WASHINGTON -- Internal Revenue Service officials are not fully cooperating with efforts to learn who is responsible for targeting conservative groups, lawmakers learned Wednesday during the third and most tense, dramatic hearing on the scandal.
First, the director of the IRS division that oversees tax-exempt organizations at the heart of the scandal invoked her constitutional Fifth Amendment right and refused to answer questions during an appearance before the House Committee on Oversight and Government Reform.
Then, a Treasury Department inspector general told the committee that IRS employees in the Cincinnati office that handled applications for tax-exempt designations were not being fully cooperative in the investigation. He said the IRS employees have stymied efforts to learn who developed the controversial questions asked of conservative groups.
The inability to find out more about who authorized the special scrutiny of conservative groups frustrated lawmakers striving to find out more even as the IRS launches its own 30-day inquiry and the Justice Department is starting a criminal investigation. At the same time Wednesday, the White House press secretary acknowledged that there have been “legitimate” criticisms about the way he has explained what the administration knew about the scandal.
The most dramatic moment of the day came when Lois Lerner, a career government lawyer and longtime IRS official, appeared before the House committee.
“I have not done anything wrong,” Lerner said in an opening statement. “I have not broken any law. I have not violated any IRS rules and regulations, and I have not provided false information to this or any other congressional committee.”
She then informed the committee she was invoking her right to not answer questions.
“One of the basic functions of the Fifth Amendment is to protect innocent individuals,” Lerner said, repeating her innocence amid allegations from lawmakers that she misled Congress.
“You don’t get to tell your side of the story and then not answer questions,” insisted Rep. Trey Gowdy, R-S.C., furious and arguing to Chairman Darrell Issa, R-Calif., that Lerner effectively waived her rights by first issuing a statement.
Issa eventually excused Lerner and she left by a side door.
Later, J. Russell George, Treasury’s inspector general for the Office of Tax Administration, told the panel that he has not been able to find out everything he wants from IRS employees.
"We have had some difficulty in terms of getting clarity from some of the employees we’ve interviewed," he said, adding that further inquiries could make those employees more forthcoming.
Before going silent Wednesday, Lerner gave her work history, noting that she had worked at the Justice Department and the Federal Election Commission before joining the IRS. She joined the tax-exempt division in 2001 and was promoted to head the division in 2006, overseeing roughly 1.6 million tax-exempt organizations with a staff of 900 employees and a budget of almost $100 million.
She’s a key figure in the scandal because George’s audit found that she apparently had knowledge of IRS employees flagging conservative groups for special scrutiny when they applied for tax-exempt status as social welfare groups. The audit said she instructed the Cincinnati office to back off the inappropriate code words used to flag applications from conservative groups.
Under questioning, George confirmed Wednesday that there were apparently other lists of groups to watch for, but he cautioned he could say no more about an ongoing and broadening investigation. George said he couldn’t rule out whether conservative taxpayers also might have been targeted for tax audits or other forms of scrutiny.
“The American people today should not have confidence that this is an isolated incident,” Issa said.
George also said that it was unusual when Lerner pre-emptively revealed the coming inspector general report during a scripted appearance before a group on May 10. George said he knew of no prior case where the IRS released information ahead of an audit. “It was a first during my tenure,” he told lawmakers, adding that a clearance process for releasing information about the audit was underway. “That clearance had not been completed by then.”
Lawmakers were especially tough on Doug Shulman, a Bush administration appointee who stepped down as IRS commissioner in November. Republicans found that Shulman visited the Obama White House 118 times in 2010 and 2011.
Shulman said he was “absolutely sure” he had no conversations at the White House about IRS targeting. He said he was there for a variety of reasons, including discussions about tax administration, the new IRS administrative role under the Affordable Care Act, and even the Easter Egg Roll with his children.
“You started targeting the very groups that came into existence because they opposed what you were talking about in the White House, 118 different visits there," Rep. Jim Jordan, R-Ohio, charged, offering no proof other than the timeline. "You started targeting them the very month that the Affordable Care Act became law."
“I operated as a nonpartisan, nonpolitical person trying to implement the laws that were on the books,” Shulman said. “It would have been inappropriate, and nobody ever asked me.”
At the White House, Press Secretary Jay Carney acknowledged the criticism of what has been an evolving story about who in the White House knew about the investigation of the IRS and when they knew it.