exactly. >> brian? >> the high life -- >> you want it. >> going golfing in london for a week? >> yes. >> sounds like the life i tried to push on mika. >> now, now. really. exactly. >> the south of france. >> usually i'm driving kids around. >> get the book. don't forget the book. she looks great. >> "way too early" and "morning joe" and now chuck todd is straight ahead. >> thank you. we are watching developing news on capitol hill where outgoing acting irs commissioner steven miller will testify this hour to the house ways and means committee. this will be his first public comments since the story exploded about the agency singling out conservative groups for special scrutiny. miller resigned his post on wednesday after treasury secretary jack lu asked him to

step down but miller doesn't actually leave until next week. good morning from washington. it's friday, may 17th, 2013. this is "the daily rundown." i'm chuck todd. today's i profile session, first of what will be a series of hearings over the next several weeks grilling current and former irs officials about whether and why conservative groups who sought tax-exempt status were singled out for special scrutiny by the agency and whether congress was misled about that policy when they had been asking about it for a couple years. also set to testify today the treasury department inspector general russell george who released a report tuesday making it clear senior irs officials had been aware of the policy for over a year. yesterday the president trying to contain the damage from this scandal appointed daniel wuerffel a veteran civil servant in the office of management and budget tapped to replace miller as the acting commissioner and the president yesterday promised to clean up the irs. >> in addition to making sure that we've got a new acting

director there we are going to make sure we gather up the facts and hold accountable anybody who was involved in this. >> the scandal already had another casualty. the irs announced yesterday joseph grant the commissioner who oversaw the tax-exempt division will retire in early june. just how rough has this week been for the president? consider this question from a reporter. >> how do you feel about comparisons by some of your critics of this week's scandals to those that happened under the nixon administration? >> well, you know, i'll let you guys engage in those comparisons. >> as you can see, white house desperately trying to get their arms around all of this and all of these controversies but the irs is the one they're most nervous about and the one that congress is most interested in investigating. in fact dave camp is beginning to speak. >> the liberty upon which this country was founded. the blatant disregard with which the agency has treated congress

and the american taxpayer raises serious concerns about leadership at the irs. let's establish the facts that we do know. based on the report we know that for an 18-month period beginning in spring, 2010, irs employees in the determinations unit employed key words such as "tea party, patriot, and 912" to target applications for tax-exempt status. these groups were then subjected to further irs investigation and document requests. irs employees later expanded their search to include groups concerned about government spending, debt, taxes, the constitution, the bill of rights, or trying to, and i quote, make america a better place to live, end quote. let me repeat that. people were targeted for trying to make america a better place to live.

these americans had their applications delayed for nearly three years and at least 98 applicants were asked for improper and inappropriate information such as donor lists and whether family members plan to run for political office. during that delay and while applications of conservative groups sat untouched for more than a year, other applications with names like progress, and progressive, were approved in a matter of months. the headline in "usa today" from earlier this week really says it all. irs gave liberals a pass, tea party groups put on hold. the audit found some of those cases should have been set aside because of concerns related to potential political activity but no such review was done. without objection i enter the "usa today" news report into the record. this week we learned that senior irs officials knew about this activity almost two years ago in june of 2011 and irs's leadership in washington knew of it in may, 2012, a year ago.

despite a two-year long investigation by thisommittee the irs never told the american people or their representatives about this simple truth. in fact, we were repeatedlily told no such targeting was happening. that isn't being misled. that's lying. but now we know the truth. or at least some of it. we also know that these revelations are just the tip of the iceberg. it would be a mistake to treat this as just one scandal. this may be the one generating headlines but in total i count at least five serious violations of taxpayer rights. the right to be treated fairly, honestly, and impartially by their government. first, back in august of 2010, a white house official discussed the status of a private company, the tax status of a private company, a clear intimidation tactic. second, in june of 2010, the targeting of conservative groups began. third, in may of 2011 the irs started to threaten doan toers

conservative conservative leaning nonprofits they were liable for certain taxes and fourth in march of 2012 the huffington post published the confidential 2008 donor list of the national organization for marriage a conservative tax-exempt organization. and, fifth, but unlikely the final transgression, pro publica announced the irs leaked confidential applications for tax-exempt status from conservative groups. mr. miller, with all due respect, this systematic abuse cannot be fixed with just one resignation or two. as much as i expect more people need to go, the reality is this is not a personnel problem. this is a problem of the irs being too large, too powerful, too intrusive, and too abusive of honest, hard working taxpayers. there isn't a person i come into contact with at home or anyone in this country frankly who does not fear the irs. they fear getting something wrong on their tax filings. and they fear the irs's ability

to audit them and wreak havoc in their lives. especially when all they're trying to do is improve their lives. let alone god forbid trying to make america a better place to live which is what the irs targeted them for. under that kind of thinking, every civic group in america is at risk. the knights of columbus, the rotary, the jay sees, american legion and vfw clubs i'm sure are aware of the saying the power of tax is the power to destroy. under this administration the irs has abused its power to tax and it has destroyed what little faith and hope the american people had in getting a fair shake in washington. 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 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 is 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 repeatedlily target the american people and keep the fact covered up for so long? who started the targeting? who knew? when did they know? how high did it go? who leaked the private taxpayer information? why were the names of donors asked for and what was done with those lists before they were supposedly discarded? 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. it 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 thateliver 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 mogadishu 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 am going to read my opening statement. i will expand on it a bit now that i've heard the opening statement of the chairman. this committee on a bipartisan basis takes seriously its

oversight role and we are fully committed to ensuring 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. singing out organizations for review based on their name or political views rather than their actual activities. 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. we are determined to get answers to our questions about how this happened to ensure that it does not happen again. finally, throughout this time, the irs leadership has demonstrated a total disregard for the over sight role of congress and this committee. former irs commissioner showmen testified in front of us in march, 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 obligation. 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 has been directly involved in this matter. yet she failed to disclose what she knew to this committee. choosing instead to do so at 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 lerner 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. i just want to add in that regard. mr. camp has said listening to the nightly news this appears to be just the latest example of a culture of coverups and political intimidation in this administration. it seems like the truth is hidden from the american people just long enough to make it through an election. i totally, totally disagree. if this hearing becomes 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 happen happened, how it happened, where it happened, who knew what when. and, if instead, this hearing essentially becomes an effort to score political points, it will be a disregard of the duties of this committee. so i conclude with the sentence, 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, but then it's not customary for this committee to have been so repeatedly misled by an agency under its purview. so it is always against the law to provide false statements to congress the act of swearing in a witness impresses upon him or her the gravity of the proceeding and the need to tell the full and complete truth. please raise your right hands. do you solemnly swear or affirm that the testimony you are about to give will be the truth, the whole truth, and nothing but the truth so help you god? >> i do. >> let the record reflect 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'd like to welcome j. russell george who 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 members. >> chairman camp, member levin and members of the committee thank you very much to discuss our report of oversight of the internal revenue service of groups that apply for tax-exempt status. as you ar ware the organization i lead protects the integrity of the federal tax system. our audit was initiated based on concerns expressed by members of 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 the 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 views 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 a monitor shows, the irs was following inappropriate crite a criteria. let me read these criteria from a briefing held by the irs exempt organization in june of 2011. the criteria included the words tea party, patriots, or 912

project. another list of cry tear ya was the group's issues included government spending, government debt, or taxes. let another list of criteria appeared as education of the public by advocacy or lobbying to, quote, make america a better place to live, unquote. finally it consisted of any statements in the case file criticizing how the country is being run. the reason for these criteria was inappropriate is they did not focus on tax-exempt laws and treasury regulations. for example 501c3 organizations may not engage in political campaign intervention. 501c4 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

began selecting tea party or 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 organization 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 exempt organization's director of rulings and agreements changed the criteria to be consistent with laws and regulations. the organizations selected for review for significant political campaign intervention again 298 in all experienced substantial delays in the processing of their applications. the organizations experiencing these delays included tea party organizations, patriot organizations, 912 organizations among other organizations. as shown on a 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, 912, or patriot organizations. my final point is that the irs requested unnecessary information for many political cases. in fact, 98 of 170 cases that received followup 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 either received a letter or phone call from the irs stating their applications were approved and they no longer needed to respond to the additional requests. the irs informed another 15 organizations they did not need to respond to previous requests for information and instead they would send a revised request for information. regarding the donor information received from applicants the irs informed us that they destroyed the information. we 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 is administering the nation's tax laws fairly. thank you for the opportunity to present my views and i look forward to your questions. >> thank you, mr. george. mr. miller, you are recognized for five minutes. >> thank you. thank you 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 i have a very brief

statement before i can take your questions. first and foremost as acting commissioner i apologize on behalf of the internal revenue service for the mistakes we made and poor service we provided. the affected organizations and american public deserve better. partisanship or even the perception of it has no place at the irs. it cannot even appear to be a consideration in determining tax-exempt goes of an organization. i do not believe that partisanship motivated the 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. i think that what happened here was that foolish mistakes were made by people trying to be more efficient in their work load selection. the listing described in the report while intolerable was a mistake and not an act of partisanship. the agency is moving forward and has learned its lesson.

we've learned to correct issues in the processing of cases described in the report and implemented changes to make sure this type of thing never happens again. now that the fact finding is completed and the report issued we will take appropriate action with respect to those responsible. i'd 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. >> to that position? when was that? >> i was designated as acting in november of 2012. >> 2012. if i'm not mistaken you hold actually two titles, acting director of the irs and also deputy commissioner for services and enforcement? >> i do, so. >> in your role 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 government office yes. >> so the website is accurate. >> yes. >> who do you report to in that position, actually in both positions as deputy commissioner for services and enforcement. >> the deputy commissioner role i would report to the commissioner if there was one. without a commissioner and holding both hats i would report to the deputy secretary of treasury. >> and is it not a violation of irs 6103 to disclose confidential taxpayer information? >> it is. >> and that really applies to all taxpayer information? >> not quite sure what that means to be honest. >> in practice it is basically all tax -- not just 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 is probably it. it was a long time ago. >> did you take any steps when you learned of that? >> i don't recall. >> so you didn't inform the inspector general or your superiors that you recollect? >> i'm not sure why i would have to notify the superiors. it was in the papers. i don't remember whether we made a referral or i made a referral at that time. >> 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. >> 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 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. so that would have been in your role as acting director as well as the deputy commissioner for services. >> 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 adviser for tax-exempt entities to lead a team and see what was going on in terms of cases that had gotten those letters. >> did you inform anyone of that action that you took or those

steps? >> i did that. i asked the senior technical adviser to do that in late march, march 23rd or 26th, something like that. and she and her team came back to talk to me in may and 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 jebl was aware of it and had made it clear to us they were aware of it and were in looking at it at that time. >> 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 -- i don't remember the date, sir, but, yeah. in that time frame again there

were press accounts and congressionals coming in talking about that. >> and did you learn that from the press or did you learn that? >> i don't know. it could have been either. it came up in a meeting and then it hit the press. i don't know. >> in any event after learning of that information of the audits what steps did you take? >> we investigated what happened. we took a look. and ultimately i issued a directive that said 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 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, study it, and put out guidance. i thought that was the fair thing to do. >> when you say we investigated, who would that have been? >> i don't remember. we took a look at the issue and how it happened and i think your committee was looking at it as well. >> when you say we what does that mean? >> the irs. the irs looked at the issue. >> what departments? >> would have been counsel -- i don't know it was an exempt -- i'm sorry sir. i am not able to answer with particularity there. >> were you ever made aware of the publication of the confidential 2008 donor list of the national organization for marriage, conservative tax-exempt organization? >> i was. >> when was that? >> that date i'll have to get back to you on but i remember the issue. >> how did you find out? >> i don't remember. might have been press. might have been somebody coming to us with a congressional complaint. >> when you learned of that

publication, did you take any steps? >> i believe we made a referral, yes. >> at that time. and you are 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 league of confidential applications for the tax-exempt status of conservative groups to publica? >> i was. >> again, when were you made aware of that? >> again, sir, i'm not able to give you a perfect time line but approximately the time it became public is when i became aware so you would know that from the time line. >> did you inform anyone else of that? >> i believe the service informed tigba at that time yes. >> in each of these instances did you ever come forward and inform 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 and pro publica? >> those two situations we went to tigda and i think mr. george can speak to what they found. we made the referrals. i believe what they found was that those disclosures were inadvertent and that there's been discipline in one of those cases for somebody not following procedures but i will obviously let mr. george speak to that. >> but you never informed congress of any of these things that you're aware of. these items i've asked you about this morning. >> they were in the press, sir. >> all right. >> obviously the irs mission statement says the role of the irs is to help america's taxpayers understand and meet their tax responsibilities.

and enforce the law with integrity and fairness to all. clearly your mission is not being met. mr. george, i guess i would just have one last question, mr. miller. when asked the truth and you know the truth and you have a legal responsibility to inform others of the truth but you don't share that truth, what is that called? >> i always answer questions truthfully, mr. camp. >> all right. mr. george, were you ever made aware of the alleged disclosure of the confidential tax structure of a private company? >> we have been alerted. >> you personally were made aware of it? >> in specific or in general? >> you specifically. >> to a specific company or in general, sir? >> it was a specific company but there was a disclosure of taxpayer information. the tax, confidential tax

structure as you know any information is considered confidential. >> right. >> 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 protected by title 76 yes. >> are you aware of the instance i am referring to? >> 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 hot line. 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 command. >> that would include the

commissioner. >> yes. >> no irs employee informed you of this information? >> most likely it would have come from one of my principal deputies 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 cannot, 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 are the ones to enforce those rules so i have to be very careful as to exactly how i respond and whether or not i can even acknowledge publicly some

of these revelations 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'll give me a moment. is it ongoing yes or no? it is not ongoing. >> all right. there are daily reports of new allegations of irs misconduct, political targeting, and 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 want to go on to other things, but 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 years now i believe. >> a couple years. who was the commissioner at that time? i believe it was mr. schulmann. >> who appointed mr. schulmann? >> 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 were requested to interview? mr. george? >> 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 seven of the ig report it states and i quote all of these individuals stated that the criteria were not influenced by any have you had or organization outside the irs. is that correct? >> that is the information we received. correct, sir. >> did you find any evidence of political motivation in the selection of the tax exemption applications? >> we did not, sir. >> mr. miller, during your review of this matter, you indicated when you started it. did you find any evidence of political motivation on the part of employees involved in processing the applications at issue? >> we did not, sir. >> if we could put on the screen the organizational chart is that possible? from the report?

someone going to do that? it's called high level organizational report. >> thank you. mr. miller, in 2010, the inappropriate criteria that singled out applications for tax-exempt status by name was developed by what office? >> it would be developed by an office that actually is not on here but is on page two of this, under lois lerner's jurisdiction. >> where are those employees located? >> for the most part located in cincinnati. there are about 140 folks who do this sort of work in cincinnati. there were a handful of people around the country that report in to cincinnati as well. >> in 2011 the report finds that the director of exempt organizations on this chart,

imafraid it's not on the screen yet. this as ms. lerner's position became aware of the inappropriate criteria, she ordered the criteria changed and it was changed in 2011 to no longer refer to 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, and 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 interventi intervention. the ig report states, in quotes, it more clearly focuses on the activities permitted under the treasury regulations. mr. george, is that correct? >> that is correct, sir. >> my time is up. >> all right. at this time i'll yield to the chairman of the oversight subcommittee. >> thank you, mr. chairman. mr. miller, on march 22nd of 2012 the oversight subcommittee held a hearing in this room and i specifically asked then commissioner schulmann 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. do we have a video? >> there is absolutely no targeting. this is the kind of back and forth that happens when people apply for 501cs. >> this was in march of 2012. knowing what you know now was commissioner schulmann's response truthful? >> it was incorrect but whether it was untruthful or not, look. when you talk about targeting and we should really get into this, because when you talk about targeting, it is a pejorative term. what happened here was, 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 faces 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 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. >> was he not informed of the process? >> to my knowledge, i don't believe he knew at the time. >> because in march, you sent a technical adviser to cincinnati. there were press reports, letters from chairman camp and myself dating back to 2011. and so, clearly.

it was congressional interest 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 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 at -- 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? >> 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 that there was a use of the list. the list seemed obnoxious to us as it does to you. >> okay. >> we were going to take actions on that and that was in may. >> you say it was not targeting but why was only one side of the political spectrum singled out? >> i think what happened was they were -- look. they get 70,000 application ness there for 150 or 200 people to do. they triage 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 the law to do so. as mr. george indicated. >> right. i understand the process. >> a c 4 organization can do some of it.

it's our obligation -- >> mr. miller, we've received letters describing process but we are trying to get to the heart of this matter and the briefing in may of 2012, you were told that tax-exempt applications were being targeted if they contained terms such as tea party, we the people, patriots and so forth. many of the terms that chairman camp referenced. and knowing these practices, knowing that 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 recognized. >> thank you, mr. chairman. mr. george, you are the

inspector general of the treasury is that correct? >> actually there are three inspectors general within the depth of the treasury. i am the inspector general exclusively focused on the irs on the system of tax administration. >> over the irs. very good. 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 that no outside groups were involved, correct? >> of this particular -- yes. as of now. that's our -- >> mr. george, who was the last presidentially appointed irs commissioner? >> it was douglas schulmann. >> appointed by then president george w. bush is that correct? >> that is correct, sir. >> and mr. schulmann was commissioner when these improper

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

and basically debunk is the notion or idea of the political statements and i believe nonfactualnonfactual statements by chairman to link the 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 at that hearing we were not given an answer. i think mr. bustani would agree. rather the world learned after she was asked a planted question at a press event and that is simply unacceptable. but what i also think is

important is to keep this at least in this point in time i would hope in a nonpartisan and maybe bipartisan context because we want to find the facts. we want to find out who knew why, when and what steps were taken. i was outraged when she was asked the question why she did not tell congress her response was no one asked her. we are all upset about this. i do not believe that any organization, political organization should be targeted solely because of their thought. that's on both sides of the spectrum. and i would dare say during the prior administration by mr. everson 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 forth right and very strongly condemning that type of action as the entire administration has. so i would really ask the chairman and my colleagues here, 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. >> 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 small business woman filed for tax exempt stat status. 20 months later she received a letter from the irs with numerous followup questions, a lot of them intrusive. she answered everyone of them and returned it well within the two week time limit. now two years to the day her

application is still pending. let's look at 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 business returns were both audited by the irs. her business received unsolicited audits twice. this is a citizen and a small business woman who had never been audited by the irs or any of these agencies until she applied to you for tax exemp status for her tea party. the 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 cannot speak to a given case. and that we talked about 6103. >> this is not just one case. you know we are talking about the whole list inspector general put up there. who is responsible for targeting these groups? >> so, again, i'm going to take exception to the concept of targeting because it is a loaded term. the listing was done -- >> this is not a listing. you created a be on the lookout list. that is not a centralized government mandated or directed listing. you had a be on the lookout list

that you acknowledged. have the cases already verified. the question remains, who is responsible for targeting the conservative organizations? >> so, again, and i think if you look at the 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 have names for you, mr. brady. and i am willing to try to find that out. i don't think targeting again is wrong. >> you are telling us you have no knowledge of who initiated or who approved this targeting of conservative organizations? >> i will stand by what the report has put out there as the facts. >> can you assure this committee that none of the information provided 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 happened. >> you can assure us there was absolutely no sharing of information? >> i would be shocked, congressman, if that happened, shocked. >> if your earlier answers are any indication we will all read about it in the media. we ought to be getting the truth from you. mr. chairman, i yield back. >> thank you. >> thank you, mr. chairman. >> we are all outraged about what occurred under the bush appointees as well as the obama appointees? >> there was no obama appointees. so under mr. -- i apologize. i'm not sure what -- >> the people that were -- once it was discovered that people

were put under a list, a lookout list, that type of thing, regardless of what you call it, were the people responsible in treasury department appointed by president bush as well as continued service under president obama? >> at the irs the commissioner was appointed under the bush administration. obviously, at treasury those would be main treasury, those individuals would be obama appoint appointees. >> what i'm trying to say, this outrage is not democrat and republican. it involves the credibility of government as relates to american citizens. now, the president has indicated outrage. you have indicated outrage. so i would assume that we are on the same side in trying to

determine how did this happen. who was responsible for it? how far did cancer go? how quickly can we cut it out so that 1tens of thousands of irs employees have this stigma of corruption taken away from them? that you, mr. miller, who is a career employee, don't have to explain to your kids and friends that you are not involved in a scandal, that all of the people that served the government, it is too late for the congress but it is not too late for the government to try to get its reputation cleaned up for america. so i don't want to see anger with you but where hope before this hearing is over that you share with us how you intend to have your voices heard so that

america would know that whether this was criminal activity or mistake, i don't know but we have to get on with it. now under 501 c 4 we are supposed to aallow political activity to take place meaning that you can make political donations without saying how much and who made the donations, right? >> if i can restructure it, donors and their contributions are not public information if that was the question. >> so you can make political contributions. >> you can make contributions that are used for political purposes. >> and you can do this as long as it is not the primary purpose you can do this for 49% of whatever the activities are without technically violating law, is that not correct? >> the test is whether your primary activities are social

welfare in nature. >> and primary means technically you can do 49% political. >> we have never been that precise. >> i know. but i'm asking you could say that? >> yes. >> and after the supreme court decision at citizens union -- >> united. >> united, whatever. the applications for this type of corporations increase dramatically, did it not? >> they did double. >> you don't have to be a political expert to know that there was an increase in political donations given to 501 c 4s. >> i think that if one looks at the reporting on the forms 990 of political activities it will show an explosion in that money, as well. >> and so, again, it is almost an invitation as the law is written for abuse in terms of