>> gretchen: brian has successfully said something bad to trace adkins again. >> brian: i was trying to be nice. >> steve: good luck sunday. on a friday morning, fox news alert. talk about a hot seat. on the hill we're about to hear for the very first time the ousted irs chief talk as he takes questions from congress about his agency's targeting of conservatives. this could get hot. good morning, everybody, i'm bill hemmer. big and intriguing day today. well to "america's newsroom". martha: good morning, everybody, i'm martha maccallum. this is the house ways and means committee. this is the first of several hearings that will dig into the irs matter and targeting of conservative groups opposed to president obama's agenda. bill: the president has shown the acting chief, steven miller, out the door. he is here today. we will hear from him. he was retiring in a few weeks anyway.

many lawmakers are not confident that will be enough to fix matters. straight away to mike emanuel to set the stage for today's hearing. mike, good morning. >> reporter: the chairman. committee, dave camp on the way in said we want to know who hatched this. steven miller, the outgoing commissioner ins irs said errors were made but not based on partisan views. he is in the same room with the inspector general who crafted the irs report. they have shaken hands. they're both in the room. they are both in the room and they will both talk to lawmakers today. president obama says he is outraged and that the government will look at structural and management issues to keep this from happening again. >> we will be putting in new leadership that will be able to make sure that following up on the ig audit that we gather up all the facts, that we hold accountable those who have taken these outrageous actions. >> reporter: it will be interesting to see see if the irs official tries

throwing some democratic lawmakers under the because in the irs explanation of what went down with these conservative groups they say in part, they took action because of concerns of lawmakers. bill? bill: you mentioned representative camp. i just want to repeat this. we want to know who hatched this. republicans are ticked off. many of them are furious the way their supporters were targeted by the irs going back three years. >> reporter: bill, no question about that. a lot of conservative lawmakers in both the house and the senate were hering from their constituents they were being harassed by the irs. they sent repeated letters to the irs asking if this was going on. so there's furry, if you will on the -- fury, if you will on the republican side because of action because they were not honest with the irs. house speaker john boehner thinks somebody may be going to jail. >> public service requires humility and everyone in public office needs to be constantly reminded that

they serve the american people and it is not the other way around. americans should never be targeted or harassed by their government for their political beliefs. >> reporter: i should note that sander levin, the top democrat on this panel, has also been very critical of the management at the irs. you can expect he will be tough as well. bill: just again for our viewers to note here, steven miller is in the room. george russell. steven miller, outgoing head of the irs. russell george, from the treasury department who carried out the inspection. when you hear the ig report mentioned by president, he is the one who ran that report. opening statements are rolling. when there are headlines we'll get you there live. martha: we sure will. in the meantime we're learning something that is quite shocking this morning. the irs official who was in charge at the time of the unit that targeted these conservative groups has moved over to a new position. she is now at the office responsible for implementing

obamacare. if you can believe this. some lawmakers are up in arms about this. sarah haul ingram is her name. this is the upgrade, some would say in terms of position within the irs that she has received. fox business network's stuart varney joins me now. stuart, it belies common sense, if you knew anything was brewing in the area she was working in, that you would put her in such a high-profile spot. >> it is frankly astonishing, martha, this may welcome up at those irs hearings that are now underway in washington. i will repeat exactly what happened here. i think it is astonishing. the official who was in charge of the tea party targeting office, if i can put it that way, is now running the irs office which is implementing obamacare. sarah hall ingram. for 2009 to 2012, she was the tax-exempt office commissioner. during that time the tea party and other conservative groups were targeted and

some of the information from those groups was released to a liberal group, release of information. now from 2012 until now, ms. sarah hall ingram has run the irs office which is policing obamacare. it is clearly a question of trust. we could not apparently trust the irs to be politically neutral. can we now trust the irs with our most personal health care information? there has been an uproar about this in congress and a political reaction. speaker boehner says, he has serious concerns that the irs should be the obama, the obamacare chief enforcer. senator dean heller, a republican from nevada, he has announced legislation that is going to defund the hiring of irs agents to police obamacare. if that goes through, you defunded the irs, the police worker over obamacare, you have essentially driven a stake right into the heart of obamacare. so this development could go

a long way. martha: yeah. you know, it may have come as somewhat of a surprise to the president this ig report. he claims that it did. but when you look into the timeline of this, this has been floating around for two years. so you had this position, this area that you wanted to make the most, you know your new health care initiative that you're rolling out, it is either just a political mistake or just incredibly dumb oversight to say, let's put this person in charge in, coming from an area that has really been controversyal and a lot of republicans have been very concerned about. >> you're entirely right, martha. we do not know who transferred her from the tax-exempt division which targeted conservatives to the irs office that oversees obamacare. we don't know why she was transferred from one to another. all, everything else of course is just speculation. but maybe we should be asking some questions of miss sarah hall ingram, what's going on here? martha: i think that is about to happen. stuart, thank you very much. we'll talk to you later. bill: let's drop in here. this is dave camp,

republican congressman out of michigan. chairman of the house ways and means committee and this really is frankly the target of the country right now. let's drop in and get his opening statement and proceed from there on the hill. >> under that kind of thinking every civic group in america is at risk. the knights of columbus, the rotary, the jaycees, american legion and vfw clubs. i'm sure you're aware of the saying that the power to tax is the power to destroy. well under this administration the irs is abused its power to tax and has destroyed what little faith and hope the american people had in getting a fair shake in washington. this will not stand. trimming a few branches will not solve the problem when the roots of the tree have gone rotten. that is exactly what has happened with our entire tax system. it is rotten at the core and it must be ripped out so we can start fresh. only then will the american people get a tax system that treats them fairly and honestly as they deserve.

while that's a larger discussion, it is directly tied to the issue before us today. how and why our tax system has gone so far off track, many questions still remain. why did the irs repeatedly target the american people and then keep that fact covered up for so long? who started the targeting? who knew? when did they know? and how high did it go? who leaked the private taxpayer information? why were the names of donors asked for, and what was done with those lists before they were supposedly discarded? and when did the administration know about each of these and what was its reaction? listening to the nightly news this appears to be just the latest example of a culture of cover-ups and political intimidation in this administration. seems like the truth is hidden from the american people just long enough to make it through an election. the american people have a right to the truth. to a government that delivers the facts, good or bad, no matter what. president obama promised to

be different and to deliver a better government, the most transparent in history. he was right. america deserves better. it is time to end the corruption at the irs and fix a tax code that allows washington and the irs to pick who wins and who loses in america. i expect nothing less than total cooperation by the irs in this administration as we investigate what happened, and what we must do to fix it. i now recognize ranking member levin for the purpose of his opening statement and thank him for his commitment to pursue this issue. >> thank you, mr. chairman. i'm going to read my opening statement. i will expand on it a bit now that i have heard the opening statement of the chairman. this committee on a bipartisan basis takes seriously its oversight role and we are fully committed to insuring an irs that

serves the american people fairly and efficiently. what is now completely clear is that the management and oversight of the agency's handling of tax exemption applications have completely failed the american people. i emphasize that. as we know from the inspector general's audit, the agency used totally inappropriate criteria in its review of tax exemption applications singling out organizations for review based on their name or political views, rather than their actual activitis. these criteria changed four times over two years with little management review or oversight. applications sat for years. work 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 and we are determined to get answers to our questions about how this happened to insure that it does not happen defend -- again. finally throughout this time the irs leadership has demonstrated a total disregard for the oversight role of the congress and this committee. former irs commissioner shulman testified in front of us in march of 2012 and said that, in quotes, no targeting, end of quotes, was going on. two months later, he was briefed on the ig'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 lerner was in front of our oversight subcommittee. she serves as the director of the exempt organization division and she has been directly involved in this matter, yet she failed to disclose what she knew to this committee. choosing to do so in an aba conference two days later. this is wholly unacceptable and one of the reasons that we believe, and as i stated several days ago, miss le are. ner should be relieved of her duties. chairman camp and i put together this hearing on a

bipartisan basis to get the facts. we must seek the truth, not political gain. and i just i just want to add in that regard. mr. p said listening to the nightly news, this appears just to be the latest example of a culture of cover-ups 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 a essentially a bootstrap to continue the campaign of 2012, and to prepare for 2014 we will be making a

very, very serious mistake, and indeed not meeting our obligation of trust to the american people. you're here today, mr. miller. you're here today, the inspector general, to talk about what happened, how it happened, where it happened, who knew what when, and if instead this hearing is 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, we must seek the truth, not political gain. we look forward to full and forthcoming answers to our questions today. >> thank you. before the witnesses are recognized for their opening

statements i will first swear them in. while this is the prerogative of every committee chair, it has not been the custom here at ways and means. then it is not customary for this committee so repeatedly misled by agency under its purview. it is always against the law to provide false statements to congress, act of swearing in a witness impresses upon him or her the gravity of the proceeding and the need to tell the full an complete truth. please race your right hand. do you solemnly swear or affirm that the testimony you are about to give will be the truth, the whole truth, nothing but the truth, so help you god. >> i do. >> let the record reflect that the witnesses answered in the affirmative. thank you. i would like to welcome j. russell george who has been the treasury inspector general for tax administration. i think we'll wait for the camera pool to leave at this point.

thank you. i would like to welcome, j. russell george has been the treasury inspector general for tax administration since 2002, and mr. steven miller, who is currently the acting commissioner for the irs. thank you both for being with us today. you will each have five minutes to present your testimony with your full written testimony submitted for the record. mr. george, we'll begin with you. you are recognized for five minutes. >> chairman camp, ranking member levin, members of the committee, thank you very much for the opportunity to discuss our report concerning oversight by the internal revenue service of groups that applied for tax-exempt status. as you are aware the organization that i lead, the treasury inspector general for tax administration, protects the integrity of the federal tax system. our audit was initiated based on concerns expressed by members of the congress because of taxpayer allegations that they were subject to unfair treatment by the irs. our report issued earlier this week addresses three

allegations. first, that irs targeted specific groups applying for tax-exempt status. second, that they delayed the processing of these groups applications, and third, that the irs requested unnecessary information from groups it subjected to special scrutiny. all three allegations were substantiated. the irs used inappropriate criteria to target for review tea party and other organizations based on their name and policy positions. this practice started in 2010 and continued to evolve until june of 2011. as the monitor shows, the irs was following inappropriate criteria. let me read to you these criteria from a briefing held by the irs's exempt organization's function in june of 2011. the criteria included the words, tea party, patriots, or 9/12 project. another listed criterion,

the group issues included government spending, government debt or taxes. yet another listing criteria appeared as education of the public by advocacy or lobbying to quote, make merck a better place to live, unquote. finally the criterion consisted of any statements in the case file criticizing how the country is being run. the reason for these criteria, were, inappropriate, is that they did not focus on tax-exempt laws and treasury regulations. for example, 501(c)(3) organizations may not engage in political campaign intervention. 501(c)(4) organizations can, but it must not be their primary activity. political campaign intervention is action taken on behalf of, or against a particular candidate running for office. although these criteria appeared in the irs's own documentation as of june 2011, irs employees actually

began selecting tea party and other organizations for review in early 2010. from may of 2010 through may of 2012, a team of irs specialists in cincinnati, ohio, referred to as the determinations unit, selected 298 cases for additional scrutiny. according to our findings, the first time that executives from washington, d.c. became aware of the use of these criteria was june 2011 with some executives not becoming aware of the criteria until april or may of 2012. the irs's inappropriate criteria remained in effect for approximately 18 months. after learning of the inappropriate criteria the director of exempt organizations changed the criteria in july of 2011 to remove references to organizations names and policy positions. however, cincinnati staff changed the criteria back to target organizations with specific policy positions but this time they did not

include tea party or other named organizations. finally, in may of 2012 after learning that the criteria had again been changed, the executive, the exempt organization's director of rulings and agreement changed the criteria to be consistent with laws and regulations, excuse me. the organizations selected for review for significant split campaign intervention, again, 298, in all, experienced substantial delays in the processings of their applications. the organizations experiencing these delays including tea party organizations, patriot organizations, 9/12 organizations among other organizations. as shown on the monitor the status as of december 2012 for 296 cases that we reviewed was, 108 cases had been approved, 28 cases were withdrawn and 160 cases were still open.

zero cases had been denied. of the cases still open, some had been in progress for over three years and crossed two election cycles without resolution. of the 108 cases approved, 31 were tea party, 9/12 or patriot organizations. my final point is that the irs requested unnecessary information from many political cases. in fact 98 of 170 cases that received follow-up requests for information from the irs had unnecessary questions. our evidence indicates that staff at the determinations unit in cincinnati sent these letters out with little or no supervisory review. the irs later determined these questions were unneeded but not until after media accounts and questions by members of congress arose in march of 2012. examples of the unnecessary information requested included the names of past and future donors, listings

of all issues important to the organization, and what the organization's positions were regarding such issues, and whether officers or directors have run for public office or would be running for public office in the future. months after receiving these questions 12 of the 98 organizations either received a letter or a telephone call from the irs stating that their applications were approved and they no longer needed to respond to the additional requests. the irs informed another 15 organizations that they did not need to respond to previous requests for information and instead they were sent a revised request for information. regarding the donor information received from applicants, the irs informed us that they destroyed that information. in closing our audit found clear evidence that each of the three allegations were correct. was the irs using inappropriate criteria in its review of organizations applying for tax-exempt status? yes. was the irs delaying their

applications? yes. and finally, did the irs ask inappropriate and unnecessary questions of applicants? again, yes. these findings have raised troubling questions about whether the irs has effective management oversight and control at least in the exempt organizations function so that the public can be reassured that the irs's impartial and in administering the nation's tax laws fairly. chairman camp, ranking member, levin, members of the committee, thank you for the opportunity to present my views and i look forward to your questions. >> thank you, mr. george. mr. miller, you are now recognized for five minutes. >> thank you, mr. chairman. excuse me. thanks for the opportunity to be here today. unfortunately given time considerations we received the notice of hearing within the last two days, the irs was unable to prepare written testimony. i would note that i have a very brief statement before i take your questions.

first and foremost as acting commissioner i want to apologize on behalf of the internal revenue service for the mistakes that we made and the poor service we provided. the effected organizations and the american public deserve better. partisanship or even the perception of partisanship has no place at the irs. it can not even appear to be a consideration in determining the tax exemption of an organization. i do not believe that partisanship motivated people who engaged in the practices described in the treasury inspector general's report. i have reviewed the treasury inspector general's report and i believe its conclusions are consistent with that i think that what happened here was that foolish mistakes were made by people trying to be more efficient in their 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 previously worked to correct issues in the

processing of cases described in the report and we have implemented changes to make sure this type of thing never happens again. now that it has completed its fact-finding and issued its report management will take appropriate action with respect to those responsible. i would be happy to answer your questions. >> all right. thank you, mr. miller. are you still acting director of the irs? >> i am, sir. >> and were you appointed by the president of the united states. >> no, sir. >> and when was that? >> i was designated as acting in november, or in november of 2012. >> 2012. and i'm not, if i'm not mistaken you hold actually two titles, acting director of irs and also deputy commissioner for services and enforcement? >> i do, sir. >> and in your role as deputy commissioner for services and enforcement, according to the irs website in that capacity you direct and oversee all major decisions with regard to the

tax-exempt and government entities division? >> that is a division that reports through to me, through the tax-exempt and government entities office, yes. >> so the website's accurate? >> yes. >> and then who do you report to in that position, actually in both of your positions as deputy commissioner for services and enforcement. >> deputy commissioner role i would report to the commissioner if there was one. without a commissioner, holding both hats i would report to the deputy secretary. >> of? >> treasury. >> treasury. and, did not a violation of irc 6103 to is disclose confidential taxpayer information? >> it is. >> and that really applies to all taxpayer information? >> i'm not quite sure what that means to be honest. >> in practice, basically, essentially the return -- >> 6103 obligates us not to disclose taxpayer information. >> were you ever made aware

in august of 2010 that a white house official in a conference call with reporters disclosed the confidential tax structure of a private company? >> i probably read it in the paper, sir. >> okay. you were made aware through news reports? >> i think that's probably. it is a long time ago. >> did you take any steps when you learned of that? >> i don't recall. i'm not, i don't, i don't recall. i have to go back on that, sir. >> all right. so you didn't inform the inspector general of that or your superiors that you recollect? >> i'm not sure why i would have to nightfy the superiors. it was in the papers. i don't remember whether we made a referral or, i made a referral at that time. >> all right. according to the inspector general audit the targeting of conservative groups began in march of 2010. when were you made aware? >> i was aware of that on may 3rd of 2012.

>> and how were you made aware? >> i was made aware of, not the targeting but i was made aware of the process that was described in the tigda report when i asked some of our people to go out and take a look at the cases subsequent to the public discussion of overbroad letters coming out. >> that would have been in your role as acting director as well as the deputy commissioner for services and -- >> no. i was deputy at that time. >> you were deputy at that time. when you say you asked some of our people, who would that have been? >> so i asked the senior technical advisor for tax-exempt and government entities to lead a team and take a look and see what was going on in terms of cases that had got those letters. >> did you inform anyone of that action that you took or

those steps? >> i did that i asked the senior technical advisor to do that in late march, march of, 23rd or 26th, something like that. and, she and her team came back to talk to me in may. subsequent to that i'm sure i informed the commissioner, but the commissioner was aware of the letters as well. >> did you inform anyone other than the commissioner at that time? >> you mean up the chain, sir? >> yes. >> i don't believe so. >> or the inspector general? >> the inspector general was aware of it and made it clear to us they were aware of it and were in looking at it at that time. >> okay. was there a time when you became aware of the irs launching audits against conservative donors? that would have been in about may of 2010? >> yes. that, that, i don't remember the date, sir, but, yeah, in that time frame. again there were press

accounts and congressionals coming in and talking about that. >> did you learn that from the press or did you learn that from inquiries from congress? >> i don't know. it could have been either. it came up in a meeting and then it hit the press and, so, i don't know. >> in any event after learning of that information of the audits, did you, what steps did you take? >> we investigated what happened. we took a look and ultimately i issued a directive that said that the law in the area was not that clear. that we had not been enforcing in that area substantially since the period of, i believe in 1982 or something like that revenue ruling that talked about gift tax and c-4 organizations and i said, let's not enforce right now. let's talk about it. let's study it and we will put out guidance and that

guidance will be propoke spif. i thought that was the fair thing to do, mr. camp. >> when you say we investigated who would that have been? >> i'm not, i don't remember but we took a look at the issue. we looked at how it happened and i think you were looking at it as well, your committee, sir. >> when you say we, what does that mean? >> the irs. >> who at the agency. >> the irs looked at the issue. >> what departments? >> would have been counsel. i don't know that it was exempt organizations -- i'm sorry, i'm not going to be able to answer with particularty there. >> were you ever made aware of the publication of confidential 2008 donor list of the national organization for marriage, a conservative tax-exempt organization? >> i was. >> and when was that? >> that date i will have to get back to you on, sir. >> all right. >> you by remember the issue. >> and how did you find out? >> don't remember. might have been press. might have been somebody coming to us with a congressional complaint. >> and when you learned of that publication, did you take any steps?

>> i believe we made a referral to tigda yes. >> at that time, you're not sure when that referral was made? >> it would have been in the same time frame. >> shortly after you became aware of it? >> would have been. >> were you ever made aware of the irs leak of confidential applications for tax-exempt status of conserve testify groups to pro-public can? >> i was. >> when were you made aware of that? >> again, sir i'm not going to be able to give you a perfect timeline. approximately the time i it became public when i became aware so you know that from the timeline. >> did you inform anyone else of that? >> i believe the service informed tigda at that time, yes. >> in each of the instances i asked you about did you ever come forward and inform the congress? >> i don't believe so unless it came up in conversation

or testimony. >> can i suggest something, mr. camp on those two, just to let you know? >> this would be the national organization of nation and "propublica". >> those two situations we went to tigda and i think mr. george can speak to what they find, what they found. we made the referrals and i believe and i believe what they found those disclosures were inadvertent and there was discipline in one of those cases for somebody not following procedures. i will obviously let mr. george speak to that. >> but you never informed the congress of any of

>> i always answer questions truthfully, mr. camp. >> mr. george, were you ever made aware of the alleged disclosure of the confidential tax structure of a private company? >> we have been alerted to this. >> we were alerted to it. >> one in specific or in general? >> you specifically. >> to a specific company or in general? >> it was a specific company but there was disclosure of taxpayer information, the tax, confidential tax

structure. as you know any information is considered confidential. it was particularly the tax structure of a private company. were you made aware of that public disclosure? >> we are made aware of public disclosure of information that is protected 26, section 6103, yes. >> are you aware of the instance i'm refering to? >> the one that you referred to? >> yes. >> i am aware of that, yes. >> when were you made aware of that? >> i don't have the exact date, sir. >> okay. how were you made aware of that? >> i believe it came through my office of investigations or it could have been put through a hotline that i'm not completely certain of. >> so, you don't believe you were, you learned of it from another, from an irs employee? >> i generally do not, below the commissioner or deputy commissioner levels interact with the average irs employee. it goes through a chain of -- >> that would include the commissioner. >> yes. >> so no irs employee

informed you of this information? >> most likely it would have come from one of my principal deputiesing and they may have received that information from someone. i don't believe at the commissioner level but may have been at the deputy commissioner level. >> but you're not aware, you can't tell us for sure. >> at this time i can not, sir. >> were you ever made aware of the alleged publication of a confidential 2008 donor list of the national organization for marriage? >> i both read in the newspapers allegations to that effect but i have to make it clear, mr. chairman, that the internal revenue code has very strict rules as it relates to the way that confidential taxpayer information is revealed and we at tigda are the ones who enforce the rules. so i have to be careful exactly how i respond and whether i can even acknowledge publicly some of these revelations that

you're inquiring about. >> did you respond to that information? >> a review has been, has been taken. >> is it ongoing? >> i will have to confer with my colleague, if you will give me a moment. >> all right. >> is it ongoing, yes or no? it is not ongoing. >> all right. there are daily reports of new allegations of irs misconduct, political targeting. it is clear more work needs to be done. is your office continuing to investigate these allegations? >> yes, we are, sir. >> all right. thank you. mr. levin is recognized. >> thank you very much. i wanted to go on to other things but the, the incidents that mr. camp has been talking about, disclosure, what years were those? mr. miller? >> again, sir, i apologize for not having the date at

hand. they have been a couple of years now i believe. >> a couple years. who was the commissioner at that time? >> i believe it was mr. shulman. >> who appointed mr. shulman? >> mr. bush. >> let me start with two key issues. there's no question about the inappropriate criteria. i want to focus on that. let me first ask right up front, if i might. mr. russell, during the course of your audit were you allowed access to everyone you requested to interview? >> to my knowledge we were not denied access to anyone. >> did you interview employees in both cincinnati and in d.c.? >> correct. yes, we did, sir. >> on page 7, mr. george, of

the ig report it states and i quote

>> was developed by what office? >> it would be developed by, a, an office that actually is not on here but on page 2 of this, is under lois lerner's jurisdiction. >> where are those employees located? >> for the most part they are located in cincinnati. there is about 140 folks who do this sort of work in cincinnati. there are and haful of people around the country that report in to cincinnati as well. >> in 2011 the report finds that the director of exempt organizations eo on this chart, and i'm afraid it is

not on the screen yet, this is miss lerner's 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. mr. george, is that correct? >> that is correct, sir. >> mr. miller, as then deputy, were you aware of the problem with the criteria in june and july of 2011? >> i was not, sir. >> in january 2012 the criteria were changed again to an, i quote, organizations involved in limiting expanding government, educating on the constitution and the bill of rights, and social, economic reform movement. the ig's report indicates that this change was again made in the cincinnati determinations office without executive approval.

mr. george, is that correct? >> that is correct, sir. >> it was changed, without executive approval? >> that is our understanding? >> the may 2012 criteria are in place today, it states, organizations with indicators of significant amounts of political campaign intervention. the ig report states that in quotes, it more clearly focuses on the activities permitted under the treasury regulations. mr. george, is that correct? >> that is correct, sir. >> i have no, my time is up. >> all right. at this time i will yield to the chairman of the oversight subcommittee, dr. buse stan any. >> thank you, mr. chairman. mr. miller on march 22nd being, of 2012, the oversight subcommittee held a hearing in this room and i specifically asked then commissioner shulman about reports that the irs had

been targeting tea party groups and other conservative groups and i would like to play the video of his response. could we have the video? >> there's absolutely no targeting. this is the kind of back and forth that happens when people apply for 501(c)(4)s. >> this was in march, march 20 seconds, of 2012. knowing what you know now, was commissioner shulman's response truthful? >> it was incorrect but whether it was untruthful or not, look, when you talk about targeting, and we should get into this, dr. buse stan any, because when you -- boustany, it is a pejorative term. what happened here and i'm not defending the list, but what happened here, and i would like to go through the application process, what happened here is that, someone saw some tea party

cases come through. they were acknowledging they were going to be engaged in politics. this was the time frame in 2010 when citizens united was out. there was a lot of discussion in the system about the use of c-4s. people in cincinnati decided, let's start grouping these cases. let's centralize these cases. the way they centralized it, troublesome. the concept of centralization not. we're not targeting these people in that sense. what we are doing is making sure that we bring them in and have people -- >> let me ask you this, you said incorrect. but not untruthful. >> yeah i -- >> he was not informed, was he not informed of this process? >> to my knowledge, i don't believe he knew at the time. >> because in march, you said, sent a technical advisor to cincinnati. there were press reports. there were letters from chairman camp and myself dating back to 2011 and so clearly those congressional

interests in this issue, press reports, and you're saying he was not informed of this? >> so let's divide the world into a couple pieces here. there is the list that was used, and there was the processing of the cases. at that time we were aware that there were issues in the processing of the cases. we were not aware of the list. i asked in late march, actually after the hearing i believe for us to go in and take a look because i thought there were problems in processing of the cases. they came back with both pieces. yes, there were problems with processing of the cases and there were problems with the listing. >> okay so at this, you were given a complete briefing on this improper selection based on political beliefs and this briefing was i think you said may 3rd of 2012, is that correct? >> so i would recharacterize your question, sir. i was informed of what we had found out to date. tigda was in there at the

time. i was told there was a use of the list. the list seemed obnoxious to us as it does to you. >> okay. >> and we were going to take actions on that. that was in may. >> and you say, it was not targeting but why was only one side of the political spectrum was singled out in this? >> look what happened, they get 70,000 applications in there for 150 or 200 people to do. they, triaged those. people look at them and they send them either through the system because they're okay into a mix of folks so that they can get technically fixed up and some go for substantive questions. politics is an area where we always ask more questions. it is our obligation under law to do so. as, as mr. george indicated. >> right. no i understand the process. >> 501(c)(3) organization can't do it and a c-4 organization can do some of

it. >> mr. miller, we received letters describing process but we're trying to get to the heart of this matter and at the briefing in may of 2012 you were told tax-exempt applications were being targeted if they contained terms such as tea party, we the people, patriots, so forth, many of the terms chairman camp referenced and knowing these practices being knowing, you sent letters to congress acknowledging our investigation of these allegations but consistently omitted that such discriminatory practices that are alleged were actually, in fact taking place. why did you mislead congress and the american people on this? >> mr. chairman, i did not mislead congress nor the american people. i answered the questions as they were asked. >> why didn't you tell us about the terms? >> time has expired. mr. crowley is recented. >> thank you, mr. chairman. mr. george, you are the

inspector general at the treasury, is that correct? >> actually, there are three inspects general within the department of the treasury. i'm the inspector general exclusively focused on the irs, on the system of tax administration. >> over the irs, very good. and you were appointed by then president bush, is that correct? >> yes, correct. >> and you state in your report that no one outside the irs was involved in this political targeting of not-for-profit organizations is that correct? >> that is the finding of this particular audit, sir. >> your audit, your findings are no outside groups were involved, correct. >> of this particular, yes, as of now that is our conclusion. >> mr. george, who was the last presidentially appointed irs commissioner. >> it was douglas shulman. >> douglas shulman, correct. >> yes, correct. >> appointed by then president george w. bush, is that correct? >> that's correct, sir. >> and mr. shulman was commissioner when these improper and outrage just

activities that both sides of the aisle recognize as being outrage just and improper, when they occurred, is that correct? >> yes it is. >> mr. george, prior to commissioner shulman, the last political head or political appointee of the irs was mr. mark everson, is that correct. >> that's correct, sir. >> he was also appointed by president george w. bush? >> yes, i believe so. >> during his tenure, it is believed that groups in the like the naacp, progressive churches that were in opposition to the war in iraq, and environmental groups were targeted by the irs. mr. miller, while you were appointed acting commissioner at the irs, you are not a career, you are, sorry, you are a career civil servant, is that not the case. >> it is, sir. >> you were not a political appointee? >> i'm not a political appointee. >> what i'm trying to point

out and basically to debunk is the notion or idea of the political statements and, i believe nonfactual statements by chairman cam, to link these scandals to the white house, or solely the targeting of conservative groups. i was the person last week who asked the question of ms. lerner, as, to whether or not the irs were investigating political nonfor profit organizations and that hearing we were not given a, we were not given an answer. i think mr. abuse taney would agree -- boustany, the world only learned after she was asked a question at a press event. and that simply is unacceptable. but what i also think is important to keep this, in at least this point in time,

i would hope in a nonpartisan and maybe a bipartisan context because we want to find the facts. we want it find out who knew what when and why steps were or were not taken. i was as outraged when i learned she was asked the question, why she did not tell congress when she was before congress, her response apparently was, no one ever asked her. i asked her and she didn't answer the question. so we're all-out raged. we're all upset about this. i don't believe, nor do any of my colleagues believe that any organization, political organization should be targeted solely because of their thought. that is on both sides of the spectrum. and i would dare say during the prior administration by mr. shulman, and mr. every son, that there was targeting of political entities as well. that has to end. that has to end on both sides and the president has been very forthright and

very strongly condemning that type of action, as the entire administration has, as has mr. lew. i would really ask the chairman, and my colleagues on the other side, let's get the answers. ask the questions. get the facts and then we can draw our own conclusions. with that i yield back the balance of my time. >> thank you. mr. brady is recognized. >> chairman, 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 of a small businesswoman, originally filed for tax-exempt status in july, 2010. fully 20 months later in february of 2012 received a letter from the irs a lot of them intrusive but answered everyone of them and returned it well within the two week time limit. now almost three years to the day that she first filed, her application is still pending.

but let's look what happened to her in the three years since she applied. beginning in december 2010, she was visited by the fbi domestic terrorism unit. her personal returns and her business returns were both audited by the irs. she received four fbi inquiris. in her business received unsolicitedded audits, unscheduled audits by osha, the commission on environmental qual atf twice. now this is a citizen in a small businesswoman who had never been audited by the irs or any of these agencies until she applied to you for tax-exempt status for her tea party. this is 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 and intimidate and 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? >> so, let me first say i can not speak to a given case. we talked about 6103 but that's -- >> this is not just one case. you know we're talking about the whole list the inspector general put up there. >> correct. >> who is responsible for tash giting these groups. >> so again, i'm going to take exception to the concept of target because it is a loaded term. the listing was done -- >> this was not a listing. you created a be on the look crowd list. >> yeah. >> that is not a centralized government-mandated or directed listing. you had a be on the lookout

list that you acknowledge to have the cases the inspector general already verified. the question remains, who was responsible for targeting these conservative organizations? >> so again, i think if you look at the, the tigda report it answers your question. >> there are no names in the inspector general's report. so i'm asking you, not only as the acting commissioner but as the deputy commissioner over this organization, who is responsible for targeting these individuals? >> so i don't names for you, mr. brady. i'm willing to try to find that out. i think tigda is looking at that right now. i don't think targeting again is wrong. >> you're telling us you have no knowledge who initiated or who approved this targeting of conservative organizations? >> i will stand by what the tigda report has put out there as the facts. >> can you assure this committee none of the information provided to the irs by these groups was shared or given to any other

federal agency? >> that would be a violation of law and i do not believe that happens. >> you can assure us there was absolutely no sharing of this information to another government agency. >> tigda and others would look at that, i would be shocked, congressman, if that happened, shocked. >> if your answers are any early indication we'll all read about it in the media. we ought to be getting the truth from you. mr. chairman, i yield back. >> thank you, mr. wrangle is recognized. >> thank you, mr. chairman these outrages occurred under the bush appoint es as well as obama appoint east? bill: this has been a phenomenal 55 minutes. it started hot. it has remained that way. both republicans and democrats trying to get at the truth and trying to figure out how the irs acted within the cincinnati office

when dealing with these tax-exempt groups. as we look at this, remember the time frame, 2010 through 2012. that spans two national elections cycles. martha: what we're hearing here this morning is the argument from the irs that the reason for all of this was, quote, a lack of leadership, and this idea to target these conservative groups was simply an effort after citizens united to cull through the thousands and thousands of applications that they had for tax-exempt status and that this was simply a way to be more efficient, is the argument. that argument has elicited a very vociferious response on the other side. let's listen to mr. miller's argument to that effect for a moment. >> i think what happened here that foolish mistakes were made by people trying to be more efficient in their workload selection. the listing described in the report, while intolerable, was a mistake and not an act of partisanship.

martha: all right. so that is his argument but what we're hearing from the other side, from chairman camp, who launched into a line of questioning that had to do with the national organization for marriage, wanting to know if donor lists for that group were shared. now just to give everybody some context on this, the suggestion is that during the 2012 electoral cycle that mitt romney was discovered to have given, $10,000 donation to this group. so camp is digging deeper here. he is wondering if donor lists were provided for purposes that may have had something to do with the campaign. so there's a lot of issues here that may be linked in a larger picture and also as we just watched the representative from texas digging in here as well, wanting to know who authorized this, who was behind the criteria that was developed. who said, basically, to workers, what you need to do is target groups that have

names like tea party, like patriot, like 9/12 in them and separate out those groups. then we have heard a very extensive analysis how long the delays were for those groups and what life was like for them once they tried to apply for that tax-exempt status. so we're continuing this. charlie rangel obviously as we continue to watch this process move forward here. so many questions are raised about how all of this got underway. and this is mr. miller, who of course we know is leaving his job and had previously been decided to leave in june and the most, strongest action that we've seen from the white house was to ask for his resignation and now one other irs official under him as well. chris wallace has been watching all of this of course, very closely as we have here. and chris, your reaction so far to what is going on here? >> well, there are a lot of questions. there aren't as many answers. miller, i thought it was quite interesting said there

was no political targeting. this was simply an effort, there was a huge increase in the number of applications for tax-exempt status. in effect he said it is a bookkeeping mistake. i don't know that that is going to, first of all, i don't think it has been, has flown with this committee very much and i think it won't fly with the american people the idea that the single abouting out of groups with tea party, with patriot, with constitution, with bill of rights in their name was simply a way to try to, you know, lump together a group with no partisan application to it at all, simply so you could organize the piles of applications. he also was asked, you know, why didn't you tell us when you found out the fact there was targeting going on? well i just answered the questions as they were asked. again i don't think that will fly with the committee. martha: yeah. i want to play a bit of sound here, chris, from representative kevin brady from texas. we're waiting on that. we'll get that in a moment. the timeline issue, chris, is one of the most

significant things here. you go back to the president he learned about the ig report. he said this yesterday when we saw him in the news conference from with the prime minister of turkey. he said he learned of the ig report. i had heard nothing basically about this before that report. how could that be possible given the fact that so many groups had expressed concerns about this? congress had had hearings biased on this as mr. boustany just pointed out. why would this have not trickled up to the president's desk in a more significant way? >> well, i read the president's answer yesterday, and i watched that with great interest, that was a great question, can you guaranty nobody in the white house knew about this. he gave a very lawyerly, remember he is a lawyer, he gave a good lawyerly answer. i didn't know about the ig report, until, you know, the other day. first of all he didn't answer the question can you guaranty nobody in the white house, he just answered for himself. second he just answered in terms of the ig report. he dimt say he never heard about the issue. he just talked about when he found out about the

inspector general's report and what was in that. i would read that, not going to say that means therefore he did know but i thought he gave a very careful, very prepared, very lawyerly answer about one specific issue. martha: absolutely. i mean, as you point out, he was asked a general question, did this go up to the white house in any way? that is what everybody seems to be digging towards here and trying to figure out. a little bit of that was addressed by congressman brady and we have that sound now. let's listen to that. >> is this still america? is this government so drunk on power that it would turn its full force, its full might, to harass and intimidate and threaten an average american who only wants her voice and their voices heard? mr. miller, who in the irs is responsible for targeting conservative organizations?

>> so, let me first say i can not speak to a given case. >> so i'm asking you, not only as the acting commissioner but as the deputy commissioner over this organization, who is responsible for targeting these individuals? >> so i don't have names for you, mr. brady and i'm willing to try to find that out. i think tigda is looking at that right now. i don't think, again, target something wrong. >> you're telling us you have no knowledge of who initiated or who approved this targeting of conservative organizations? >> i will stand by what the tigda report has put out there as the facts. >> can you assure this committee that none of the information provided to irs by these groups was shared or given to any other federal agency? >> that would be a violation of law and i do not believe that happens. >> you can assure us there was absolutely no sharing of this information to another government agency. >> tigda and others will

look at that. but i would be shocked, congressman, if that happened. shocked. martha: that whole line of questioning started with a questioning about a tea party member in his state who was visited by the fb i-4 times and audited and he wanted to know why. chris wallace, stay with us if you can. let's go to paul ryan with live testimony on capitol hill. >> cover up, by any scheme, or material device any material fact. how was that not misleading this committee? you knew the targeting was taking place. you knew the terms tea party patriots were being used. you just acknowledged a minute ago they were outrageous. then when you were asked about this after you were briefed about this, that was the answer you gave us? how can we not conclude that you misled this committee? >> so that was a lot of questions, sir. >> it is one. how can we conclude that you did not mislead this committee? >> i did not mislead the committee. i stand by my answer then. i stand by my answer now.

harrassment part of that discussion implies political motivation. there is a discussion going on. there's no political motivation. >> let me ask you again. >> may i answer, the question, sir. >> i will help you, give you some clarity here. here is the question you were asked. what kind of letter or action is being taken place at this time that you are aware of? >> so the discussion of the context of that, and again, we need to go back and look at the context, there was the listing. there was the treatment of the cases. my understanding of that question was the treatment of the cases because all of the letters that he was talking, i think mr. marshan was talking about, i'm hearing people are complaining about letters. my response was to that. we found out about those letters. we dealt with them. as has been explained. we gave more time. we went and talked to them about, about expanding the

way they could answer it. and we dealt, i think fairly and successfully with the donor list issue. >> you knew of our concern of this targeting. you knew of the allegations that had been reported to this committee. we brought you here to talk about it. you had received a briefing that this targeting was taking place but you did not divulge that to this committee when we were asking questions about this. you said in your answer you were aware of some 200, 501(c)(4) applications fell into this category. we did the group to assure consistency and quality. we continue to work those cases. you didn't mention targeting based on ideology. you didn't mention targeting based on buzzwords like tea party or patriots or 9/12. you knew that but didn't mention it to the isn't tee. do you think that is not a complete answer. >> i answered question truthfully. >> ask one more question. you gave us a list the other day approved applications for advo say organizations through 2009 may. we don't know how long these

applications sat or how long it took to process them. just from mr. wrangle's question and from earlier testimony the irs was doing this because they were concerned about political activities by nonprofits. that is the debate that seems to be taking place here. some of these, that were approved were chattanooga organized for action, progressive leadership alliance, and the progressive usa. if you were concerned about political activity, did you have targeting lists that contained words like progressive or organizing in their names? >> so let me, let's step back again and let me walk you through the process. we centralized cases based on political activity, evidenced in the file. we took a shortcut on some of it but we collected, to be blunt, more than tea party cases. mr. george's own report -- >> there were no progressive

or organizing buzzwords that were used for targeting is that correct? >> that's correct. >> all right. >> we collected more people. anytime it was seen that political activities -- >> thank you. >> was part of the pile it went into -- >> time expired. mr. mcdermott is recognized. >> thank you, mr. chairman. these days congress can't seem to agree whether the sun is shining but this issue has brought us together in a way unlike anything you've seen here. woe all agree these applications were poorly handled and that the irs stiff armed us basically at best. when we asked about it. our public servants ought to be held to a higher standard, none more so than the age that oversees and enforces the tax collection. the irs is an easy target. and everybody wants to get a pitchfork when the taxman comes but with our 24-hour media cycle passing around lighter fluid it is getting harder and harder to get to the facts and fix what really is going on here. there's a difference in my

mind between stupid mistakes and malicious mistakes. the overwhelming majority of applications for tax-free status for political activities were from far-right groups. and examiners took a shortcut, which they clearly regret, deeply regret. the reports says in black and white on page 7, quote, the determination unit employees stated that they considered the tea party criteria as a shorthand term for all potential political cases, close quote. she is applications were singled out for nair names and policy positions and not for act tastes which is what they should have been singled out for. some of these political groups were delayed in getting their taxpayer status was wrong. as much as i dislike the right, i think it is wrong to be uneven handed in government application. inspector general report

says that no one acted out of malice or political motivation. mr. george, i want to know, do you still stand by that? >> we have no evidence at this time to contradict that assertion, sir. >> if we really want to root out the causes of this we need to talk about campaign finance laws and citizens united decision in 2010, which is when this all started. it all started right after citizens united. people saw the door open. we can get in. we can do political advertising. and we won't have to report anybody's name. applications, for secret money, political organizations, increased by fourfold after that supreme court. this small group of people in this cincinnati office screwed up. nobody's going to deny that. they have simply screwed up but the congress, 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 and that means they have got to collect a lot of data to try and figure out what people are actually up to. mr. miller, clearly there's a problem with our current way of determining what an organization's primary purpose is and i want to ask you in a minute about that. i want you to think about it while i'm talking but as i watched this conversation shift from, find out what is right and wrong to fix it, to the irs's broken and let's repeal it, imagine a country without, we could have repealed that along with the obamacare yesterday. i'm reminded that it's on part right, part wrong. it is also about republican storyline in this agenda. we need to find some truth here and i heard members of this committee now talk about it. the irs can't access your medical files, is that true, mr. miller? >> correct, sir. >> they can not find out

your private medical information? >> that's correct that's correct, sir. >> their job in obamacare is simply to collect paid financial information on which a determination is made as to whether somebody can get a subsidy for their premiums, is that correct? >> were you covered and over what period is what we would be getting. >> it is not a fascist takeover that is going on here of the health care system. and let's not forget that the irs has one of the hardest and most hated jobs and there are thousands and thousands of good, solid, hard-working americans who work every day to run the system. and, a couple of people make a problem, that does not damage the organization in my view. you get rid of the people who made the problem. but what i would really like to hear from mr. miller, what do you need that would make it so that this

wouldn't have happened before? >> sir, there are two things, sir. i appreciate the kind word for our people because we're incredibly hard-working an honest group, frankly, that seems to be forgotten in all this. with respect to political activity, it would be a wonderful thing to get better rules. to get more clear rules. and in terms of our ability to get to this work it would be, 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 to do our job and looking at whether an organization is tax-exempt or not. bill: now they're trying to figure out whether the uptick in applications after citizens united in january 2010 had a factor in all this. to our viewers at home, we are streaming this online. we're not going to go away for long. but we are a business too and we have our bills to pay. so a quick two-minute

commercial break here. then straight back to the hearings on the hill after this. [ male announcer ] running out of steam? ♪ now you can give yourself a kick in the rear! v8 v-fusion plus energy. natural energy from green tea plus fruits and veggies. need a little kick? ooh! could've had a v8. in the juice aisle. need a little kick? ooh! man: the charcoal went out already? ... forget it. vo: there's more barbeque time in every bag of kingsford original charcoal. kingsford. slow down and grill.

martha: we are back in the hearing. this is representative nunez from california who has asked mr. miller at any time had contact with the obama campaign and white house. he has said no. he said in his capacity he did do some communications with treasury and believes that on the topic of this in terms of targeting, that happened very recently. let's listen in. >> why did you resign or why are you resigning? >> i never said i didn't do anything wrong, mr. nunez. 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, stops at my desk. and so i should be held accountable for what happens, whether i was personally involved or not, is a very different question, sir. >> well, i hope that you would be willing to submit all your e-mails, phone

records, any personal meetings that you had in the last four years and i think that would really, i think keep your reputation in good standing with this committee and the american people. >> obviously we'll have to talk about that. i'm not saying no, i'm not. i just don't know. >> thank you, mr. miller. i yield back my time, mr. chairman. >> mr. kneel is recognized. >> thank you, mr. chairman. mr. chairman, you referenced an article from "usa today", i would like for the purpose of this hearing to insert an article from "bloomberg news" that appeared on may 14th, indicating that there were democratic leaning organizations that were the focus of the irs as well. >> without objection. >> thank you. mr. chairman, when i woke up this morning as i do just about every morning now, i went to my phone and i was curious about what the word of the day would be and the word of the day because

merriam webster is located in my hometown. mr. miller, you rejected the term targeted, is that correct? >> i think it's a, a term that implies something that didn't exist here. >> okay. let me draw you into the weeds based upon what miriam webster by sheer irony this morning suggested, they used the term litmus test which they define as a single factor as an attitude, event or fact that is decisive choosing these organizations. would you say there was a litmus test? >> no, sir. the litmus test, if any was political activity. >> political, okay. i have one of my con sit ants who contacted my office yesterday outlining a pretty egregious situation. he is treasurer of a small nonprofit in massachusetts, a volunteer organization i should note and their association was told by the irs and employees they were not required to file form 990 because of their small size so they didn't file one. this past november they

received a letter from the irs saying that their tax-exempt status was revoked for failure to file the necessary forms without any advance notice. so the irs told them they no longer needed to file the forms but instead of notifying them first about the problem, and allowing them to fix it, especially in light of the advice they were given byers, the irs just went ahead and revoked their tax-exempt status. they now have to reapply and pay. this is a nonprofit that has been around for 60 years. now taxpayers should not be intimidated by the irs. there is broad agreement on that today. the american people should not be afraid of the irs. there is broad agreement on that today. but what we should be able to rely on advice that they provide and not be punished for it. so i hope that we're going to have the opportunity to work on this specific con sit ant issue. i want to turn to recent focus by the irs. that is the question today,

their political views that caused them to become that focus. we all know that is outrageous and unacceptable and a thorough review will get us to the bottom of this and assure it never happens again. let's not forget something this morning. even with the egregious actions acknowledged by the irs there is still an underlying problem here and that is 501(c)(4)s being engaged in politics. after citizens united the irs was flooded with applications, as you have indicated. seeking 501(c)(4) status and why was that? in large part because super pacs must disclose their donors while 501(c)(4)s do not. as policy makers, we have many disagreements on this committee and between the parties. however, i think that we should be able to agree on that whole notion of disclosure. now the case that unleashed --. martha: we're going to take a very quick break here but

that whole issue of whether or not there were increased applications for these tax-exempt forms is in question. much more coming up on america "america's newsroom" ♪ to more efficient pick-ups. ♪ wireless is limitless.

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martha: we are back with live coverage of the hearings on capitol hill. this is representative berry in ohio. let's listen in. >> quote, we're in a educational group, he said. we don't have a paid staff. we don't take stand. we don't endorse candidates. we don't man phone banks. we don't do any of those kind of political activities. mr. miller, question -- >> without objection the article will be placed in the record. >> thank you, mr. chairman. mr. miller, question 26 of the irs questionnaire to the tea party group is as

follows. provide details regarding your relationship with justin thomas, an american citizen, who is in the audience today, who still doesn't know why he was questioned number 26. the dispatch article goes on to say, thomas said he was shocked when he found out that the irs was asking questions about him of a group he barely knew. he had been involved in a cincinnati tea party. even served as a spokesman, but he said he had not worked with the libertytownship tea party. quote, the obvious question that comes to mind are, why am i being targeted amongst all the others? why where does this information go in the end? clearly it is housed in the irs but does it get shared with other government agencies? do i get an audit? if i do, is it against my business? all of those things go through your mind. now, to this day he doesn't know why his name is question question number 26

for an organization who still hasn't received approval since january of 2010. now the article goes on to say, democratic governor ted strickland, ohio, former governor of ohio, his top aides, who i know, very political, filed for tax-exempt status as a 501(c)(3) organization in august of 2011. they were approved nine months later. mr. miller, another organization, in ohio, the ohio liberty coalition. this is their part of their documents in response to irs requests. this is only part of it. and this, all these documents weren't enough for the irs to approve their application. and in fact, tom zee, former president of the organization who is here today, said they applied in june 2010. they finally received approval, this wasn't enough,

by the way, in december of 2012. one month after the november election. there is another lady i met in the group, in the audience from ohio. fremont, ohio, who indicated that her group had a book club and the irs demanded a list of all the books they had read and a book report from the group explaining what was in the books that they read. you can't make this stuff up. this is unbelievable. now, mr. miller, i don't know how you can defend any of this and i don't know how you can say it is not political when the liberal group got exempt status and three that just mentioned didn't for over two years. mr. nunes mentioned miss lerner. who was her boss in 2011 and 2012. who did she report to? >> i believe it would have been -- >> sarah ingram, maybe? >> part of that time and part of that time another

gentleman. >> okay. and that other gentleman has since submitted his resignation? >> i believe so. >> and what is miss ingram doing today? what is her job title? >> she works on our, on implementing the affordable care act. >> who promoted her to that position? >> i would have moved her into that position. >> why would you promote somebody to that position who was in charge of the exempt organization division which certainly has had some controversy over the last couple of years? under investigation. >> because she is a superb civil servant, sir. >> so she had nothing to do with this. >> i wouldn't imagine so. by the way i can't speak to individual cases. i can say generally we provided horrible customer service here. i will will admit that. we did, horrible customer service. >> you -- >> is very differen>> individuay doesn't no why he was question number 26. >> time has expired.

mr. becerra is recognized. >> thank you, mr. chairman. gentlemen, thank you very much for your testimony. let me key off something, mr. miller, you said, you said foolish mistakes were made. i think the president actually said it better. he said that the handling of those tax-exempt applications in that process, at the irs was outrage just and intolerable. no excuse. and, as much as we know that the folks at irs have a thankless job because they have to go and tell their fellow americans that they may be audited or they have to do this work understaffed, we have to maintain the confidence in the system because if they voluntary system of payment of our taxes. >> agreed. >> and so you are right, it was a foolish mistake but the president is even more correct that it was outrageous and intolerable. now, let me also focus on

something mr. george you said, when you were asked was there any finding or evidence of political motivation here, you said, no. >> that's correct, sir. >> okay. and so what we find is a situation where inexcusable activity took place because it erodes the confidence the american people in a system where they participate voluntarily. if there's a place in public service where you have to have the highest level of conduct and standards, it's at the irs. and so, mr. miller, i think it is unfortunate for those who are in positions of authority but the buck has to stop somewhere and i think that's exactly what we're seeing. that should not diminish the good work done by anyone within the irs over the years and so i hope you understand that you are here today, talking to us, because we need to get to the bottom of this. we need to clean up and

clear out. so we can go back to the business of making sure people respect we have a voluntary system of paying our taxes. bill: indeed we do. quick break

bill: back inside the hearing now. to this point the best tefpbs from steven miller, par partisanship was not a part of this. the reason for the singling out of applications was done for quote, efficiency. we will see in time whether or not there was a ramping up in

2010 for the tax exempt groups and whether or not it overwhelmed the office in town town cincinnati. that has yet to be proven out. that is his explanation to this point. back inside now congressman ryker, washington state. >> were groups treated differently, that is the question, because of their belief, policy, position or their name? >> no. >> that is a yes or no question. >> no, sir. >> no? no one was treated differently? >> may i answer? i would like to be a little broader than a yes now. i understand your views, sir. my understanding of the cases that went in to this cue is that it included elements from throughout the 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. >> okay. >> my understanding is. >> excuse me. >> is that the organizations -- >> mr. miller. >> yes, sir. >> ph miller it's my time and i'm going to take it back for now. i'm not going to be delayed here. so your answer was no, no one was treated differently. but to take you back to mr. ryan's question, you knew that groups with the term tea party had been automatically subjected to extra scrutiny. you've admitted that today. you acknowledge your investigation into whether certain groups where are being treated differently, whether there was intent or not, didn't this committee have the right to know? >> i answered all questions truthfully, sir. >> didn't this committee have the right to know that groups were being treated differently? that you have this group of 200, 300, whatever the number was, did not this committee have the right to know? >> i answered all questions i

was asked. >> so your answer is a nonanswer once again. it's an easy question. do you not think that congress has the right to know all the information that you knew? >> so look congress was -- >> mr. miller. does this committee, mr. miller, have the right to know the information that you knew? yes or no? >> this committee -- >> yes or no. >> are this congress is always going to get that information. >> you testified before this -- please, mr. miller. >> yes, sir. >> you testified before this committee and you did not provide the information, you did not share the information you knew. so my question is, do you not believe that -- this is the united states congress here that you're accountable to, which is accountable to the people, the american citizens across this country. do you not believe that it is your job to provide us with the information that you knew so

that as you said the people of this country can be properly served honestly? you're a law enforcement agency for crying out loud. way us a cop for 33 years. you've raeutze raised your right hand today. did this committee have the right to know what you knew. yes or no. >> i answered all questions truthfully. i also will tell you that it was -- >> health me ask -- who i'm going to go to mr. george because my time -- you're not going to cooperate with me, mr. miller and you've been uncooperative during this hearing. mr. george we've heard an early draft of your report indicates that you're unable to determine who initially direct egd the i.r.s. employees to target cases based on political beliefs. >> that we were unable to yes. >> mr. miller you're the commissioner. who was responsible? you conducted the investigation. who was responsible?

>> i don't have that name now. >> why don't you have that name? have you asked anybody. >> yes. >> who have you asked. >> i don't have that name either. >> i'll be glad to provide the names. >> let him answer the question. >> it's washington state's time. >> who did you ask? >> i asked the senior technical adviser. >> what is the senior technical adviser's name? >> nancy marks sph what did nancy tell you, who is responsible? >> by that i don't remember to be honest with you. >> you don't remember again? >> all right time has expired the committee -- there are votes on the floor of the house of representatives, the committee will recess for 15 minutes. -p. martha: that is one of the operative questions here, right? i mean if we're supposed to believe that this was the kwhr the idea of under links in and office in cincinnati and had to use target words to cull through

applications, who authorized that and said that would be a good way to do this. that has been acknowledged by all that it was allows see way to do this and unfair to do do this. mr. miller doesn't seem to remember who was the person that authorized that decision in cincinnati. bill: absolutely gripping testimony. steufpls you sit in the hearings and wonder where they are going. this was packed with drama. screen left is a microphone, that is set up for any members of the committee who wish to come out and reflect on what we have watched and listened to for the past hour and a half. when they arrive we'll show that to you. another quick commercial break here. back in only two minutes. but i feel skinnier, you know? not really. aaah! jessica! whoa! your friend's a rate sucker. her bad driving makes car insurance more expensive for the rest of us. try snapshot from progressive. snap it in and get a discount based on your good driving.

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and save a lot more than money. call or click today. bill: we are in what we believe is a 15 minute break. when the hearings resume we'll take you back in there. one of the more intriguing exchanges that we watched was representative paul ryan out of wisconsin. when he was questioning steven miller about previously testimony he gave before the same committee back in july of 2012 and whether or not he knew of the scrutiny that had been placed on these various groups. here is how the exchange went. it runs about 45 seconds. >> you knew of our concern of this targeting, you knew of the allegations that had been reported to this committee. we brought you here to talk about it, you had received a briefing that this targeting was taking place, but you did not divulge that to this committee when we were asking questions about this. you said in your answer that you were aware some 200 501(c)(4) applications fell into this quote category. we did this grouping together to

insure consistency and assure quality. we won't to kworbg the case kes. you didn't mention tarpb getting based on ideology or buzzwords like tea party or patriots or 9-12. you knew that but you didn't mention that this to committee. do you think that was not a very complete answer. >> i answered the question truth three. bill: mike emanuel with you live. is this the way they expected this to go so far, mike? >> reporter: yes, bill, absolutely. you know, there is dual track anger here, one because of the actions that were taken by the i.r.s. going after these groups, it wasn't just tea party groups, it was religious groups. franklin graham says the reverend billy gram happens organizations got audited after running ads on traditional marriage. there is not coming clean to congress also. he said it wasn't just misleading it was flat outlying. we've heard some suggestions that there will be criminal

prosecutions to come out of this i.r.s. matter. you've heard mr. miller choose his words carefully, suggesting that he didn't know about some of the stuff that was going on, that he answered the questions truthfully, but republicans are looking nor who gav for who gave the order, who said let's go after these groups and shut them down. so far miller hasn't given them that. they continue pushing. you've heard democrats sound angry as well because they realize next time it could be an administration that says, let's go after the liberal groups. let's shut them down, and so some anger on both sides for a variety of reasons, bill. martha: mike, it's martha. you know, when you look at the history of the congressional appearances that have happened here in these hearings, mr. miller testified in july, july 25th of 2012 and then prior to that the former commissioner doug shulman testified before the committee that there was no -- none of this sort of targeting going on. it raises a lot of questions about the legality and future of

possible criminal charges that may come forth in this in terms of lying to congress. and that -- mr. miller is really trying himself from that with his very carefully worded answers as you said. at one point he was asked, would you produce all of your emails from 2010 to the current date and he said, i'm going to have to talk to my lawyer about that before i get back to you on that one. >> reporter: right, the other day john boehner came out the speaker of of the house and said he wasn't looking for a resignation or two, he wanted to know who is going to jail for this. and so there are people who think that there was some criminal activity here. you heard him suggest that he wasn't aware of what was going on, but a lot of people up here on capitol hill do not believe that the cincinnati outpost on its own decided to go after these groups. and so they are trying to tie it back to washington, some of the inspector general's report ties it back to officials in washington, but they are trying to get specific names to try to figure out who gave the order,

and so far that has not been forthcoming. that is part of the irritation you hear in the questioning here. but as you mentioned, there are bigger reasons beyond this hearing why mr. miller may be concerned, because if there may be criminal prosecution down the road. bill: thank you. standby there, when the hearing resumes again, and we believe it will be about 10:55 eastern time we'll take you back in the room. martha, this is what we have heard now, this is what steve miller has talked about and democrats on the panel as well. the citizens united ruling handed down in january of 2010, remember that moment during the state of the union address when the president referred to that. martha: sure do. bill: and justice alito sat there shaking his head in disagreement. the argument that some are making, steve miller included, is that the number of applications that flooded this i.r.s. office was so overwhelming for the employees there that they had to winnow out the applications in order to be more efficient. there are those suggesting already that 2010 was not the year that the applications went

higher. that was more like 2011, 2012. it does appear to be a fact, though, between that three-year period the number of applications for tax exempt nonprofit organizations doubled, but did that happen in 2010 when these orders were given down? or did that come later in 2011 and 2012 during the heat of the national election? martha: bill, you take sort of the bigger picture, bird bird's-eye view of all of this. and you point to the fact that a number of these groups, tea party groups, different organizations that had a similar kind of mantra have been saying, we are being targeted, we are being singled out, we are being given a different set of rules than other people, and frankly, a lot of people are short of shaking their heads at them and said that they were crazy, that they didn't know what they were talking about. this list certainly substantiates some of those concerns and that's what got us here today. bill: four more minutes before the hearing resumes. jim mcdermott a democrat from the state of washington made a very pointed comment, you will

hear from him as our coverage continues after this.

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you're living a maybe life. and you may have chronic migraine. but knowing this thing you're going through has a name means knowing you can find treatments that are right for you. go to mychronicmigraine.com to find a headache specialist. and don't live a maybe life. >> this small group of people in the cincinnati office screwed up. nobody is going to deny that. they simply screwed up. but the congress, this committee messed up by not giving any clear criteria for what a real charitable organization is. martha: that is the explanation that some folks would like to see be the case here, and you've got half of the room, the democrat side of this congressional hearing arguing that this was just a low-level mix-up, and that they were trying to make their work easier so they put in a few search warrants to cull out the political ao groups applying for

tax exempt status on these applications. and that's all there is to it. bill: one of the moments that stuck out was from representative reichert, a former police officer as he explained 30 years. martha: it became quite clear. bill: that eud date. he was working to get a name. did he succeed? you be the judge. >> you're the commissioner. who is responsible in you conduct ebgd th conducted the investigation. who was responsible? >> i don't have that name sir. >> why don't you have the name? have you asked anybody. >> yes i asked -- >> who did you ask. >> i don't have that name either. >> i'll be glad to provide the names. >> let him answer the question. >> it's the gentleman from washington state's time. who did you ask? >> i asked the senior technical adviser. >> and what is the senior technical adviser's name. >> nancy marks. >> and what did nancy tell you? who is responsible? >> that i don't remember to be

honest with you. >> you don't remember again? bill: steven miller moments ago back in the room in a matter of minutes. they start to re-enter the hearing room on the hill now. martha: very heated morning on the hill. all of these questions and the major one, who authorized this decision to target these conservative groups? busy morning and we're about to get ready to go again. man: the charcoal went out already? ... forget it. vo: there's more barbeque time in every bag of kingsford original charcoal. kingsford. slow down and grill.

bill: steve miller might have

needed a lot of water there during that break. martha: he might have. bill: round two is about to begin. martha: it is. he has said that he always answered truthfully. he will be questioned once again in a heated hearing on capitol hill which continues now. jon: right now brand-new stories and breaking news. a new way to avoid those long lines at the airport. one airline announcing a plan that would allow some passengers to board flights earlier than others, but there is a catch. plus, a man in new mexico accused of kidnapping a four-year-old girl. that child's mother gets in her car and chases him down. the dramatic ending. and how you can rediscover north america without leaving your home. it's all "happening now." and also "happening now" the ousted i.r.s. chief grilled