and whatnot. have you -- have you seen specific instances of that happening? i mean, presumably you have a lot more clarity on what turns a panel as it deliberates. you are not afforded the opportunity to go back and scrutinized. what i am suggesting is that after 10 years of war, there is the potential that we should examine whether we have become a little bit too forgiving, and not just of sexual harassment and sexual assault, but other forms of misconduct as well. what you're hearing me expressing is the commitment to try to gain a deeper understanding of what we are dealing with and an instinct that suggests that 10 years of war might be a factor. the answer is we continue to look at every option.

we have to. every option is on the table. thank you very much. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013] >> next, the house ways and means committee on how the irs handle tax-exempt investigations for some conservative groups. then chuck hagel and martin sexual on stopping assaults in the military. irs commissioner told congress that foolish mistakes were made by the tax agency's, but they were not motivated by partisanship. he was referring to revelations that conservative groups were targeted filing for non-profits that s.

a regulator testifying at the same hearing said he did not find evidence that irs decisions were motivated by politics. this is 3 and a half hours. >> the committee of ways and means will come to order. on may 10, the director of exempt organizations for the irs division that oversees tax- exempt groups finally acknowledge that the agency had been targeting to inserting -- conservative leaning political organization. that the irsd

used inappropriate criteria to identify organizations applying for tax-exempt status. the report also confirmed that this abuse of power was as far back as 2010. this goes against the very principles of free speech and liberty on which this country was founded. -- let'snt disregard establish the fact that we know. based on the report, for 18 months beginning in spring of 2010, irs employees in the agency determination unit employed keywords such as the party, a patriot, and -- tea 912., patriot, and employees later expanded their search to include groups

concerned about government spending, debt, taxes, the constitution, the bill of rights, or trying to make america a better place to live. let me repeat that. people were targeted for trying to make america a better place to live. these americans had their applications delayed for nearly three years and 98 applicants were asked for inappropriate information such as donor lists and if family members plan to run for political office. other the delay, applications with names like progress and progressive were approved in just a matter of months. the headline from usa today really says it all. groups put on hold. some of those cases should have

been set aside for cases related to political activity. no such review was done. i entered the news report into the record. we learned that senior irs officials learned of this activity to years ago in june of 2011 and others knew in may of 2012 year ago. by the an investigation committee, the irs never told the american people about this simple truth. we were repeatedly told that no such targeting was happening. we know the truth, or at least some of it. we know that these revelations are just a tip of the iceberg. it would be a mistake to treat this as one scandal. it might be the one generated headlines, but i count violations of taxpayer rights,

treated in fact -- and partially by the government. a clear intimidation tactic. in june of 2010, the targeting of conservative groups began. the i.r.s. started to threaten donors that they were liable for certain taxes. in march of 2012 the huffington post published the donor list for organization of marriage. unlikely the final transition it was announced that i.r.s. leaked confidential applications from conservative groups. mr. miller, with all due respect this abuse cannot be fixed with one or two resignations. the reality is this is not a personnel problem.

this is a problem of the i.r.s. being too large, too powerful, too intrusive, and too abusive of honest, hard working taxpayers. there isn't a person that i come into contact at home or anyone in this country that does not fear the i.r.s. they fear getting something wrong on their tax filing. they fear the i.r.s.'s ability to audit them and wreak havoc in their lives. they are all -- only trying to make their lives better and make america better. atry group in america is risk. i'm sure your aware of the saying the power to tax is the power to destroy. under this administration, the i.r.s. has abused its power to tax and has destroyed what little faith the american

people had in getting a fair shake in washington. this will not stand. trimming benches will not save the tree when the roots are rotten. only then will the american people get a tax system that treats them fairly and honestly as they deserve. that is larger discussion it is tied to the issue before us today. how and why our tax system has gone so far off track. who started the targeting? who knew? when did they know? how high did it go? who leaked the private taxpayer information? why were the names of donors asked for and what was done with the lists before they were supposedly discarded? when did the administration know about each of these and

what was the reaction? listening to the news this appears to be the latest example of cover-ups in this administration. it seems like the truth is hidden from the american people long enough to make it through an election. the american people have a right to the truth, a government that delivers the facts good or bad. president obama promised to be different and deliver a better government, the most transparent in history. he was right. america deserves better. it is time to end the corruption at the i.r.s. and fix tax code that allows washington and the i.r.s. to pick who wins and who loses in america. i expect nothing less than the cooperation from the i.r.s. i recognize ranking member levin for his opening statement and thank for his commit to pursue this issue.

>> thank you, mr. chairman. i'm going read my opening statement. i will expand on it a bit now that i heard the opening statement of the chairman. this committee on a bipartisan basis takes seriously its oversight role and we're fully committed to ensure an i.r.s. that serves the american people fairly and efficiently. ist is now completely clear that the management and oversight of the agencies tax applications have completely failed the american people. i emphasize that. as we know from the inspector general's audit, the agency used inappropriate criteria in its review of tax exemption applications.

singling out organizations based on their names or political views rather than their actual activities. these criteria changed four times over two years with little management review or oversight. workcations for years, stopped for 13 months while one department waited to hear back from another. questions were asked that were not necessary. again, no oversight, no accountability. all of us are angry at this on behalf of the nation. we are determined to get answers to our questions about how this happened to ensure that it does not happen again. finally, throughout this time, the i.r.s. leadership has

demonstrated a disregard for the oversight role of the congress and this committee. former i.r.s. commissioner testified in front of us in march 2012 and said that "no targeting" was going on. two months later he was briefed on the i.g.'s investigation and was fully informed that indeed singling out by name had occurred on his watch. he had an obligation to return to this committee and set the record straight so did mr. miller. neither fulfilled their obligations. a little more than a week ago, lois learner was in front of our committee. she has been directly involved in this matter.

yes, she failed to disclose what she knew to this committee, choosing instead to do so at a conference two days later. this is wholly unacceptable. one of the reasons that we believe, as i stated several days ago, she should be relieved of her duties. chairman camp and i put together this hearing on a bipartisan basis to get the facts. notust seek the truth, political gain. i just want to add in that the regard, mr. camp has said listening to the nightly news this appears to be the latest example of a culture of coverups and political intimidation in this administration. it seems like the truth is

hidden from the american people just long enough to make it through an election. i totally, totally disagree. 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 not meeting obligation of trust to the american people. you're here today, mr. miller. you're here the inspector general to talk about what happened. how it happened, where it happened, who knew what, when. if instead, this hearing

essentially becomes an effort to score political points it will be a disregard of the duties of this committee. so i conclude with the sentence that we must seek the truth, not political gain. we look forward to full and forthcoming answers to our questions today. >> before the witnesses are recognized, i will first swear them in. this is the prerogative of every committee chairman, it has not been the custom here at ways and means, but there for it is not customary to have been falsely led. there's the gravity proceeding in the need to tell the full and complete truth. please raise your right hand. do you solemnly swear or affirm that the testimony you are about to give will be the truth,

the whole truth, and nothing but the truth so help you god? let the record reflect the witness is answered in the affirmative. i would like to welcomej. russell george. i think we'll wait for them to leave at this point. j. russell george has been the general inspector for the tax administration from 2002 and the current acting commissioner for the irs, steven miller. you will each have five minutes to resent your testimony with your full written testimony submitted for the record. mr. george, you're recognized for five minutes. >> chairman camp and levin. as you are aware, the

organization i am a part of the inspector general, protects the integrity of the federal tax system. this was initiated based on concerns expressed by members of congress because of taxpayer allegation that they were subject to unfair treatment by the irs. the report issued early this week issues 3 allegations. first, the irs targeted spas the groups applying for status. second, they delayed these groups applications, and third the irs request of the necessary and permission from groups they subjected to special scrutiny. all three allegations were substantiated. the irs used inappropriate criteria to target for review to party and other organizations based on their name and policy. this started in 2010 and

continued to involved. followings inappropriate criteria. let me read to you these criteria from a briefing held by the irs's exempt organizations function. the criteria included the words "tea party, patriot, or 912 project." another listing criteria was education of the public by advocacy or lobbying "make america a better place to live." there were any statements in the case file criticizing how the country is being run. criterian for these were inappropriate in that they did not focus on tax-exempt bonds and treasury regulations. 501c3 organizations may not

engage in political and campaign organizations. 501c4 can but it may not be their primary activity. political campaign prevention, action taken on behalf of or against a particular candidate running for office. although these criteria appeared in the irs documentation, they began selecting tea party and other organizations for review in early 2010. through may 2010 and may 2012, a team of specialists in cincinnati, ohio, the determinations' units selected cases for additional scrutiny. according to our findings, the first time executives from washington, d.c., became aware was june 2011 with some executives not becoming aware of the criteria until april or may of 2012.

the irs's inappropriate criteria remain in effect for approximately 18 months. after learning of it, the director of exempt organizations changed the criteria in july 2011 to remove references to organization names and policy positions. however, they changed the criteria back to target organizations with specific policy positions, but this time they did not include the tea party or other name organizations. in may 2012 dr. learning the criteria had again been changed, the exempt organizations director changed the criteria to be consistent with regulations. the organizations selected for review for political campaign intervention, 298 in all, experienced substantial delays in the processing of their

applications. the organizations included tea party organizations, patriot organizations, 912 organizations, among others. thehown on the monitor, status as of 2012 with the cases we revealed was 108 cases have been approved, 28 cases were withdrawn and 160 cases were still open. zero cases had been denied. of the cases still open, some have been in progress for over three years and crossed two election cycles without resolution. of the 108 approved, 31 were t party, 912, or patriot organizations. the irs request the necessary and permission for many political groups. 98 of 178 cases that received follow-up requests for information had unnecessary

questions. our evidence indicates that staff at the determinations' unit in cincinnati send these letters out with little or no supervisory review. theses later determined questions work and needed but not until after media accounts and questions by members of congress in march 2012. this included the names of past and future donors, listings of all issues important to the organization, and what their positions were regarding such issues and whether officers or directors have run for public office or would be in the future. months after receiving these questions, 12 of the 98 organizations either received a letter or telephone call from the irs stay in the application was approved and they no longer

needed to respond to the additional requests. the irs and form another 50 organizations as they did not need to respond to previous requests for information and they were sent there revised request for information. regarding the donor and permission received, the irs informed us that they destroyed that intermission. in closing, our audit found clear evidence that each of these three allegations were correct. was the irs using inappropriate criteria in its review of organization the plan for tax- exempt status -- yes. was the irs delaying their applications -- yes. finally, did the irs asked inappropriate and unnecessary questions of applicants -- yes. these have raised troubling questions about whether the irs has the effect of management oversight and control at least in the exempt organizations function. so the nation can be persuaded that they are doing so fairly. thank you for the opportunity to present my views and i look

forward to your questions. >> mr. miller, you are now recognized for five minutes. >> thanks for the opportunity to be here today. given considerations, we have received the notice of hearing within the last two days and the irs was unable to prepare written testimony. brief have a very statement before it take questions. wantting commissioner, i to apologize on behalf of the internal revenue service for the mistakes made and the poor service we provide it. affected organizations and the american public deserves better. partisanship or even the perception of has no place in the irs. it cannot even appear to be a consideration in determining the tax exemption of an organization. i do not believe that this

motivate the people engaged in the practices described in the treasury inspector general's report. i have reviewed the report and i believe its conclusions are consistent with that. i think what happened here is foolish mistakes were made by people trying to be more efficient in the workload selection. the listing described in the report, while intolerable, was a mistake, and not an act of partisanship. the agency is moving forward. it has learned its lesson. we have worked to correct issues in processing described in the report and give them the mets -- implemented changes to make sure this type of thing never happens again. management will take appropriate action with respect to those responsible. i would be happy to answer your questions. >> think you, mr. miller. are you still acting director? >> i am. >> were you appointed by the president? >> no, sir. >> i was designated as acting in november of 2012.

>> of i'm not mistaken, you actually hold two titles. deputy commissioner for services and enforcement? in your role as deputy commissioner, according to the irs web site, in that capacity you direct and oversee all major decisions with regards to tax-exempt and government entities division? >> is a division that reports to the tax-exempt government entities office. >> of the website is accurate. you do your report to in that position? in both positions? >> in the deputy commissioner role, i report to the commissioner, if there was one. holding both hats, i report to the deputy secretary.

>> of dock >> the treasury. -- of? >> the treasury. >> is not a violation to have all taxpayer information? >> un not sure what that means. >> it is not just the return but any taxpayer information. >> 61 03 obligates us not to disclose taxpayer information. >> were you ever made aware that a white house official in a conference call disclose the confidential tax structure of a private company? >> there probably read it in the paper, sir. >> you were made aware through news reports? >> that was a long time ago. >> did you take any steps when you learned of it? >> i do not recall. i would have to go back and look. >> you did not inform the inspector general of that, or your superiors that he

recollect? >> un not sure why would have to notify the superiors it was in the papers. i do not remember whether we made a referral or i made a referral at that time. >> according to the inspector general's audit, the targeting of conservative groups began in march 2010. when we made aware? >> i was aware of that on may 3rd, 2012. >> how were you made aware? >> i was made aware not of the targeting of the process that was described in the report. and when i asked our people to go look at the cases subsequent to the public discussion of the letters coming out. >> that would have been in your role as acting director as well as the deputy commissioner for services? >> i was deputy at that time. >> when you say you had "some

of your people, close "to would that have been? >> the senior technical adviser for tax exempt and government entities to lead a team to see what was going on in terms of who had gotten those letters. >> did you inform anyone of that action you took? technical the senior advisor to do that on march 23rd or 26, something like that. iny came back to talk to me may. subsequent to that, i'm sure ryan for the commissioner. he was aware of the letters as well. >> did you inform anyone other than the commissioner? >> up the chain at? >> i do not believe so. he had made it clear to west

they were whereupon at the time. -- they were aware of it it. >> was there a time when you became aware of the irs launching audits against conservative donors? that would have been in about may 2010. >> i do not recall the date, sir, but in that timeframe there were press accounts and individuals' coming in to talk about it. >> did you learn from the press or inquiries from congress? >> it could have been either. it came up in a meeting and then it hit the press. >> in any event, after learning of that information, what steps did you take? >> investigated what happened. we took a look. atimately, we issued directive that said the walk in the area -- the law was not that clear and we had not been

in force in that area substantially since i believe 1982 or something like that that about gift taxes and c4 organizations. let's not in force right now. let's talk about it and we will put out guidance and it will be pushed back. i thought that was the fair thing to do. >> when you say you investigated, who would that have been? >> i don't remember, but we took a look at the issue and how it happened. you're looking at it as well, your committee. >> when you say "week," to do you mean? >> the irs. >> what department? >> i do not know if it was an exempt organization.

on not going to be able to answer with particularities. >> were you ever made aware of the confidential 2008 donor list for the conservative tax- exempt organization? >> i was. >> when was that? >> i would have to get back to you on that. >> how did you find out? >> i don't remember. it might have been the press or someone coming to us with a congressional complaint. >> when he learned of that, did you take any steps? >> i believe we made a referral. >> you are not sure when the referral was made? >> would have been in the same timeframe. "shortly after you became aware of it? >> it would have been. >> were you ever made aware of the leak of confidential applications for the tax-exempt status of conservative groups pro public cut? again, i cannot give you a perfect time line. the approximate time it became public is when i was aware.

you would know about from the time one. >> did you inform anyone else of that? >> i believe in the service informed me at the time, yes. >> in each of these incidents, did you ever come forward to inform the congress? >> i do not believe so unless it came up in conversation or testimony. can i suggest something? on those two just to let you know, this to be the national organization -- those two situations, we went and, i think, they can speak to what they had found, but we made the referrals and, i believe, what they found was that those disclosures were inadvertent and that there had been disciplined in one of those cases, for someone not following procedures, but i will obviously let mr. george speak

to that. >> never informed the congress of any of these things that you are aware of? >> they were in the press, sir. >> all right. well, obviously, the irs statement says the role of the irs is to help american taxpayers understand and meet their tax responsibilities and enforce the law with integrity and fairness to all. clearly, your mission is not being met. mr. george, i guess i would just have one last question for mr. miller. when asked the truth, you know the truth and you have the legal responsibility to inform others of the truth, but you do not share it, what is that called? >> i always answer questions truthfully, mr. kemp. -- mr. camp. all right.

madeeorge, were you ever aware of the alleged disclosure of the confidential tax structure of a private company? >> we have been alerted. >> you're personally made aware? >> in specific for in general? >> you specifically. into a specific company or general? >> there was a disclosure of taxpayer information. the confidential tax structure, any information, is considered confidential. taxas particularly the structure of a private company. were you made aware of that disclosure? >> we are made where public disclosure that is protected by title 26, yes. >> are your the incident by referring to? >> i am aware of that, yes. >> when we made aware? >> i do not have the exact date, sir. >> how we made aware? >> i believe it cantor the office of investigations or it

could have been through a hot line. i'm not completely certain. >> you do not believe you learned of that from an irs employee? the generally do not below commissioner or deputy commissioner level interact with the others. "that would include the commissioner. no other employees informed you of disinformation? >> it would have come from one of my principal deputies in may had received information from someone, not that the commissioner level, but maybe at the deputy level. >> your not aware and you cannot tell us for sure? >> at this time, i cannot. a we made aware of confidential donor list of the national organization for marriage? >> i have read in the newspaper the allegations to that effect,

but i have to make it clear, chairman, the at the internal revenue code has very rules as to the way that confidential tax parents' permission is revealed. toave to be very careful as how i respond and whether i can even acknowledge publicly some of these revelations you are inquiring about. >> did you respond to that information? >> a review has been taken. >> is an ongoing? >> i would have to confer with my colleagues if you give me a moment. >> is an ongoing? it is not. >> there are daily reports of irs misconduct and it's clear more work needs to be done. is your office continuing to investigate the allegation

>> yes, we are. >> mr. levin is recognized. >> thank you very much. i want to go on to other things. the incident that mr. kemp has been talking about, the disclosure, what years were those? mr. miller? >> i apologize for not having the date at hand, but it has been a couple of years now, i believe. >> the was the commissioner at that time? >> to appointed him? >> mr. bush. >> ok, let me start with two key issues. there's no question about the inappropriate criteria. i wanted to focus on that.

let me first ask the right up front, if i may, mr. russell, during the course of your audit, were you allowed access to anyone requested to interview? >> to my knowledge we were not denied access to anyone. interview can employees in cincinnati and both d.c.? >> yes, we did. >> they stated they were not influenced by any individual organization outside the irs. is that correct? >> that the information we received. >> did you find any motivation and the tax-exempt notification? >> we did not. >> during your review of this

matter coming you indicated when you had started, did you find any evidence of political motivation on the part of employees involved in processing the applications of this this year? >> we did not, sir. >> if we could put on the organizational chart, is that possible? is someone going to do that? it is called high-level organizational report. mr. miller, the inappropriate criteria that singled out applications for tax exempt status was developed by what office? >> it would be developed by an office that is actually not on here but is under lois' employees where are those

located? >> for the most are located in cincinnati. >> they found the director of exempt organizations on this chart, which is not on the screen yet, but this is as her position became aware of the inappropriate criteria. she ordered the criteria changed and it was changed in 2011 to no longer refer by name, "tea party or patriot." is that correct? >> yes. >> as then deputy, were you aware of the criteria in june- july 2011? >> i was not.

>> in january 2012, the criteria was changed again to "organizations involved in limiting expanding government, educating on the constitution and bill of rights, and social economic reform movements." the ig report indicates this was made in the cincinnati determination office without executive approval. mr. george, is that correct? >> yes, sir. >> it was changed without executive approval? >> that's our understanding. >> the may 2012 criteria today states organizations with an indicator of significant intervention. the ig report states that it more clearly focuses on the activities permitted under the treasury regulations.

is that correct? >> that is correct. >> i have no further questions. >> i yield to the chairman of the oversight subcommittee. >> thank you, mr. chairman. on march 22nd, 2012, the subcommittee held a hearing in this room and i specifically asked the then commissioner shall men about reports that they have been targeting tea party and other conservative groups and i would like to play the video of his response. could we have the video? [video clip] >> this is the kind of back- and-forth that happens when people apply for 501c4. >> this was march 22nd, 2012. knowing what you know now, was his response truthful?

>> it was incorrect, but whether it was untruthful or not -- when you talked about targeting, we should really get into this, because when you talked about targeting it is a pejorative term. and not defending the list. what hd heapne, and byne like to go through the application process, is that someone saw a tea party cases come through and there were the knowledge and that they would be engaging in politics. this is the timeframe in 2010 when citizens united was out and there is a lot to discussion in the system about the uses of c4. there was discussion about centralizing and grouping these cases. the way they centralized it is troublesome. they are not targeting people in that sense. what they're doing is making

sure that they are putting them in -- >> let me ask you this. you said "incorrect but not been truthful." was he not informed of this process? >> to my knowledge, i do not think he knew at the time. you set the technical adviser to cincinnati. there were press reports and there were notices from chairman camp and myself dating back to 2011. and you are saying he was not informed of this? >> let's divide this into a couple of pieces here. there was the processing of the cases. we were aware there were issues in the processing of the cases. we were not aware of the lists. i asked in late march, after the hearing, for us to go in and take a look. i thought there were problems and they came back with both

pieces. there were problems with the cases and the listings. >> were given a briefing on the improper selection based on political belief and everything was, i think, may 3rd, 2012. is that correct? so i we characterize your question. >> i was informed of what we had been informed of to date. tigda was in there and there was a use of the list. us,list seems obnoxious to as it does to you, and we are going to take action. that was in may. >> you say it was not targeting, but was only one side of the political spectrum singled out? >> look. they get 70,000 applications in 4150-200 people to do. -- for 150-200 to do. they triage them into a mix to

get technically fixed up and some go for substantial of questioning. politics is an area where we always ask more questions. it's our obligation under a lot to do so. as mr. george indicated, a c3 cannot and a c4 can do some. >> we have received letters describing process and we're trying to get to the heart of this letter. you were told tax-exempt organizations were being targeted they contained terms like tea party, we the people, and so forth. knowing these practices can be sent letters to congress of knowledge. thesevestigation of allegations but consistently omitted that such discriminatory practices, that

are allegedly, are in fact taking place. why did you mislead congress and the american people on this? >> i answered the questions as they were asked. >> why did you not tell us about the terms? >> the time has expired. >> mr. george, you are the inspector general at the treasury? >> correct. there are three inspector general's in the department of the treasury. i am exclusively for the irs and the system of tax administration. then- your appointed by president bush. >> correct. >> you were appointed by then- president bush. >> your report was no outside groups were involved. >> as of now.

>> was the previous commissioner? >> douglas schillman. appointed by then-president bush? >> correct. >> he was commissioner when these outrageous activities going on, which both sides of the aisle recognize as outrageous. prior to commissioner shulman, the last political head or political appointee of the irs was mr. mark everson, is that correct? he was also appointed by president george w. bush. it is believed that groups like

the naacp, progressive churches and environmental groups were targeted by the irs. mr. miller, while you were appointed acting commissioner at the irs, you are a career civil servant. is that not the case? >> yes. >> you are not a political appointee. >> i am not. >> what i'm trying to basically the blanc is the notion or idea -- tryin gto debunk are the nonfactual statements by chair camp to link these candles to the white house or solely targeting of conservative groups -- link these scandals to white house. i asked the questions of ms.

lerner last week as to whether or not the irs was investigating political not for profit organizations. she got involved after she was asked a question at a press event and that is simply understandable. what i also think is important, at least at this point in time, i would hope is in a bipartisan context because we want to find the facts. we want to find out who knew what and when and what steps were or were not taken. iwas just as outraged when was learned when she was asked the question why she did not tell congress. i asked her and she did not answer. we are outraged. i did not believe any political

organization should be targeted because of their thoughts. that's on both sides of the spectrum. i would dare say during the prior administration by mr. shulman and mr. everson that there was targeting a political entities as well. it has to end on both sides. the president has been very forthright and very strongly condemning that type of action. the entire administration has as has mr. lew. let's get the answers. ask the questions, get the facts, and then we will draw our own conclusions. i yield back the balance. >> mr. green. >> thank you for getting to the truth in this scandal. let's look at one of the tea

party groups in my community. the founder, a small businesswoman, applied for tax exempt status in july 2010. in february, 2012 she received a letter with numerous follow- up questions that were intrusive but she answered every them and return them well within the two week time frame. three years to the day that she first filed, her application is still pending. let's look at what happened to her in the three years since she replied. beginning in december 2010, she was visited by the fbi domestic terrorism unit. her personal and business returns were both are edited by the irs -- both audited. she received four inquiries and business received unsolicited audits, and questioned audits by osha and the atf twice. this is a citizen and a small

business woman who had never been audited by the irs or any of these agencies until she applied to you for tax-exempt status. there's a broader question here -- is this still america? is this government so drunk on power that it would turn its full force, its full might to harass, intimidate, threaten an average american who only wants her voice and their voices heard? mr. miller, who in the irs is responsible for targeting conservative organizations? >> i cannot speak to a given case. we talked about 6103. >> this is not just one case. you know we are talking about

the whole list the inspector general put up there. who was responsible for targeting these groups? >> again, i take exception to the context of targeting because it is a loaded term. the listing was done -- >> this is not a listing. you created a beyond the lookout list. it is not a centralized or mandated listing. lookout" "be on the list and the inspector general already verified. who was responsible for targeting these conservative organizations? >> again. if you read the report, it answers your questions. >> there are no names in the inspector general's report. so i'm asking you not only of the acting commissioner bud the deputy commissioner of this organization who is responsible for targeting these individuals?

>> i do not have names for you. i'm willing to try to find thatt outfindigta = = finding out. tigta is looking into it. ." >> you have no knowledge of who is behind this? >> ipad knowledge what tigta has put out as a fact. ofcan you of knowledge none this shared or given to many other federal agency? >> that would be a violation of law and i do not believe it happened. >> you can assure us there was no sharing of this information? >> tigta will look into it, but i would be shocked. aref your earlier answers any indication, we will all be reading about it in the media. we are to be getting the truth from you. >> mr. rangel is recognized. what are all out raged by

has occurred under the bush as well as obama appointees. >> there were no obama appointees. i apologize. i'm not sure -- water talking about? >> once it was discovered that people were put on a book out list, that type of thing, regardless of what you call it, were the people responsible in the treasury department appointed by president bush as well as continuing service under president obama? it is basically the question you have already been asked. >> at the irs, the commissioner was appointed under the bush administration. at the treasury, those

individuals would be obama appointees. >> the outrage is not democrat and republican. the president has indicated outrage. you have indicated outrage. i would assume we are on the same side in trying to determine how this happened, who was responsible, how far does the cancer go, how quickly can we cut it out? so that tens of thousands of irs employees have this stigma of corruption taken away from them that you, mr. miller, a career employee, does not have to explain to your kids and friends that you are not involved in a scandal, that all

the people who serve the government -- it's too late for the congress, but it's not too to tryr the government to get its reputation cleaned up for america. i don't want to see anchor, but i certainly hope before this hearing is over that you share with us how you intend to have your voice is heard so that america would know that whether this was criminal activity or a mistake, i don't know, but we have to get on with it. under 501c4, you can make political donations and without saying how much and who made the donation, right? >> under 501c4 organizations, donors and their contributions are not public intermission, is that is the question.

>> you can makeolital contributions? >> beacon make a contribution to a 501c4 for political purposes. >> and can do that as long as it did not the primary purpose. it can do that for 49% of whenever the activities are without technically violating the law. is that correct? >> the text -- the test is whether your primary activity is social welfare in nature. >> you could be 49% political. >> we have never been that precise. >> you could say that. after the supreme court decision in citizens union -- citizens united, whenever. the application for this type of corporation increased dramatically, did it not? >> they did double. >> he did not have to be a political expert to realize

there was an increase in political donations given to 501c4's. >> if you look at the reporting on forms 990 on political activities, it will show an explosion of money there as well. clucks the law is written for abuse in terms of political life primarily social service work. is that not correct? >> it something we have to look at correctly closely. >> you should of been looking at it before the scandal. it's wrong to abuse the tax system. tax reform, out for does it not? the outrage it should still be there, is that not correct?

>> the outrage as it to -- >> the abuse? >> yes. >> this has been abused by government employees, not by all but some. our job is to find out who they are. all i want to get from you, mr. theer and mr. george, is reputation that are on the line. it's the congress involved in this. people are losing confidence in our government and i hope that you feel the same in finding out how this could happen and help us to restore the confidence that americans should have in their government. i yield the balance of my time.

>> mr. ryan is recognized for five minutes. >> mr. miller, we have now established and you have the knowledge that you were briefed on may 3rd that there was improper criteria used for tax- exempt applications. you were told that tax-exempt applications were being targeted the they contained terms like tea party, we the people, bill of rights, and those criticizing how the country was run. after that, you sent letters to congress of knowledge in our investigation of the allegations but omitted that discriminatory practices were allegedly taking place. this briefing was made in 2012. then, you came here to a subcommittee hearing on this issue on july 25th where we were investigating the discriminatory filters to hold up the 501c4 applications of

groups, specifically told that these groups fell like they were being harassed and you're asked this question. "what kind of letter or action is taking place at this time that you are aware of?"knowing full well these were used to target certain groups you said, "i am aware that some 200501c4 applications fell into the category. we did a group these organizations together to ensure consistency, to ensure quality. we continue to work those cases." thiswas your answer to committee after you had received a briefing that the was occurring, which you already of knowledge was outrageous. the law governing how he must respond to congressional inquiries requires you to tell not only the truth but the whole truth. you cannot conceal or cover-up by any trick, scheme, or device a material fact.

how is that not misleading the committee? unity terms tea party and patriots were being used. you just admitted they were outrageous, yet when you're asked about it after you were briefed, that was the answer you gave us? how can we not conclude that you misled this committee? >> there were a lot of questions there. >> its one. how can we conclude you did not mislead the committee? >> i stand by my answer is then and i stand by it now. that implies political motivation. there is a discussion going on. there is no political motivation. >> let me ask you again. >> may i answer the question? >> let me give you some clarity. hear the question you are asked. what kind of action is being taken place at this time that you are aware of? >> the discussion of the context of that, and again we need to go back to look at the context. there with a listing and the

treatment of cases. mine understanding is that the treatment of the cases, because all the letters that they were talking about, i'm hearing that people are complaining about letters. we have dealt with them as have been explained and we went to them to talk about the ways they could answer it and we delta, i think, fairly and successfully with this issue. >> union of our concern with the targeting in the allegations reported to the committee. we brought you here to talk about it. -- you knew of our concern. you said in your answer that you were aware of some that fell into the category to ensure consistency and quality. you did not miss -- you did not mention targeting based on of buzz words like tea party, patriots, or 912. do you not think that is a very

incomplete answer. >> i answer the question truthfully. >> you give us a list the other day of approved tax exempt applications for advocacy organizations through may 2009. we do not know how long these applications sat or how long it took to process them. just from mr. rangel's question in earlier testimony, the irs was doing this because they're concerned about political actions by nonprofits. some of these approved are chattanooga organize for action, aggressive leadership and progress of usa.

if you were concerned about political activity, did you have targeting lists that contain less like "progressive" for "organized" in their name? >> let's take a step back and i walk you through the process. we centralize cases based on political activity. we take a shortcut on some of it, but we collect, to be blunt, more than a tea party cases. mr. george's own report -- >> there were no progressive buzz words used. >> we collected more people because any time it was seen as -- >> thank you mr. chairman. congress cannot seem to agree whether the sun is shining these days but this issue has brought together in the way unlike anything we have seen here.

we all agree these applications were poorly handled and that the irs stiffed on this at best. public service ought to be held at a higher standard. the irs is an easy target and everybody wants to get a pitch for when the taxman comes. isn our 24 hour media cycle getting hundreds of different? there is a difference between stupid mistakes and militias mistakes. malicious. examiners took a shortcut which they clearly regret, deeply regret. the report says, in black and white on page 7, the determination of employees stated that they considered the tea party criteria as a shorthand term for all potential political pieces.

these applications were singled out for their names and policy positions, not for the activities, which they should have been singled out for. some of these political groups are delaying getting their taxpayer status. that is wrong. as much as i dislike the right i think it is and wrong to be on evenhanded in government application. the inspector general report said no one acted out of malice or political motivation. i want to know if you still stand by that. >> we have no evidence to contradict that assertion. >> we want to root out the causes of this. it all started right after citizens united. people saw the door open, we could get in and to political advertising. we will not have to report anybody's name. applications for secret money,

political organizations, increased by four full after that supreme court. this small group of people in the cincinnati office grew up. screwed up nobody is quite to deny that. they simply screwed up. this committee messed up by not giving any clear criteria for what a real charitable organization is. the law is not clear and people have to make judgments. that means we have to collect a lot of data to try to figure out what people are actually up to. mr. miller, there is clearly a problem in our current way of determining what a primary purpose of an organization is. i want you to think about what i am talking about. as i watched this conversation shift from what is right and wrong to the irs's problem. we could have appealed that

along with obamacare yesterday. it is also about republican storyline in this agenda. we need to find some truth here. i have heard members of this committee now talk about it. the irs cannot access your medical files, is that true? >> correct. >> they cannot find out your private medical information. >> that is correct. >> their job in obamacare is to simply collect paid financial information on which a determination is made on whether somebody can get a subsidy for their premium. is that correct? >> it is not a fascist takeover of what is going on here of the health-care system. let us not forget that the

virus is one of the hardest and most hated jobs and there are thousands -- the irs is one of the hardest and most heated jobs and there are thousands of hard-working americans who work day to run the system. a couple of people make a problem. that does not damage the organization, in my view. you get rid of the people who make the problem. i would like to hear, mr. miller, what he believed would make it so that this would not have happened before? >> there are two things, sir. i appreciate the kind words. we are a hard-working and honest group, frankly.

that seems to be forgotten in all of this. with respect to political activity, it would be a wonderful thing to get better rules, to get more clear rules. in terms of our ability to get to this work, it would be good to have a little budget that would allow us to get more than the number of people we have to do 70,000 applications and do our job in looking at whether or not an organization is tax exempt. >> time is expired. >> thank you, mr. chairman. mr. miller, do you know the director of the irs is presented as the position of lois lerner? were you aware she did not acknowledge the investigation at the time? >> i did not know that. >> were you aware that the irs was preparing a statement to put out during this time last week? >> yes. i did not know whether we knew it at that time not. >> what did ms. lerner know when she testified before the

committee? what i do not know that. >> did you know that ms. lerner was going to appear last friday, may 10, on a panel called "news from the irs and treasury of the american far association conference." >> i did not know the topic. >> did you or any of your support and its director to make any of the public statements acknowledging that targeting of groups? >> it was a prepared q&a. >> do you know the member of the irs is advisory council on tax amenities? >> i do. >> was she questioning mr. lerner about targeting conservative groups. advance? planned in >> i believe we talked about that. contact,u have any either by e-mail, phone, or in person, with the white house regarding the targeting of tax- exempt groups from 2010 to today? >> i did not. >> how about the department of

treasury? >> i would have had some conversations with treasury in my role as acting commissioner because i reported to them. on this topic it would have been -- i have to look back. i believe that conversation would have taken place. >> how about president barack obama's reelection campaign? >> no. >> did you have any contact with organizing for action? >> no. >> did you have any contact with anyone associated with pro-publica? >> when this whole thing came out i think the irs might have talked to them. >> something that would probably clarify your involvement in this would be if you submitted to this committee

your e-mails, phone records, and 2010 schedule until you resigned. >> i will see what is appropriate. >> we could subpoena those records. >> i will have to talk to my agency. you are asking me and we will talk. >> i would suggest that we work hard to get those records. i would also encourage you to contact your colleagues to testify before this committee at their earliest possible time. i just have one last question, mr. miller. you really are not taking any acknowledgment that you knew anything or did anything wrong. you said that numerous times on the record today, you did nothing wrong. i find it hard to believe -- why are you resigning? >> i never said i didn't do anything wrong.

what i said is contained in the questions. i resigned because as the acting commissioner what happens in the irs, whether i was personally involved or not, stopped at my desk. i should be held accountable for what happens. whether i am personally involved or not -- those are very different questions. willinge you would be to submit all of your e-mail, phone records, any personal meetings you have had in the past four years, i think that would really keep your reputation in good standing with this committee and the american people. aboutwill have to talk that. i am not saying no.

>> thank you, mr. miller. >> mr. mcneal is recognized. >> thank you. your referenced an article from "usa today." there were democratic leaning organizations that were the focus of the irs as well. >> without objection. >> thank you. when i woke up this morning i went to my phone and i was curious about what the word of the day would be. you have rejected the term "targeted." >> i think it is a term that implies something that did not exist. >> by sheer irony this morning, they used the term "litmus test," which it defined as a single factor as an attitude or event that is decisive in choosing these organizations. would you say this was a litmus

test? >> if it was a litmus test it was political activity. >> i have one of my constituents who contacted my office yesterday, outlining a pretty egregious situation. he is treasurer of a small nonprofit in massachusetts, a volunteer organization. their association was told by the irs employees that they were not required to file a 49- 90. this past november they received a letter saying their tax-exempt status was revoked without the proper forms without any defense notice. the irs told and they no longer needed to file the forms but instead of notifying them first of the problem and allowing to fix it, especially in light of the id by steeper given, the irs went ahead and revoked the tax-exempt status.

they now have to reapply and pay. this is a nonprofit that has been around for 60 years. a taxpayer should not be intimidated by the irs. there is broad agreement by that. notamerican people should be afraid if the irs. there is broad agreement on that today. we should rely on the advice they apply. i hope we will have the opportunity to work in this specific and central issue. i want to turn to the topic of recent focus by the irs. that is obviously the question today, the allegation that there are political views that have cost them to be that focused. we all know that is outrageous and acceptable and a thorough review will get us to the bottom of this to ensure that never happens again. let us not forget something this morning, even with the egregious actions that have been acknowledged by the irs

there is still an underlying problem here, and that is 501(c)(4) being engaged with politics. the irs was flooded with applications seeking 501(c)(4) status. why is that? it is in large part because super pacs must disclose their donors. we have many disagreements on this committee between this and the parties. we should be able to agree on that whole notion of disclosure. the case that unleashed a torrent of money in public life was in 1976, which the court held that money was enabled in speech. "the suggestion -- be the bestsaid to of disinfectants. electric light,the most efficient policeman." as part of our scrutiny as

think we all ought to be able to agree based on this problem here today that the simple act of transparency and disclosure would alleviate much of what has happened here. becauseen't this rest they wanted to join the sisters of mercy in common cause. it was not to hide the donors. claude i am hopeful we can get to the bottom of this. let me ask you this, has anyone been disciplined directly related to this development review approval and use of inappropriate criteria? and have any corrective actions and ticket is to ensure this does not happen again?

>> the answer to that is yes in may when i was told this i asked the management there to reassign an individual who had been involved in these letters that were objection. i also was aware that -- as i mentioned in my statement now that they are out with the facts will be able to look again. i should not just because -- i have to be careful here. the oral accounts may not have been involved so what was done in lieu of that was all the managers in that group were brought in and walked through the new processes and explained that this was no way to behave at the irs. in terms of the future, the listing cannot be done and cannot be changed. >> thank you. >> thank you, mr. chairman.

organization10 an called liberty township key party in ohio applied for tax- exempt status. there is no resolution to their application. they received 35 questions that i have in front of me in march 2011. there were 94 questions when you look at all of these of questions. copies of all activity on facebook and twitter, estimates of all past and present

employees, whether a past or present employee or their family members plans to run for office in the future. i would like to submit a copy of the article from yesterday that references this. in the article, and i quote a board member from the liberty township party. "we are an educational staff. we cannot endorse candidates, we do not man phone banks. we do not do any kind of political activities." >> without objection, the article to be placed in the record. >> question 26 of the questionnaire to the tea party group is as follows, "provide details regarding your relationship with justin thomas," an american citizen in the audience today who does not know why he was question no. 26. the dispatch article goes on to say he was shocked when he found out that the irs is asking questions about him of a group that he barely knew. he was involved in a cincinnati tea party and served as a spokesman.

the obvious question that comes to mind are why am i being targeted amongst all of the others? where does this information go? does it get shared with other government agencies? do i get an audit? is it against my business? all of those things go through your mind. he does not know why his name was question no. 26 for an organization who still hasn't received approval since january 2010. the article goes on to say the democratic gov. ted strickland, a former governor of ohio, filed for tax-exempt status in august 2011. monthsre approved nine later. mr. miller, another organization in ohio, the ohio liberty coalition.

this is their documents in response to irs request. this is only part of it. all of these documents were not enough for the irs to approve their application. in fact they applied in june 2010. they finally received approval in december 2012. one month after the november election. another young lady i met in the group indicated her group had a book club and the irs listed all the books they had read and a book report from the group. you cannot make this stuff up. this is unbelievable. i do not know how you can defend any of this and i do not how you can say this is

not political when the liberal got a tax-exempt status and three did not mention for over two years. who was mr. lerner's boss in 2011? >> i believe it would have been -- >> ingram? >> another gentleman. >> he has since submitted his resignation? so. believe >> when she did today? >> she works in the affordable care act? >> who approved her to that position? >> i approved that position. >> why would you move her to a position which was in charge of the extent division or as station, which certainly has had some controversy over the last couple of years? what she was an approved single

certain -- and approved civil certification -- an approved civil servant. civilshe was a superb servant. we did horrible customer service. i will admit that. whether it was politically motivated or not is a different question. individual.ted an >> time is expired. >> thank you for your testimony. something off with you just said. wereid foolish mistakes made. i think the president said it better, "the handling of those tax applications at the irs was outrageous and intolerable." no excuse. as much as we know that the folks at the irs have a thankless job because they have

to go and tell their fellow americans that they may be audited, they do this work understaffed, we have to maintain confidence in the system. you are right, it was a foolish mistake. the president is even more correct in that it is outrageous and intolerable. let me focus on something you said. when you're asked if there was any finding or evidence of political motivation you said no. >> that is correct. >> would find is a situation -- what we find is a situation where inexcusable activity took place. i think it is unfortunate for those who are in positions of authority. the book have to stop somewhere.

that cannot diminish the work that has been done by anyone in the irs. i hope you understand it you are here today talking to us because we need to get to the bottom of this. we need to clean up and clear up some can go back to the business of making sure people respect the fact that we have a voluntary system of paying taxes. let me ask the question of mr. george. indicated,ort you that "there appeared to be some

confusion by the determination cnet specialist and applicants on one activities are allowed by internal revenue code or by 501(c)(4) organizations. we believe this could be due to the lack of specific guidance primary activity a 501(c)(4) organization. they should have social welfare as the primary activity of their mission. however, the regulations do not define how to measure whether social welfare is an organization primary activity. the question, could some of these delays have been avoided if there were clear guidance on sex 501(c)(4) organizations -- on section 501(c)(4) organizations?

>> the direct answer is yes. i should note that the determination to it did seek clarity from washington headquarters and it took months before they received a response. >> that is a great way to leave it to mr. miller. what we have been saying for quite some time, many of us, is that there is not clarity in what is social welfare. you have many see for organizations, these non-profit organizations, who are trying to do good work. they are being painted by some of these organizations doing nothing more than political activity. the supreme court gave the

license to use a nonprofit status to do politics. is the law clear in your mind on what is political campaign activity? >> it is very difficult, sir. >> can you distinguish between sections 501(c)(4) and a section 527 political organization? >> that is difficult. presumably the level of political activity and expenditures needs to be less in the 501(c)(4) area. >> let me suggest to you to go back in your opportunity with fellow employees at the irs and mr. george your capacity as inspector general, thank you for your service, to please communicate that you need to give us your sense of what is the best guidance. we do not have this proliferation of organizations that are abusing the nonprofit status at taxpayer expense so that we will not run into this

situation again and the american people can have confidence in their system and government. i yield back. >>mr. reichardt is recognized. >> thank you. i have about 15 minutes to question me but i only have five. i am disappointed. you did not even know who investigated the case but he said it was investigated. i am puzzled by that. you are not instilling a lot of confidence in this panel and the people across this country. i want to go back to your version of the word "target" or "targeted." he said there was no carpeting because there was no intent. would you not agree that certain groups were treated differently because of their name or policy position? >> i believe --

wherthey treated differently? that is the question. >> no. >> no one was treated differently? >> may i answer? i would like to be broader than a yes or no. my understanding is that the cases that went into this queue is that it included elements for a political spectrum. that of the 300 cases that were looked at by the treasury

inspector general 70 of the 300 had "tea party" in the name. >> i am going to take my time back. i am not going to be delayed him. your answer was no one was treated differently. to take back to mr. ryan's question, you knew the groups with the term "tea party" had automatically been suggested to extra scrutiny. you would acknowledge your investigation as to whether groups were being treated differently. didn't this committee have the right to know? >> i added all questions truthfully. >> didn't this committee have the right to know that groups were being treated differently? you had this group of 200 or 300 -- did not this committee have the right to know. >> i answered all of the questions i asked. >> your answer is a non-answer once again. it is an easy question.

do you not think the congress has the right to know all the information? does this committee have the right to know the information that you knew it? yes or no? you testified before this committee. mr. miller, you testified before this committee and you did not provide the information. you did not share the information you need. my question is do not believe -- this is the united states congress that you are accountable to which is accountable to the people and american citizens across this country -- do you not believe that it is your job to provide us with the information that knew so that as you said the people of this country can properly served honestly? you are a law enforcement agency.

i was a cop for 33 years. you raise your right hand today. did this committee have the right to know what you knew? yes or no. >> i answered all questions truthfully. i will also tell you -- >> i am going to mr. george if you are not going to cooperate with me. you have been not cooperating with us. mr. george, we heard in the early draft of your report indicate you are unable to determine who cost the irs to target groups based on their political beliefs. you are the commissioner, who is responsible? >> i do not have that name. >> why not? have asked anybody? >> yes. >> who did you ask? >> i did not have that name.

>> it is the gentleman from washington state's time. >> who did you ask? >> i asked the senior technical adviser. >> what was their name? >> nancy. >> what did nancy tell you? who is responsible? >> i do not remember. >> you do not remember again? >> time has expired. the committee will recess for 15 minutes. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013] the >> the committee will come to order, if everyone will take their seats. recognized for five minutes. >> what happened here is inexcusable. for those of us who strongly disagree with the tea party on many issues allow it to be as wrong as it wants to become a

we impair our democracy. many charges have been made here this morning. under title 5 section two, you have a statutory responsibility as inspector general to prevent and detect fraud and abuse in the programs and operations of the irs, do you not? >> correct. >> using the extensive powers to have as inspector general, you have found any evidence of corruption at the irs? >> not at this time. >> do you feel like our tax system is rotten at the core? >> a definitely not. statutory powers in fulfilling your responsibility,

do you determine the irs picks who wins and loses in america? >> i do not believe that is the case. statements the mermaid in inflammatory charges of the beginning of this hearing, it's obvious they have no basis in fact, at least and the fact that has been demonstrated this morning. in addressing and correcting one wrong, we need to not have other wrongs, such as encouraging a proliferation of secret money, not just the proliferation and pollution, but that it be taxed subsidized secret corporate money, that we not permit those who have a fundamental disagreement with the progressive tax system using this incident as a basis for shifting even more of the burden of financing our defense and our essential government services on

to working people, that we not permit those who have an agenda who has now voted 37 times to try to undermine the implementation of the health care act so that the crisis has ended for families across this country, that's what is at stake here. that is what has been discussed here. it is not based on any fact associated with this investigation to date, as indicated by the republican appointed inspector general, whose job it was to determine whether any of these charges had merit. let me move to an area where i disagree with some of my democratic colleagues in their comments. i do not believe there is any lack of clarity in the statute here. the statute that is in effect has been in effect for decades.

the citizens for responsibility and ethics in washington has pointed out in a petition that you are to be denied this status if you are not exclusively engaged in social welfare as party to the statute. the statute they adopted a 30-40 years ago has adopted different language. i ended asking for a clear reading of the statute. in place today so that there should be a denial of tax- exempt status to any group that is not exclusively engaged in social welfare operations.

was there any indiscretion involved in this operation? >> those in the policy. from the department of the -- sury >> the clear wording of the statute, we would not be having to deal today with selective enforcement. we would not have any problems with the enforcement in this area out all and i hope that petition is honored and responded to promptly as i believe you have to build your responsibilities as inspector general. thank you for your testimony.

thank you for stepping aside. >> the time has expired. timet's not waste a lot of parsing on this, but you admit that you spoke with ms. lerner about the questions beforehand. can you tell us more about that conversation? >> tigta report was finalized and we have responded in writing and everything was done, did it make sense for us to start talking about it in public? >> can you walk me through the logic animated and that time were you thought it would be a good idea to make a public disclosure to the american bar

association rather than following up on your duty to disclose that in the house? what other experiences did you have when you're talking about this scheme to have the planted question at the aba? >> un not sure what your asking. >> what is your recollection of that conversation? >> we talked about what might be said and how we would do it. >> where did this take place? >> over the phone. >> what day? >> i would have to look back in my notes. >> you have notes? >> i would have to try to find it. >> why did you say you have no to do not? >> senator, please. >> do you or don't you? >> i don't know. shift gears.

you werewhile ago, engaged with mr. reichardt on the question as to whether you knew that this committee, this whole idea of the committee have the right to know this information, and then you sort of sheltered yourself in this idea that, i have always told the truth. let's set that aside. you are a lawyer. i'm a warrior. in the process of discovery, when you find subsequent informations, counsel has a duty to disclose that to the opposite party. there is no perry mason moment. there is no got shot, no litigious situation where someone comes in and says we are gesturing up with misinformation and we have not yet disclosed it to the other side. don't you read knowledge that you had a duty based on your testimony before this committee of what your actual knowledge was?

didn't you have a duty, mr. miller, to come forward and disclose it to the committee based on all of the cascading inquiries that had happened from the ways and means committee directed to you? was in possession of some facts, not all facts. we had done an internal review to see what we needed to do to get this case is moving because the processing was bad and the listing was bad. it came in at exactly the same time and they were getting the same facts. we're going to wait for them to get the facts so i did not come in and mess up their otherwise getor the facts that were not correct, sir. >> you're not concerned about the timing of the tigta conversation when you had a planted question? >> it was done. we had our written response. >> you had the actual information.

the totality of the information you're describing today was all in your possession at the time at which you were under a scheme to go into a planted question. is that right? >> i object to the word " scheme." >> an understanding. indicationown or not to manipulate. you had the information of. >> we were reaching out to the committee at the same time. >> in what form did that out -- cate? >> we call to get on the calendar. >> a call to get on the calendar? is that all you have? >> it the truth. >> i find it incredibly ironic. on the one hand, your argument today that the irs is not corrupt, but the subtext of that is you're saying, we are just incompetent. it is a perilous path way to go

down. notions sort of this that has not been satisfactorily answered. if the targeting was not targeting, if it was not based on a philosophy, how come only conservatives got snagged it? >> they did not. all walks and all persuasions were looked at. only a small percentage were looked at. >> that is in contradiction to the ig testimony. i yield. >> mr. thompson is recognized. >> i appreciate the fact we are having this hearing and i want very much to be able to get to the bottom of this. more important, i want to make sure that we are able to do all that we can to prevent this from ever happening again.

for all the same reasons that many of my colleagues on both sides of the aisle mentioned today, i want to associate myself with the outrageous and intolerable group as to where i think this ranks. what i would like to know, general george, first, in your testimony, you have a section that is titled, results of review, where you say the irs used inappropriate criteria for identifying these organizations. is that legal? >> is it legal? get a sense ofo the inappropriate criteria. >> it is not illegal, sir. enumerate the inappropriate criteria that was developed and it stayed in place

for a total of more than 18 months. is that illegal? >> not illegal but inappropriate. >> and trying to get a sense. >> contrary to treasury regulations and other policies in place by the department. >> i understand. >> substantial delays. are those illegal or inappropriate? >> inappropriate. >> and the unnecessary information, illegal or inappropriate? >> inappropriate. >> thank you, very much. you also outlined recommendations that you think are most critical and explain whether there is enough to prevent this from happening again. are they? >> the vast majority are. >> do you haveomsome eight tricg

sure that they are put in place? is there a plan to go back and review these and to continue your good work of review to ensure that your recommendations are being followed out? and that your recommendations are enough to protect the citizens of our great country? >> mr. thompson, we anticipated almost all of our entire future plant to take a look to see whether the irs has successfully implemented, as i believe you indicated, or someone did, the president indicated that he was going to ensure that the irs complied with those recommendations and that it would be our intention to follow up to guarantee that it had occurred. >> one of the responsibilities that we have is also an oversight responsibility. is there something in your recommendations and your

subsequent plans that will keep us in the loop? are we going to have to find out about this outrageous and intolerable behavior through some other means? an audit plan each year laying out which audits that we are going to engage in. werequest information and solicit ideas from conagra's, from the administration, and from anyone who has a tangible role in the system of tax administration. it is our intention to once and we will be following up in a regular basis. >> thank you, mr. miller. obligations in regards to reporting this type of behavior to congress? >> i would have to go back and take a look. i do not believe there is an

obligation. we knew they were in may, almost immediately, when we were involved. we had a meeting in may when there was an indication that it would be done this summer. our indication was that they were going to get the facts out there and there was never the intention nor believe that they had not come out in full. george, is there a need to pass specific legislation that would make it more difficult or, hopefully impossible, for this to happen again and to strengthen the requirements for reporting when something this outrageous and intolerable takes place? >> i have to preface that the secretary has delegated tax policy questions to the

assistant secretary. >> this is not a process question. >> time has expired. you can supplement that in writing, if you wish. to thek you, according inspector general's report, they started the inappropriate handling of certain tax-exempt candling of organizations in 2010. the swing back to prior testimony, mr. miller, you indicated that you never spoke -- excuse me, let me highlight two pieces of media articles that appeared also, one in 2010 as well as one more recently. there was an article in "the weekly standard" concerning the koch industries attorney that there had been confidential tax parent permission in the hands of senior administration officials part of an august 27th

on the record briefing. subsequently just a few days ago in "usa today," there was someone with the national organization and marriage to indicate in that off at that the release of this organization's confidential tax returns to the human rights campaign as a canary in the coal mine, contrary to assertions, the targeting of tea party groups was an error in judgment by low- level irs bureaucrats and the release of this data to a group of this nature suggests the possibility of complicity of the highest level of politics and government. back to whether there was any information sharing of taxpayer records or returns with anyone outside of the irs, you indicated in testimony some moments ago that you never spoke personally with anyone in the white house about the sharing of confidential taxpayer information. is that correct?

>> i believe so. >> any reason to believe that it some point you did from january 2010's beat somebody in the white house or communicate in sharing of about the confidential taxpayer information? >> i don't think that would happen. >> you did >> are you aware of anyone in the white house sharing information outside of the i.r.s.? are you aware of anybody in the i.r.s. from january 2010 to present communicated or spoke with anybody in the white house about the sharing of confidential taxpayer information? >> so i don't believe so. i'm confused, i apologize, so i'm clear about what i'm answering. are you talk about if i believe we shared information? >> if you have knowledge or you

know if information was shared all that information being shared with somebody outside of the i.r.s. in violation of the 03?tion 6 >> i did not. i understand, thank you sir. >> i'm not saying the white house, i'm saying the treasury department, if i read that correctly, you spoke to someone in treasury at some point, the that correct? >> i don't think so. let's be clear. >> i will ask it more directly. did you speak or communicate with anybody in the treasury department who was not within the i.r.s. about the sharing of confidential taxpayer nformation in violation of 6103? >> can i rephrase it and you tell me -- >> no. >> if you're asking me if i shared 6103 --

>> i did not ask that. did you speak with anyone in the treasury department about sharing taxpayer information? >> i don't believe so. i don't know if you're talking about the subject, which they are fine to talk to them about. >> that's what i'm acquiring about. what you did, what you knew and who you spoke with? you're saying from 2010 to present did you speak so to someone about the treasury department about sharing the confidential taxpayer information? >> what i'm saying -- >> i want you answer the question. did you share, did you communicate, by e-mail or fax or sign language? >> i never shared information. did i talk to them about the rules around it? i don't think so but that is permissible. >> are you aware of news reporting about the national

organization of marriage and the concern they had about the sharing of their confidential information you indicated you were aware of that news story. on that story or any other story, did you talk or communicate with anyone outside of the i.r.s. or treasury about that issue? >> i don't know. i don't believe so. >> will you check all of your records, all of your notes, all of your e-mails to get back to this committee? >> time has expired at this point. >> thank you, mr. chairman. thank you gentleman for your testimony today. mr. miller, let me start with you. there is an agency in the federal government that needs to have a buffer approach, mistreatment, unequal treatment to any individual or organization, it is the i.r.s. is that correct?

>> i agree, sir. that is what is sad about this. >> what happened in the cincinnati office and reviewing the applications this what comes from it. is that right? >> the perception is that. >> my understanding is based on the report and the recommendation that the i.r.s. has taken that up and have done the best to implement that this will not happen in the future? >> it will not happen again. >> who is being held accountable and why? obviously, you have rendered your resignation to the president and he's accepted that as commissioner of i.r.s., is that right? >> i have done so to the secretary. >> ok. any other instances of accountability as far as those in the cincinnati office, those in charge of the cincinnati office and the development and use of this criteria? >> i think i mentioned there were two instances where counseling was suggested and

as an reassignment of someone. we now have possession of the facts with respect to the report. now it is time to look that the. >> any pushback from the i.r.s. with the report and the recommendations they making? any difference of opinion? >> there is no difference in the recommendations. >> is think there any rule on the cung to with the i.r.s. to make sure this does not happen in the future? 70,000 applications that was submitted and -- a doubling of c-4 applications too. do you feel there is sufficient personnel to expedite the review of these applications? >> there is not sufficient personnel. >> i don't think we'll have many recommendations on the other side as far as allocating more resources, you're sufficiently staffed to deal with the huge influx of applications that the i.r.s. is experiencing right now.

i think there's a role for congress and we have to share some responsibility as well. let me ask you, part of the problem is the definition of criteria in engaged in social welfare is a subjective criteria with no clear rules. i think the i.r.s. is trying to further define that for the division in cincinnati. is there further tightening of that definition, which can be helpful to i.r.s. personnel when it comes time to review the applications? >> the answer is yes. >> does that have to be internally with the i.r.s. or can congress help to further define and present more objective and bright-line rules when it comes to reviewing social welfare applications? >> i understand that the i.r.s. has the authority to do this on its own. >> obviously, this committee needs to work with i.r.s. too to ensure it is done orse it will be a flawed -- otherwise it will

be a flawed process, special with the huge influx of applications. i think it is so important that it needs to be reiterated, mr. george, i apologize if you think you made yourself clear on it. you found no partisanship of the use of the criteria for selecting applications in the cincinnati office is that right? >> that is correct, sir. >> that is clear in your report too. anyone outside of the i.r.s. involved in the review? >> not at this time. >> not white house or treasury? -- hat is direct, sir correct sir. >> thank you, mr. chairman. i think if i'm sitting at home trying to figure out what is going on here and listening to the testimony and the remarkable revelation some of these questions, you get somic?

ers after some of them. you have the federal government asking what book you read, having the federal government ask you if you know someone is going to run for political stuff. this is chilling stuff. his is very, very serious. do you accept the findings of the i.g. report? >> we do, sir. >> one of those findings that groups that were targeted, do you accept that finding? >> i would not characterize it as targeting. >> would you understand why the inspector general believe that groups are targeted? >> i think the group that were put into the centralized grouping would have gone in whether we have done the correct thing or -- >> you describe a list of criteria being used to identify these groups as obnoxious,

orrerr. >> it is not just tea party groups, it is not just conservative groups. they are religious organization, are they not? >> i don't know that, sir. >> are you not aware that there were religious organizations that were identified by the list of criteria that was formulated? were. unaware that there i looked a the list but very quickly. >> there were baptists churches that were identified for further scrutiny. >> who is sara? >> she an executive at the internal revenue service, she does the affordable care act work frs us. >> where did she work from 2010 to 2012? >> someone has corrected my prior comment, i think. so 2011 and 2012 she was already working on the affordable care. i don't know when in 2010 we

medicine that -- >> did she hold the tight of the directors title? >> she was the commissioner. >> she had responsibility over the concerns we're discussing today. >> at the time she was the division commissioner pe. >> would she have known about the list of criteria? >> i have no reason that she would. >> that she would? >> i have no reason to to believe that she would. i don't think so. >> you don't think she knew about the criteria of the folks that are under her responsibility? >> therapy a couple -- they were a couple of thousands folks. >> have you had that conversation her? >> no. >> so you never asked if she knew > i don't think she was in the jab at the time, sir? >> then you ask about the

oversight? >> correct. >> who appointed her? >> i moved her into that job. >> you've also said that in the context of the criteria list and what we're talking about today that the i.r.s. "provided horrible service," correct? >> i think that's correct. >> that's what you said earlier today. the individual who was overseeing a portion of this and had responsibility for the provision of this "horrible service" now sits over the entity at the i.r.s. that will determine whether or not people s. complying with the rule is that correct? >> i don't think so, sir. >> she is is not in control? >> we would have to go back. >> i don't think your timeline works perfectly, sir. there might be a peed of time when she was still in that job but she transfered.

>> in questioning you said that the i.r.s. would not have access to medical records, is that correct? >> i believe that is correct. >> so it is unnecessary for them to gain access to medical records, correct? >> i didn't -- i think so. >> isn't that how you described the questions and the information that the i.r.s. folks were gaining through the criteria list unnecessary? >> i think -- are you talking about the letters? >> i'm saying there is a parallel here in the nature of what the i.r.s. has done. characterize the word? is it illegal? >> it is not illegal. let me understand the question. what is your statement as to what is illegal? >> do you believe it is illegal for employees of the i.r.s. to

create lists to target individual groups and citizens in this country? >> i think the treasury and inspector general indicated that it might not be. >> what do you believe? >> i don't believe it. i don't believe it should happen, don't get me wrong. it should not happen. >> thank you. >> thank you, mr. chairman. i appreciate the opportunity for our being able to listen to the witnesses and try to develop a record and people putting forth their own ideas, their own question, clarification. i think, mr. inspector general, you have provided a tremendous service with the report. it is straight forward, identifying mismanagement, inappropriate activity, and i hope that people will be able to actually read the report to reflect on it.

i appreciate your being here, mr. foreman miller. you have accepted responsibility and resigned. it is a error that you don't often see in the political arena, i would say. but i'm hopeful that we can continue to probe, to direct, ake sure that no political entity is subjected to inappropriate activity on behalf of the i.r.s. i appreciate some of my colleagues talking about efforts that we can do to clarify laws and regulations together to be able to make sure that there is less ambiguity and better standards. i think at some point it would be interesting to reflect on congress' role in what

chairman referred to in strong terms about a tax code. in the 104th re congress. there were 114,000 employees in the i.r.s. since i've been here congress and its wisdom has expanded the code, made it more complex, and cut dramatically the men and women who are on the front lines to deal with it. their inadequate training budget. we had this testimony just across the capitol before the senate this last week. i really hope there's an opportunity to think about how we support the integrity of the internal revenue service, not just by making sure there's inappropriate or gross mismanagement, there is

clarification but we rely on it for it to function. congress has slowly been starving the budget of the i.r.s. at a time when each of those employees dollars -- dollars spent on the employees gives the federal government and for usin revenue not make shu it is adequately staffed, adequately trained, adequately equipped invites short cuts and makes it harder to have the oversight and accountability and harder for overall performance. i think it's inexcusable to cross the line. i think it's important that we bear down, we understand, we make sure it doesn't happen again. i also think as the congress has made the code more and more complex given the i.r.s. fewer and fewer resources to

administer it, make it difficult to train. i think it's -- it undermines the ability to take a complex intyty that relies on self-reporting and people having confidence in it. i'm hopeful this isn't something that we slide past. i appreciate, mr. commarme -- chairman in simplifying the code. but i also hope we look at the task they have been given, the budget they have been given and think about maybe a rate of return that would more than pay for itself if we invest in training in management, and having more than 150 people to deal with the avalanche of these applications. i guess that wasn't so much a question. but it is something that will occurred to me and i know mr. miller you have referenced the stress that group is on and how

hard it is to keep track. at some point, if you would provide to the committee, not putting you on the spot now, but some reflections on what to do this right. i think it would be a valuable part of the committee record going forward. we all want it to have integrity, we want it done right, we an to treat the employees and the taxpayers properly. thank you. >> thank you, mr. chairman. mr. miller, i want to talk about the culture of the organization as looking at the notes, your bio. 90,000 employees, $12 billion budget. you've been there 25 years. i'm concerned -- i guess to start off we got a mission statement there. i'm very concerned about the breath and the depth of what is going on. i think a lot of employees probably do a good job but i've been in business for 30 years and run larger organizations.

you got a mission statement in terms of working for the american people, doing what is right, playing by the rules, is that something that is internalized at the i.r.s. or is that something on a website? >> i believe it is irn alternativalized. the vast majority of our folk are hard working and incredibly honest people. i'm going tell you and you should hear that as these discussions occur, as, union, it is damaging to the moral of those people. we, you know, it is ultimately damaging to the sense of volunteering compliance, which under lies our entire tax system. let me just say i think there's a lot of good people, at the same time, we have a massive p.r. problem at minimum we do. it can't drag on for six months

to a year but we need to get to the bottom of this. in terms of that size organization, who is in charge? whose who is the boss? how does it work? i ran a decentralized business, i had a corporate structure but i had mappingsers and partners. -- managers and partners. you've been there 25 years. who do you report to? the commissioner in the past, who a do they report to? at what point, when something like this comes up, who is involved? >> the reporting chain and the organization is -- there are two deputies reporting to the commissioner and the commissioner reports to the deputy secretary of treasury. >> who is ultimately responsible? >> the commissioner -- acting commissioner, not the treasury.

the treasury relationship is such that they would not be involved. who is responsible for you? who asked you to resign or fired you? > it would be secretary lew. >> the secretary of the treasury. the other thing is, let me ask you, there's been two people -- were you terminated or fired? are you getting ready to retired? i was asked to resign and i will retire. >> under what basis do you feel like you're getting asked and one other person got asked but it seems like there is other people in cincinnati and washington and other parts that have not been held accountable? >> i'm not sure what the question is, sir. if i could answer it and tell me if i'm not answering it correctly. >> go ahead. >> we're not done yet. we have the report. we have the sense of the facts. now is the time for those that

remain, including the incoming, acting commissioner, mr. werfel to take those actions. >> it's been brought up with a couple of the ladies that work with you, what is being done about those two? there's a lot of concern about them. they ran a large operation and it seems to be at the heart of the issues. i think it has to be done in an aggressive, clear way in the next week or two. >> i don't know if it will be or not. that will be up to the next acting commissioner. >> let me ask you in terms of the new acting commissioner. are we looking to gate permanent commissioner or is this -- looking to get a permanent commissioner or is this a commissioner for a period of time? >> we ought to have a nomination. >> i hope. i think at the end of the day, leadership matters. getting the right cture, the

right environment within the organization, the i.r.s., it needs incredible leadership, incredible integrity and we need to make sure that person, not so much the acting one, but ther permanent one is the right choice. >> i agree, sir. >> thank you, and i appreciate the this opportunity. let me say a couple of things and i will ask a question. this is not an easy hearing for you or for us. we're outraged on behalf of the american people. that is number one the american people need to deserve to trust their government. it was violated and that violation is unacceptable and outrageous to us and i hope to you. the fact there changes that need to happen, some thanks that you're making but we need to be assured those changes we made --

things happen, investigations have to be done and changes have to be made to ensure the american people that we know that went won't accept bias or discrimination in any way. i think that is clear to all of us. secondly, this committee and congress also has the responsibility to do this questioning and our own demand for accountability and transparency from you, the administration, from everything that happened. to do it in a way that is not politicalette. i think we have to be -- political either. i think we have to be careful about that. we need to engage in this in a way that is clear, fair, and nonpolitical. we all agree that something has to be done. my question is really about boardly what is going on in the division that happens for the

application for nonprofit status. i heard from my office that groups that came to us for nonprofit status, not c-4, which is the issue here. but the backlog of a year. they don't understand why it take so long. they don't understand why they are not clear about what is wrong with their application. they are not hearing back. given some of the cuts we've made, nonprofit groups in articular but really are looking to make up stosm gaps that are here, to be able to raise money in charitable contributions and to make a difference in our communities. i need better clarification of what is the criteria, why they don't hear back, why the applications are taking longer than a year, if there is

problems with them and how we can move though process forward. i think we have every reason to ask those questions and get those kind of answers on behalf of our constituents. it goes all of the nonprofit organizations. is there reasons to review an application to a greater depth and there might well be. we need 20 understand that and so do the people making the application. they should not be in the dark about the criteria or why sitting on someone's desk or why it is receiving more review. if you can clarify for us now, mr. miller, about what the criteria is and how we can help you to make sure you're doing this right. you're in there during the investigation and getting those answers and correcting those and i'm sure the american people have the right process, the fairness of the process, the crier the combra that is being used in a timely, appropriate

responsible and process to american taxpayers and certainly to nonprofit organizations. so you're chance tos than will be appreciated. >> it is a big enough question that will follow up in writing. the process right now, as i mentioned, we have a limited number of people, 140-200 that work on the 70,000 applications that come in for tax exempt status. -33 of them are 051 organizations. they get some instances to issue bonds. they get state tax, property tax exempts, postal rate reductions. these are significant benefits in addition to just tax exemption and we have to look at them. many are small organizations that go through quickly and some are large organizations that we

need to take a look at. the largest hospital systems, the largest universities, there are large organizations. then you look at issues within them. we look for, is there private benefits? is there political activity again. c-3 no political activity is permissible. c-4, some. those are things we try to look at. we try to move them along as fast as we can. we do not have enough people. >> you don't have enough staff but you're clear of the criteria. >> time has expired. >> this will be a continuing conversation. >> mr. smith is recognized for five minutes. >> can you define political activity as relates to the agency and the applications? >> political activity has some limits. you need a candidate, you need a candidate for publifi

that sort of what you need for it to be a political campaign c-4. ty under 051 c 4 and >> was it the concern of the political activity that led to the review of applications? >> i believe it was. it was the fact we were seeing more applications indicating a they might be doing political activity and it is an air dwhra the is difficult for us. -- an area that is difficult for us. those are very difficult for us to flush out. the decision was made to get them into one group and educate those people. how they started that process was one of the problems here. the other problem here as i mentioned, was the method of processing these cases was flawed. i think the report and mr.

russell's report goes into great detail in the problems that we saw in the lack of communication between the pieces of the service, the letters that were brordout that were overly >> how many employees would have been associated before and taferttralization? >> i'm not sure of the question? >> the number of employees associated with the applications were greater before the centralization. is that accurate? >> it might be. i don't know the answer. it might have been the same number of people but they were centralized versus spread out. >> it was mentioned earlier in testimony in questions that donor lists were requested by the i.r.s. is that accurate? >> that's accurate. in some cases. not all these cases by any stretch of the imagination. >> and the acquisition of those