Political storm bursts over IRS

The White House and top lawmakers from both parties on Monday called for broad investigations of the IRS as the scandal surrounding its admission of singling out Tea Party groups for extra scrutiny deepened. 

The response from both parties — and both ends of Pennsylvania Avenue — illustrated how few in Washington want to be seen as defending the IRS, an agency unpopular with the public even on its best days.

President Obama said targeting groups politically would be “outrageous” and the agency would have to be held “fully accountable,” while congressional Democrats said they would push the IRS for answers. Leading Republicans called for resignations at the agency’s highest levels.

“I don’t care whether you’re a Democrat, independent or Republican. At some point there are going to be Republican administrations. At some point there are going to be Democratic ones,” Obama said in a news conference. “Either way, you don’t want the IRS ever being perceived to be biased and anything less than neutral in terms of how they operate.”

The top lawmakers at the House Ways and Means Committee, Chairman Dave Camp (R-Mich.) and ranking Democrat Sandy Levin (Mich.), announced Monday that their panel would hold the first congressional hearing on the IRS’s actions Friday, one week after the news first broke.

“The Committee on Ways and Means will get to the bottom of this practice and ensure it never takes place again,” Camp said. 

Steven Miller, the acting IRS commissioner who Senate Minority Leader Mitch McConnellAddison (Mitch) Mitchell McConnellSessions: 'We should be like Canada' in how we take in immigrants NSA spying program overcomes key Senate hurdle Overnight Finance: Lawmakers see shutdown odds rising | Trump calls for looser rules for bank loans | Consumer bureau moves to revise payday lending rule | Trump warns China on trade deficit MORE (R-Ky.) and Sen. Marco RubioMarco Antonio RubioOvernight Cybersecurity: Bipartisan bill aims to deter election interference | Russian hackers target Senate | House Intel panel subpoenas Bannon | DHS giving 'active defense' cyber tools to private sector Senators unveil bipartisan push to deter future election interference Puerto Rico's children need recovery funds MORE have pressed to resign; and Russell George, the Treasury Department’s inspector general for tax administration, are scheduled to testify. 

Details from a report authored by George helped spark the blowback from Obama and others since Friday, when an official admitted that the agency gave additional attention to groups seeking tax-exempt status that had “Tea Party” or “patriots” in their name. 

George’s report, parts of which were circulated by congressional staff members over the weekend, asserts that Lois Lerner, the IRS official who discussed the targeting on Friday, knew about it nine months before agency officials publicly told lawmakers they weren’t singling out groups for political reasons. 

The audit also makes clear that the IRS’s extra scrutiny went beyond just Tea Party groups, looking at organizations that focused on government spending or taxes and those lobbying to “make America a better place to live.”

“Americans expect the IRS to do its job without passion or prejudice,” Senate Finance Committee Chairman Max BaucusMax Sieben BaucusSteady American leadership is key to success with China and Korea Orrin Hatch, ‘a tough old bird,’ got a lot done in the Senate Canada crossing fine line between fair and unfair trade MORE (D-Mont.) said Monday, suggesting his panel would conduct a “full investigation” into the inspector general’s findings.  

“We need to get to the bottom of what happened here. I want to see all the facts.  We need to know who knew what, and exactly what mistakes were made.”

Senate Majority Leader Harry ReidHarry Mason ReidDems search for winning playbook Dems face hard choice for State of the Union response The Memo: Immigration battle tests activists’ muscle MORE (D-Nev.) backed Baucus’s efforts, saying the reported targeting would be “a terrible breach of the public’s trust.”

At the same time, the White House is facing accusations from GOP lawmakers that the president and his administration shielded the truth about last year’s attack on the U.S. Consulate in Benghazi, Libya. Obama responded sharply to those charges on Monday, in stark contrast to his concerns over the IRS situation. 

Press secretary Jay Carney said the White House counsel heard about the inspector general’s report in April, but that both he and the president only found out on Friday. Even so, compared to the developing IRS clamor, there remains more evidence that political appointees were involved in the response to Benghazi.

The added attention heaped on to the IRS also has raised new questions about the agency’s ability to implement ObamaCare, and about whether the uproar will impede or give new momentum to lawmakers’ efforts to overhaul the tax code. 

The inspector general report, expected to be released publicly this week, found that IRS employees began special searches for Tea Party groups’ applications around March 2010. 

In recent years, Tea Party organizations and other groups have increasingly been seeking 501(c)(4) status with the IRS, a designation reserved for social welfare groups that allows them to shield the identities of their donors. The IRS says annual applications for that status more than doubled between 2010 and 2012, and that the mistakes that singled out Tea Party and conservative groups occurred at its Cincinnati-area office. 

Lerner, who heads the IRS section that oversees tax-exempt groups, was briefed on how IRS staffers were giving special attention to Tea Party and other conservative groups in June 2011. Shortly thereafter, the agency developed new criteria that identified groups seeking tax-exempt status that were involved in politics, lobbying or advocacy.

But Doug Shulman, then the IRS commissioner, told lawmakers at public hearings in March 2012 that the agency wasn’t giving special attention to any groups and that career agency staffers in Washington helped decide whether audits would move forward.

The IRS said Monday that staffers first told Miller, then the agency’s deputy commissioner for services and enforcement, about the improper targeting on May 3, 2012 — more than a year ago, but still after Shulman’s testimony.

Miller, then the agency’s deputy commissioner for services and enforcement, had been informed of the situation by March 8 that year, before Shulman testified.  

“It is clear the IRS cannot operate with even a shred of the American people’s confidence under the current leadership,” Rubio wrote to Treasury Secretary Jack LewJacob (Jack) Joseph LewOvernight Finance: Hatch announces retirement from Senate | What you can expect from new tax code | Five ways finance laws could change in 2018 | Peter Thiel bets big on bitcoin Ex-Obama Treasury secretary: Tax cuts 'leaving us broke' Senator demands answers from DOJ on Russia bribery probe MORE on Monday, calling for Obama to demand Miller’s resignation.

Tea Party groups have said that the IRS scrutiny was highly invasive, with some dismissing the idea that Obama’s fingerprints aren’t all over the treatment they got from the agency. The IRS itself has admitted that it wrongly asked Tea Party groups for donor lists. 

“The connection between Obama’s rhetoric and IRS action seems more than coincidental,” said Tim Phillips, the president of Americans for Prosperity, a conservative group linked to the politically active Koch brothers. 

Some lawmakers and activists on the left, while blasting the IRS’s actions, say they are concerned that the uproar will take attention away from a broader issue: that the agency lets far too many political groups obtain tax-exempt status.

House Minority Leader Nancy Pelosi (D-Calif.), for instance, directly linked the oversight of Tea Party groups to Citizens United, the 2010 Supreme Court decision that rolled back political spending limits. 

“There needs to be more clarity in the law regarding the activities of tax-exempt organizations along with greater disclosure and transparency,” Pelosi said. 

Jonathan Easley and Justin Sink contributed.