Internal Revenue Service staffers in Cincinnati that handled tax-exempt applications weren’t as sensitive to the political fallout of their treatment of conservative groups as they should have been, an agency official in Washington told congressional investigators.
Holly Paz, formerly a D.C. official dealing with tax-exempt groups, told interviewers from the House Oversight Committee that Cincinnati staffers were “apolitical,” and used the term "Tea Party" as a way to flag groups that might play a role in campaigns.
“Many of these employees have been with the IRS for decades and were used to a world where how they talked about things internally was not something that would be public or that anyone would be interested in,” Paz told investigators in the first closed-door interview conducted on the IRS controversy.
“So I don’t think they thought much about how it would appear to others. They knew what they meant, and that was sort of good enough for them.”
Paz also told investigators that she first learned of the Tea Party applications for tax-exempt status in February 2010. After returning from maternity leave that fall, Paz asked for an update, and was given a list of 40 cases under scrutiny.
In all, Paz said she reviewed roughly 20 to 30 of the flagged Tea Party cases — the latest development suggesting that staffers in Cincinnati weren’t solely responsible for the targeting of conservative groups seeking tax-exempt status.
Republicans on the House Oversight Committee say that subsequent interviews with Cincinnati IRS staffers have raised more questions about Paz’s testimony, and they are discussing whether to bring her back for more questioning. The IRS announced this month that it had placed a new official in Paz’s position as director of rulings and agreements for exempt organizations.
The release of Paz’s testimony comes as the chairman and top Democrat at House Oversight — Reps. Darrell Issa (R-Calif.) and Elijah Cummings (D-Md.), respectively — continue to spar over whether full transcripts of interviews should be released, and as senior administration officials continue to say that the blame for the targeting lies with the Ohio office.
Treasury Secretary Jack Lew told Univision on Monday that “the screening that took place in Cincinnati” was unacceptable, and stressed that “there is no evidence at all that suggests that there was any political involvement in any of these decisions.”
Pressed on Paz’s involvement, Lew said: “I’m not going to comment on one particular individual or another.” The Treasury secretary added that the acting head of the IRS, Danny Werfel, would release a 30-day, top-to-bottom review of the IRS next week.
In a statement, Cummings again accused Issa of releasing cherry-picked excerpts of IRS interviews, and called on him to release full transcripts. The Hill is one of several media outlets to review transcripts from Paz’s interview.
“Chairman Issa should not be afraid to let the American people see all of the transcripts so they can make their own judgment,” Cummings said in a statement. “It's time to stop politicizing this investigation and start focusing on implementing the recommendations for reform in order to restore trust in the IRS.”
Issa has said that releasing full transcripts would be “reckless,” and that the interviews with IRS staffers show that “we still don't know why everything happened and who is responsible.”
Congressional investigators have interviewed at least six IRS staffers, and want to interview more in what Republicans have called the "grunt work" phase of the inquiry.
In her interview, Paz was on the same page with Cincinnati staffers on certain matters. For instance, Paz said that an Ohio employee flagged the first Tea Party case, leading to it getting sent to Washington.
Paz and Cincinnati employees have also not reported any political motivations, or White House involvement, in the targeting, in accord with a Treasury audit last month that detailed the singling out of conservative groups.
But one Cincinnati-based staffer, Elizabeth Hofacre, said that she was only tasked with Tea Party applications — conflicting somewhat with Paz’s assertion that the term was a generic catch-all for political cases.
Hofacre added that Carter Hull, a Washington-based lawyer for the IRS, micromanaged her handling of applications from conservative groups. House investigators sat down with Hull last week.
Paz also told investigators that the agency struggled in figuring out how much political activity groups seeking 501(c)(4) tax-exempt status could carry out.