By Matea Gold and Jim Puzzanghera
The ousted head of the Internal Revenue Service apologized Friday for the agency's "foolish mistakes" in singling out conservative groups for intrusive and time-consuming scrutiny, but said that the effort was not driven by partisan motives.
Acting IRS Commissioner Steven Miller, whose tenure will end Wednesday after he resigned under pressure this week, said the agency staff's attempts to identify groups with political aims was not "targeting," as it was termed in an inspector general's audit. He called that a pejorative characterization and said the problem was essentially a bureaucratic failing.
"I do not believe that partisanship motivated the people who engaged in the practices described," he told the House Ways and Means Committee.
That did not satisfy Republican members of the panel.
"On the one hand, you're arguing today that the IRS is not corrupt, but the subtext of that is you're saying, 'Look, we're just incompetent,'" Rep. Peter Roskam of Illinois shot back.
Alternately penitent and defensive in the face of nearly four hours of sometimes rough questioning, Miller strenuously denied that he had misled Congress last year when lawmakers repeatedly pressed him about complaints from tea party groups that they were being harassed by the IRS.
"I answered the questions as they were asked," Miller said.
But he admitted that the IRS decided to acknowledge the problems publicly for the first time at an American Bar Assn. meeting last week by planting a question with a lawyer in the audience. That unusual strategy infuriated lawmakers on both sides of the aisle, who said the agency's first stop should have been Congress.
The hearing was the first of three called by congressional panels to grill top officials about how the agency bungled the handling of applications from conservative groups seeking tax-exempt status as social welfare organizations. The inspector general's audit released Tuesday concluded that the agency inappropriately flagged for review dozens of organizations that used terms such as "tea party" or phrases such as "educating on the Constitution" in their applications in its efforts to determine their level of political engagement. Social welfare groups are permitted to do a limited amount of election activity, but it cannot be their primary purpose.
Nearly 300 organizations were caught up in that process, many bombarded with extensive questionnaires about their activities. Their applications languished, some for more than three years.
"I can say, generally, we provided horrible customer service here," Miller admitted.
The revelations about the screening process triggered a political storm. On Wednesday, President Obama, seeking to quell the controversy, forced Miller to resign, calling the misconduct "inexcusable."
The White House has said it first learned that the inspector general's audit was underway several weeks ago, when the Treasury Department alerted the White House counsel's office that a report would be released.
On Friday, J. Russell George, the Treasury inspector general for tax administration, told the committee that he informed top Treasury officials nearly a year ago that he was conducting an investigation.
George told Treasury Secretary Jacob Lew of the audit on March 15, but Lew said he did not know the details until last week. "From the moment I learned about it, I was outraged," Lew told Bloomberg TV.
More details may yet emerge. George told the panel that his office was still reviewing how the IRS handled applications for tax-exempt status.
Even as administration officials sought to distance themselves from the controversy, Republican lawmakers tried to use Friday's hearing to link the scandal to the president.
"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," said Rep. Dave Camp (R-Mich.), the committee chairman.
His GOP colleagues piled on.
"Is this still America?" asked Rep. Kevin Brady of Texas. "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?"
"This is chilling stuff," said Rep. Tom Price of Georgia.
"This was more than just foolish mistakes," said Rep. Diane Black of Tennessee. "This was abuse."
Democrats on the panel stressed that the inspector general found no evidence that IRS employees had partisan aims and accused their colleagues of trying to use the controversy to score political points.
"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," said the ranking Democrat, Rep. Sander M. Levin of Michigan.
Miller's testimony provided a window into the actions by IRS officials as they tried to contain the damage. He said two employees had been disciplined as a result -- one who was reassigned and another who received "oral counseling," although he said officials later realized the second employee "may not have been involved" after all.
As the agency struggled to handle the situation, IRS officials repeatedly passed up chances to inform Congress about the matter.
Miller first learned on May 3, 2012, that groups had been flagged based on inappropriate criteria. But in testimony before the Ways and Means Committee on July 25, he made no mention of the problems.
"You knew the targeting was taking place," said an indignant Rep. Paul D. Ryan (R-Wis.). "How can we not conclude that you misled this committee?"
"I did not mislead the committee," Miller responded, saying he did not believe there was any harassment going on because he did not think the staff was politically driven.
Miller said he did not want to get ahead of the inspector general's audit, which he had expected would be released last summer.
"Our understanding is they were going to get the facts; they were going to get them out there," Miller said. "There was never the intention or belief that these facts would not come out in full."
IRS officials received a draft of the audit in mid-March. When they became aware that it would soon be released, the agency decided to go public with the problems at a May 10 meeting of the American Bar Assn. in Washington.
The day before, Lois Lerner, the IRS director of exempt organizations, called Celia Roady, a tax attorney who serves on the agency's advisory board for tax-exempt entities, and gave her a question to pose during the gathering, according to a statement Roady provided to the Los Angeles Times.
"She did not tell me, and I did not know, how she would answer the question," Roady said.
Miller told the committee he was reaching out to lawmakers at the same time to inform them about the issue.
"What form did that outreach take?" Roskam asked him.
Explaining that he tried to arrange to meet with the committee, he said, "We called to try to get on the calendar."
"You called to try and get on the calendar," Roskam replied with disgust. "Is that all you got?"