If true, IRS acts outrageous, president says; awaits facts

WASHINGTON - President Barack Obama called it “outrageous” for the Internal Revenue Service to target groups that promote limited government for special attention, as a Democratic panel chairman became the latest to announce a congressional probe.

“If, in fact, IRS personnel engaged in the kind of practices that have 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 news conference at the White House.

The president said he first learned of the IRS targeting through news reports Friday. On that day, Lois Lerner, the IRS official in charge of overseeing tax-exempt groups, acknowledged that the agency had targeted for special review groups that promoted limited government and issued an apology.

The extra IRS scrutiny was given to organizations that were seeking tax-exempt status if they had “Tea Party” or “patriot” in their name.

Calls for congressional probes of the matter followed. They intensified after disclosures over the weekend that a Treasury Department inspector general’s report found that IRS officials knew of the targeting of the groups as early as June 2011, nine months before the agency’s head told lawmakers it wasn’t occurring.

The House Ways and Means Committee will hold a hearing Friday with acting IRS Commissioner Steven Miller and Inspector General J. Russell George as the only witnesses, according to a statement by panel Chairman Dave Camp and the committee’s top Democrat, Sander Levin, both of Michigan.

Representative Charles Boustany, R-La., chairman of the Ways and Means oversight subcommittee, sent a letter to Miller demanding by Wednesday all agency communication containing the words “tea party” and “patriot” as well as the names “of all individuals involved in this discrimination.”

Senate Finance Committee Chairman Max Baucus also said his panel would investigate.

“Targeting groups based on their political views is not only inappropriate but it is intolerable,” the Montana Democrat said in a statement.

“The IRS should be prepared for a full investigation into this matter by the Senate Finance Committee,” Baucus said. “The IRS will now be the ones put under additional scrutiny.”

Senate Majority Leader Harry Reid said the allegations, if true, “would be a terrible breach of the public’s trust.” He said he had “full confidence” Baucus’s panel would “get to the bottom of this matter and recommend appropriate action.”

Obama said the IRS must be “fully accountable” because “the IRS as an independent agency requires absolute integrity” so people can be confident it is “applying the laws in a nonpartisan way.”

“We’ll wait and see what exactly all the details and the facts are,” Obama said. “I will not tolerate it, and we will make sure that we find out exactly what happened on this.”

White House press secretary Jay Carney said the IRS alerted the White House counsel’s office about the situation during the week of April 22. Carney said the administration “doesn’t have access to, nor should we” have access to the inspector general’s report.

Rep. Darrell Issa, chairman of the House Oversight and Government Reform Committee, has said his panel will hold hearings on the IRS’ actions, which he said represent a clear “abuse of power.”

“Making sure there are not just rules but checks - real safeguards to keep this from happening, at the low level, the medium level, or at the top is essential for the American people,” Issa, R-Calif., said Monday in an interview with Bloomberg Television.

He said there must be “swift action” and raised the possibility that “heads have to very appropriately roll.”

Rep. Mike Turner, R-Ohio, who is on Issa’s committee, was introducing legislation Monday criminalizing IRS discrimination against individuals or groups based on political speech or expression.

“Americans should not have to wonder if their government is actively looking to subvert them or their political views,” Turner said in a statement.

The Senate Permanent Subcommittee on Investigations is expanding its inquiry of whether the IRS didn’t enforce the law on tax-exempt groups to include the extra scrutiny it gave to Tea Party-affiliated groups.

Committee Chairman Carl Levin, D-Mich., and Senator John McCain of Ariz., the panel’s top Republican, said in a joint statement Monday that the committee will delay a hearing tentatively planned for June so it can examine the targeting allegations.

Miller, the acting IRS commissioner since November, told lawmakers in July that the agency had grouped together advocacy organizations seeking nonprofit status “toensure consistency, to ensure quality” without saying that some groups had been scrutinized for having words like “tea party” in their names.

According to a timeline from the inspector general’s report, Miller became involved in the issue as early as March 8, 2012. That was 19 days before his predecessor, Douglas Shulman, testified to Congress that the IRS hadn’t targeted groups based on ideology.

Shulman may not have known details about what happened, in part because the IRS attempts to insulate itself from politics, said Floyd Williams, who retired in June 2012 after 16 years as the agency’s liaison to Congress.

Because the commissioner is one of just two presidential appointees at the IRS, the agency tries to limit any appearance of politics by keeping its leader out of day-to-day decisions on individual cases, Williams said. Shulman, now a guest scholar at the Brookings Institution in Washington, didn’t respond Monday to an e-mailed request for comment.

The IRS said Monday that Miller was first informed in May 2012 that Tea Party groups were inappropriately targeted for scrutiny.

A month later, he wrote a member of Congress to explain the process of reviewing applications for tax-exempt status without mentioning the added scrutiny on some groups.

Several senators called Monday for the firing or resignation of IRS officials as the political fallout over the agency’s targeting of conservative groups intensified on Capitol Hill.

In a letter to Treasury Secretary Jack Lew, Sen. Marco Rubio urged Lew and Obama to demand Miller’s resignation.

“No government agency that has behaved in such a manner can possibly instill any faith and respect from the American public,” Rubio, R-Fla., wrote Monday.

Sen. Joe Manchin, D-W.Va., called for Obama to fire the officials involved. “The actions of the IRS are unacceptable and un-American,” he said. “The president must immediately condemn this attack on our values, find those individuals in his administration who are responsible and fire them.”

Several anti-tax Tea Party groups, some of which include the word “patriot” in their names, formed after Obama took office in January 2009 and helped fuel gains by Republicans in the 2010 midterm election that gave the party control of the U.S. House.

In addition to groups with “Tea Party” and “patriot” in their names, other organizations selected for the additional IRS review included those in which “statements in the case file criticize how the country is being run,” according to a June 29, 2011, briefing given to Lerner, the timetable says.

Lerner “raised concerns over the language” and instructed the criteria “be immediately revised,” according to the timeline.

“The timeline supports what the IRS acknowledged on Friday that mistakes were made,” Michelle Eldridge, an IRS spokesman, said in an e-mailed statement Sunday. “There were not partisan reasons behind this.”

“IRS senior leadership was not aware of this level of specific details at the time of the March 2012 hearing,” Eldridge said.

The IRS has been under pressure to regulate political spending by nonprofit groups, in particular those falling under Section 501(c)(4) of the U.S. tax code. Organizations qualifying for that status don’t have to disclose donors even when engaging in political activity.

The timeline suggests a continuing discussion on defining an appropriate standard for review of such groups.

A Jan. 25, 2012, timeline entry described a standard that included “political action type organizations involved in limiting/expanding government, educating on the Constitution and Bill of Rights, social economic reform/movement.”

In May 2012, the standard shifted to “organizations with indicators of significant amounts of political campaign intervention (raising questions as to exempt purpose and/or excess private benefit).”

Nonprofit groups spent $1 billion on the 2012 campaign, with more than two-thirds benefiting Republican candidates, according to the Center for Responsive Politics, a Washington- based research group that tracks campaign spending. That was triple the amount spent in the 2008 campaign.

Information for this article was contributed by Kathleen Hunter, Richard Rubin, Jonathan D. Salant, James Rowley and Andrew Zajac of Bloomberg News; by Stephen Ohlemacher of The Associated Press; and by Christi Parsons and Lisa Mascaro of Mc-Clatchy Newspapers.

Front Section, Pages 1 on 05/14/2013

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