>> good morning. the committee will come to order. good morning. over three years ago, this committee started asking the irs was it targeting conservatives for their beliefs, was asking groups inappropriate questions, wasn't harassing conservative

donors -- was it harassing conservative donors? testified that no targeting was occurring. , the then head of exempt organizations of the irs lois lerner admitted that the irs targeted conservative organizations. the irs like the congress and the american people. this committee found there is evidence to suggest the irs violated the constitutional rights of taxpayers. as of today, the investigation into the irs' intentional targeting of americans for their beliefs has been ongoing for over a year. what we have found so far is outrageous. the rs spent over three years responding to top democrat complaints in calls to actions to stop all activities of conservative groups. the irs in washington took their marching orders and subjected

americans to harassment, going so far as to question the content of their prayers and their political beliefs. when the scandal first broke outcome of the president vowed that his administration would work hand-in-hand with congress to get this thing fixed. this spring commissioner k oskinen, you said your goal was transparent about the process. since my time in congress i have never seen an irs so broken. late last friday the irs admitted to congress the agency had lost over two years' worth of lois lerner's e-mails. anstaff later learned in interview it was not only ms. lerner's e-mails, but six a chief including

of staff's. learned thatgo we irs kept it secret from congress. this is not the most open transparent administration the president promised. what does this mean? it means the irs' claim that the hard drive is unrecoverable, the public will never know the of americansws who were exercising their rights. investigatorsd she first learned about the targeting in july of 2011. that was not true. in february 2011 ms. lerner told subordinates tea party matters dangerous and discussed ways to deny applications. we only have this e-mail because it came from another employee's inbox. anothere-mailed it to

address, it would be gone forever. we are missing a huge piece of the puzzle. the years between 2000 nine and 2011 are the very peak of when the irs organized and implemented its targeting scheme. how convenient for the irs and the administration. i find it hard to believe and i do not believe the irs went to every possible exercise to recover these documents. we are missing e-mails of seven officials during times critical to this investigation. how is this possible? making matters worse the irs kept all this a secret from the public for months while informing staff in the administration. after all the obstruction, i fear this congress and the american people cannot take the irs at its word. one thing is for certain, you can blame it on a technical glitch, but it is not a single glitch to mislead the american

people. you say you have lost the e-mails, but what you have lost his all credibility. the irs is in charge of hundreds of millions of tax payers' information, and you are now saying your system was so poor that year's worth of e-mails are forever unrecoverable. how does that put anyone at ease? how far would the excuse of i for an debt with the irs average american trying to file their taxes who may have lost a few receipts? oddly enough, this seems the satisfactory answer for the attorney general. this administration has done whatng to investigate truly happened, notwithstanding this committee sending justice a letter of nearly 100 pages. they have try to sweep this under a rug and claim no wrongdoing without ever looking for the that spirit the american people have no reason to trust the irs or the administration on this issue. to wait years to reveal the fact

that the irs was targeting the people, and then wait months to reveal the missing years of documents, no wonder i have heard the word cover-up thrown around. the time for denials, delays, obstructions, and attempts to blow this off as a phony scandal all over. this committee is set up and we from theswers not only irs, but from the administration. it is time we restore trust in government, but i fear that may not be possible. mr. levin, i will recognize you for an opening statement. >> thank you. 2013, theer 11, internal revenue service with onethis committee ofthe 770,000 pages documents it has turned over since ways and means undertook its investigation into the irs in may 2013.

250 irs, more than employees have spent over 120,000 hours working to produce documents at a cost of at least $16 million to taxpayers. , received last september, last september, included an e-mail from lois lerner to other irs personnel dated june 14, 2011. it began, my computer crashed yesterday. we now know the full extent of that equipment failure. despite an exhaustive effort by forensic i.t. professionals at the irs, they were unable to save her hard drive and her e-mails between january 1, 2009 and april 2011.

although her e-mails from june 1, 2009, to april 2011 are unrecoverable from her hard drive, the rs will produce-- the 67,000l produce e-mails related to lois lerner. they recovered these e-mails from other irs employees. that is on top of more than 43,000 e-mails involving ms. 2011 thater april have already been produced. there is absolutely no evidence, absolutely no evidence, to show that ms. crash wasomputer anything more than equipment

failure. at the time of the incident in experts1, irs computer reviewed the issue and informed lois lerner that, " unfortunately, the news is not good. the sectors on the hard drive were bad, which made your data unrecoverable." your computer crashed a conspiracy? nno. was the irs system for backing up its e-mail system entirely under funded and wholly deficient? clearly, yes. in fact, congress has cut the irs budget for operations, which includes what it spends on computers and other information technology every year for the last five years. house republicans have are proposing -- are proposing to slash it once again next year.

koskinen has informed this committee that the billion worth of computer equipment and the agency should be spending $150 million to $200 million on maintenance for that equipment. instead, the agency spends virtually nothing because it cannot afford to properly maintain what it has. it is important to remember that e-mails were routinely lost during the bush administration. 2007, instance in according to a report by democrats on the oversight and government reform committee, the bush white house acknowledged having lost nearly 5 million e-mails between march 2003 and october 2005, related to allegations of the politically

motivated dismissal of u.s. attorneys. lost data under the bush administration, coupled with a number of computer crashes at the irs, clearly demonstrates the need for government agencies to have adequate budgets to invest, upgrade, and maintain information technology. the other siden of the aisle have taken this opportunity to rehash well-worn allegations of white house involvement, allegations that republicans have made from the very moment the inspector general released his report more than a year ago. on the day the report was released, before congressional investigation into the issue had even begun, chairman issa accused the white house of targeting its political enemies. three days later, our chairman,

mr. camp, in your opening statement during the first hearing on this matter, you accused the white house of a culture of cover-up. congressional republicans are so determined to find a needle in a haystack that they seek desperately to add to the haystack even though no needle has been discovered. it was in that vein that chairman camp this week said this entire case started with the white house, and sent a letter to the president requesting all car respondents between lois lerner and the executive office of the president between january 2009 and may 2011, the period before ms. lerner's hard drive crashed. the white house has conducted that search, and what have they found? the resort even a single e-mail correspondence sent to or from ms. lerner and the white house.

this committee has been involved in this investigation for over a year. here is what we have learned. the 501(c) four applications of both conservative and progressive groups were inappropriately screened. there were long delays in processing applications. there was serious mismanagement, and i was among the very first to call for ms. lerner and then commission learn miller to be released of their duties. ofall of the 770,000 pages documents that the irs has supplied the breaker shall -- supplied congressional committees, including ours, there has not been any evidence of political motivation or of white house involvement. now there have been computer failures at the rs, and -- at the irs, and republican conspiracy theories have started a new. the evidence today reinforces

this long-evident truth, the prevailing skins prissy in this matter -- prevailing insperity in this matter is that of to stirans' desire their base, tied a problem to the white house, and keep up this drumbeat until the november election. i am glad that you, commissioner k is here with us today to set the record straight. we are glad you are here. lasttarted at the irs december after a distinguished career in the public and private sectors, at omb, at freddie mac, as the chair of president computer council. we are glad you are here. we look forward to your testimony to set the record straight. >> thank you. that he stand to be

sworn in. , youssioner koskinene solemnly swear or affirm that the testimony you are about to give will be the truth about the whole truth, and nothing but the truth? >> i do. >> let the record reflect that the witness answered in the affirmative. iq. -- thank. thank you for being with us today. you're now recognized for five minutes. camp, members of the committee, thank you to appear for you today to provide you with an update on recent document productions to congress. the irs has made a massive document production in response to inquiries from congress. irs advises committee and the senate finance committee that we had completed the production of documents

identified as relating to their investigation of the processing and review of applications for tax-exempt status as described in the may 2000 and eight report from the treasury in such administration. those efforts included 11,000 e-mails from lois lerner, former director of the iris to organizations division. this committee and the senate finance committee has 700 -- has now received over 770,000 in pages of documents. you already have more than 25,000 e-mails from her computer account and more than 5000 e-mails from other can study accounts.odians' -- iris expects to complete the irs expects to complete their investigation by the end of the month. by that time you will have all of the e-mails and we have from ms. lerner's computer from that.

period 2009 to 2013. 67,00 0 have a total of lerner emails. and identify the possibility of an issue because the date distribution of the e-mail was uneven. it was not clear whether lerner e-mails were overlooked or had issues involved. irs information technology professionals identify documents that she had experienced a computer failure. e-mails had earlier been provided last fall to this committee. in march 2014, the irs focused on rejecting materials and

processing the rest of her e-mails for production. as we reviewed additional e-mails, not limited by search terms, relevance, subject matter, all of her e-mails, the irs review came to learn additional facts regarding ms. lerner's computer crash, which occurred before these investigations opened or the i.g.'s report. we learned in 2011 the irs technology division had tried using multiple processes at ms. lerner's request to recover information stored on her hard drive. a series of e-mails available after offer e-mails were loaded recounts the sequence of events in 2011. toront-line manager reported ms. lerner in an e-mail in 2011 i checked with the technician and he still has your drive. he wanted to exhaust all avenues to recover the data before sending it to the hard drive

cemetery. unfortunately, after receiving a assistance from several skilled technicians, he still cannot recover the data. ms. lerner was told by e-mail on august 1 2011, as a last resort, i. sent your hard drive to c. forensic lab to attempt it a recovery. in an e-mail on august 5, 2011, after a tense to retrieve e-mails at lois lerner's request, she was advised unfortunately, the news is not good. the sectors on the hard drive were bad, which make your data unrecoverable. i am very sorry. everyone involved tried their best. the committee has been provided earlier these e-mails earlier this spring. in light of a hard drive issue, the irs took steps over the past months to assess the situation and produce as much e-mail as possible for which ms. lerner

was an offer or recipient. we traced the collection process for the e-mails, we located processes that were identified backup, we confirmed the tapes from 2011 no longer existed because they have been recycled or student to the irs normal policy. he searched e-mail from other custodians. from mid march to late april, the irs team concentrates on loading for review all the remaining e-mail from ms. lerner's account and repeating the entire process for quality control and to ensure that no new e-mails from his lerner were missing. during this time we were identifying and reviewing lerner e-mails to and from two other can study and. by mid-may as result of these efforts, the irs had identified the 24,000 e-mails between january 1 and april 2011. washe search for production

concluding, i ask those to determine whether computer systems of the other 82 custodians had experienced any similar difficulties, especially in light of the aged equipment the irs has been using as result of its budget pressures. after the irs report was delivered last friday, it was onermined earlier this week, monday, that seven additional custodians had experienced hard drive failures area the time. the hard drive failure does not automatically mean that any or all e-mails have been lost or cannot be reconstructed. broad scoperemely of our effort, it is not surprising we would discover that some employees had encountered some technical issues, especially in light of the agency's aging infrastructure. the iris described in great -- the irs described great detail its effort to produce lerner e-mails. we are still assessing what tresses haverive

on other custodians. at this time it is too early to know if any e-mails have been lost on any of those hard drives. we are committed to continuing to work cooperatively and transparently with you, this committee, and we will continue to provide you with updates. this concludes my testimony. i would be happy to take your questions. >> thank you. what i did not hear him that was an apology to this committee. >> i do not think an apology is owed. not a single e-mail has been lost since the beginning of this investigation. we have produced or will produce by the end of this year -- >> you do not take the time period between 2009 and 2011 is relevant to this investigation -- >> it is very relevant -- >> the e-mail that we received -- >> they were lost offer higher drive -- >> let me finish.

i will give you an opportunity to answer. you fail to explain the timeline of events that led to that admission. my question to you is, from the interviews that we have had with the deputy chief of information for the irs, i'm told the irs knew as early as february that her computer crashed supposedly caused the loss of her e-mails 2009g the time of january 22011. as the irs known that since february? >> cir has new february there was an issue. we all had e-mails from ms. lerner last fall where she recited she had a hard drive crash -- we knew there was a problem because we were looking at the standpoint of what the timeframe was in which her e-mails appeared and it appeared that there were not enough e-mails in that timeframe. >> so why did not the irs notify congress at that time there was a problem with the potential loss of the e-mails we were investigating?

wei thought it was important complete the investigation so we could fully advise you as to what the situation was. >> i got a letter from the white house two days ago that said treasury contacted the white house in april of this year to tell them about the lost e-mails. who told the treasury department? >> pardon? >> who told the treasury department? the letter i received said treasury told them in 2014. my question is who told the treasury department? >> my understanding of the letter says that someone in the general counsel's office said to treasury that there was an issue and the irs was investigating -- >> the letter said the treasury told the white house, and the treasury said that they learned in 2014. who told treasury? do you know who in treasury told the white house? cationsve no communi

with the white house. >> you are unaware of them? >> we are part of the executive branch. we have regular medications with treasury. we issue and review regulations. we are reviewing the regulations on the 501(c) four issue. >> if the irs knew in february or march and treasury and white house knew at least in april, but congress and the american people did not find out until june, were you purposely not telling us, not revealing this to us? >> my proposal was our original thought was to complete the lois lerner production, the pig the review of what other custodians had a problem, and produce you a report laying it all out. not -- thethe iris irs not inform the congress?

>> we were not keeping it a secret. it was a report that was providing you the information. there's been no attempt to keep it a secret. my position has been that when we provide information is provided completely. if we provide an incomplete iteration, people are sometimes tempted to leap to their wrong conclusion, so we thought it would be important to give you the full -- >> it is ok for the white house and treasury to lead you to a conclusion six weeks before the congress. had there been discussions within the irs when to reveal this information to congress? >> certainly. >> these discussions include treasury? >> no. >> how to treasury find out about it? >> apparently the first time i knew about that was -- >> i will have a lot of questions to write you to follow up. completely unacceptable. >> can i answer that question? >> i do not think you have given me the answer. your letter charts the e-mails as being unrecoverable. >> correct.

>> but failed to mention where the hard drive is today. you know where the hard drive is that crashed in 2011? >> after it was determined it was dysfunctional and no e-mails could be retrieved, it was recycled and destroyed in a normal process. >> was it physically destroyed? >> that is my understanding. . >> was a melted down? >> i have no idea what the recycler does with it. . >> does the irs have a system for tracking items? >> we track items. we do not track every item that everybody has everywhere, but i'm sure we track some items -- >> the someone have a serial number for the hard drive? >> i do not know. i am advised that a normal case when the hard drive fails the e-mail cannot be reconstructed, the hard drive is turned over to recyclers. >> it seems that government poverty would have been track. >> pardon?

property wouldrac be tracked. i assume there is a tracking system for the disposal of government property. >> my understanding is lois lerner's computer continued to be functioning with a new hard drive. i am not aware whether hard drives have serial numbers. >> [indiscernible] >> if they have serial numbers, you're welcome to them. >> i want that hard drive and want to hard drive that every computer that crashed during that timeframe. what i have learned in last week, i think calls and question every document in response the irs has given or has failed to given this committee, and the only hope that i see industry conference is to establish a special prosecutor with the authority and resources needed to uncover the truth. for the sake of the agency and restore the trust of the american people, will you

support the appointment of a special prosecutor? >> there are six investigations going on -- the i.t. is giving -- >> do you support the apartment of a special prosecutor? >> i do. i am asking a question that can have a simple yes or no answer. order.r >> i think the appointment of a special prosecutor after the investigation into this matter ongoing would be a monumental waste of taxpayer funds. >> is that a yes or no? >> that is a no. >> mr. levin is recognized. you have five minutes. >> you know, i think witnesses deserve some respect.

i think it is in the tradition of this committee to give witnesses respect. this is not the committee of whodes ago, led by people disrespected witnesses. in -- mr. koskinen, you have had a long career. what have you done in your long career, briefly? yearscareer has been 20 in the private sector, turning around large troubled organizations. i started my career as the chief of staff for a senator in the united states senate. i served on a presidential commission as a staff member in the late 1960's. i represented new york city here for a year and a half.

i was the deputy director for management at omb for three years. i was the chair of the presidents council on the year 2004 two years, adding the country through the year 2000 transition. i was asked by the bush administration to take over freddie mac as the chairman of the board when the government took over those enterprises, and the irsked to come to last january, when i was confirmed to steer the agency through these difficult times. >> the letter that went from the , mr.il to the president cap, and mr. wyden spelled this out and indicated when the treasury was notified, or when the treasury counsel informed aboutite house counsel this problem with the computer. it also has indicated, contrary committeefort by the

on the republican side to connect the problems, and they were serious problems, to the white house -- that there is no such connection. they are desperate to find a connection. they have never found it. they will keep looking, because i think it makes sense for them politically. i do not think, whatever our political affiliations are, we should be disrespectful. will you repeat again what happened these last months after you found out about the computer crash, and why you decided to conduct yourself the way you did? >> we learned in february there was a potential issue with the hard drive. that was investigated through into early march and april. the i.t. people uncovered the e-mail train that talked about hereffort to restore

computer. the e-mails have been provided some time ago to this committee. they were not hidden or covered up. we wouldr, we decided look at all the other custodians, to produce as many e-mails as we could that were within our system, the 24,000. i also asked that we review all the 82 custodians, to see what, if any, failures have happened them. when we completed the production of all of the e-mails, at the end of the month, we would provide a full report, and know what the situation was with the custodians. why i did not advise congress earlier -- we do better to have a rational discussion when you know all the facts. it is shown by the fact that on limitedthere were difficulties with a handful of custodians. that was passed to the staff on monday afternoon. , a pressly thereafter

release went out from this committee, identifying the coal flacks as a particularly interesting person, compared to this committee. had the committee waited to issue that relates until we knew information, they would have discovered that nicole flax at her office computer, which he used during the day, and a portable computer. the portable computer crashed. e-mail systemsame as her office system. there is no indication that a single e-mail has been lost. those press releases with regard were misleading. it demonstrates why we will provide a full report about the custodian review. when it is completed, we are not going to dribble out the information and see it played out in the press. >> thank you for holding this hearing.

learning about the loss of the e-mails is troubling. we received that information with great skepticism. americans have been waiting for the whole truth, and we hope to get it today. it is past time to hold all of those responsible accountable for targeting americans for their beliefs. mr. commissioner, welcome. i have some questions for you. you have argued that the irs practice of destroying employee e-mails after six months was a cost-cutting measure. in fiscal year 2011, the irs enacted budget was $12 billion, a high water mark of spending. the irs was accused of

destroying its backup tapes. >> in 2008, when our new i.t. director came, the retention policy was only for less than three months. he increased the retention backup policy to six months. it is a disaster recovery system. if the system goes down, you can reconstitute the e-mail. those systems are usable. if there is no disaster, you continue to back up the e-mails so they are available. start of this investigation, every e-mail has been preserved. nothing has been lost. nothing has been destroyed. >> you have plenty of computer space. i wondered at the time how you could keep track of everybody's irs requirements when you lose your own. didn't the irs estimate that keeping and storing those tapes would only cost $200,000 annually? >> $200,000 annually every year, but it grows. ,e have trillions of terabytes

hundreds of millions of e-mails stored over six months. -- disaster recovery program the e-mail system is not a system of record. the system of record is for the hardds act, to produce copies and file those in the records, so the irs has historically only preserved backup tapes for six months. we are reviewing all of this. when we get through with this, we need to take a look at what we can do to create a more searchable e-mail process. the problem right now is, anytime anybody wants a piece of information, we have 90,000 employees. we have to pull their e-mail accounts, hard drives, load them into a search precedent -- a search machine. that is an antiquated system. i fondly refer to it as a model t with a nice gps system with a sound system and a redundant engine, but still a model t.

>> my constituents and i refuse to accept that in years of , you wouldbudgets not let us refuse to give you information on our tax returns. the irs destroyed employee e-mails every six months just to save $200,000 annually. i am far too familiar with the rampant wasteful spending at the irs during that time. hasate, the committee uncovered wasteful spending from the star trek videos to the spending on lavish conferences, to an irs estimated $23.5 million in spending on salary and benefits due to union time, and the bonuses going to workers who go back taxes. -- who owe back taxes. thisnd i both know happened before any budget cut's happened to that agency. there is simply no excuse for

what happened. i yield back. >> today, we are here listening myth that there was a conspiracy by ms. lerner and whoever else to get rid of some data. congress, i was a physician. one of the things you always did with the patient was take the history. i would like to review the history again with you. on june 13, 2011, lois lerner's hard drive failed, meaning all her e-mails were lost at that point. is that true? >> that is correct. >> 16 days later, she was briefed that inappropriate criteria had been used in miss management in cincinnati, according to the ig's report. >> that is what the report reports.

but the question is, did lois lerner preemptively crash her hard drive? >> all the evidence is to the contrary. the e-mail string shows that at her request extraordinary efforts were made to retrieve the e-mails from her crashed hard ride. couldyou think she foresee something happening in the future and make the decision to destroy her own hard drive? >> the record shows quite the contrary. also, after the crash on april 11, she continued to send and archive e-mails on her computer. we will produce 40,000 of those. there is no indication in the record that her performance generated that. evidence toany suggest that she called the white house or the white house called her and said, get those right wing organizations?

>> there is none we have been able to produce, and i understand that the white house did not find any e-mail to or from lois lerner. >> and the inspector general did not find them? >> the report stated there is no evidence of political involvement. >> in fact, as you talked about on july 19, 2011, lerner wrote director of customer service support for informational technology, saying, whatever you can do is helpful, would be greatly appreciated? mid-july, 2011, she learned about cincinnati. for a couple of weeks, the i.t. division tried to repair her hard drive, bringing in experts inside i.t., and also the the irs.division of

is that correct? >> that is correct. >> and they failed. >> they failed after three weeks of efforts. the e-mail trail is clear. i will note the criminal investigation division is expert , in seizures from civil and at seizing hard drives and restoring e-mail. we had great confidence if you could find those e-mails, they would find them. and they were unsuccessful. >> finally, she wrote, thanks for your efforts. i really do appreciate the effort. sometimes, stuff happens. is this a woman rejoicing over losing her hard drive and saying, thank god that thing is gone, they are never going to get me? no, this is a woman who is resigned to the fact that the thing was lost. we upgraded to windows 2010, and my staff director in washington

state lost her hard drive. they fried it. i do not know how it happened. nobody knows. she lost all her records. rejoice over that experience, i can tell you. to february 20 4, 2014, and the chairman asked for all, and i emphasize all, lois's e-mails. is there anything you can see in thereme you have been that you have seen that the irs did not do to try to get all? >> we have gone to great lengths, as i said. we retrace the process for producing her e-mail twice, just to make sure no e-mail was missing. we understand the importance of this investigation. we have gone to great lengths, spent a significant amount of money to make sure there is no e-mail that is required that has not been produced.

>> i understand you backtracked and went to people in the agency she had contact with and retrieved their e-mails to try to get the e-mails for the committee. >> that is why rather than having lost lois lerner e-mails, as if there are none of them, we have been able to produce 24,000 lois lerner e-mails from the timeframe in question. >> time has expired. i would ask unanimous consent to put into the letter from this committee from me as chairman to then commissioner doug shulman on june 20 320 11, asking for the names, titles, and divisions of any individuals involved in investigating taxpayer investigations into 501(c) four's, sent days before the e-mail crash. they let her, without objection, is put into the record. -- that letter, without objection, is put into the record. >> was that circulated to members of the committee? >> that letter was by me to the

head of the irs. >> some on bus have seen it? >> he may have seen it. none of us have seen it? >> you may have seen it. i will get a copy to you. >> when were you told about problems with the learner e-mails? >> in february, i was told there had been an issue with her e-mail. >> in february? why did you choose to withhold that information from this congressional investigation? ask our plan was to find out what the details were. at that point, we did not know whether there had been a crash that affected her e-mails or not. >> you testify that you gave your agency three weeks to determine if it would be retrievable or not. they were not successful. giving you the benefit of the doubt, in march, you knew the e-mails were not available. -- inform you form

this congressional investigation then? ally goal was to determine of the facts, so we could give you a full report. i noted earlier this week -- >> you informed the treasury. >> 10 the witness answer the question? >> regular order, mr. levin. has theleman from texas time, and he is questioning appropriately. lease, no more interruptions. >> regular order allows the witness to answer a question. >> regular order allows questioning as fit. the commission has given latitude to members of both parties to do that. parliamentary inquiry, mr. chairman. ask the gentleman will state his parliamentary inquiry. bucs under the rules of the house, every member has five minutes to pose questions to the witness, and the witness is given the opportunity and right to respond. is the chairman saying the witness does not have a right to respond to the questions? ask the gentleman has had plenty

of time to respond. that is not parliamentary. >> does the witness have a right to respond? >> the gentleman has not stated a parliamentary inquiry. >> you withheld the information from a congressional investigation. and in may you assure this committee that all of ms. lerner's e-mails would be provided to us. yet you knew that that was not possible. knew we would, i provide you all the lois lerner e-mails that we had. >> you already knew in march they were not retrievable. you did not inform the congressional investigation. months later you told us you would provide all the e-mails, without limitation. and you knew you did not have them. >> by march i did not know they were not retrievable. in fact, we have retrieved 24,000 of those e-mails. >> you knew that was the case.

you knew. and in april, your agency informed treasury about the problem, and treasury agreed with you that congress should be told as soon as it was able to. yet you did not provide the information. and you assured us you would provide all the e-mails without limitation, with no mention that you then new, three months into they were not retrievable. >> all of this is a result of our providing you a public and fulsome document about this matter. we have not been hiding. after you knew the e-mails were supposed to be lost, holding the information -- you are aware this was a congressional investigation. you withheld the information. may, when congress in you said the e-mails would be provided. >> we have provided you the

information, and you have had the information for some time. notr. commissioner, you did tell me under oath that you told us in february and march and april and may that the information would follow. that was just what you said. tell us that again, that we knew that. >> until april, i did not know if any information was lost. had already,gency in april, communicated with the treasury department about the problem, and the letter we had from treasury says we agreed with the irs that it should inform congress as soon as it is able. today that letter exactly disputes what you just told us under oath. exactly disputes. >> that letter from treasury reveals and provides to you all of the lois lerner e-mails, so that there is no issue that any lois lerner e-mail -- >> the assistant secretary for

legislative affairs. treasury agreed with the irs that it should inform congress as soon as it was able. yet you did not. >> we actually have provided you the information. >> you have not provided us any information. in fact, we did not learn until last week. you supposedly lost the e-mails not just from ms. lerner, but other persons of interest. >> there is no evidence that any of those e-mails have been lost either. my process has been to make sure we had all of the information provided to you. >> at this point, why should anyone believe you? irs denied for two years targeting of information -- of americans based on their political beliefs. that was not the truth. i said it was a few rogue agents in cincinnati. that was not the truth.

you said you were targeting liberal organizations. that was not the truth. you are telling us out of thousands of irs computers, the one that lost the e-mails, was a person of interest in an ongoing congressional investigation, and that is not the truth either. >> the gentleman's time is expired. mr. lewis is recognized. >> mr. commissioner, first of all, i want to thank you for your service. thank you for your patience. youi want to apologize to for the way you have been treated this morning. i thought this was a hearing and not a trial. i want you to take the five minutes that i have, and use it

to say anything that you have not had an opportunity to say. >> i think between my full testimony and my oral testimony and my response to the questions, i hope it is clear that we have not, in this investigation, lost any e-mail from the start of the investigation until now. i hope it is clear that by the end of this month we will have provided all of the lois lerner e-mails we have, that those will number 67,000. it should be clear that in the hard drive crash, we have located 24,000 e-mails that lois lerner sent or received. it should be clear, on the basis of the e-mail track, the lois lerner was not trying to destroy e-mail, in fact asked for extraordinary efforts to try to restore her e-mail at that time, so there does not appear to be any attempt to rejoice over the

loss of those e-mails. it should be clear that when we did provide this committee with preliminary information reporting, the net result was a press release, erroneously leaping to conclusions that e-mails had been lost. it turns out, on further investigation, and we are continuing, that none of nicole e-mails have been lost. we will provide a full report on the other custodians as we report that work. it has been demonstrated that piecemeal information about the problem simply results in press releases and angry letters to me. will, as we have, continue to keep the committee fully informed of the facts as we find them. if there are situations, we will give you all the information about them. i did not come out of retirement to run an agency that did not create transparency, responsiveness to congressional

letters, and otherwise. this is an important agency that collects 93% of the money the government uses to run. it is important for every american taxpayer to feel comfortable and confident that when they deal with the irs, they are going to be treated fairly, whether they are rich or poor, republicans or democrats, whoever they voted for in the last election. to say this is the most corrupt irs in history seems to me again to be a classic overreaction to a serious problem which we are dealing with seriously. i am comfortable and confident and have received that in the six months i have been the irs commission. >> i place into the record a june 18 letter by the council president, as well as a june 20 by theof this year

assistant secretary for legislative affairs at the department of the treasury. >> without objection, so ordered. >> may i reserve my right to object? >> you may. >> and i will tell you why. i hope everybody will read the letter from mr. fitz paying -- fitzpaine. >> that is the purpose of placing it in the record. >> i want to continue with my reservation. and i want to tell you why. it says, in response to your questions, irs informed treasury ms. lerner's custodial e-mail box appeared to contain very few e-mails prior to 2011. treasury agreed with the irs that it should inform congress as soon as it was able to provide accurate and complete

information, although treasury ultimately deferred to the irs on how to handle the matter. >> those letters being distributed -- >> we are making copies now. the committee received these recently. copies will be made available to every member of the committee. mr. ryan is recognized for five minutes. >> this is unbelievable. the apology that ought to be given is to the american taxpayer, not to a government agency that is abusing its power. i am sitting here listening to this testimony. i just -- i do not believe it. that is your problem. nobody believes you. the internal revenue service comes to congress a couple years ago and misleads us and says no targeting is occurring. then it said it was a few rogue agents in cincinnati. then it said it was also on progressives.

all of those things have been proven untrue. this committee sent a criminal referral of possible criminal wrongdoing just a month ago to the justice department. we have heard nothing. you bury it in a 27 page letter to the senate, asking for them investigation, that you have lost lois lerner's e-mails because of a hard drive crash. monday, our investigators ask your agency whether any other hard drives crash. the people who were investigating were involved. you did not tell us that. on monday.you because we asked you. >> and what did you do with that information? >> we asked you whether any other hard drives were crushed. this is unbelievable. you told us you are going to give us all of lois lerner's e-mails, and you learned in february that this crash. >> i did not learn in february there was a crash.

>> i am not asking a question. i am making a statement. you are the internal revenue service. you can reach into the lives of hard-working taxpayers, and with a phone call or letter can turn their lives upside down. on tok taxpayers to hang seven years of their personal tax information, in case they are ever audited. and you cannot keep six months of employee e-mails? and now that we are seeing this investigation, you do not have the e-mails. hard drives crash? you learned about this months ago, you just told us, and we had to ask you on monday. this is being misleading again. this is a pattern of abuse, a pattern of behavior, that is not giving us any confidence that this agency is being impartial.

i do not believe you. this is incredible. >> i have a long career. this is the first time anybody has said you do not believe me. >> i do not believe you. >> we have a disagreement. our record was not buried in 27 pages. most of the 27 pages is exhibits. when asked about the custodians, we told you what we knew, which we knew for one day. >> congress is investigating -- >> will you let him answer the question? >> i did not ask him a question. if yes, you did. >> i control the time. i realize disrupting a hearing sort of -- >>, on. -- come on. >> i am not yielding time. i control the time. regular order. >> if we are investigating criminal wrongdoing, targeting people based on political beliefs, and the e-mails in

question are lost a cousin of a hard drive crash that is apparently unrecoverable, which a lot of i.t. professionals question, and you do not tell us and how we ask you about it, that is not being forthcoming. the balance of my time. >> that is not true. >> the gentleman has yielded back his time. >> thank you. mr. neale is recognized. >> i am going to let you answer mr. ryan's question. ask mr. ryan tried to leave the question the information about the hard drive crashes in the e-mail that you have had. some time. second, we produced the public reports telling you about the e-mail loss on our own. it wasn't in response to a question. thirquestion. third-party alert on monday morning about the custodians. our staff was asked on monday afternoon if there was an

indication to any hard drive problem. the next morning the committee put out a release of searching and leaping to the conclusion therefore that e-mails have been lost, particularly nicole flax. as we continue to work -- and we have more to do -- there is no evidence that her e-mails were lost. we are responding and what we are trying to do as the letter suggested is as soon as we are evil to give you a full picture, we are providing that. it's not in response to the question. question. that was in a public report and provided. you have 770,000 pages and you will have 67,000 lois lerner e-mails, $24 of the e-mails in the period that it crashed have not been lost and they will be produced to you. >> commissioner come at this point may i ask you a question and i will give you more time. there is a distinction, yes, the committee didn't know about the hard drive but we didn't know about the server.

there is a distinction. we didn't know about the server and what came in the carbon copy of the letter that he sent to the senate, the server means they are lost forever in a hard drive crash doesn't necessarily mean that the e-mails are lost forever, so there is a significant distinction that hasn't been made yet today. >> would you like to respond? >> you may. >> that's an important questions in one of the reasons we did not immediately say we discovered a hard drive crash is because as you noted a hard drive crash does not mean that e-mails have been lost forever. and in the case of lois lerner, 24,000 of her e-mails were not lost. they've been found and they will be produced. you have 5,000 already and you have 24,005 by the end of the month. when the hard drive crashes the e-mails do not necessarily disappear. her e-mail account in any e-mails in those accounts, which we could find in the period, were included and did not crash.

>> thank you commissioner. i must tell you based on what we've heard so far today if you came in here and say that you've agreed with everything that the republicans have suggested, then they would say we don't believe you. they have come to a conclusion, not based upon the facts, but upon what they might promote as a conspiracy. the only thing that is missing is oliver stone but there's time for that because there's an election five months from now so there will be plenty of opportunity for them to do that. having served on this committee for a long period of time, you have an individual here who has a distinguished career, who served in republican and democratic administrations, coupled with the fact he took an oath today. unless those here didn't hear him take the oath or witnessed him taking the oath, for him to take the oath and then have people suggest him don't believe you. that i isn't the way this committee has functioned in the past. and it off not be the way that we function going forward. now just a couple of quick

questions and then i want to offer something to you. the tax investigator general has said there wasn't a cover-up; is that correct? >> that's correct. it's not a conspiracy. based on the consortium that he has made? >> that's my understanding. >> at the moment there is no smoking gun linking the administration to lois lerner sex >> that's also my understanding. >> now, i would hope that at some point, the committee might spend a hearing may be a morning talking about the success that you have had with the off shoring accounts for the individual taxpayers, but the numbers are pretty stunning in what you would be done to collect from those that have voluntarily complied in switzerland and other tax havens and it's a story that i would hope he would have an opportunity to talk about. mr. camp is correct when he says the tax system works on the basis of people believing that there is equity in it. and that everybody carries their

burden and spending some time on offshore and spending some time on compliance by teak we got for the hearing. but i know that it doesn't fit in the determination that was me this morning for the purpose of this hearing. thank you, commissioner. >> okay mr. nunes is recognized. >> mr. commissioner in september of 2010 a letter from the chairman asking for an investigation of a political five o. one c. -- 501(c)4. >> i don't know where it would have gone. >> but assuming that it did she would have responded. >> and the agency i haven't seen the letter and i don't do what the response would have been. >> would we have that e-mail? what we have that response? >> of the response wouldn't have been by e-mail. but there would be a letter back to the senator.

>> if the letter comes in from the senator there should be a response back. >> then there was in october of 2010, senator durbin wrote the commissioner or urging him to investigate the conservative groups specifically crossroads gps. that letter would have likely been sent to ms. lois lerner. did she ever write a staff that? >> i have no idea. >> would we have any of the e-mails associated with that? >> if she wrote back there would be a hard copy any letter in the final as to what it said. >> and during the period before the crash, the liberating groups, democracy 21 repeatedly wrote to the irs asking for an investigation of the conservative leaning groups. did lois lerner ever write an mac? >> i don't believe she wrote them back or not. >> would you have a copy of those letters? could we get those letters? >> if we have them they've

probably already been produced. >> in june of 2011, chairman camp sent a letter asking about the abuses of the gift tax targeting. just so you know, we do have that letter. we didn't receive a response. so, the point here is that there were 83 specific employees that we asked for all of their e-mails on. you are aware of that right? >> we worked with the investigators to select the 83 that seemed the most likely to be involved in a selected range of search terms that would actually produce the e-mails that would be relevant to the investigation. >> but that was only the e-mails between the e3. for example if lois lerner send an e-mail to the secretary, that would be in those e-mails? >> there is no location that

they would only be in the agency. the search terms were any e-mails to anyone. adjust the 83 were the accounts that were searched to see if they have 83 return to anybody else about the search terms those e-mails would be produced. >> that the secretary isn't one of 83. you're telling me if there was an e-mail from any of the 83 to the secretary that e-mail would be in the e-mail box and would have been found in the produce? >> the limitations back and forth belong the 83 it was the 83 custodians as they are called. they are e-mails, any e-mails that the search terms that were agreed to in all of them were produced whether they were to someone within the 83, outside of the 83 in the agency were outside of the agency. >> but do you understand

mr. ryan's plaintiff in a lettee letter that he sent to the senate last week on friday, which is exactly what had happened when lois lerner planted the question in the audience way back, if this shows a pattern of abuse, then the pattern of dumping things on friday and then specifically -- i am not trying to get into a tit-for-tat with you. i'm saying why it's not believable is because you have -- the one we talked about lois lerner's hard drive which is one of the 83 that there were six additional folks in that 83 that have disappeared and you didn't tell us about it on friday. >> can i explain? >> we hoped to complete the production of all of the e-mails and complete the investigation which just started and provide a complete report. the senate finance committee indicated that they were nearing the conclusion on their report and they wanted an update on the letter in march to the committee

and the finance that we have found that we produced all of the relevant e-mails to the investigation. we provided that letter. they also asked for an update. the reason it was produced friday rather than at the end of the month was in response to the question from the finance. at the time that we produced the report we had no information about the custodians and i have asked people to review. that information was provided to our people on monday morning who happened to be reading your stuff on monday afternoon. >> i'm under a lot of heat because i didn't know on monday and i didn't tell them on monday because i didn't know. it wasn't included in every part produced in response to the finance committee request because when the report was prepared, no one in the agency knew which any of the other custodians were involved. >> the time is involved in the -- time is a expired.

>> lesniak might regret that this has been held -- this hearing has been conducted as less of a hearing then it might have been as an inquisition and you deserve better. you certainly are obligated to give truthful answers, and we appreciate your trying to. but these are just one thing. you have the right to try to respond to any question. if you find that you are being badgered or not given an opportunity to respond, take a breath and then try to get your answer out. if you are not given the opportunity, then recognize that again this is maybe not a hearing but an inquisition. you have the rights to mak righe the record reflects what you under oath would like to say. somewhat confused the issue that has been raised by this investigation. let me ask you a question.

iand as added scrutiny that the irs was giving to the so-called social welfare organizations is there evidence that shows that any number of different types of organizations other than just far right or conservative organizations were being scrutinized? >> there is evidence that organizations across the spectrum were reviewed. the bold of the applications were from the conservative groups and were of conservative groups. >> but it wasn't just of conservative groups. >> that's correct. >> some would like to portray this as just targeting an attack on the conservative groups. but the evidence, which has been revealed to everyone including members of the committee is otherwise. we are watching how people try to confuse this investigation should really be about what is really wrong with the system and that is that today in america this so-called social welfare organization committees, these not-for-profit organizations that get special tax breaks that

ordinary americans don't get and they pay less in taxes that doesn't have tax as a five o. one c. -- 501(c)4 they spent in 2012 more money than as social welfare organizations and the two political parties combined. $256 million spent by the so-called social welfare organizations to conduct political campaigns. while the two parties, which are there to conduct political campaigns spend less than the $256 million then the social welfare organizations spent. i hope at some point, commissioner, we have a chance to get into that because my understanding is that we are seeing now the seeds of this dark money that's being spent. my understanding is that there is an investigation by the state prosecutors in the state of wisconsin of the wisconsin

governor for perhaps coordinating illegally campaign activities in ways that might not violate the law. what we are finding is that fewer and fewer of these organizations are applying for the tax-exempt status that gives a special tax treatment are doing social welfare. they are doing nothing more than campaigning. is that something that the irs is concerned about that what was to be a tax provision in the tax status reserved for the organizations that want to do social welfare is being used to conduct the campaign activity? >> our concern at this point is to try to testify on the numerous occasions to take our review of the relations governing all of the organizations to determine can we provide clarity as to what is allowable activity and the amount that you can engage in without jeopardizing your tax exemption and to which organization should apply.

we have had over 150,000 comments on the draft regulation. we have announced that sometime probably in the early to next year we will review and we propose and ask for more comments and have a public hearing. we are not in the political business and i think what is important is to provide clarity. right now it is an unclear standard and it is hard for people running those organizations to know what is allowable and not allowable. they shouldn't operate those organizations and worry somebody is going to see the facts and circumstances change and now you are not eligible. so the goal was to have a rule that is fair to everyone, clear and easy to administer and we are going to try to do that. >> final question. you are under oath. to your knowledge are there any documents or requests for information that you have not responded to completely? >> we are responding as quickly as we can. we have the far-flung request documents we cannot respond to

now and there is no known document request that we are not going to respond as quickly as we can. >> mr. t t. tiberry is recogniz. >> this congress and this committee have heard from a lot of different leaders who come and go and it's been quite frustrating for us and many other were constituents regarding -- and i will not rehash the concerns. but i think that every member of the committee ought to do something this weekend and maybe monday. go talk to your caseworker who deals with the irs for your constituents. get an earful from them and maybe we wouldn't be apologizing. let me tell you a story. a small businessman in my district paid his taxes on timee forever. forever.

an automatic payment was setup in fact with his bank to pay the irs. like you have done as a businessman in the past. october last year, he found out when they actually the day that his payment was due to the irs got his account had been hacked. no fault of his own but fraud. he did what any law-abiding citizen would do. he worked with the bank, closed the account. the irs had already accessed the account but it had already been closed and he knew that. he called the irs and said my account has been hacked. a payment was made. it was made in perfectly because they closed the account. so the payment is going to bounce. i don't want to get penalized. i don't want interest. what do i do? >> thank you for letting us know. get us a check immediately. and it will all be good. it's the middle of june. he is being charged penalty and

interest because of that fraudulent payment through no fault of his own. that is just one case ladies and gentlemen. and when these constituents have watched long before you got to the irs by the way, long before you got there has seen the irs continually delay when there is no delay on their part of the information. if they say my document got destroyed, sorry. not an excuse. there seem to be two sets of rules. and the frustration that we have is quite frankly everybody knows this has been going on for yea years. if the president would have asked me to be the commissioner of the irs and i found out in may, april, march, february was you found out rather than bury

it in a letter on page 15 here is what i would have done. just a suggestion because of the lack of confidence the american people into this committee have because of how our constituents are treated differently than how the irs leadership treats america. i just found out this happened. it wouldn't cost to pick up the phone. the president has a phone. you probably have a phone. pick up the phone and say something very bad just happened. i don't know why. i don't think it is a cover-up and i don't think that it is, no. but because of the past and the lack of transparency in the past and because we are a really important agency that the american people need to have confidence in and the congress needs to have confidence in i just wanted you to be aware of this and we are going to try to continue to get to the bottom of this. when you don't do that, for what reasons i understand completely

what you're saying but when we find a buried in a letter and then on monday because we ask the question not because you provided the information but because we ask the right question and there's a lot of questions we haven't figured out that we get the right answer there is a feeling that my gosh the irs has no credibility and it doesn't need to be that way. this isn't about republicans and democrats. it's about our constituents. talk to your irs caseworker. i can give you 12 more. i did i.r.s. casework. americans fear the irs. and now it is unfortunately with the pattern of delay and the disrespect and defeat in many cases there is no credibility. this isn't good for our country. and my hope is that you can

clean this up. i have to tell you i don't even have a question for you. this is amazingly awful. it's absolutely awful. this isn't partisan. just talk to your caseworkers. thicaseworker's.this is not par. this is just americans frustrated with the arrogance of an agency that is above the law and that their opinion. i yield back. >> the first thing i did preparing for today's hearing was to talk with my caseworkers were constituents service representatives as we call them in austin and san antonio and what i found, commissioner, is when 250 irs employees spend over 120,000 hours in almost $20 million on responding to congress, those employees are not able to respond to their ordinary duties. i found for example that as far as the nonprofit community service organizations that the office of the cultural center

that a smal is multi-area commuy foundation that wanted to raise money in a small town for the first time to support the community activities that a neighborhood community association in san antonio that the overzealous justice ministry, that a video service that covers community organizations in san antonio and tries to spread the word about their activities all of them have waited for months and in some cases over a year to try to get approval of their application to cause it would appear to be that you me that ye so busy responding to one claim after another you have no additional resources there's been a long-term commitment to underfund the internal revenue service and discredit it and the whole concept of progressive

taxation in this country. now let me ask you as to the seriousness of the investigation have you ever been in benghazi? >> no. >> do you know if you have ever had any response ability for anything having to do with benghazi? >> no. >> how about area 51 and ross walden -- roswell new mexico into the space aliens? >> no. q-quebec have you ever had custody of the president certificate? >> no. you did is that this was a serious inquiry into the endless conspiracy theory that is being exploited solely for the political purposes. i do not approve of his lois lerner and the way that the irs handled all of these matters, but i think that there is a much larger cover-up issue here and

it is the desire of our republican colleagues to cover up these purported social welfare organizations that don't want to disclose the secret campaign contributions they rely on to pollute our democracy. it's not surprising to me the entire revenue service would have questioned what organization paid by karl rove of texas was spending $71 million in the election cycle 2012. my concern is it doesn't appear in the public record has been a determination as to whether that was a legitimate social welfare organization are not window from today's papers and elaborate charts that anothechart that anl welfare organizations headed for citizens for a strong america.

but that organization apparently wasn't involved in promoting the political process in the state of wisconsin. iabc that this is a serious matter. the use of the corporate secret money is a problem enough. but the determination to have that money to be taxpayer subsidized in social welfare organizations and in some cases headed by individuals who never had any interest until they could claim it for themselves to public our democracy that is a serious problem. i'm pleased you are going to be coming forward with anything else that you can find. because although this is not a serious investigation but the endless pursuit, the obsession with conspiracy and conspiracies we do need to have every bit of information every shred of information that you can find even though the people i talked about in texas who have legitimate issues before the irs

are collateral damage in the process. but then i guess in some of his colleagues tha at the much cared about the collateral damage in other contexts anyway. i yield back i believe you are and i honest man and you took this job to improve the irs and serve the american people and so i just have a few questions. i was a cop for 33 years so i wanted over some questions. technology is confusing to all of us. there is an investigation currently ongoing, right?

going back to the hard drive crash at lois lerner -- >> and you are fully cooperating with the office and i once chaired the intergovernmental agency of all inspectors general i'm a big supporter. you provided them all the information that they asked for in the process of the investigation into the request anrequestsand you've kept them s much as you can on all of the information that is developed on this investigation? i'm a little confused today when i learned that the ig office called our office here in our staff people here on the ways and means committee and decided that they didn't learn about the hard drive issue until the ways and means committee for doctor press release. how did that happen?

>> vig is conducting an investigation into the avenue idea. >> the investigation they were doing as of the response to their report. they have started an investigation on issues regarding the hard drive. they were not doing an investigation. they have to learn from the press release in the ways and means committee in the united states congress they have to learn from that that there is an issue i would think if you were a part of that in helping me and assisting me in that investigation, does that not make sense to you that that would be information that you would provide the office?

>> i just need a yes or no. >> i think that is important to continue to provide. they learned it in a press release. that is not correct. i think you want to be honest, but there's been some mistakes made and i can understand that. so let's just go through this very quickly. lois lerner sent her e-mails to the irs employees since they should probably leave not have these cases it's very dangerous we are told in a potential targeting is conducted by the rogue employees in ohio. we request all of the e-mails. the internal review then we find out the e-mails are destroyed and now we find out the hard drive is destroyed.

mr. koskinen, the american people don't believe this you wouldn't accept that i'm supervisor i lost my e-mails or my hard drive. what would you do? my time, thank you. regular order. >> if i destroyed it id straight my hard drive.

if i found the investigative contemporaneous information from three years earlier that he affect worked very hard to restore his hard drive you've got the best experts to conduct the e-mail and that had failed tiwould tend to believe it. the other hard drives used it to? one of the ones on monday turned out to have not caused the loss of a single e-mail. they do not cause the e-mail to be destroyed. we will make sure that we get it to you. >> now mr. thompson. >> thank you for being here. i too want to thank you for your public service and your distinguished career. and i don't want to apologize to the irs, but i do want to apologize to you.

there are things that we can offer both sides of the aisle agree to. i think that we are all pretty upset if in fact there was any inappropriate behavior on the part of the irs come and i think most of us in previous hearings have expressed that. i don't care if you are a democrat -- actually i do care if you are democrat or republicarepublican doesn't matf you're a democrat or republican or conservative or liberal, you should receive equal into transparent treatment from the irs and if there's an there is y targeting done, it was absolutely inexcusable. i think we are all at the least disappointed that ms. lois lerner took the test and i think that they helped create a lot of the political nonsense that we are seeing playing out today. i wish that would have gone

smoother and we could have gotten to the bottom of some of these problems from the start. and i certainly hope give that f these hearings we are having worked race to to have before te other committee has there's an all of the effort that's gone into this has really been a distraction from us being able to address a lot of the problems that are important to the american people the highway repair transportation if we could just take a little bit of this time maybe we could get some of the issues that would help put america back to work. and i think that all of us experienced the same situation as my friend from ohio. we all can tell stories about constituent problems with not just the irs but with anything

given that you're here to tell you i personally have been trying for weeks to get an appointment in my district with the irs over a constituent matter of a small businessman in my district has been dealing with for a couple of years and it's all based on a bill dealing with conservation easements, so if you have any influence on your california office please ask them to return my call. i would like to deal with that. but the thing i found that it is really in my interest today in addition to getting this thing cleaned up and down with. it's misplaced and not knowing where they are or what the process for dealing with it is a. in number of years ago because of the legislation that i have carried dealing with electronic

waste we found out not through our own resources through press reports that a number of hard drives from our intelligence committee and from the department of defense were found in third world countries and that was a terrible breach that caused me to amen amend our intelligencamend orintelligencer intelligence bills and probably everybody here who was there then. we had the same security problems with hardware and software in your agency and i would like to know if you think that's something we should try to collaborate on to protect the records of the public as they are stored in your equipment.

>> it is important. it goes to recycle and as you stride rather than put in the waste dump were sent out somewhere else. >> i would be happy to share with you the approach that we took if you think that might help. in the remainder of my time i know that you had some things you were trying to say to my last copy and let us know if there are issues. i spent a significant amount of time visiting 25 largest offices across the country to let me know if there is an issue and to give us their best insight to the advice and suggestions on how to improve our operations.

i'm particularly concerned and we are working on the backlog in the organizations and while we are doing our best to work that down so that your constituents actually get an appropriate and prompt answer to the replications i was angry when we learned what happened to lois lerner's hard drive and all the news that's broken since then and i'm even angrier today about this and it's interesting we sent a letter to secretary lew on monday we got the documents before this committee convened its hearing it's just amazing that the white house or the treasury can respond that quickly she had two computers

write a laptop and a desktop quick >> right. >> which hard drive failed to close the laptowas the laptop oe computer. >> how do you even know where she's archived or do you know where she's archived to key documents from the timeframe that we are interested in? >> the timeframe you're interested in everyone archives their documents on their hard drive in the office because that's where most of the work is done and they want to be reached readable. >> can you attest that all of the documents and the memos from the targeting are produced you have these i cannot attest any e-mail was lost i have not talked to her and this is all information being developed as we talk.

>> my understanding is no e-mail of hers has been lost as a result of her hard drive crash. we just got the list on monday ourselves and we've been pursuing this and we will in fact give you a full report on all of the custodians now it doesn't count. >> so we don't know where those hard drives are right now. >> we don't know where those are. it's unbelievable you don't have that information it then weeks since this information was made public to us. >> we advise you in the committee on monday that this is all that we have is the names. we are actually working through and review to find out what is the status of those and how many e-mails are lost and we will know where the hard drives are. we will give you that information as we have it.

>> then we get asked what is the answer to this and we don't know the answer. so we can expect this in a timely manner. i can get yo give you all of the information. >> she was advised as i noted in the summer of 2011 that the kernel investigation division had been unable to retrieve any e-mails with her hard drive and was recyclable by what date to the date. >> it took this long for the committee to find the information in the letter that we received on friday. >> there were e-mails that actually last fall in the productions that referenced the crashes and no one was paying attention to because they were looking at all of the relevant

information as we proceeded through it wasn't until april that was a crash and it wasn't until mid-may that we actually found the issue to determine how many e-mails were available. >> that's why it was into this committee notified and the decision was made to completely recycled the hard drive. >> that would have been made three years ago. none of us had anything to do with the investigation. it was -- >> i would submit it does have to do with the investigation. you might be able to shed some light as to why we were not notified and it disturbs me that this decision was made internally without any kind of outside consultation on this committee was vigorously pursuing information regarding the targeting. >> i would like to make the record very clear that decision about the hard drive was made three years ago and there has

been no decision made since this investigation started and certainly since i started to have anything destroyed. any e-mail, any hard drive people are using now is after the crash is now in the possession of the eiji. any of the decisions that are made we need to be notified. this committee needs to be notified prior to any decisions made about the disposition of those hard drives. >> we will be going to-1. >> thank you mr. chairman. commissioner, i'm going to make an observation. it will sound condescending and i don't mean it to be. go deep into the meeting of time communicating. growing up my father told me make good choices and we kind of have a running joke when my kids go out of the door in the morning were particularly in the evening to make th good choices.

i think that you made a bad choice and it wasn't based on that motivation. i think the administration came to use singularly as a person as a white knight. as someone with a sterling reputation, someone who has had experience turning around bad organizations. and i think that the administration is trading on your representation. so i think you've made a bad choice. you are in it now that the decision to accept this responsibility as the irs commissioner in defending this administration was a bad choice and i will make a prediction that you're not the commissioner of the irs anymore and it will go out to someone else because now you are the third person. and i would ask you to respond to that but it is an observation and i mean no condescension so here is the point you're been characterized by the other side

as a victim. the irs as a victim is so richly ironic you can hardly believe it. so you're not a victim today. the irs isn't a victim today and here's the fundamental problem. the chairman sent a letter on this whole issue and then ten days leader. think about the duration of the ten days. ten days is the ability to panic as the irs, reflect, plan, talk and execute. and there was a crash. ten days after the chairman's letter. now i have a slide. that is a fire and inside that fire is a hard drive. i have another slide. that's the hard drive after it was burned and you know what, commissioner do you know what was recoverable from that column

hundred% of the data. so the notion that a hard drive or a server in the midst of this entire situation has been lost into oblivion and is the case even a white knight can't make. >> can i make a comment? >> he has yielded that his time. >> can i ask unanimous consent that lois lerner's drive was thrown into a fire and 100% was recoverable because that is ridiculous. >> there isn't a question pending for the witness. i object. you are recognized and you may use your time as you see fit.

thank you for appearing. you are not going to be doing this forever. i'm surprised anybody takes this job based on the treatment that has been accorded to people that have better things to do with their lives and had credible careers and a stepped into difficult circumstances. thank you. i appreciate it. i appreciate the fact that you are managing or attempting to housing the employees. you have a budget of almost $11 billion. and i appreciate that you are doing this with a workforce since i've been in a congress that shrunk 25,000 employees. 10,000 in the last four years. but the budget in its wisdom my

republican colleagues are cutting your budget. the training budget went to $172 million to $22 million. from the tax code that we consistently make more complex and often times we don't get our jobs done in time so that your employees can do their job and somehow we are covering you and some of this does sound condescending i will say not allowing you to answer questions for the situation that the congress has made worse and is systematically assaulted the irs in its capacity to function. what did you do in the government shutdown? with business furloughs its accounts receivables department?

not one that stays in business very long. with the layers of complexity and the vast system where people pound away on the irs for the people that work there. i appreciate that they do and certain irony is now in the republican party to assault the irs and return and undercut its ability to function. in its owand its own republican presidents starting with linco lincoln. i appreciate the hard work and being able to tease out this and

i appreciate my friend mr. doggett's reference to the manner of things that have been relayed at your doorstep. like the training and like people on the job to not have the budget cuts that we are told by the tax advocates of the budget cut of 1 dollar costs the federal government seven. and undercutting the enforcement which every dollar is over $250 that's returned to the taxpayers for veteran services and for environmental protection. i'm sorry. i'm taking more time than i wanted. i would like to turn you to get an unfettered minute or two if there is something that you would like to say. >> thank you very much. >> and i would conclude with my thanks for your being here.

>> with regards to bad choices i'm sorry the congressman has left. i have noted that when people ask why i took this job perhaps i need counseling. we have 90,000 dedicated employees that i talked to and listened to 10,000 of them. there is one point i want to come out from this to refute the suggestion in the next six to 12 months i'm going to fade away. i am firmly committed by will wl serve the remaining three and a half years of my term, come whatever it may be. and i think it's important for those employees dedicated as they are to the mission of this agency to have confidence that they are a leader and the irs isn't going to cut and run and decided to send a bad choice to take this job and it's delighted to be working with them and i look forward to the next three and a half years of my term during that. i would also like to note and reference again but somehow it is unbelievably lost the hard drive now is unbelievable

because it wasn't lost now. it wasn't destroyed. that was a decision made three years ago before any of these investigations started. there should be no implication that anything has been the story or tampered with since this investigation started and certainly since i became the commissioner. >> the time is expired. >> thank you mr. chairman. commissioner, on the numerous occasions as well as on a first page of your written testimony that he presented to the committee, you cite murderous statistics of the amount of e-mails and other indications the irs produced with this committee and certainly for the senate finance committee but frankly all of these statistics are relevant if the effort doesn't get us to the full truth and certainly all of the statistics are minuscule to when compared to the constitutional rights of the average citizens that have been trampled on and is guided by lois lerner and others within the irs.

the scope of the investigation into the work that was conducted by lois lerner and others and i would like to ask you based upon your understanding of all of that what do you think that lois lerner did wrong word inappropriately in the healing of her duties while she was in charge of the tax-exempt organizations in the application review process. >> in the past we had a lot of investigations going on. i think it is clear to the extent the ig found inappropriate. was used to select applications for the further review to the extent that applicants were required or requested to provide the voluminous improper information that was a mistake. it shouldn't have happened and we should do everything we can to make sure it doesn't happen again. the ig made recommendations of

what should be done but accepted all of those and we are implementing all of those and providing appropriate training and safeguards because as i said earlier, i think it is critical for every american th american t their political beliefs, whether they go to church or don't go to church, whatever they went to last week it should be confident. if they hear from us is because of something in their return. and if they said something in the return that looked like that they would hear from us again and i think that is critical as a commitment that we have made. >> so you are basing that on the report in the investigation that you just said you didn't do your own investigation. i think however that if i were to become the head of an agency like the irs, i would want to conduct an internal investigation of my own agency to understand fully what happens. so i knew what happened because i am in charge of that agency. do you have any plans to do your own internal investigation of this activity? >> when i arrived it was clear with the investigations going on to the last thing i wanted to do was appear to be interfering in

those investigations into talking to any of the potential witnesses in the second michael continues to be with the investigations and the amount of time going on what i'm looking forward to his being educated by the reports of those committees. you have all spent more and more time i have an agency to run. >> so you're not going to do your own. >> i'm looking forward to your facts in your recommendations. we will take those recommendations. >> it will be everybody's fact. >> let me ask you this in the time that we have. the tax-exempt government decision they announced the irs will restart the audit of the 501(c)4 investigations during the target ended due to political activity they were suspended after the acting commissioner expressed concerns that there may have been tainted by the targeting. the committee found evidence that lois lerner's bypass internal controls as you just indicated and reached into the right-leaning group for the audit.

getting these concerns and the evidence that she influenced the office selection of these groups why would the irs use these audits? i think it is unfair for them to leave it in limbo that they deserve to have closure. we've made it clear. >> why not just provide the answer without auditing the process? >> we have noted that -- >> any request for the information they don't have to respond to the normal follow-up and we want to close the investigations of those organizations are not left in limbo and are not able to function and we should not leave them on there and we ought to appropriately review them and most of these cases we should do that. >> doctor price. >> commissioner, i want to also thank you for your service. there is a notion that we

decided to appreciate what the public servants do come and we do. but this is serious stuff. .. your job is to rebuild this trust. and with all due respect, the comments we've heard today, the processes that you've gone

through, haven't begun to rebuild that trust. you said that the work continues, the ongoing work continues. isn't it true that our friends who draw the conclusion of innocence is likely premature, is that not correct? >> are not sure who's i innocent you're worried about. i would like to note that the statistics we shared with this committee and happy to continue to work with you do not show that any donors were audited at a higher rate than people in the public generally. if they were it was a mistake but there's no evidence there was a systematic attempt. >> it's clear that the individuals -- and anecdotally there's no doubt about it, but the statistics will show that folks who donated to these groups were audited at a high rate. i want to get to a couple of specific questions. you said you learned about the crash of this hard drive in

february of this year? >> i don't there was a potential problem in february. we did not know and i was not advised there had been a crush in may when her i.t. people discovered it and it wasn't until the end of may we understood there were able to complete the investigation of what the revocations were, how many enough still existed and then started the investigation of how many other -- >> winless treasury informed? >> i don't know. i did not -- >> they had to have been informed by the irs the? >> my understanding is that sometime by mid-april any conversation between council, council of treasury their advice there was a problem with the lois lerner's e-mails and that -- >> the irs council that inform the treasury? >> that's my understanding. they were advised we were investigating. >> secretary lew is refused today to provide a mouse as relates to lois lerner and other items to this committee. don't you think would be appropriate given, or maybe his computer crashed. didn't know if secretary lose

crash -- computers has crashed, do you? >> my understanding, i haven't seen any of these documents. >> do you think it would be appropriate -- >> treasury department has provide all of their lowest learner e-mails. >> we have not reviewed them yet. >> none of us had had a chance to review those but that's my understanding. >> if there are any from lois lerner and secretary lew you will have those. >> to know if lois lerner headed back to larry -- a blackberry or an eiffel? >> i don't know spend i do not know. >> do employees of the irs kerry mobile devices issued by the government? >> the kerry mobile devices. the mobile devices running same e-mail system. people do not have on their office blackberries. if they have them or whatever mobile devices they have, ma they all run against the same e-mail account. >> can you find out if lois lerner had an iphone or a blackberry? >> i'd be happy to let you know. >> there's a notion on the other side this is the artist is

scrapped ashman strapped for money. can't do a doggone thing goes to the money. you are aware the irs has a studio that produced the famous star trek video that spent $5 million annually on the studio, are you not? >> no longer, the studio has been closed. we now have a review board and produce very dubious and they're not done in the fancy studio. that was all four years ago. since then our budget has been cut by $850 million. >> i arisen please use 521,000 hours in fiscal year 2013 at a rate of about $23.5 million for union activity, are you not? >> that's right. that's consistent. across rugged entrance of union voice and all federal agencies have a right to spend some portion of their time on official business for the kenya. the irs has a union and those employees pursuant to the process do spend time on union time. >> might be appropriate for them to spend time on something other