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IRS Screenings Showed 'Lack of Sensitivity': Chief

AP with CNBC.com
Tuesday, 14 May 2013 | 10:08 AM ET
Steven Miller, Internal Revenue Service acting chief.
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Steven Miller, Internal Revenue Service acting chief.

The IRS acting chief acknowledged Tuesday that the agency demonstrated "a lack of sensitivity" in its screenings of political groups seeking tax-exempt status, but he said those mistakes won't be repeated.

Chief Steven Miller made his acknowledgment amid reports that he had not informed Congress that tea party groups were being inappropriately targeted even after he had been briefed on the matter.

In his first public comment on the case, Miller said there was "a shortcut taken in our processes" for determining which groups needed special screening.

Miller has emerged as a key figure in the controversy over the IRS' singling out of conservative groups for extra scrutiny. President Barack Obama said Monday that if the agency intentionally targeted such groups, "that's outrageous and there's no place for it."

(Read More: Obama: IRS Focus on Conservative Groups 'Outrageous')


In an opinion piece in Tuesday's editions of USA Today, Miller conceded that the agency demonstrated "a lack of sensitivity to the implications of some of the decisions that were made." He said screening of advocacy groups is "factually complex, and it's challenging to separate out political issues from those involving education or social welfare."

"The mistakes we made were due to the absence of a sufficient process for working the increase in cases and a lack of sensitivity to the implications of some of the decisions that were made," Miller wrote.

Miller said the agency has implemented new procedures that will "ensure the mistakes won't be repeated."

On Monday, the IRS said Miller was first informed on May 3, 2012, that applications for tax-exempt status by tea party groups were inappropriately singled out for extra scrutiny. Congress, though, was not told tea party groups were being inappropriately targeted, even after Miller had been briefed on the matter.

At least twice after the briefing, Miller wrote letters to members of Congress to explain the process of reviewing applications for tax-exempt status without disclosing that tea party groups had been targeted. On July 25, 2012, Miller testified before the House Ways and Means oversight subcommittee, but again did not mention the additional scrutiny—despite being asked about it.

At the hearing, Rep. Kenny Marchant, R-Texas, told Miller that some politically active tax-exempt groups in his district had complained about being harassed. Marchant did not explicitly ask if tea party groups were being targeted. But he did ask how applications were handled.

Miller responded, "We did group those organizations together to ensure consistency, to ensure quality. We continue to work those cases," according to a transcript on the committee's website.

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Earlier, Rep. Charles Boustany, R-La., had raised concerns with the IRS about complaints that tea party groups were being harassed. Boustany specifically mentioned tea party groups in his inquiry.

But in a June 15, 2012, letter to Boustany, Miller said that when the IRS saw an increase in applications from groups that were involved in political activity, the agency "took steps to coordinate the handling of the case to ensure consistency."

(Read More: IRS Singled Out Select Groups in Tax Scrutiny)

He added that agents worked with tax law experts "to develop approaches and materials that could be helpful to the agents working the cases."

Miller did not mention that in 2011, those materials included a list of words to watch for, such as "tea party" and "patriot." He also didn't disclose that in January 2012, the criteria for additional screening was updated to include references to the Constitution or the Bill of Rights.

The House Ways and Means Committee, chaired by GOP Rep. Dave Camp of Michigan, is holding a hearing on the issue Friday and Miller is scheduled to testify.

The Senate Finance Committee announced Monday that it will join a growing list of congressional committees investigating the matter.

The IRS apologized Friday for what it acknowledged was "inappropriate" targeting of conservative political groups during the 2012 election to see whether they were violating their tax-exempt status. In some cases, the IRS acknowledged, agents inappropriately asked for lists of donors.

The agency blamed low-level employees in a Cincinnati office, saying no high-level officials were aware.

When members of Congress repeatedly raised concerns with the IRS about complaints that tea party groups were being harassed last year, a deputy IRS commissioner took the lead in assuring lawmakers that the additional scrutiny was a legitimate part of the screening process.

That deputy commissioner was Miller, who is now the acting head of the agency.

Camp and other members of the Ways and Means Committee sent at least four inquiries to the IRS, starting in June 2011. Utah Sen. Orrin Hatch, the top Republican on the Senate Finance Committee, sent three inquiries. And Rep. Darrell Issa, R.-Calif., chairman of the House oversight committee, sent at least one.

(Read More: IRS Takes a Closer Look at the Wealthy)

None of the responses they received from the IRS acknowledged that conservative groups had ever been targeted, including a response to Hatch dated Sept. 11, 2012—four months after Miller had been briefed.

In several letters to members of Congress, Miller went into painstaking detail about how applications for tax-exempt status were screened. But he never mentioned that conservative groups were being targeted, even though people working under him knew as early as June 2011 that tea party groups were being targeted, according to an upcoming report by the agency's inspector general.

The IRS issued a statement Monday saying that Miller had been briefed on May 3, 2012 "that some specific applications were improperly identified by name and sent to the (exempt organizations) centralized processing unit for further review." That was the unit in Cincinnati that handled the tea party applications.

Miller became acting commissioner in November, after Commissioner Douglas Shulman completed his five-year term. Shulman had been appointed by President George W. Bush.

On June 29, 2011, Lois G. Lerner, who heads the IRS division that oversees tax-exempt organizations, learned at a meeting that groups were being targeted, according to a draft of the report by the Treasury inspector general for tax administration.

At the meeting, Lerner was told that groups with "Tea Party," "Patriot" or "9/12 Project" in their names were being flagged for additional and often burdensome scrutiny, the report says. Lerner instructed agents to change the criteria for flagging groups "immediately."

However, when Lerner responded to inquiries from the House oversight committee, she didn't mention the fact that tea party groups had ever been targeted. Her responses included 45-page letters in May 2012 to Issa and Rep. Jim Jordan, R.-Ohio, who chairs a subcommittee.

Lerner also met twice with staff from the House Ways and Means oversight subcommittee to discuss the issue, in March and in May 2012, according to a timeline constructed by committee staff. She didn't mention at either meeting that conservative groups had been targeted, according to the timeline.

_ By The Associated Press

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