IRS scandal: First head rolls

Acting Internal Revenue Service Commissioner Steven Miller resigned on Wednesday over his role in the agency’s controversial singling out of conservative groups.

President Obama announced the resignation — which Treasury Secretary Jack Lew asked for earlier in the day — at the White House. 

Miller, a 25-year veteran of the IRS, became the first official to lose his job in the uproar over the agency’s actions, which have consumed Washington and the Obama administration since they were revealed last week. 

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“It’s important to institute new leadership that can help restore confidence going forward,” Obama said in a short statement at the White House.

The president said he has urged Lew to quickly implement recommendations from a Treasury audit, and vowed that the White House would work closely with Congress as it investigates the matter. 

In a resignation letter released by the IRS, Miller told his colleagues he would stay on the job until next month. Top Republicans had said that Miller, who found out about the targeting in May of 2012, had misled them about the IRS’s actions.



The acting chief’s resignation capped a whirlwind day in the scandal over the agency’s targeting of Tea Party groups seeking tax-exempt status, which Speaker John Boehner (R-Ohio) said should end with IRS staffers in jail. 


“My question isn’t about who’s going to resign,” Boehner said. “My question is: Who is going to jail over the scandal?”

GOP aides said that the IRS’s treatment of tax-exempt applications that targeted conservative groups could have broken several laws, including violations of civil rights protected under the Constitution and laws specific to government employees.

A broad range of criminal tax experts agreed jail time is possible, though based on what has been revealed thus far, they said the government would have its work cut out for it building criminal cases against agency employees.

Attorney General Eric Holder made clear in his appearance before Congress Wednesday that investigators were not sure exactly what they would uncover after a probe was launched the day before.

“That actually is a good question, and I’m not sure what the answer is,” Holder said when asked about potential violations by IRS staffers. “We’re going to have to get into the investigation before I can answer that question more intelligently.”

He did rattle off a list of potential problem areas, including civil rights violations and making false statements to Congress.

A spokesman for Boehner pointed to a section of the criminal code specific to government employees involved in revenue laws as a possible candidate for prosecution. That law stipulates that government employees could face penalties of up to $10,000 in fines or five years imprisonment if found guilty of “extortion or willful oppression.”

A Senate GOP aide said IRS employees could face jail time if an investigation reveals they improperly leaked confidential taxpayer information, or if IRS employees inspected tax information in a way that violated the Internal Revenue Code.

ProPublica revealed Tuesday that the IRS office that had sent it nine private tax applications for nonprofit groups in 2012 was the same Cincinnati office that has come under scrutiny.

The consensus among tax attorneys reached by The Hill was that it would be difficult to prove criminal intent on the matter, especially if the government tried to argue IRS employees violated the First Amendment rights of the targeted groups by flagging them for added scrutiny.

“A criminal case is a somewhat difficult proposition for the Department of Justice to bring in these types of situations,” said Nathan Hochman, who headed Justice’s tax division from 2008 to 2009. “It has to be a sort of knowing and willful violation of their constitutional rights.

“The standard of proving the violations of someone’s civil rights ... particularly at the criminal level, is very, very high,” he added.

Hochman, now a partner at Bingham McCutchen, said that barring evidence proving IRS employees conspired and knowingly violated the law, the government faces an “extremely difficult hurdle” to bring charges.

Other tax and criminal experts were similarly skeptical after reviewing the report from the Treasury’s inspector general on tax administration detailing how the IRS came to single out Tea Party groups. The inspector general’s report found that no applications from the groups were denied, although some were withdrawn and others were still under consideration.

But Hochman pointed out that the Justice Department has far more investigatory tools at its disposal than the inspector general, and leading lawmakers added that it was very early in the process, and that there is still much to learn.

“I think the IG report is almost as significant for what it doesn’t cover, as much as what it does cover,” House Ways and Means Committee Chairman Dave Camp (R-Mich.) said Wednesday.

Camp’s panel is scheduled to hold the first hearing on the matter on Friday, and the House Oversight and the Senate Finance committees plan to get into the act next week. Doug Shulman, the former IRS commissioner, is among those expected to testify, and Miller will still appear as scheduled before Ways and Means. 

On Wednesday, the IRS also clarified that William Wilkins, the agency’s chief counsel and one of two political appointees, did not take part in an August 2011 meeting on tax-exempt applications, as the inspector general report suggested.

Lawmakers will also look into whether top IRS officials lied to Congress when asked about possible targeting of Tea Party groups.

Congressional investigators contend that IRS officials have consistently misled lawmakers about the targeting. House Oversight Committee Chairman Darrell Issa (R-Calif.) told Lois Lerner, the IRS official that first publicly disclosed the targeting, in a Tuesday letter that recent information about IRS activity conflicted with what she told the panel in the past.

Making false statements to Congress carries a maximum penalty of five years in prison for each count.