Battle Lines Harden In Debate Over Blame For IRS Controversy

The Treasury Department's inspector general, who faulted the IRS for flagging conservative groups for extra scrutiny, is now investigating how the agency is monitoring the political activities of tax-exempt groups. These so-called social welfare organizations are not supposed to be primarily about politics, although many seem to be.

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Lawmakers are demanding to know what went wrong and who is to blame at the IRS. Two Senate committees held hearings yesterday on the agency's aggressive handling of applications from conservative groups who were seeking tax-exemption. A top IRS official facing a House committee, today, intends to invoke her Fifth Amendment right not to testify. NPR's Peter Overby reports.

PETER OVERBY, BYLINE: Lois Lerner heads up the section on tax-exempt organizations. She's the IRS official who acknowledged the severe scrutiny and apologized for it earlier this month. Since then, the FBI has started an investigation. And Lerner got a subpoena and a letter from Republican congressman Darrell Issa, chairman of the House Oversight Committee. Issa detailed past testimony she had given to the panel and wrote: It appears that you provided false or misleading information.

Which, he noted, can be a crime. Lerner's attorney wrote back to Issa that she has not committed any crimes, but has no choice but to refuse to testify. But Issa's subpoena still stands, and Lerner is at the witness table this morning. Also present today, the man who was commissioner of the IRS when the targeting of conservative groups was going on: Donald Shulman.

He appeared yesterday at the Senate Finance Committee. When Republican Senator John Cornyn of Texas suggested he apologize for bad leadership, Shulman sidestepped.

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DONALD SHULMAN: You know, I'm deeply, deeply saddened by this whole set of events. I've read the whole IG's report, and I very much regret that it happened, and that it happened on my watch.

REPRESENTATIVE JOHN CORNYN: Is that an apology?

OVERBY: Cornyn decided it was not. Certainly, nobody's defending the IRS. Here's Treasury Secretary Jacob Lew at yesterday's hearing of the Senate Banking Committee.

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JACOB LEW: While this conduct was not politically motivated, it was unacceptable and inexcusable.

OVERBY: And the departing acting IRS commissioner, Steven Miller, told the Finance Committee that a shrinking budget has forced cutbacks.

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STEVEN MILLER: Do we have the resources to get the job done? I don't believe that we do at this point.

OVERBY: Republican lawmakers pressed for evidence of political influence behind the targeting.

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REPRESENTATIVE PAT ROBERTS: There must've been a directive from Washington or something.

OVERBY: That's Pat Roberts, of Kansas on the Finance Committee. And here's Republican Bob Corker of Tennessee on Banking.

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REPRESENATITIVE BOB CORKER: People should not be surprised that bureaucrats at lower levels took it upon themselves to do what they did, when at the highest levels people were being demonized and villainized in the way they were.

OVERBY: But the Treasury Inspector General for tax administration, J. Russell George, told the Finance Committee he's found no evidence of political interference. His audit report concluded that employees were just trying to manage an overwhelming workload. Democratic lawmakers cite another audit finding that the rules on 501-C4 political activity are convoluted and confusing, even to the IRS.

Finance Committee Democrat Ron Wyden of Oregon said the government is right to take a hard look at the social welfare groups.

REPRESENTATIVE RON WYDEN: If political organizations do not want to be scrutinized by the government, they shouldn't seek privileges like tax-free status and anonymity for their donors.

OVERBY: No more hearings are officially scheduled after today's session in the House. But congressional investigators are demanding that the IRS turn over extensive and detailed information. Peter Overby, NPR News, Washington.

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