Patriot" in picking out applications for closer scrutiny, setting off a controversy that has embarrassed the agency and distracted the White House.

"During the 2012 election cycle, some members of Congress raised concerns to the IRS about selective enforcement," the TIGTA report said.

"We initiated this audit based on concerns expressed by Congress and reported in the media regarding the IRS' treatment of organizations applying for tax-exempt status," it said.

(Reporting by Kim Dixon and Kevin Drawbaugh; Editing by Howard Goller; Christopher Wilson and Sandra Maler)

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IRS IG Report: Targeting Conservatives Began In 2010

The targeting of conservatives by the IRS started earlier and was more extensive than the IRS acknowledged last week, according to a draft IRS inspector general report obtained by ABC News.

As we reported on "Good Morning America" this morning, the IRS began targeting "Tea Party or similar organizations" in March 2010. That was when the Cincinnati-based IRS unit responsible for overseeing the applications for tax exempt status starting using the phrases "Tea Party," "patriots" and "9/12? to search for applications warranting greater scrutiny.

During this first phase, 10 Tea Party cases were identified. By April of 2010, 18 Tea Party organizations were targeted, including three that had already been approved for tax-exempt status.

By June 2011, the unit had flagged over 100 Tea Party-related applications and the criteria used to scrutinize organizations had grown considerably, flagging not just "Tea Party" or "Patriot" in group names, but also groups that were working on issues like "government debt," "taxes" and even organizations making statements that "criticize how the country is being run."

The report, done by the Inspector General for the IRS, also shows that senior IRS officials in Washington was aware of what was going on as early as August 4, 2011 when, according to the report, the IRS chief counsel held a meeting with the IRS's Rulings and Agreements unit "so that everyone would have the latest information on the issue."

Click here to see the draft report.

Related: IRS Targeted Tea Party Groups

Justice investigating IRS targeting of tea party

WASHINGTON (AP) — The Justice Department is investigating the Internal Revenue Service for targeting tea party groups for extra scrutiny when they applied for tax exempt status, Attorney General Eric Holder said Tuesday, widening a probe that includes investigations by three committees in Congress.

Ineffective management at the IRS allowed agents to improperly target tea party groups, concluded one investigation, by the Treasury inspector general for tax administration. The inspector general's report, released Tuesday, lays much of the blame on IRS supervisors in Washington who oversaw a group of specialists in Cincinnati who screened applications for tax exempt status.

The report does not indicate that Washington initiated the targeting of conservative groups. But it does say a top supervisor in Washington did not adequately supervise agents in the field even after she learned the agents were acting improperly, enabling the practice to continue for more than 18 months.

Holder said he ordered the FBI to investigate Friday — the day the IRS publicly acknowledged that it had singled out conservative groups.

"Those (actions) were, I think, as everyone can agree, if not criminal, they were certainly outrageous and unacceptable," Holder said. "But we are examining the facts to see if there were criminal violations."

Three congressional committees already are investigating the IRS for singling out tea party and other conservative groups during the 2010 congressional elections and the 2012 presidential election. But Holder's announcement takes the matter to another level, if investigators are able to prove that laws were broken.

Holder said he wasn't sure which laws may have been broken.

The agency started targeting groups with "Tea Party," ''Patriots" or "9/12 Project" in their applications for tax exempt status in March 2010, the inspector general's report said. Lois Lerner, who heads the IRS division that oversees tax exempt organizations, was briefed on the matter in June 2011.

Within days, she ordered agents to change the criteria for singling out groups to a more generic "organizations involved with political, lobbying, or advocacy." But by January 2012, agents started singling out groups that promoted the Constitution and the Bill of Rights.

Agents made the changes "without executive approval because they believed the July 2011 criteria were too broad," the report said.

IRS agents were trying to determine whether the political activities of such groups disqualified them for tax-exempt status. These groups were claiming tax-exempt status as organizations promoting social welfare. Unlike other charitable groups, they can engage in political activity. But politics cannot be their primary mission.

It is up to the IRS to make the determination.

But by using improper criteria, the IRS targeted some groups, even though there were no indications that they engaged in significant political activities, the report said. Other non-tea party groups that had significant political activities were not screened, the report said.

"The criteria developed by the Determinations Unit gives the appearance that the IRS is not impartial in conducting its mission," the report said.

In all, IRS agents identified 298 applications for additional, sometimes burdensome scrutiny. Ninety-one of them were tea party, patriot or 9/12 groups, the report said.

Of the tea party groups, 17 should not have been targeted because they did not indicate that they were engaged in significant political activities, investigators concluded.

The additional screening resulted in long delays as IRS agents asked intrusive, sometimes inappropriate questions, or merely let applications languish, the report said. Inappropriate questions included requests for lists of donors and the political affiliation of officers.

As of December, the delays averaged 574 days, which probably made donors reluctant to contribute, the report said. No group has had their application denied, though about half are still waiting, the IRS said.

House Oversight Committee chairman Darrell Issa, R-Calif., said that report "magnifies our concerns about the breadth and depth" of the IRS's targeting of certain groups.

"Unfortunately, the report raises more questions than it answers," Issa said. "What we do know for sure is that the IRS personnel responsible for granting tax exemptions systematically targeted conservative groups for extra scrutiny, and that officials in Washington, D.C. were aware of this practice, even while publically claiming that it never happened."

The practice ended in May 2012, when the criteria for additional scrutiny was changed to "organizations with indicators of significant amounts of political campaign intervention (raising questions as to exempt purpose and/or excess private benefit)," the report said.

"After seeing issues with particular cases, inappropriate shortcuts were used to determine which cases may be engaging in political activities," the IRS said in a statement Tuesday evening. "It is important to note that the vast majority of these cases would still have been centralized based on the general criteria used for other cases."

"It is also important to understand that the group of centralized cases included organizations of all political views," the statement said.

The IRS has said the improper reviews were limited to a Cincinnati office where a special team was assembled to screen them. The inspector general's report does not contradict the agency on this assertion.

However, documents obtained by The Associated Press suggest the targeting of conservative groups could be more widespread. Documents sent from the IRS to tea party groups show that IRS offices in California and Washington, D.C., also sought extensive information from tea party groups who requested tax-exempt status.

In letters provided by the American Center for Law and Justice, which represents 27 tea party groups that have sought tax exempt status, IRS officials from two cities in California — El Monte and Laguna Nigel — as well as officials in Washington, D.C., and Cincinnati contacted groups seeking extensive information.

The law center's chief counsel, Jay Sekulow, said he was astonished the IRS said activity was limited to Cincinnati.

"To me, that was what was mind-boggling, they tried to create a narrative," he said.

On Monday, the IRS said acting IRS Commissioner Steven Miller was first informed on May, 3, 2012, that applications for tax-exempt status by tea party groups were inappropriately singled out for extra scrutiny.

At least twice after the briefing, Miller wrote letters to members of Congress to explain the process of reviewing applications for tax-exempt status without disclosing that tea party groups had been targeted. On July 25, 2012, Miller testified before the House Ways and Means oversight subcommittee but again did not mention the additional scrutiny — despite being asked about it.

On Tuesday, the IRS said, "While flaws in our process were corrected last year based on our own review, we only recently discussed this publicly as there had been a concurrent ongoing (inspector general) audit of the situation. There was no intent to hide this issue, but rather we waited until (the inspector general) completed their fact finding, made recommendations, and we reviewed their findings.

Miller was a deputy commissioner at the time. He became acting commissioner in November, after Commissioner Douglas Shulman completed his five-year term. Shulman had been appointed by President George W. Bush.

Miller is scheduled to testify before the House Ways and Means Committee at a hearing Friday.

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Associated Press writer Pete Yost contributed to this report.

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Follow Stephen Ohlemacher on Twitter: http://twitter.com/stephenatap

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Top IRS official didn't reveal tea party targeting

WASHINGTON (AP) — Acting Internal Revenue Service Commissioner Steven T. Miller repeatedly failed to tell Congress that tea party groups were being inappropriately targeted, even after he had been briefed on the matter.

The IRS said Monday that Miller was first informed on May, 3, 2012, that applications for tax-exempt status by tea party groups were inappropriately singled out for extra, sometimes burdensome scrutiny.

At the hearing, Rep. Kenny Marchant, R-Texas, told Miller that some politically active tax-exempt groups in his district had complained about being harassed. Marchant did not explicitly ask if tea party groups were being targeted. But he did ask how applications were handled.

Miller responded, "We did group those organizations together to ensure consistency, to ensure quality. We continue to work those cases," according to a transcript on the committee's website.

He added, "It is my hope that some of the noise that we heard earlier this year has abated as we continue to work through these cases."

Earlier, Rep. Charles Boustany, R-La., had raised concerns with the IRS about complaints that tea party groups were being harassed. Boustany specifically mentioned tea party groups in his inquiry.

But in a June 15, 2012, letter to Boustany, Miller gave a generic response. He said that when the IRS saw an increase in applications from groups that were involved in political activity, the agency "took steps to coordinate the handling of the case to ensure consistency."

He added that agents worked with tax law experts "to develop approaches and materials that could be helpful to the agents working the cases."

Miller did not mention that in 2011, those materials included a list of words to watch for, such as "tea party" and "patriot." He also didn't disclose that in January 2012, the criteria for additional screening was updated to include references to the Constitution or the Bill of Rights.

"They repeatedly failed to disclose and be truthful about what they were doing," said Rep. Dave Camp, R-Mich., chairman of the House Ways and Means Committee.

Camp's committee is holding a hearing on the issue Friday and Miller is scheduled to testify.

"We are going to need to find out how much he knew," Camp said of Miller.

The Senate Finance Committee announced Monday that it will join a growing list of congressional committees investigating the matter.

The IRS apologized Friday for what it acknowledged was "inappropriate" targeting of conservative political groups during the 2012 election to see whether they were violating their tax-exempt status. In some cases, the IRS acknowledged, agents inappropriately asked for lists of donors.

The agency blamed low-level employees in a Cincinnati office, saying no high-level officials were aware.

When members of Congress repeatedly raised concerns with the IRS about complaints that tea party groups were being harassed last year, a deputy IRS commissioner took the lead in assuring lawmakers that the additional scrutiny was a legitimate part of the screening process.

That deputy commissioner was Miller, who is now the acting head of the agency.

Camp and other members of the Ways and Means Committee sent at least four inquiries to the IRS, starting in June 2011. Utah Sen. Orrin Hatch, the top Republican on the Senate Finance Committee, sent three inquiries. And Rep. Darrell Issa, R-Calif., chairman of the House oversight committee, sent at least one.

None of the responses they received from the IRS acknowledged that conservative groups had ever been targeted, including a response to Hatch dated Sept. 11, 2012 — four months after Miller had been briefed.

In several letters to members of Congress, Miller went into painstaking detail about how applications for tax-exempt status were screened. But he never mentioned that conservative groups were being targeted, even though people working under him knew as early as June 2011 that tea party groups were being targeted, according to an upcoming report by the agency's inspector general.

"It is almost inconceivable to imagine that top officials at the IRS knew conservative groups were being targeted but chose to willfully mislead the committee's investigation into this practice," Camp said. "This revelation goes against the very principles of free speech and liberty upon which this country was founded, and the blatant disregard for which the agency has treated Congress and the American taxpayer raises serious concerns about leadership at the IRS."

The IRS issued a statement Monday saying that Miller had been briefed on May 3, 2012 "that some specific applications were improperly identified by name and sent to the (exempt organizations) centralized processing unit for further review." That was the unit in Cincinnati that handled the tea party applications.

Miller became acting commissioner in November, after Commissioner Douglas Shulman completed his five-year term. Shulman had been appointed by President George W. Bush.

On June 29, 2011, Lois G. Lerner, who heads the IRS division that oversees tax-exempt organizations, learned at a meeting that groups were being targeted, according to a draft of the report by the Treasury inspector general for tax administration.

At the meeting, Lerner was told that groups with "Tea Party," ''Patriot" or "9/12 Project" in their names were being flagged for additional and often burdensome scrutiny, the report says. Lerner instructed agents to change the criteria for flagging groups "immediately."

However, when Lerner responded to inquiries from the House oversight committee, she didn't mention the fact that tea party groups had ever been targeted. Her responses included 45-page letters in May 2012 to Rep. Darrell Issa, R-Calif., who chairs the committee, and Rep. Jim Jordan, R-Ohio, who chairs a subcommittee.

Lerner also met twice with staff from the House Ways and Means oversight subcommittee to discuss the issue, in March and in May 2012, according to a timeline constructed by committee staff. She didn't mention at either meeting that conservative groups had been targeted, according to the timeline.

"Knowing what we know now, the IRS was at best being far from forth coming, or at worst, being deliberately dishonest with Congress," Hatch said Monday.

On Monday, President Barack Obama said he first learned about the issue from news reports on Friday. White House spokesman Jay Carney said the White House counsel's office was alerted the week of April 22 that the inspector general was finishing a report concerning the IRS office in Cincinnati. But, he said, the counsel's office did not get the report and the president did not learn the focus until Friday.

"If, in fact, IRS personnel engaged in the kind of practices that had been reported on and were intentionally targeting conservative groups, then that's outrageous and there's no place for it," Obama said Monday at a press conference. "And they have to be held fully accountable, because the IRS as an independent agency requires absolute integrity, and people have to have confidence that they're applying it in a non-partisan way, applying the laws in a non-partisan way."

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Associated Press reporters Jim Abrams and Henry C. Jackson contributed to this report.

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Follow Stephen Ohlemacher on Twitter: http://twitter.com/stephenatap

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IRS commissioner was grilled on targeting conservatives earlier than first thought

IRS Commissioner Douglas Shulmanis sworn in prior to testifying before the Senate Homeland Security and Governmental …

News reports about how the Internal Revenue Service applied heavier scrutiny on conservative political organizations applying for tax-exempt status have pointed to a March 22, 2012 House Ways and Means oversight subcommittee hearing in which IRS Commissioner Douglas Shulman denied any wrongdoing. But that wasn't the first time lawmakers grilled him about the IRS' practices.

During a Financial Services subcommittee hearing earlier that month, on March 7, 2012, Georgia Republican Rep. Tom Graves questioned Shulman about similar concerns. Shulman pushed back against allegations that the IRS was targeting groups that advocated for limited government, just as he did at the subsequent Ways and Means subcommittee hearing.

At the March 7 hearing, Graves pointed to concerns from tea party groups that the IRS had unfairly scrutinized them with burdensome questions because of their political ideology. Shulman, who was appointed to the post by President George W. Bush and whose five-year term as IRS commissioner ended in Nov. 2012, told Graves that the agency had followed standard protocol and said allegations that specific groups were being targeted were "off."

"Can you help put any of those concerns to rest today that these groups are specifically being targeted because of their political activities or their opposition to the administration’s policies?" Graves asked, according a transcript of the exchange.

"It is a good question. I am glad you asked it because I think there has been lots of information flying around in the press, and I think it is important that people put it in perspective," Shulman said, and went on to explain the agency's process for examining applications non-profit status. "When we decide to do an examination, we pride ourselves on being a non-political, non-partisan agency. We are given these complex rules that have things like political activity written into the tax code that does not allow you to do certain things or else you jeopardize your tax exemption. We have set up very clear safeguards, for determinate exams.

"This notion that we are targeting anyone, I think, is off," Shulman added, "because these people are going through an application process that they voluntarily decided to do. It is not required under the law."

The IRS on Friday apologized for singling out conservative organizations that applied for tax-exempt status between 2010 and 2012. A forthcoming audit of IRS procedures during that time will show that the agency was made aware of the practices as early as 2011, according to copy of the report obtained by the Associated Press.

The White House and several lawmakers have called for an investigation for more details.

Here's the full transcript of Graves' exchange with Schulman during the March 7 Financial Services subcommittee hearing:

Mr. GRAVES: Madam Chair, Commissioner. There has been a great deal of press in terms of the likelihood of your agency structure and form and funding of 501(c)(4) in terms of welfare organizations. This media attention specifically focused on our assets, examination of what are (c)(4) groups, who also engage in political activity, should be denied a release of their taxes. Two reasons I think that your activities are of so much interest to the press, and to everyone out there, certainly to us in Congress, first because of the timing of the inquiries, which make it appear a little bit linked to other actions, and second, is the focus, since the examinations seem to be centered on groups that are considered Tea Party groups, or those that openly oppose the Administration’s policies.
Can you help put any of those concerns to rest today that these groups are specifically being targeted because of their political activities or their opposition to the Administration’s policies?
Mr. SHULMAN: It is a good question. I am glad you asked it because I think there has been lots of information flying around in the press, and I think it is important that people put it in perspective. First, is for taxpayers to operate as a 501(c)(4) organization, they need to be primarily engaged in promoting the common good or general welfare. They are allowed to be involved in political campaign activity, but it cannot be the primary activity. Second, in order to be a (c)(4) organization, you do not need to apply to the IRS. You can hold yourself out as a 501(c)(4). You then file your 990 at the end of the year, and if we see something that either has to do with political activity or something else, we have the option to do an examination, and there is not a high chance of an examination; we run samples. Third, when we decide to do an examination, we pride ourselves on being a non-political, non-partisan agency. We are given these complex rules that have things like political activity written into the tax code that does not allow you to do certain things or else you jeopardize your tax exemption. We have set up very clear safeguards, for determinate exams. Our Chief Counsel and I are the only Presidential Appointees, and I have a five-year term, so that it goes past Presidential election cycles.
There is a committee of three career employees in our tax-exempt organization, not even based in Washington, who look at any political referrals or any allegations of political activity. Those three rotate, but they make decisions about farming out examinations to the field, so there are many safeguards built in. This work has nothing to do with election cycles and politics. And so that is, generally, what happens. But the important thing about what has been in the press in the last few weeks is not all of these organizations are being examined. They voluntarily came in and said, ‘‘I would like to apply for 501(c)(4) status, so I would like to engage the IRS in what my activities are,’’ and when you apply, you send in an application. We ask sets of questions. These people had a choice to not engage the IRS, to be 501(c)(4)s, hold themselves up as such, file a 990 after a year plus of operation, and then there would have been a much less of a chance that we would have discussions with them. So this notion that we are targeting anyone, I think, is off because these people are going through an application process that they voluntarily decided to do. It is not required under the law.
Mr. GRAVES: Has the IRS recently changed its policies with respect to these organization’s applications?
Mr. SHULMAN: No. No, when you apply as a 501(c)(3) or a 501(c)(4) you send in information. If we need more information, we do a back-and-forth with you. I think there have been press reports about the questions we ask. We also send out information that say, ‘‘If you think you can provide us information in other ways, please let’s have a conversation.’’ I think we are quite reasonable around those things.
Mr. GRAVES: The questions you ask today are the same questions you asked two, three years ago?
Mr. SHULMAN: It is facts and circumstances, and up to the examiner what they think they need to ask to get the information to determine what the activities of this organization are.
Mr. GRAVES: So back to the original question. So you did not deny that are increasing in exams or looking into these organizations, in fact you said engaging in political activities is not the primary focus, but you can come good after determining that does increase the opportunity for examination, so sounds to me like you confirmed the fact that the groups identified that the primary focus here is not the common good, but it is of a political nature.
Mr. SHULMAN: No, I think you have got that wrong. I was reciting the tax law and what are the standards we use when we look at 501(c)(4) organizations. We have been clear in our exam plan that we will look at these groups. When we see 501(c)(4)s not using their status right, we will look at it. That is our job, it is written into the tax code, and when people apply, we will make sure we try to do our best to understand what is happening.
Mr. GRAVES: What is your intention when somebody is not using it correctly?
Mr. SHULMAN: People file a 990, we get referrals from organizations about what is happening, and our examiners have a variety of ways it comes to their attention. A lot of it is on the application. They say, ‘‘Here are my activities,’’ and we will go out and do examinations.