Republicans grill acting IRS chief over targeting probe

By Tom Cohen, CNN

WASHINGTON (CNN) — The acting head of the Internal Revenue Service said Thursday that no evidence has emerged that liberal groups came under the same kind of extra scrutiny as some conservative groups when the agency assessed their applications for tax-exempt status.

An initial report on the IRS targeting scandal made public this week by Daniel Werfel, the IRS principal deputy commissioner, led to the disclosure that IRS workers flagged liberal groups as well as conservative groups in trying to determine if applicants were eligible for the tax-exempt status available to social welfare organizations.

Under tough questioning Thursday at a congressional hearing, Werfel acknowledged that no evidence so far showed liberal groups faced the same kind of delays and questioning that some conservative groups faced.

Werfel repeatedly noted that his internal investigation was incomplete and that groups that have waited more than 120 days for an answer to their requests for a tax break included a diverse range of political leanings.

His report released Monday said five managers had been replaced and other steps taken in response to an inspector general’s audit that found the agency targeted conservative groups applying for tax-exempt status.

Werfel’s report also said no evidence has emerged so far that the targeting was politically motivated or that anyone outside the tax agency had a role in it.

Rep. Dave Camp, the GOP chairman of the House Ways and Means Committee, who presided over Thursday’s hearing, called Werfel’s initial report incomplete and led the tough questioning about the targeting.

“So far, the evidence only shows conservatives being targeted, not just flagged, but targeted,” Camp said. He also said that Werfel’s response “fails to deliver the accountability the American people deserve.”

Another GOP legislator, Rep. Kevin Brady of Texas, called Werfel’s report “a sham.”

Republican leaders contend the targeting uncovered by the inspector general’s audit indicated political villainy by the Obama administration to try to stifle opponents, such as groups with “tea party” in their names that were flagged for additional IRS scrutiny.

Democrats said Thursday that such allegations were politically motivated instead of based on any evidence. Rep. Sander Levin of Michigan, the top Democrat on the panel, asked Werfel if there was any evidence of White House involvement in the targeting, and Werfel answered no.

On Wednesday, White House spokesman Jay Carney told reporters that “there’s been a lot of flagrant, unfounded accusations made by members of Congress in the Republican Party about this issue, accusations that were made without factual foundation.”

Investigations by the FBI, congressional committees, the Treasury inspector general’s office and the IRS continue.

President Barack Obama appointed Werfel to clean up the IRS mess last month after the inspector general’s audit uncovered targeting of applications that contained conservative-themed words such as “tea party.”

The audit by Treasury Inspector General for Tax Administration J. Russell George said the targeting resulted in some conservative groups having their applications delayed or stonewalled with requests for answers to inappropriate questions regarding donors, political beliefs and other matters.

George’s audit said the targeting of conservative groups ended in May 2012.

In his first substantive report on the agency, Werfel said Monday that its tax-exempt unit used multiple lists of inappropriate criteria in assessing tax-exempt applications until earlier this month, more than a year later than previously revealed.

The “be on the lookout” or BOLO lists included liberal-themed words such as “progressives” and other politically oriented terms such as “occupy” and “medical marijuana” in alerting IRS workers to check for unacceptable political activities, according to copies made available by Levin.

Werfel said he has suspended the use of BOLO lists in considering tax-exempt applications for now.

Republicans have claimed the controversy amounted to political retribution against enemies of the administration, an accusation denied by the White House and the IRS.

Werfel’s report Monday said the five IRS managers replaced included the previous acting commissioner he succeeded, as well as the head of the unit based in Cincinnati that handles tax-exempt applications.

In addition, Werfel created an Accountability Review Board to recommend within 60 days “any additional personnel actions necessary to hold accountable those responsible” for the targeting disclosed by the inspector general’s report.

As part of his review, Werfel said 80 groups awaiting IRS action on their applications for tax-exempt status for more than 120 days could self-register with the agency as long as they certified under penalty of perjury that they would comply with applicable laws and regulations.

At the heart of the matter is what kind of organization can qualify for tax-exempt status. Regulations limit such status to groups primarily involved in social welfare activities, while political groups are considered ineligible.

Confusion over defining what constitutes political activity versus social welfare activity contributed to the targeting by the IRS, Werfel said.

An IRS statement Monday said the “safe-harbor” option for self-certification would apply to groups that “certify they devote 60% or more of both their spending and time on activities that promote social welfare.”

“At the same time, they must certify that political campaign intervention involves 40% or less of both their spending and time,” the statement said. Applicants meeting those thresholds would get approval within two weeks of seeking self-certification, it said.

Werfel said the IRS would continue checking on tax-exempt groups to ensure they were following the law.